Petrogas Acquires 30% Stake in Egypt's Area A from Oil Search

Oil Search has entered into a sale and purchase agreement with Petrogas E&P LLC, for the sale of a 30% interest in Area A in the Eastern Desert, Arab Republic of Egypt. The transaction has an effective date of September 1, 2007.

The consideration for the sale is as follows:

--A cash payment together with reimbursement of 30% of past costs

--A carry of Oil Search's 70% share of costs for the next three exploration wells and a further two wells (which may be either appraisal, development or exploration wells), with a financial cap ("Carry").

--Petrogas will also carry Oil Search (subject to an agreed financial cap) for the well completion expenditure for each successful well drilled within the "Carry" budget.

The transaction, which is conditional on approval from the Egyptian Government, is expected to take approximately two months to complete. Interests in Area A following the sale will be Oil Search as operator with 705; Petrogas E&P with 30%.

Oil Search's Managing Director, Peter Botten, said: "We are delighted to welcome Petrogas E&P into the Area A joint venture. Petrogas is a privately owned Oil and Gas Exploration and Production (E&P) company registered and incorporated in the Sultanate of Oman, with interests in the Middle East and Asia. It is an experienced operator of mature oil fields and we believe will add considerable value to our activities in the block.