Bounty Oil Expects Magnolia Well to Spud in Late November

Magnolia-1 – AC/P 32
Bounty Oil has been advised by the Operator that drilling operations are expected to commence at the Magnolia-1 well in the last week of November, after the rig (the Ocean Bounty) is released from its current operations. Magnolia has the potential to hold 85 million barrels of recoverable oil. Bounty has a 10.4% interest in the permit and will be virtually free-carried through the drilling (Bounty will fund approximately 0.6 percent of the costs – to a cap of US$8MM).

Utopia Oil Field, ATP 560P
The Utopia-6 development well, which was drilled last month, has now been completed and put onto production. The well was put online on October 14, 2005 and is presently producing approximately 40 barrels of oil per day, with a roughly equivalent amount of water. As the flow from the well is still cleaning up and we are yet to "fine-tune" the production, the final flow rate will vary but at this time we are encouraged by its initial performance. This flow rate has increased the total field production rate from approximately 35 barrels of oil per day to approximately 75 barrels of oil per day.

PEP 38215, New Zealand
Bounty Oil refers to previous announcements regarding our New Zealand permit PEP 38215 and the review by the Chief Ombudsman.

We have previously advised that, in late 2004, the relevant government agency, Crown Minerals, gave notice that they intended to commence revocation procedures of the permit based on Bounty's failure to drill a well in the permit by August 2004. This was effected by an Initial Notice of Proposed Revocation. We were advised that, in the events that have happened, the applicable policy would justify an extension of the drilling date. We responded to the Initial Notice accordingly.

As previously announced, Bounty believes that the policy was not correctly or fairly applied. We sought a review by the Office of the Ombudsman of Crown Minerals' decision not to extend the drilling date. At the request of the Chief Ombudsman, Crown Minerals undertook to defer further revocation procedures pending the Chief Ombudsman's decision. As recently announced, that decision is now expected in the first half of November.

In May 2005 Crown Minerals issued a further Initial Notice of Proposed Revocation based on an asserted failure to file seismic data. On advice Bounty believes there are good reasons for the non filing and we responded in detail to this Initial Notice. As Bounty believes that the issues underlying both Initial Notices are part of the same chain of events, we understood that revocation procedures on this issue would also be deferred pending the Chief Ombudsman's decision. Crown Minerals took a different view and, on 8 September 2005, they issued a Notice to Revoke the permit based on the asserted failure to file the seismic data.

The Chief Ombudsman does not have jurisdiction to require the withdrawal of the Notice to Revoke. Bounty therefore lodged an appeal against this notice in the High Court on 5 October 2005 to protect the position pending the Chief Ombudsman's decision. The appeal operates to suspend the revocation until the appeal is heard and at this time a hearing of the appeal is not expected before the first or second quarter 2006.

On advice Bounty is optimistic of a favorable outcome from the Chief Ombudsman's review and Bounty believes that a positive outcome should enable it to resolve both the drilling and seismic filing issues simultaneously, and thereby also the revocation procedures.

Partners in AC/P 32 (subject to the completion of earning phases) are: Bounty Oil & Gas NL 10.4%; Westranch Holding Pty Ltd* 19.6% (Permit Operator); OPIC Australia Pty Ltd 25.0%; Adelphi Energy Limited 15.0%; Australian Worldwide Exploration 10.0%; Coogee Resources (Ashmore Cartier) Pty Ltd 20.0% (Farmin Operator); *Westranch is a wholly-owned subsidiary of Norwest Energy NL

Partners in PEP 38215 are: Bounty Oil & Gas NL 90%* (Operator); Albatross Energy Pty Ltd 10%*; *following completion of the Hardman Resources withdrawal

Partners in the Utopia Oil Field are: Bounty Oil & Gas NL 40%; Oil Wells Inc of Kentucky 60% (Operator)

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