FAR and Genesis Production to Drill Redfish Reef Well

First Australian Resources

First Australian Resources (FAR) says drilling permits have been issued, a located staked and pilings being driven in preparation for TODCO's Rig 57 currently scheduled to arrive in the Redfish Reef Area of Galveston Bay State Track 135, offshore Texas in the Gulf of Mexico between July 13th – 15th.

The ST135S #1 well, in which FAR has a 12.5% working interest (reducing to 9.375% after payout), has a planned total depth of 9,900 feet and will test a multiple Frio Sand Prospect supported and defined by 3D seismic and subsurface data. Planned drilling duration is approximately 12 days.

The Prospect is adjacent to and across from a saddle form the existing Smith Point Field that has cumulative production of 6 million barrels of oil and 42 BCF of gas form 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.

A portion of the play lies within the northeast half of Galveston Bay State Track 135 where FAR recently submitted the winning bid (US $169,500) with Genesis Production Co and others to secure protective acreage now aggregating 640 acres offshore Texas in the Gulf of Mexico.

An existing platform facility lies within 3 miles of the proposed location enabling use of spare tankage for temporary flow through with favorable processing fees. From here gas and oil may be piped to shore where gas goes into a trunk line and oil is trucked from a tank facility.

FAR was attracted to this opportunity given the relatively low risk associated with the prospect, the multiple Frio Sand targets, the quality technical control, the attractive indicated profitability (for only one or two sands from a possible 6), the nearby platform facility and the potential for near term production.

The Operator is Genesis Production Company of Houston.

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 and follows our winning bid for acreage in the Gulf of Mexico. This is one of a number of initiatives now in progress likely to further improve FAR's growing reserve and production profile."