Anzon & Beach to Continue with BMG Oil Development, Defer Gas Phase

Anzon Australia Limited and Beach Petroleum Limited, advise that the Basker-Manta-Gummy (BMG) Joint Venture has decided to continue with expansion of the oil development and to defer the final investment decision (FID) for the gas phase.

The Gas Sales Agreement with Alinta Limited (GSA) signed on 16 March 2007, was conditional on FID being made by the end of this month. The GSA will therefore terminate.

The decision to delay the FID for the gas phase of the project and to allow the GSA to lapse has been made after further consideration of the optimum oil development needs. Oil production is the major source of profitability for the project and is the first priority of further development activity. Accordingly the BMG Joint Venture remains fully committed to the oil development expansion. The Basker-6 oil development well is currently scheduled to be drilled in the 1st Quarter, 2008. Progress is currently being made to secure a rig for further oil development in 2008. The 2008/2009 drilling program is likely to also include gas appraisal and oil exploration work.

As part of the overall expanded development, the BMG Joint Venture is considering the potential to commit to a larger FPSO (to replace the existing FPSO and shuttle tanker) to accommodate an optimal oil development ahead of a revised gas development plan.

The BMG Joint Venture expects to commit to a gas development within the next 12 months with any future gas off-take arrangements to complement the optimized oil development plan.

The BMG Joint Venture considers that the deferral of the gas development will result in a more profitable development of the Basker, Manta and Gummy fields.

The participants in the BMG Joint Venture are Anzon Australia Limited as operator with 50% and Beach Petroleum Limited with 50%.