Austral Pacific Arranges Financing for Cheal Field Development

Austral Pacific Energy Ltd. has signed agreements with a number of accredited investors to privately place 12,500,000 common shares with attached warrants, sold as units at $1.20 per unit. Each unit consists of one common share and one share purchase warrant. The warrants are convertible one-for-one into the company's common shares for 12 months after closing at an exercise price of $2.25. The placement is subject to stock exchange approvals expected in the ordinary course.

Proceeds from the private placement will be used primarily in connection with accelerating the Cheal field development with a goal of increasing the field reserve base and increasing production through the newly commissioned Cheal Production Station. The proceeds will also fund other appraisal and development projects in Taranaki, New Zealand and PNG and will be used to both progress the Cardiff field appraisal and to complete the cash portion of the previously announced purchase of a further 19% interest in Cardiff.

Austral Pacific has now successfully re-completed the Cardiff-2A ST-1 discovery well with the Parker Rig 252. The rig is scheduled to be released from the site at the end of this week. Detailed testing operations for this well are part of the ongoing field appraisal and development activities that are scheduled for first quarter, 2008.

Cardiff lies 3 kilometers (1.8 miles) from Cheal facilities in onshore Taranaki, New Zealand. It is 44.9% owned by Austral, which is also field operator.

Austral Pacific has an interest in 13 exploration and production permits that total more than 2.6 million acres in onshore New Zealand and Papua New Guinea. The company's primary assets are the Cheal Field, Kahili Field and Cardiff Field located onshore in the highly prolific Taranaki Basin on the North Island of New Zealand. In Papua New Guinea, the company has an interest in four onshore blocks.