First Australian Resources Wins State Tract in Galveston Bay

First Australian Resources has submitted the highest bid (US$169,500) with Genesis Production Co and others on the northeast half of Galveston Bay State Tract 135 comprising 320 acres located offshore Gulf of Mexico.

The 320 acres offset a multiple Frio Sand Prospect acquired by FAR lying adjacent to and across a saddle from the existing Smith Point Field.

The prospect is supported and defined by 3-D Seismic and a considerable amount of subsurface data and lies on the up-thrown side of the Smith Point Down-to-the-South trapping fault.

The Smith Point Field has cumulative production of 6 million barrels of oil and 42 BCF of gas from multiple wells and multiple normally pressured Frio Sands (from F-2 through the F- 15 Sand).

Three drilling locations have been identified by Seismic mapping. Discussions are in progress with a rig provider operating in the vicinity that may result in the first location being drilled between April and July 2006.

In view of the relatively low risk associated with this prospect, the multiple Frio Sand targets, the quality technical control, the attractive indicated profitability (for only one or two sands from a possible 6), FAR has elected to participate with a view to near term production.

FAR has a 12.5 percent working interest in the Galveston Bay ST 135 prospect. All other working interests are held by North American entities. The Operator is Genesis Production Co of Houston, Texas.

Commenting on its US activities, executive Chairman Michael Evans said that:

"This offshore Gulf Coast project represents a ground floor opportunity with multiple drilling objectives and potential for near term production. This is the first time FAR has bid directly on offshore acreage and serves to highlight its maturing status. This is one of a number of initiatives now in progress likely to further improve FAR's growing reserve and production profile."

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