Highlands Gas Project to Proceed to FEED Phase

On October 6, 2004, the owners of the Highlands Gas Project have announced their decision to proceed to the Front End Engineering and Design (FEED) phase of development, at a projected cost of between US$80 million and US$100 million.

The decision to proceed with the FEED development and engineering stage is based upon the success of Esso Highlands Limited (a subsidiary of ExxonMobil), operator of the Highlands Gas Project, in signing two new long term conditional gas sales agreements with Queensland Alumina Limited and CS Energy.

The Highlands Gas Project is owned by Esso Highlands Limited; Oil Search, MRDC; and, Nippon Oil exploration, and is a proposed natural gas pipeline originating in Papua New Guinea and continuing to Brisbane, Australia. Cheetah Oil & Gas Ltd., is the second-largest petroleum license holder in the country of Papua New Guinea, behind only InterOil Corporation which controls 8.8 million acres.

CEO and Chairman Garth Braun comments that, "Some of our licenses are located in close proximity to the proposed new gas pipeline route while others are located within moderate distances of the proposed route. In the past we've focused our evaluation and exploration activities primarily on potential oil-bearing structures, however, if this new gas pipeline is built then our ability to deliver valuable natural gas to the Australian market could be greatly enhanced. As a result, we have increased the priority of locating and defining gas bearing structures located within our license areas. Papua New Guinea is blessed with extraordinarily high prospectivity for natural gas and the valuation of this gas will rise if it is no longer shut-in and limited only to the domestic marketplace."

As one of the operators of the Highland Gas Project, Oil Search is presently involved in feasibility studies regarding petrochemical, CNG and Gas to Liquids projects that could be built in conjunction with an expanding Papua New Guinea access to natural gas.

Separately, Cheetah Oil & Gas Ltd. also reports that, in association with 3D-Geo of Melbourne Australia, it is continuing it previously announced exploration and evaluation program. Seismic interpretation and structural and stratigraphic modeling is ongoing and has already enhanced the understanding of previously poorly understood areas. Garth Braun says "We are very pleased with our progress to date and expect to have defined drill targets shortly. We also continue to evaluate additional new opportunities outside of our current licenses and will report on any developments as and when appropriate."

Cheetah Oil & Gas Ltd. is evaluating and exploring oil and gas prospects over approximately 8.3 million acres in its license areas in Papua New Guinea.