PPP to Spud Appraisal Well in Vietnam, Updates 4Q10 Ops

Pac Pacific Petroleum (PPP) updated its quarterly activities for the 2010.

The operational highlights for the December quarter were the completion of the Pateke-3H repair and reinstatement of production, and planning of the CRD-2X appraisal well in Vietnam, which is due to spud very shortly.

The evaluation of the CRD discovery made in June 2009 is long awaited and makes for an exciting start to 2011.

PPP remains focused on developing the exploration potential and drilling opportunities in our existing acreage, and on acquiring new opportunities to further broaden the portfolio in the South East Asia and Australia-New Zealand regions. PPP retains a strong cash position, and hence is very well placed to compete for new opportunities while maintaining a strong commitment to acquiring quality assets.

Further details on the Tui Area Fields, and activities in other areas are summarized below.

New Zealand

Tui Area Oil Project (PMP 38158) Taranaki Basin (PPP interest 10%)

Continuing operations related to the repair of the Tui Area Fields Pateke-3H well were a key activity early in the period, and the repair was successfully completed in late October.

Production from the Tui Area oil fields totaled 715,803 barrels (PPP 71,580 barrels) for the December quarter, averaging 7,780 barrels a day, an increase in production compared to the September quarter reflecting the impact of bringing Pateke-3H back on production. During December the Tui Fields produced an average of 8,891 barrels a day with all four wells on-line. Cumulative field production to the end of December 2010 was 29.5 million barrels (PPP share 2.95 million barrels). PPP’s operating revenue from Tui during the quarter was US $4,728,000.

PEP 38483 Taranaki Basin (PPP interest 14.091%)

This permit has been surrendered. The Bahamas shallow biogenic gas play was fully evaluated, but was not considered sufficiently attractive to warrant continued investment.

Block 07/03 Vietnam (PPP interest 5%)

Planning for the CRD-2X appraisal well was a focus for the December quarter. This well, targeting evaluation of the oil and gas discovery made by CRD-1X in June 2009, is expected to spud in late January. The CRD-1X well encountered approximately 90m net pay comprising both oil and gas within multiple stacked reservoir layers. Two of these reservoir zones were tested and flowed oil at a combined rate of 3,265.4 barrels of oil per day plus 8.1 million standard cubic feet of gas per day, through a 48/64” choke. No water was produced from either zone.

The appraisal well has been planned to reduce uncertainty in whether the CRD structure contains sufficient volumes to support a potential development.

The Vietnamese Ministry of Industry and Trade has approved a one year extension of the First Exploration Period which will now conclude on 30th November 2011. This is extension is added to the term of PSC Block 07/03.

JPDA 06-103 (PPP interest 15%)

The Autoridade Nacional do Petróleo of Timor Leste (ANP), the Designated Authority, has approved the request for a 12 month extension of the current contract term to 16th January 2011 to enable completion of the remaining commitments, conditional on a 25% relinquishment. The ANP has also agreed to vary the work program such that of the remaining two commitment wells, the third and fourth in the contract area, if the third commitment well is unsuccessful, the fourth commitment well is discretionary and that PSC-06-103 could be relinquished if the Operator and JV partners decide not to proceed with any further exploration.

The first two wells Loré-1 and Lolotoe-1 drilled to test Elang and Plover objectives in the southern part of the block adjacent to existing discoveries encountered hydrocarbon shows but did not find commercially significant hydrocarbons. These results have been incorporated into prospectivity studies which have progressed to include the less well known northern part of the contract area. Efforts are ongoing to identify attractive drilling candidates, and preparations are in hand to acquire additional 3D seismic over the promising Tutuala lead in the northwest corner of the block.