Strike Oil Increases Stake in Carnarvon Basin

Strike Oil has recently concluded negotiations that have resulted in the company acquiring high equity levels and operatorships in five permits in the Carnarvon Basin offshore Australia. The company has also taken an option to farmin to a sixth permit. Details are given below.

TP/6 and EP 342

The company has finalized a sale and purchase agreement with Apache Northwest Pty Ltd (Apache) whereby Strike Oil will acquire Apache's 100% interests in exploration permits TP/6 and EP 342

TP/6 lies to the west of the Saladin, Skate and Roller oil fields in the southwestern portion of the Barrow sub-basin. The permit covers an area of 834 square kilometers and contains a number of prospects and leads which may be drilled in the next few years.

EP 342 lies to the west and south of TP/6. The permit covers an area of 534 square kilometers and contains the Leatherback oil field and a number of leads. The Leatherback field is currently considered non-commercial.

In the case of TP/6 only, Apache has the right to buy back a forty percent (40.00%) interest in the permit following the drilling of the next three wells or the expiry of the permit term, whichever comes first, by reimbursing Strike Oil the proportional share of its past costs. Under the terms of the agreement, Apache has an option to operate the wells in this permit on behalf of Strike Oil.

EP 110

Agreement has been recently reached to restructure the EP 110 joint venture. As a result, Strike Oil has been assigned a forty percent (40.00%) interest and will assume operatorship. Other members of the new joint venture are Carnarvon Petroleum Ltd (35.00%) and Pancontinental Oil & Gas NL (25.00%).

The permit covering approximately 690 square kilometers is located onshore/offshore near Onslow, and is adjacent to the producing Tubridgi Gas Field.

EP 424

EP 424 consists of a single graticular block (approximately 80 square kilometers) adjacent to the northwest corner of the offshore portion of EP 110. The block was recently awarded to Stirling Products Limited (formerly West Oil NL) who has now assigned its 100% interest to Strike Oil. In due course Strike Oil will assign interests to Carnarvon Petroleum Ltd and Pancontinental Oil & Gas NL so that the equity interests are the same as for EP-110 (Strike Oil 40.00%, Carnarvon 35.00% and Pancontinental 25.00%).

EP 325 and EP 41(1) (Option)

Strike Oil and Victoria Petroleum NL have reached agreement on farmout terms for EP 325 whereby Strike Oil will earn a forty percent (40.00%) interest and operatorship in the permit. Strike Oil has also acquired an option to earn a forty percent (40.00%) interest and operatorship in adjacent permit EP 41 (part 1) from Lansvale Oil & Gas Pty Ltd.

EP 325 covers an area of 1,700 square kilometers between Exmouth in the Exmouth Gulf and the Tubridgi gas field. The permit overlies portions of both the Exmouth and Barrow sub-basins. The permit contains the Rivoli (14 Bcf) gas field and a number of prospects and leads including the Champion oil prospect which is on trend with the Rough Range oil field.

EP 41 (part 1) covering approximately 160 square kilometers is located immediately west of EP 325 and lies partly onshore and partly offshore in the Exmouth-sub Basin. The permit contains several prospects on trend and updip of the Rivoli gas field which is thought to have a thin oil leg at the base of the gas column.

Subject to the usual regulatory approvals and the availability of a suitable rig, Strike Oil plans to drill the Champion 1 well in EP 325 in November 2004. Victoria Petroleum has estimated the Champion structure has the potential to hold up to 27 MMbbl of recoverable oil, if present.

Strike Oil's Technical Director Jim Durrant said "Strike is extremely pleased to have been able to acquire such large equity interests in permits located in Australia's most prolific hydrocarbon basin.

These permits will provide Strike with an inventory of prospects and leads some of which will be drilled in the next couple of years.

Operatorship of the new permits will also provide Strike with the opportunity to develop concepts, apply modern technology and to test new ideas using its experience and knowledge from elsewhere in the basin."