Austral Arranges US$10 Million Financing

Austral Pacific Energy has finalized a private placement of 4 million equity Units to accredited investors in North America and New Zealand. Each Unit is priced at US$2.50 and consists of one common share and one-half of one share purchase warrant. Two half-warrants (one whole warrant) plus US$3.50 are needed to purchase an additional common share for one year from completion of the financing, which is expected to occur in approximately 14 days.

The warrants are subject to a 30 day accelerated expiry at the Company's option if Austral shares trade over US$4.50 on AMEX for 10 consecutive trading days during the last eight months of the 12 month term of the warrants. All shares issued, including any shares issued on exercise of the warrants, bear a legend restricting transfer for four months from closing in Canada and New Zealand with longer resale restrictions applicable within the United States. Austral paid a standard commission to certain registered dealers in connection with the placement.

The placement was oversubscribed, with New Zealand investors being scaled down to achieve the $10 million limit. The major subscriber is Infratil Limited, a New Zealand listed specialist investor in infrastructure and utility assets, and a long term investor in the energy and transport sectors in New Zealand and Europe. With this placement, Infratil (via its subsidiary Infratil Gas Limited) will hold approximately 11% of Austral's issued capital.

The financing proceeds will be used for ongoing exploration activities and working capital requirements. The placement currently remains subject to stock exchange approvals, which are expected in the ordinary course.