Austral Pacific to Begin Drilling Cheal Development Wells

Austral Pacific Energy reports that the drilling of the first of the development wells in the Cheal oil field in New Zealand will commence in the second week of October. The well will be drilled from the Cheal B site where preparation for the drilling is nearing completion. Ensign Energy Services' Rig 19 has been contracted to undertake the drilling of all the Cheal development wells.

Progress on the preparation and construction of the Cheal B site was delayed due to persistent rain in August and early September, regularly preventing heavy earth moving equipment from working. With the weather improving in the last two weeks most of the major earth works have now been completed and the last of the conductors is being set in preparation for the start of drilling activities.

Up to four wells will be drilled back-to-back from the Cheal B site. The wells are planned to intersect Mt Messenger and Moki targets identified from the interpretation of the Brecon 3D seismic. Following completion of the wells at the Cheal B site the rig will be moved to the Cheal A site to drill a further two development wells. At the same time as drilling commences from the Cheal A site a program of continuous well testing will start on the Cheal B wells. It is expected that each well will take twenty days to drill and complete. In addition to the drilling of new wells the existing Cheal A wells will be worked over and re-completed. The workovers are planned to commence in December 2006.

Detailed engineering and design work for the processing facilities is underway and site foundation works at the Cheal A site have commenced. Off site fabrication of long lead items including tanks and compressors is underway and construction of the processing facilities will start immediately following the completion of the site preparation. The processing facilities are scheduled to be commissioned in 1Q 2007. Oil production through the Cheal A processing facilities will commence at approximately 1000 barrels a day and full production of approximately 1900 barrels a day is expected to be reached during 2Q 2007. (Austral share 36.5%)

Long term production testing from the Cheal-A4 well using interim production facilities continues.