Ausam Energy Finds Gas with Ungabilla-1 Well

Ausam Energy reports initial results from its Ungabilla-1 exploratory well in ATP754P in the Surat/Bowen Basin in Queensland, Australia.

The well was drilled conventionally to a depth of 2,895 meters and encountered strong gas shows in the primary objectives, the Permian Upper and Lower Tinowon sands. In addition, prior to reaching the primary objectives, gas shows were encountered in the secondary objective, the Triassic Basal Rewan sands.

Ausam (50%) and operator Origin Energy Limited (50%) are evaluating the well logs and side-wall cores. The well has been cased to bottom. Ausam expects that a workover rig will be mobilized during July 2005 to perforate the Permian Upper and Lower Tinowon sands in order to test the well's potential to produce conventionally. If necessary, it is proposed that a window will be milled out of the casing and a coiled tubing unit will be used perform a horizontal underbalanced test of gas production in both the Permian Upper and Lower Tinowon sands. The ATP754P permit covers approximately 1.5 million gross acres and contains 19 additional prospects and leads.

Mark Avery, Chairman and CEO stated "We are pleased with these initial results from the Ungabilla-1 commitment and exploration well. These results are the first validation of our belief that there are significant gas reserves in the Permian Tinowon sands of the Surat/Bowen Basin, reserves that Ausam expects to commercially exploit using conventional and underbalanced drilling techniques. The Ungabilla-1 well was one of the prospects identified in Ausam's regional geophysical and geological study of Ausam's Queensland permits."

"Ausam will continue its development drilling program in PL71, however our plans and priorities may be revised following further interpretation of the results from the Ungabilla-1 well".