Primeline Completes Lishui Seismic Work in East China Sea

Primeline has completed the re-processing of 3,673 km regional 2D seismic data, in its Block 25/34, and commenced a new round of regional evaluation.

The Company is continuing with its dual strategy of exploring for additional resources whilst proceeding with the preparation of Overall Development Plan (ODP) for a stand-alone development for the existing Lishui 36-1 discovery. The exploration program involves drilling a step out exploration well in the nearby prospect in the Lishui Gas Play, adjacent to the Lishui 36-1 discovery, and further regional evaluation for the remainder of Block 25/34.

The Lishui Gas Play, in the Lishui West Basin of East China Sea, is covered by 3D seismic data, and through detailed interpretation, the Company has identified several high potential prospects. The remainder of the 7,006 km2 Block 25/34 is covered by 2D seismic data. In and around this basin there are a total of seven previously drilled wells (in addition to Primeline's discovery wells) that had various forms of hydrocarbon shows and flows. The Company believes that channel and canyon systems as identified in the Lishui Gas Play are likely to extend across the Basin and could be developed as future drilling targets with significant additional resources potential.

During the period from November 2007 to June 2008, the Company carried out a thorough testing program for re-processing part of the 23,000 km 2D seismic available to the Company which is of various vintages spanning over 20 years. The Company signed a contract with Hispec in June 2008 to reprocess 2D seismic data based on agreed parameters from the testing program. Hispec has now completed the re-processing of a total of 3,673 km 2D seismic data. The data has been received by the Company in London, and RPS Energy, the Company's consultant, will now commence the next round of regional evaluation using this new data.

The Company's regional geological and geophysical evaluation include the interpretation of these regional 2D seismic data in and around Block 25/34 and reviewing the information from 12 wells previously drilled in the region by other companies. This regional evaluation is aimed at identifying and documenting the exploration potential in the Basin to provide the Company with prospect inventories. The results will guide future exploration work programs in the remainder of Block 25/34 outside the Lishui 36-1 Gas Play area that is covered by 3D seismic data.

Separately, following the signing of the Agreement in Principle for gas sale as announced on October 27, the Company is now proceeding with the preparation of ODP for the Lishui 36-1 discovery. Project teams are now being established in Shanghai and London to manage the ODP work. The terms of the appointment of the ODP contractor(s) are currently being finalized and the Company will make a further announcement when such appointments are made.