Drilling to Begin on Champagne Creek 2A

Sunshine Gas Limited

Sunshine Gas Limited advises that drilling on the Champagne Creek 2A gas well in Queensland is expected to begin by the end of this week.

Operations to re-enter and deepen the Champagne Creek 2 well to test the Clematis Sandstone target will begin after ADS Rig 6 moves to the location in ATP 768P in the eastern Bowen Basin.

Sunshine Gas has previously advised that a Heads of Agreement had been executed with Beach Petroleum Limited, allowing Beach to earn 50% of ATP 768P by funding the Champagne Creek 2A deepening project (up to an agreed maximum amount). Should Beach elect to proceed with their farm-in on completion of the Champagne Creek 2A well, they are to pay Sunshine Gas a portion of their back costs to date.

The primary objective is to test the conventional gas potential of the Triassicaged Clematis Sandstone which has not yet been intersected by drilling on the prominent Champagne Creek anticline.

The Champagne Creek structure is a dip-closed anticline with an estimated potential resource at the Clematis Sandstone level of up to approximately 60 billion cubic feet (bcf) of recoverable gas. The well is expected to take about 16 days to drill and evaluate.

Sunshine Gas Limited is the operator and has a 100% interest in the permit. Beach Petroleum Limited has the option to earn a 50% interest in the permit after the completion of Champagne Creek 2A.