Stuart Strikes Oil in Cooper Basin

Stuart Petroleum reports that the Padulla # 2 exploration well has discovered a new oil pool in the Murta formation on the Dirkala Ridge. The 100% owned well in Stuart's Southern Cooper Basin PEL 113 acreage produced 21 barrels of light sweet crude in a Drill Stem Test conducted last week.

"This result is most pleasing at many levels," Stuart Petroleum Managing Director, Mr. Tino Guglielmo, said today. "It will have a material impact on Stuart's business, it has validated the geological model and enhanced the prospectively of the Stuart-owned acreage in the Padulla area."

The full significance of the Padulla discovery is now under evaluation, however the field is likely to contain between 850,000 (P50) to 3.4 million (P10) barrels of oil in place. Crude oil reserves are expected to be between 30% and 40% of the oil in place. It is Stuart's sixth Cooper Basin oil discovery since the company's inception just four years ago. The field also holds significant development potential with additional drilling to be undertaken in early 2006.

"This discovery now opens up an exciting Murta exploration play around the entire Dunoon Trough between the Harpoono oil field and Padulla. Ultimately, this area will add significantly to Stuart's reserve base," Mr. Guglielmo said. "We have always rated highly this part of PEL113, which also hosts our Harpoono and Derilyn oil fields."

Padulla is now likely to be brought onto production via an extended production test following completion and fracture stimulation prior to Christmas. Padulla was a relatively inexpensive shallow well and the field could be producing revenue for Stuart as early as next month. "The beauty of owning 100% of the well is you get 100% of the reserve additions and revenue from the discovery of this new field." Mr. Guglielmo said.

Oil from Padulla is likely to be trucked to the Moomba processing facility. "It is too early to accurately predict flow rates from this new field, however, the well is likely to produce between 100 and 200 barrels a day on pump going forward," Mr. Guglielmo said.

Stuart Petroleum recently commenced the largest exploration program in its short history. A significant revenue boost from high Australian dollar oil prices – between A$80 and A$100 a barrel in recent months - has allowed Stuart the financial flexibility to retain maximum equity in the best prospects in it's exploration portfolio. "This strategy positions us to accelerate our organic growth beyond what we thought possible just 12 months earlier," Mr. Guglielmo added. Stuart is forecast to produce between 800,000 and 900,000 barrels of oil this financial year, following on from production of 832,000 barrels last fiscal year.

Mr. Guglielmo said that on completion of the Padulla well, the drilling rig will move to the nearby Hiraji oil target to drill on another shallow structure on trend with Padulla. Stuart is currently also drilling the 100% owned Harry No.1 oil and gas exploration well in the Northern part of Stuart Petroleum's Cooper Basin leases.

"The driver of Stuart's success is its high equity stake in a large land bank in the most prospective areas of the Cooper Basin. When you combine this with the speed at which oil discoveries can be brought on production and Stuart's low cost operating techniques, you have a potent formula for success," Mr. Guglielmo said.

So far this fiscal year, Stuart has drilled the following successful wells: Acrasia 4, an oil development well; Derilyn 2, a development well which has enhanced the size and production capability of the Derilyn oil field; and Worrior 3, which has just been completed as a further production well from Stuart's Worrior Field, 30km north of Padulla.