Stuart Petroleum Discovers New Oil Field in Cooper Basin

Stuart Petroleum has discovered a new oil field in Cooper Basin, Australia's most prolific onshore hydrocarbons region. This is Stuart's eighth oil field discovery since its first oil find, Acrasia, over three years ago.

Wildcat exploration well Toparoa No. 1 flowed at a rate 1814 barrels of 42 degree API oil from a six meter oil column in the Hutton formation. Further testing of the Murta and Cadna-Owie zones will continue.

"This is fantastic result for the Stuart team, it's our second oil field discovery in the Cooper this financial year," said Stuart Petroleum managing director, Mr. Tino Guglielmo.

"We will now move to fast-track production testing and development of Toparoa which will likely include a second well on the Toparoa structure and a modular production facility. Toparoa should be producing oil, and more importantly revenue, for Stuart and its 35% partner in the well, the Canadian-based Avery Resources, in a matter of weeks."

Stuart and Avery moved to drill Toparoa this month as part of Stuart's expanded drill program for the current drill season. Avery is funding 100% of the cost of this well to earn its interest in the permit. "We are delighted to have Avery on board this Stuart-operated discovery," Mr. Guglielmo commented. "The introduction of international oil investors and explorers into the Cooper Basin is something that should be encouraged."

"This is the second oil field we have discovered in this aggressive drill program, coming soon after Stuart 100% owned 1 million barrel Padulla field discovery in the same exploration permit PEL 113," Mr. Guglielmo said.

"The old saying rings true, the harder you work, the luckier you get. We will end up ploughing more than $20m into this exploration program and have already found perhaps as much as 1.5m barrels, with the final reserve number subject to more testing and appraisal of Padulla and Toparoa. And with prime quality Cooper crude fetching more than A$80 a barrel, that's a great return on not only our investment, but the investment by our partners."

"Stuart's aim is to keep working our Cooper acreage hard with a target of finding twice as much oil as we produce every year. This financial year, our production should amount to more than 800,000 barrels, so Padulla and now Toparoa, take us a long way to our reserve replacement target."

Toparoa is the fifth oil field discovery in PEL 113, which Stuart tendered for and won more than five years ago. PEL113 has been a prolific winner for Stuart, with oil success in five of the seven wells Stuart has drilled on its own and with partners.

Toparoa is just three kilometers south-west of the Stuart's Derrilyn oil field which straddles the border between PEL 113 and PEL 114, an exploration permit operated by Santos. The Derrilyn field, operated by Santos as a joint venture with Stuart, which owns 35%, produces around 25% of Stuart's total make. "Derrilyn is a big part of our production profile," Mr. Guglielmo said.

"Proximity to both Derrilyn and the main Adelaide to Moomba road really opens up our development options for Toparoa," he said. "It may also open up the potential to truck additional oil from Derrilyn to Moomba in the event of any problem affecting the pipeline network that currently transports Derrilyn crude to the Moomba hub.

"Stuart's production profile is looking good this half. We can fast track Toparoa crude to market, drill five appraisal and development wells on Padulla, two development wells on Harpoono and then look at more wildcatting in the second half of 2006."

"We have a big year in front of us, but we have a big A$ oil price and a seasoned Exploration and Production team in place collectively with more than 200 years of operating experience in the Cooper Basin," Mr. Guglielmo said.