Premier Oil Enters Four New Exploration Ventures

Premier Oil's strategy is to provide shareholders with asset value growth by realizing early value from exploration and commercial success. Geographically, Premier continues to focus on new activity within its existing areas of strength - South and South East Asia and the UK. At the same time it is building on its position in West Africa. Premier is therefore pleased to announce that it has entered into four new exploration ventures, one each in the United Kingdom and Gabon and two in North East India.

Premier has concluded an agreement with British Gas to farm-in to the P1029 license, comprising blocks 204/16 and 176/20, located in UKCS waters adjacent to the UK/Faroes boundary. Both blocks are operated by Amerada Hess.

Premier will carry BG through parts of the forthcoming work program to earn between 16.0% and 20.8% equity in the license (depending on actual costs incurred). Work program activity includes 3D seismic currently being acquired and the drilling of well 204/16-1 which spudded on 1st September 2002.

This area was licensed for the first time in June 2001, following delineation of the border between the UK and Faroes. The well, which is in 951 meters of water, is a low risk appraisal of the potentially significant Marjun-1 discovery made by Amerada Hess and partners in 2001 in the adjacent Faroes License P001. With this carry, Premier will have earned the option to access other BG equity in the area, allowing the possibility to take a very significant position in the play.

Premier and partner Indian Oil Corporation have signed a farm-in agreement with Hindustan Oil Exploration Company to explore the Jaipur block (AAP-ON-94/1), with Premier gaining 38% equity and operatorship in return for funding part of a work program which includes the acquisition of 155km of 2D seismic.

The Jaipur block covers 870 square kilometers and lies adjacent to the Digboi oil field in Assam in the foothills of the Himalayas. Digboi was discovered over 120 years ago, and is still on production today, though it has been joined by a host of other fields forming the long north-south Assam oil belt trend. No drilling has been undertaken to-date under the first thrust front east of Digboi. However, preliminary studies are encouraging and the techniques required to explore successfully in this environment represent some of Premier's core competencies, utilizing technical expertise developed in thrust belts around the world. Seismic acquisition is expected to commence this year. Data acquired may result in the drilling of oil exploration wells on this license in 2003.

Additionally, Premier has concluded agreements with Tullow Oil and Essar Oil, subject to Indian Government ratification, to take an 84% interest and operatorship of block CR-ON-90/1 in the Cachar region. Consideration to these parties includes payment of a proportion of back-costs and funding of a 200 km 2D seismic work program.

The Cachar block covers 2,570 square kilometers, and lies adjacent to large gas discoveries in eastern Bangladesh. Premier has interpreted very large structures on satellite and seismic data, indicating significant gas and oil potential for this area. Established Indian gas markets in Calcutta and New Delhi would be targeted in the event of a large gas discovery. Prospectivity is further enhanced by the possibility of encountering oil, suggested by a number of oil discoveries and seeps to the east and west of the Cachar block.

Premier has, subject to Gabon Government approval, concluded an agreement with Sasol relating to the Ex-Phenix study area ('Phenix'), offshore Southern Gabon. The area is currently held by Sasol as a Technical Evaluation Area (TEA), and Premier has agreed to share costs in the evaluation of this area. Should the evaluation be positive, the group is able to elect to negotiate an Exploration & Production Sharing Agreement over this block, in which Premier would take a 25% stake.

The shallow water 2,775 square kilometer block lies south-east of, and on structural trend with, the Etame oil field. Prospectivity is chiefly recognized in the regionally prolific sub-salt plays. Modern 3D seismic technology is assisting a number of operators in Southern Gabon to drill successfully in this sub-salt play where accurate imaging of the prospects has only now become possible with state of the art 3D seismic technology.