Anzon Inks Deal with Arrowhead to Acquire a Stake in PEP 38259


Anzon Australia Limited has reached agreement with Arrowhead Energy Limited to acquire a 15% interest in PEP 38259, an exploration permit located in the Canterbury Basin, offshore New Zealand's South Island. The interest was previously held by Claire Energy (Australia) Pty Ltd and subsequently assigned to Arrowhead.

Anzon will assume the rights and obligations in relation to a farmin arrangement agreed in September 2005 between Claire Energy (Australia) Pty Ltd (assumed by Arrowhead) and Tap (New Zealand) Pty Ltd and AWE New Zealand Pty Ltd. Under the terms of the farmin Anzon will earn a 15% interest in PEP 38259 by contributing to the cost of drilling the Cutter-1 exploration well.

PEP 38259 is located in the Canterbury Basin, offshore from Oamaru and Dunedin on the east coast of the South Island (see map). PEP 38259 is a large offshore permit, comprising an area of approximately 6,648 sq kms. The Canterbury Basin has been lightly explored. The hydrocarbon potential of the basin has been demonstrated by the Galleon-1 well, drilled within the permit in 1985, which encountered a 21 m gas column that flowed at rates up to 10 MMcf of gas per day, with associated condensate of 2,240 bpd.

Two prospects are currently considered to be ready for drilling in the permit – Cutter and Barque. The Cutter prospect, as assessed by the Operator, has the potential for recoverable volumes of approximately 50 to 80 million barrels of oil. The larger prospect, Barque, is located in 850 m water depth and represents significant upside potential for future exploration drilling. As assessed by the Operator, Barque has the potential for recoverable volumes of approximately 5 to 6 trillion cubic feet of gas with 500 million barrels of condensate.

The Cutter-1 well will be drilled around October this year by the semisubmersible drilling vessel Ocean Patriot which will be mobilized to the permit following the completion of drilling operations on Nexus Energy's Longtom-3 well in the Gippsland Basin. The well will be drilled in a water depth of approximately 75 m.

Subject to execution of final documentation and subsequent approval by the regulatory authority, interest holders in PEP 38259 will be Tap Oil as operator with 40%; AWE New Zealand with 25%; Beach Petroleum with 20% and Anzon Australia Limited with 15%.

The acquisition of this interest is in keeping with Anzon Australia's strategy of expanding its exploration portfolio and diversifying its assets. It represents the company's first move into the Australasian region outside of the Gippsland Basin.