Adelaide Energy Completes Testing at Jacaranda Ridge Discovery

Adelaide Energy has now completed production log testing at its 100% owned Jacaranda Ridge 2 discovery well located in PEL-255 in the Otway Basin, SA. The results confirmed that the well has the potential to flow liquids rich gas. Gas flow has been recorded at rates in excess of 2 million cubic feet of gas perday and condensate, produced in association with the gas flow, has been recorded at rates up to 100 barrels per million cubic feet of gas produced.

These recorded flow rates are very encouraging, particularly as no formation water was produced during testing.

Hole conditions did however preclude the production log testing from gaining specific information about individual sand reservoirs interected by the well below 2675 meters and the flow rate given is the collective rate for all intervals beneath this level. Reservoirs are known to exist below this level based on interpretation of electric logs recorded immediately after drillin was completed.

A 27 meter thick sand intersected immediately beneath the 7" casing shoe appeared to contribute only minimal amounts to the recorded flow-rate. This is despite the sand computing to have approximately 11 meters of "pay" based on log interpretation. It is possible that this sand could have better reservoir properties in other areas of the 7 square kilometer structure.

This sand presents a significant primary target for future drilling, particularly as the demonstrated gas and condensate flows produced by Jacaranda Ridge 2 are emanating from sands thinner than this.

A 5 meter thick oil bearing reservoir penetrated in Jacaranda Ridge 1, which was drilled in 1999 and produced an oil flow at a rate of up to 408 bopd, has not reached in Jacaranda Ridge 2. The Company plans to investigate this at a later date.

Negotiations are currently underway for the sale of the gas and condensate that can be produced by the Jacaranda Ridge 2 well.