Austral Completes US$10 Million Financing

Austral Pacific says that the placement of 4 million units at US$2.50 announced on September 27th, has now received all necessary regulatory approvals and has completed. These securities are subject to a hold period expiring Feb 14, 2006 in Canada and New Zealand and are subject to Rule 144 resale restrictions in the United States.

Cardiff-2A Production Test (Austral 25.1%, operator)

Testing of this well is continuing, with steady production of gas to flare and condensate (light oil) to tank. The gas has a 25% CO2 content, in line with expectation, and approximately 30 barrels of condensate are produced per million cubic feet of gas. The average flow of one million cubic feet per day is interpreted to be dominantly from the topmost test zone, near 4,050m (~13,300 feet). Clean-out of sands from tubing and casing in the lower part of the well was successful, but upon further testing a viscous, oily residue, mixed with some further ‘frac’ sand, again blocked the lower part of the well above the bottom test zone below 4,800m (~15,700 feet). Although there is evidence that gas from the bottom test zone is gradually breaking through this obstruction, it has been decided to re-enter the well with the coil tubing unit to clear out this obstruction and inject nitrogen to assist the bottom zone to ‘kick in’ to flow. Planning for this operation is now underway.

Oru-1 Well ( Austral 53.9%, operator)

The Oru-1 well is scheduled to spud on or around 28 October, upon release of the ODE 19 rig from its current well for another operator. The well will be drilled to a depth of approximately 1,600m (~ 5,000 feet) to test the oil bearing potential of Mt Messenger sandstones within a seismically defined structure situated above the eastern flank of the deeper Waihapa oil field. The nearby Wingrove-1 well also produced oil from shallower sandstones. Oru-1 is scheduled to take about two weeks to reach its target.

Cheal Oil Field (Austral 36.5%, operator)

Commissioning of the onsite electrical generation system is continuing, using the gas associated with oil production from Cheal-A4. Due to temporary limitations on the ability of the Waihapa Production Station to accept all oil produced, full commissioning and acceptance is now scheduled for end of October.

Douglas-1, Papua New Guinea ( Austral 35%, operator)

Site construction is proceeding well. Disruption to shipping of rig and ancillary equipment out of US due to hurricanes will result in delay in drilling of this well until end of year.