Xtract Significantly Scales Back Global Oil Shale Investments

Further to the commentary provided in its recent annual report, Xtract gives the following update on the development of its oil shale projects.

Queensland, Australia

In August 2008, the Queensland Premier announced a 20-year moratorium on a proposed oil shale development in the Whitsunday coastal region, and a 2-year review period for oil shale developments throughout the state during which no new mining activity would be permitted. Although the mineral rights of Xtract's 100% subsidiary Xtract Oil Ltd ('XOL') in Queensland were not affected, the review has created uncertainty over the extraction of the underlying oil shale.

XOL recently held a meeting with representatives of the Queensland government to present the progress of XOL's technology and to understand the proposed review process. Whilst response to the technical progress was encouraging, the government representatives were not able to give much further information about the review process or its likely impact.

Under these circumstances, Xtract has taken the decision to scale back significantly its projected investment in the development of oil shale technology. The net investment by XOL in the current financial year is now estimated to be A$0.9m, the majority of which has already been committed.

As a result of this decision, the project enters a 'hibernation' phase until conditions improve sufficiently to attract further investment. XOL intends to maintain its mineral rights over its 2.12 billion barrels of indicated and inferred resources.

Morocco, New Zealand and Egypt

On September 19, Xtract announced the creation of a joint venture company in Morocco, Xtract Energy (Oil Shale) Morocco S.A. ('XOSM'), for the evaluation and possible development of an oil shale deposit near Tarfaya, in the south west of the country. A decision as to whether to conduct an initial pre-feasibility study is pending. An
early stage project in the Nevis Valley in New Zealand is on hold and discussions about participation in Egypt have been discontinued.

Commenting on the developments, Andy Morrison, CEO of Xtract said, "The world has continued to change since we issued our annual report, and we believe that there are now better prospects for the Company in the coming months than those offered by the oil shale business. By maintaining the mineral rights at limited cash expense, Xtract retains the option to exploit the resource when investment conditions are more supportive."