Niko Resources Updates Operations in Southern Asia

Niko Resources says that well P1-A in Block D6 offshore India has been completed and the rig moved off location. P1-A was the first well drilled on the newly acquired 3D seismic program. P1-A is the 15th consecutive successful exploration well drilled in D6.

Log analysis indicates several hydrocarbon bearing zones exist over a 600m interval. These hydrocarbon zones have significant impact on the future exploration potential of the D6 block. Hydrocarbons were found in the Pliocene/Pleistocene section, which confirms extension into the deeper water of the geologic environment, which contains all the hydrocarbons discovered to date in D6. Further, the deepest discovered hydrocarbons were found in the older Miocene interval and marks the first time hydrocarbons have been discovered in this time period. This opens up significant additional new exploration potential in the deeper water portions of D6.

Bangladesh

The Chattak 2C data well reached a targeted depth of 612 meters. No drilling problems were encountered. All the well's objectives were met and an optimal relief well using the acquired data has commenced and is currently drilling at 133 meters.

Wireline logs run across the sand that created the initial problem indicate 20 meters of net pay with porosity of approximately 30%. Casing setting depths have been optimized. Reservoir pressure was obtained confirming all formations are normally pressured confirming no reservoir damage has occurred and very little gas was lost.

The 2C well will be completed and put on production after the next relief well is drilled. This is an important discovery with five more deeper sands down to 2800 meters still to be tested.

Niko advises that a lawsuit has been filed in the State of Texas naming Niko and another party as defendants. The action was filed by a number of plaintiffs purporting to be citizens of Bangladesh who claim to have suffered damages as a result of the uncontrolled release of gas that occurred at the Chattak 2 well in Bangladesh in January and June of 2005. The amount of damages claimed in the filed pleadings is US$250 million. With regards to the release of gas in Chattak, misleading statements and quotations in articles by various individuals and publications will be dealt with on an orderly basis.

On September 12, 2005 articles appeared in the Bangladesh press indicating the High Court of Bangladesh asked the Government to freeze all of Niko's Bangladesh Bank Accounts.

Niko has not received at any of its offices, any order to freeze any bank accounts at this time.

However, on the basis of the newspaper article, Niko's Bangladesh bank, Standard Chartered suspended activity on the Niko Accounts. Niko is currently working with the Governments and Courts to lift this suspension.

Niko believes the action taken by Standard Chartered is wholly inappropriate.

In the event that Niko receives a court order freezing bank accounts in Bangladesh, Niko will pursue this matter with the Government.

NEC-25 Block India

Gaffney, Cline & Associates (GCA) were engaged to provide an independent assessment of natural gas resources contained in NEC 25 effective as of March 31, 2005. The findings of the GCA assessment include the exploration results from the six wells drilled by Reliance and Niko in the first original 1,800 km2 area and include analysis of log, production test and subsurface sampling of 12 separate gas accumulations. In addition to completing a review of these discoveries GCA also independently evaluated the range of prospective resources that might be associated with undrilled seismic leads in the first seismic area.

GCA has stated that as yet none of the discoveries in NEC 25 have approved development plans to allow them to be classified as "reserves" under SPE/WPC and National Instrument 51-101 resources classification guidelines.

In its assessment, GCA's best estimate of original gas in place for the drilled discoveries in NEC 25 is 2.3 trillion cubic feet (TCF) (Niko has a 10 per cent gross interest) with a low estimate of 0.8 TCF and a high estimate of 5.5 TCF. In addition, GCA's best estimate of original gas in place for the undrilled prospects in the first seismic area in NEC 25 is 1.4 gross TCF, with a low estimate of 1.0 gross TCF and a high estimate of 2.7 gross TCF for an upside total of 8.2 TCF.

Acquisition of 1,700 km2 of new 3D seismic over the prospective area extending south from the original seismic area is now complete and the data is being processed and evaluated.