Stuart Petroleum Spuds Dalray-1

Stuart Petroleum has commenced the evaluation of the Dalray prospect with the spudding of the Dalray 1 well on May 27, 2006. This is a follow up to the oil discovery made by Padulla 2 in October/November 2005.

The Dalray structure has potential oil in place of 2.1 million barrels (mean) in the Murta Formation and in the McKinlay Member.

Dalray 1 is located 2.5km southwest of the Padulla oil discovery on a separate culmination at the south-western end of the Dirkala Ridge.

Participants in License: PEL 93 in the Cooper / Eromanga Basins SA are Stuart Petroleum Ltd as operator) with 70% and Cooper Energy Limited with 30%.

Dalray 1 is an exploration well designed to test the oil potential of the Murta Formation in which oil has been discovered at Padulla, 2.5km to the northeast.

Dalray will also test the oil potential of the McKinlay Member, in which oil shows have been recorded in the nearby Padulla Field.

The Cadna-owie Formation is an important secondary target in Dalray 1. A small amount of oil was recovered from this formation in Padulla 4 and the same formation will soon be tested in Padulla 3 where strong oil shows and a positive log response occur.

Dalray is an independent closure on the south-western end of the Dirkala Ridge, adjacent to the Padulla Field with closure at the Cadna-owie, Namur and Birkhead horizons.

Permian Age Patchawarra Formation source rocks are present along the western and northwestern faulted flanks of the Dalray Structure.

There is an additional Dalray South closure 2.5km from the Dalray 1 location, which would provide a follow-up location if this well is successful.

The Murta Formation is the primary target of the Dalray 1 well.

Padulla 2 recovered 21 barrels of oil and in the nearby Wancoocha oil field the Murta reservoir yielded various small flows and recoveries of oil.

The reservoir in the nearby Padulla wells has proven to be thin and hard to identify while drilling and even after logging.

Seismic mapping of the Namur Sandstone has Dalray 1 located at the highest point of a structure at the PEL93/113 border.

The McKinlay a primary target which had oil shows in Padulla 2, but which on testing proved to be wet. Later drilling on Padulla had additional oil shows in this potential reservoir.

Dalray 1 will evaluate the Murta and McKinlay oil potential on the Dalray trap. The Cadna-owie, which had oil shows in Padulla 2, recovered a small amount of oil in Padulla 4 and will be tested during completion of Padulla 3, is considered a good secondary target in Dalray 1.