Paladin Makes Tunisian Discovery

Paladin announces the discovery and successful testing of oil and gas in its Adam-1 exploration well, in the Borj el Khadra permit area in southern Tunisia.

The well, operated by AGIP Tunisia B.V. ('Agip'), was spudded on July 7, 2002 on the Adam prospect and encountered oil and gas shows over a gross interval of 313 meters in the Acacus 'A' and 'B' Sands at a depth of ca. 3,000 meters. Four potentially productive zones with net pay totaling ca. 30 meters were identified. Two of these zones are analogous with productive zones in nearby oilfields operated by Agip; these zones will be tested through tubing in the near future prior to being brought into production when a field development plan has been approved.

Drill stem tests were carried out on the other two zones to assess their potential productivity. The first test over an interval of 7m in the Acacus 'A' Sand produced at a rate of 250 bopd of 42 degree API oil with a gas-to-oil ratio of ca. 1,000 scf/bbl. The second test also over an interval of 7m in the Acacus B Sand produced at a stabilized flow rate of ca. 3,500 bopd of 41 degree API oil with a gas-to-oil ratio of ca. 400 scf/bbl.

The well is now being completed as a production well and will be suspended, pending approval of a field development plan and hook up to existing process and export facilities some 12 km. distant. Paladin anticipates that this will occur in early 2003.

Paladin has a 10% interest in the Borj el Khadra permit. Paladin's partners are Agip (50%) and Pioneer Natural Resources (40%). The Tunisian state oil company, ETAP, is carried through the exploration phase of activity, and has a right to back in for up to a 50% interest in any development, by reimbursing its share of past expenditure from production revenues.

Roy Franklin, Chief Executive of Paladin, commented: 'This is the first significant success for the exploration element of our corporate strategy. The discovery is attractive in its own right and enhances the prospectivity of other identified leads in the permit area.'