Kalrez Farms Into South Australian Cooper Basin

Kalrez Energy Ltd has entered into a farm-in agreement with Victoria Petroleum NL to earn a 12.5% interest in the onshore South Australian Cooper Basin permit PEL 104.

PEL 104 covers 1,069 square kilometers and is located immediately adjacent to the Tirrawarra Oil field, Australia’s largest onshore oil field with estimated reserves of 70 million bbls and 340 billion cubic feet of gas. Also adjacent is the Fly Lake Oil and Gas field and the permit surrounds the Callabona oil discovery. In August 2002 the Sellicks 1 well located 30 kilometers south of PEL 104 flowed 2,160 barrels of oil per day.

Kalrez considers the permit is highly prospective for both gas and oil in both the Permian and Jurassic sequences that are highly productive in the Cooper/Eromanga Basin.

An independent consultant’s initial study of the permit has outlined in excess of ten prospects and leads that are anticipated to require only further minor evaluation to become drillable.

The initial proposed work program over the coming twelve to fifteen months will be to reprocess 1350 kilometers of existing seismic data, record 150 kilometers of seismic followed by the drilling of two wells.

Under the terms of the Agreement, Kalrez will contribute 25% of the initial work program to earn a 12.5% interest in PEL 104. The estimated cost of the program is A$4.2 million. After the initial program Kalrez will contribute to further exploration at its working interest rate (12.5%).

Kalrez is pleased to be involved in exploring this highly prospective South Australian Cooper Basin permit and will follow with interest the current drilling program in the South Australian Cooper Basin of up to 10 wells by Beach Petroleum Limited, Cooper Energy NL and Stuart Petroleum Limited. Over the next twelve months any success in this drilling program will upgrade the prospectivity and focus attention on any adjacent areas such as PEL 104.

The company expects the exploration program to commence with seismic recording in the second half of 2003.