Strong Oil Revenues Fund Major Cooper Basin Oil Program

Stuart Petroleum foreshadowed a A$12m seven-well development plan for its recently discovered Padulla oil field in the Cooper Basin. In its Australian Stock Exchange report for the December quarter, Stuart said it would fast track the Padulla development to take advantage of high prices for its high quality light sweet crude. The 100% owned Padulla field, Stuart's seventh SA oil development, would boost current production and underpin supply for Stuart's planned $20m diesel refinery, based near its Cooper Basin fields.

Releasing the report, Stuart managing director Tino Guglielmo, said the $12 million Padulla development plan would include $8 million on drilling one exploration well and six appraisal and development wells and $4 million on oilfield facilities in order to develop an upside reserve volume approaching 1.5 million barrels of oil on the greater Padulla structure.

"Development of the Padulla field, along with existing oil production will provide the foundation to feed the proposed diesel refinery," Mr. Guglielmo said. "Progress on front end engineering and design for the refinery is on schedule. The proposed refinery's planned production of up to 100,000 million liters of diesel per annum is approximately 10% of South Australia's consumption and will add to the security of the SA's fuel supply."

Stuart announced that sales revenues totaled $13.3 million for the December quarter compared to $8.8 million for the previous corresponding period. The increase reflects increased average prices net of hedging. "Expenditures on exploration/appraisal and development totaled $14.8 million for the quarter, a record for the company", Mr. Guglielmo said.

"The results reflect the impact of strong oil prices and the continued strong production performance of our existing fields," he said.

Stuart has changed its immediate exploration focus from a mix of oil and gas to almost entirely an oil focus due to the continued strong oil prices. The Company continues to mature exciting new oil prospects in its core Cooper Basin areas and to seek further oil opportunities. Stuart will drill the Toparoa #1 prospect from 1 February and if successful will follow up immediately with Toparoa #2.

Stuart also foreshadowed further expansion away from the Cooper Basin, with the establishment of a new ventures group that will seek new oil and gas exploration opportunities. "The Cooper Basin has provided a tremendous foundation for Stuart. After three years growing inside the South Australia, it is time to open our eyes to other opportunities outside what we have already built," Mr. Guglielmo said.

"We are expecting a strong second half from our exploration and development programs which should be reflected in our production performance."