Po Valley Significantly Increases Proven Gas Reserves

Po Valley Energy has increased its proven reserves by 45 percent in its northern Italy gas fields - to 36.6 billion cubic feet (bcf) from 25.3 bcf previously.

The Company announced the reserve upgrade after a review by Italian-based consulting geologists, Ecopetrol, of results from Po Valley's 2005 exploration program.

The review, which assessed Po Valley's recently drilled Sillaro and Vitalba development fields, also reported total 2P (Proven and Probable) steady at 104.6 bcf and 3P reserves (Proven, Probable and Possible) equally steady at 130.4 bcf.

Sillaro and Vitalba are two of the three fields currently being developed to date by Po Valley and which are planned to supply the Company's first sales into the Italian gas market at the end of this year / early 2007.

"This increase in Proven reserves clearly establishes the success of our business model of targeting low risk, economically attractive gas prospects in this highly productive gas province," Po Valley's Chief Executive Officer, Mr. Michael Masterman, said in Perth today.

"It means we, as a new Australian energy company, are now well placed to become a gas supplier into the high price European gas markets," Mr. Masterman said.

"When we raised our capital and listed on the ASX just over a year ago, Po Valley owned three development fields and only 12% of our reserves were Proven.

"Today, we have expanded our boundaries to have four development fields, three of which have been successfully drilled, our proven and probable reserves have increased by 70% and of these, 28% are in the Proven category.

"Significantly however, our fields will be commercialized within an environment where Italian gas prices have escalated by 55% in the past year so this augurs well for our first sales and revenues."

A fourth field, Bezzecca (formerly Pandino), southeast of Milan, will be drilled later this year / early 2007.