FAR: Rig Arrives at Redfish Reef

First Australian Resources Limited

First Australian Resources Limited (FAR) announced Tuesday that Todco Rig 57 has arrived in the Redfish Reef Area of Galveston Bay State Tract 135, offshore Gulf of Mexico, in preparation for the drilling of the ST135S #1 well.

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 a saddle from the existing Smith Point Field that 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. A portion of the play lies within the northeast half of Galveston Bay State Tract 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 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 there, gas and oil may be pipelined to shore where gas goes into a trunk line and oil is trucked from a tank facility.

FAR said that it 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 six), the nearby platform facility, and the potential for-near term production. Houston-based Genesis is the operator. All other participants are North American entities.