Pukeko-1 Results Disappointing

Wire line logging operations at Pukeko-1 offshore New Zealand have now been completed. Over the interval 4055-4160 meters, where gas peaks and oil shows were observed while drilling, wire line log data indicate interbedded shales and sands with poor reservoir quality.

It is possible that the shows encountered while drilling may be remnants of an ancient oil field that has subsequently been spilled by later tectonic movements in the area.

Over the interval 3910-3917 meters, wire line log data indicate sandstone with poor reservoir quality.

While there does not appear to be an economically producible oil column at this location, the Joint Venture is strongly encouraged by the extensive oil shows in the well, as these have confirmed the oil play in the area west of the Maui Field. The Operator of the PEP 38460 Joint Venture is now investigating options for early acquisition of 3D seismic in order to define potential up dip of Pukeko-1.

It is expected that the Ocean Bounty drilling rig will be released tomorrow in order to drill a third party well. The Joint Venture will take the rig back in mid July to drill Pateke-1 and Kiwi-1 in the area close to the Tui and Amokura oil discoveries.

New Zealand Oil & Gas Limited holds a 12.5% interest in PEP38460 through subsidiary Stewart Petroleum Company Limited.

Other participants in the venture are New Zealand Overseas Petroleum Limited (operator) 45%; WM Petroleum Limited (a subsidiary of Pan Pacific Petroleum N. L.) 10%; AWE New Zealand Pty Limited 20%; and Mitsui E&P New Zealand limited 12.5%