Smegsy Pipeline Agreement Signed

Enterprise Energy reports that a Well Tie-In and Service Agreement has been signed with the South Australian Cooper Basin Producers (SACBP) for the construction of the pipeline to connect the Joint Venture's Smegsy-1 gas well to the SACBP pipeline system. The tie-in pipeline will be approximately 4.5 kilometers in length and will link the well to the Moomba Gas Plant.

Construction of this pipeline is expected to commence shortly and be completed by the end of the year. This pipeline will be owned by the Joint Venture. On completion of construction and commissioning, an initial phase of extended production testing will begin to allow the determination of the optimal gas flow rates. Commencement of gas flow from this well will also mark the commencement of cash-flow as a Gas Sales Agreement, which was announced in September this year, has already been signed with the SACBP.

Partcipants in the Smegsy Block Joint Venture are Traditional Oil Exploration NL (Traditional) with 25% and Great Artesian Oil & Gas Limited as operator wtih 75%. Traditional Oil Exploration NL is a wholly owned subsidiary of Enterprise Energy NL.

Enterprise (Traditional) is expected to commence its next drilling program in early December with the first well being Rossco-1 located approximately 5 km north of Smegsy. Rossco, a gas target well, will be operated by Great Artesian Oil and Gas Limited and will be followed immediately by Udacha-1 located 8 km southwest of Smegsy.

The Well Tie-In and Service Agreement and the Gas Sales Agreement that have been negotiated with the SACBP for the Smegsy Gas Field provide a platform to assist with the early commercialization of any future gas discoveries that may be made in the vicinity of the Smegsy Gas Field.

Enterprise (Traditional) will be entitled to 12.5% of any production obtained from the Rossco and Udacha wells.