Production Begins at Tui Area Development

The AWE operated Tui Area Development, in New Zealand's offshore Taranaki basin, has commenced oil production in just 19 months from the joint venture's Final Investment Decision and represents a successful 'fast track' approach to the project. Oil Production started on July 30, 2007.

The final capital cost for the project is estimated to be US$269 million or approximately 10% over the previously advised project capex. The increase is largely attributable to adverse weather conditions affecting the offshore construction activities.

The Tui Area Development incorporates three adjacent oil fields with four subsea production wells tied back to the Umuroa, a leased Floating Production Storage and Offloading vessel.

The project is expected to ramp-up over the next few weeks to produce at a peak rate of 50,000 barrels of oil per day and produce approximately 10 million barrels in the first year of production.

The four wells were drilled and completed with extended horizontal production sections ranging from 819 meters to 1,850 meters in the oil reservoirs.

The pre-drill reserve estimate for the three fields was 27.9 million barrels and this figure will be updated based on the post-drill remapping of the fields and early well production performance.

When fully commissioned, the Tui Area Development will be New Zealand's largest oil producing operation.

AWE's managing director Bruce Phillips said:

"This is AWE's first oil production from New Zealand, the first offshore production from a project operated by AWE and is also the first sub-sea development in New Zealand."

"The start of production from the Tui Area Development is a major milestone for AWE and given some of the worst weather condition seen in 25 years during the construction phase, a substantial achievement by the joint venture and our project contractors."

"AWE thanks the thousands of people involved, who have worked tirelessly to bring the project to fruition.

"AWE is now seeking more commercial successes in New Zealand through one of the country's largest ever offshore exploration drilling programs. This campaign currently involves the drilling of the Hector, Taranui, West Cape and Kopuwai prospects which collectively target potential recoverable reserves of 100's of millions of barrels of oil."

Participants in the Tui Area Development and PMP 38158 are AWE* as operator with 42.5%; Mitsui E&P New Zealand Limited with 35%; Stewart Petroleum Company Ltd. ("New Zealand Oil & Gas") with 12.5% and WM Petroleum ("Pan Pacific Petroleum NL") with the remaining 10%. *New Zealand Overseas Petroleum Pty Ltd. – 22.5% and AWE New Zealand Pty Limited – 20%.

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