Methanol Australia on Track to Become LNG Producer

Cambrian Oil & Gas Plc

Methanol Australia Limited (MEO), which is 25% owned by Cambrian Oil & Gas Plc (COIL), seeks to become a leading producer of liquefied natural gas (LNG) and methanol from its proposed gas-to-liquid projects on the Tassie Shoal, located in Australian waters some 275km northwest of Darwin.

MEO announced on 31 October 2006 the successful completion of the acquisition of new 3D seismic data over Epenarra, located in MEO's 100% owned Exploration Permit NT/P68 in the Timor Sea. The Epenarra structure is a broad, low relief anticline at the Darwin formation level with mapped closure of approximately 1,200 square kilometers, located entirely within Australian waters. The 3D seismic data has been acquired to confirm distribution and orientation of faults and fracturing within the 50m gas-bearing fractured carbonate zone of the Epenarra structure intersected by the Heron-1 well, drilled by ARO in 1972. This data will be used to determine the optimum location for the Heron-2 appraisal well.

MEO recently announced that approximately 74% of the data for the 600-line km 2D seismic survey over the Blackwood structure in Exploration Permit NT/P68, had been acquired and remained on schedule. The new 2D infill data will be combined with the extensive 1996 and 1997 2D grid already over the permit and will improve the structural mapping of Blackwood. MEO expects the new data to confirm the final location of the Blackwood-1 exploration well.

MEO intends drilling up to three wells (Heron-2, Blackwood-1 and potentially Heron-3) in the Permit area next year and has secured a new jack-up rig to undertake the drilling. The rig is expected to arrive on location in August 2007.

Chris Hart, the Managing Director of MEO, stated that a just released study on the Epenarra prospect revealed a strong possibility of high levels of associated gas liquids (LPG and condensate) within the gas bearing structure. This means potential for significant commercial quantities of liquids.