Matrix Pursues Legal Action in Connection with the Langsa FPSO

Matrix Oil NL has commenced legal proceedings in the High Court of Justice (Commercial Division) in the United Kingdom against PT Bawana and Langsa FPL Pte Ltd the Contractors for the supply and management of the FPSO on site at the Langsa TAC. The proceedings are for breach of contract and relate to the alleged negligence of those Contractors when opening the L1 well in November 2001 resulting in mechanical failure and the subsequent shut down of L1 well. Unspecified damages are sought including loss of profits as a result of the failure of the Langsa TAC fields, and of other investment opportunities to Matrix.

Following commencement of these proceedings on Monday October 14, 2002, the Company received a notice of purported termination of the FPSO contract from the Contractors on the evening of October 15, 2002 and advice that all oil production would cease at midnight October 15, 2002. Production has now ceased. The notice from the Contractors sought substantial termination charges under the FPSO contract

Matrix strongly refutes the right of the Contractors to terminate. The directors of Matrix have also requested ASX suspend the company's shares effective immediately. The directors of Matrix will be working closely with the Administrators in an attempt to come to a satisfactory conclusion as quickly as possible.