Rift Assumes 100% Ownership of PNG Assets

Rift Oil Plc has reached an out of court settlement with its partner, Austral Pacific Energy Limited. This results in Rift assuming 100% ownership of Licenses PPL 261 and PPL 235 which include the Douglas and Langia gas discoveries as well as the Coral Sea Drilling Rig for a total payment of US $5 million. The assets being acquired are 35% of PPL 235 and the rig, plus 50% of PPL 261.

The US$5 million will be settled as follows:

  • US $2 million within five days from 22nd May 2008
  • US$1.5 million on obtaining PNG Ministerial approval of the transfer or three months from 22nd May, 2008
  • US$1.5 million on obtaining PNG Ministerial approval of the transfer or twelve months from 22nd May 2008
  • The settlement is dependent on ministerial consent. All debts to Rift which currently exceed US$5m and future drilling and seismic cost obligations between Austral and Rift have will be cancelled on successful completion of the transaction.

    On May 6, Rift disclosed that it was pursuing Austral for its share of exploration costs and that it was seeking to obtain compensation through the New Zealand High Court. The Board of Rift is pleased to have achieved a rapid conclusion to the dispute, enabling the Company to concentrate on drilling and assessing the size of its gas field at Puk Puk-1 part of the Douglas gas discovery area in PNG

    "I am delighted that this dispute is behind us and that we now have total control of our gas fields and so can move forward as rapidly as possible," Ian Gowrie-Smith, Chairman of Rift, commented. "The recent dramatic oil and LNG price hikes has led to unprecedented interest in Rift's deposits in PNG, which together with the Company's existing MOU with Rio Tinto Alcan, give us the potential for a very exciting future."

    The Douglas discovery was made in May 2006. In March 2007, Rift and its then joint venture partner, Austral Pacific Energy Limited ("Austral"), signed a non-binding memorandum of understanding ("MOU") with Alcan to further investigate the supply of approximately 40 BCF per annum of gas to the Gove Alumina plant in Northern Territory, Australia for a period of 20 years following initial production. Supply is proposed to be via a direct pipeline from the Douglas discovery to Gove, subject to the joint venture establishing sufficient reserves. Under the terms of the tri-partite MOU, the joint venture stated its intention to carry out an active drilling program during the first six months of 2008. As a result of the dissolution of the joint venture with Austral, Rift is now the sole MOU partner with Alcan.