Austral Pacific to Spud Two More Cheal Wells

Wellington-based petroleum explorer Austral Pacific Energy Ltd plans to drill two additional production wells at its Cheal oil field in onshore Taranaki from June as soon as its newly constructed production station is commissioned.

Austral Pacific will drill the Cheal A5 and Cheal A6 wells from the Cheal A site once the production station has been completed. The new wells will be tied into the new processing facilities as soon as the wells are completed.

The Cheal field development, which commenced in July 2006, is projected to achieve a production rate of 1900 barrels of oil per day once full production is achieved by the fourth quarter of 2007.

Austral Pacific said that an independent assessment has assigned total proven undeveloped reserves of 1.643 million barrels (oil equivalent to the Cheal field.) This is a 3.4% increase on 2005 Cheal assessment. The pre tax value at a 10% discount factor of the Proven and Probable reserves is $NZ38 million. During 2007 the company has plans to progress the drilling of Kahili-2 and to conduct further testing of the Cardiff gas field, which lies close to, but deeper than, Cheal.,P> Results of flow testing of the McKee sands in Cardiff-2, undertaken during 2006, demonstrated sufficient commerciality to secure a mining permit. Current simulation studies will determine the form of further testing to be carried out in the second half of 2007 on the deeper K3E zone in which the majority of the gas/condensate resource is mapped.

Austral says it has raised $NZ3.25 million from a group of accredited investors in New Zealand by privately placing 2.5 million ordinary shares at a price of $NZ1.30 per share. The proceeds will be used in connection with the Cheal field development and for working capital purposes.

David Newman, the chairman of Austral Pacific, said the board had accepted the resignation of its chief executive officer, Rick Webber, effective from April 30, 2007. At the same time Webber will resign his position as a director of the company.

David Newman and his fellow director Peter Hill will jointly assume the duties of chief executive and conduct a review of the organization to find the best-suited, permanent, leadership structure.