Ausam Energy Enters Farmin Deal with Rawson Resources

Ausam has entered into a farmin agreement with Rawson Resources in ATP 552P in the Surat/Bowen Basin of Queensland, Australia.

ATP 552P is a 42,600-acre (67 sections) permit along trend with the Fairymont and Alton oil fields. Ausam and Rawson will each fund 50 percent of the Bellbird West-1 well and will earn a 25-percent interest in the permit. Great Artesian Oil and Gas, the beneficial owner of the permit, will retain the remaining 50 percent interest.

Ausam will be the operator of the Bellbird West-1 well (which will be drilled conventionally to test the shallower secondary objectives), the Showgrounds, Evergreen, and Boxvale sands, and will then be drilled underbalanced to test the primary objective in the Permian. The Bellbird West-1 well is expected to be drilled in June 2006 to the proposed TD of 2,500-meters. Drilling is expected to take approximately 30 days.

The Bellbird-1 discovery well was drilled in this permit in 1984, recovering oil and gas from the Permian, but the field was never developed. Production testing indicated an estimated initial production rate of 15-35 bopd, which could be increased by installation of a pump. The nearest significant oil fields to the prospect are the Alton field (discovered in 1964) and the Fairymount field (discovered in 1985), which were both drilled conventionally and are located to the southwest of the Bellbird West prospect.

The Alton field is estimated to have produced 1.2 million barrels of oil and the Fairymount field is estimated to have produced 1.0 million barrels of oil to date, and both fields produced from the formations that are secondary objectives in the proposed Bellbird West-1 well.

Mark Avery, CEO, stated "in line with our strategy of taking more operational control in Australia, Ausam is pleased to be operator of this well which is targeting oil in an area that is on trend with two other oil fields and is in an upthrown block adjacent to the Bellbird-1 discovery well. Ausam sees this well as a further opportunity to apply underbalanced drilling techniques in the Surat/Bowen Basin in order to significantly reduce formation damage and thereby encourage increased flow rates. In addition, this furthers our strategy of seeking lower risk targets that will yield either oil or liquids-rich gas."

The ATP 552P farmin, together with the farmout of a portion of PEP 166 is the first step in Ausam's program to reduce overall risk by increasing our acreage position through judiciously selected farmin opportunities while farming out portions of acreage in which we have a large percentage interest.

ATP 754P
Prior to the Bellbird West-1 well, Ausam will commence the reentry, perforation, and testing of the Ungabilla-1 well (ATP 754P: Ausam 50 percent, Origin 50 percent and operator). A fracture stimulation of the Ungabilla-1 well will be dependent upon results of the perf test. Additionally, the new 250-km 2D seismic acquisition program in ATP 754P has been completed and the data is currently being processed. Evaluation of this data is expected to be completed in June 2006. Ausam expects to farmout the prospects defined by the new 2D data.

PEP 166
Lakes Oil has announced the results of the Loy Yang-2 well drilled in PEP 166 in Victoria. The Loy Yang-2 reached total depth of 1443 meters and was cased and suspended. Lakes is evaluating the possibility of hydraulically fracturing the well. The well recorded numerous gas and oil shows in the Strzelecki Group, although a DST recovered only small amounts of gas accompanied by water. Lakes also announced plans to drill a deeper well when equipment becomes available. The next well would attempt to locate and test additional parts of the Strzelecki Group as well as the deeper Rintouls sandstone. Lakes funded 100 percent of the cost of the Loy Yang-2 well. By drilling the well, Lakes has increased its interest in an envelope surrounding the well to 75 percent, with Ausam holding the remaining 25 percent. Lakes and Ausam each hold 50 percent interests in the rest of PEP 166.