AWE Spuds Oi-2 Exploration Well in PMP 38158 Offshore Taranaki

AWE Limited, as Operator of Petroleum Mining Permit 38158 offshore Taranaki, New Zealand, disclosed Friday that the Kan Tan IV (mid-water semisubmersible) commenced drilling the Oi-2 exploration well at 05:30 hours (5.30am) NZDT on Friday, June 13.

As at 06:00 hours (6.00am) NZDT today, operations were drilling a 36 inch hole to a planned depth of 754 feet (230 meters) in preparation for the installation of a 30 inch surface conductor.

The Oi-2 exploration well is located approximately 7.45 miles (12 kilometers) northeast of the Tui Area Oil Fields in water depth of approximately 393 feet (120 meters). The well objective is to evaluate the hydrocarbon potential of a 4-way dip closed structure similar to the producing Tui, Amokura and Pateke fields and is targeting the same F10 reservoir sandstones.

The Oi-2 exploration well will be drilled vertically to a planned total depth of 12,732 feet (3,881 meters) and is forecast to take approximately 31 days to complete.

The Oi prospect, in a discovery success case, represents a best estimate Prospective Resource of 11 million barrels of recoverable oil (gross, unrisked P50 estimate). AWE is participating in the Oi-1 exploration well at a reduced equity of 31.25 percent and has the option to increase its equity participation in any future appraisal drilling and development to 57.5 percent by exercising existing buyback provisions.

In the event of a commercial discovery, it is envisaged that any subsequent development of the Oi field would involve a tie back to the nearby Tui production facility, the FPSO “Umuroa”, where sufficient production capacity is available.

The Joint Venture partners in PMP 38158 are:

• AWE Limited (via subsidiaries) (Operator) - 57.50 percent
• New Zealand Oil & Gas (via subsidiaries) - 27.50 percent
• Pan Pacific Petroleum (via subsidiaries) - 15.00 percent

The Joint Venture partners in the Oi-1 exploration well are:

• AWE Limited (via subsidiaries) (Operator) - 31.25 percent
• New Zealand Oil & Gas (via subsidiaries) - 18.75 percent
• Pan Pacific Petroleum (via subsidiaries) - 50.00 percent

Prospective Resources

AWE follows the Society of Petroleum Engineers – Petroleum Resources Management System (SPE-PRMS) guidelines with respect to the definition of different classes of reserves and resources. SPE-PRMS defines  Prospective Resources as being the estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) related to undiscovered accumulations. These estimates have a probability of discovery and a probability of development. Consistent with these guidelines, AWE has assessed the probability of geological success to be 17 percent and the probability of commercial success to be 13 percent. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons and the probability of development.