Salamander Reports First Gas from Phu Horm

Salamander Energy PLC

Salamander Energy plc, an independent private exploration and production company operating in Southeast Asia, said that natural gas production has commenced from the Phu Horm Field, located in Northeast Thailand.

The operator of the Phu Horm Field is Hess Corporation, which owns a 35% interest. The other partners are APICO (35%), PTTEP (20%) and ExxonMobil (10%). Salamander owns 27.2% of APICO and therefore has a 9.5% interest in Phu Horm.

Initial production from Phu Horm is from two wells, with additional wells to be brought into production in 2007. Gross production will be approximately 60 million cubic feet per day (Salamander share 5.7 million cubic feet per day), increasing to an expected rate in excess of 100 million cubic feet per day, plus condensate (Salamander share 9.5 million cubic feet per day).

As a result of the Phu Horm field coming on stream, Salamander's total production has risen from 6,600 barrels of oil equivalent per day (boepd) to 7,500 boepd and is expected to rise further to over 8,000 boepd in 2007 when gross production from Phu Horm reaches 100 million cubic feet per day.

Gas is being supplied to the power station at Nam Phong under a Gas Sales Agreement with PTT Public Company Limited. The agreement provides for the supply of more than 500 billion cubic feet of natural gas over 15 years.

James Menzies, Chief Executive Officer of Salamander, said: "We are delighted that Phu Horm has come on stream. With a ready and growing local market we have always seen this as an excellent long term gas play and recognise further gas potential both in Phu Horm Field and our surrounding exploration acreage."