AWE Records Strong Interim Profit, Sees Growth Opportunities Ahead

The first half of 2008/9 was a satisfactory period for AWE, considering that global oil prices fell and impacted significantly on the company. The profit after tax for the half year ended December 31, was $96 million. This was achieved despite a number of exceptional items primarily related to the ARC merger amounting to $37.4 million, which negatively impacted the results.

Sales revenue in the first half of the year was $392.1 million, and this was supported by higher international oil prices that continued into the early part of the financial year. Revenue was 27% higher than the previous corresponding period, in which production from the Tui fields in New Zealand started up in August 2007.

EBITDAX reached $332 million in the half year. Exploration expensed during the half year was $25.4 million reflecting the expenditure on new ventures activities and seismic surveys in Indonesia, New Zealand and Yemen. Amortisation charges rose slightly as a result of the merger with Arc Energy.

AWE's share of oil production for the half year was 3.0 million barrels, driven by continuing strong, though declining production from the Tui oil fields in New Zealand. In the full year AWE forecasts that production from the Tui fields will meet or even exceed the published production target of 9.0 million barrels (100% JV).

Gas and gas liquids production remained at similar levels during the half year, despite disruptions at Casino and BassGas late in the period. Production was also positively impacted by the contribution from assets acquired in the merger with Arc Energy. At December 31, AWE held cash of $383 million. In addition to this the company has an undrawn corporate facility of $135 million and no debt. This strong financial position, together with the company's ongoing strong cash generation, will enable AWE to fund its ambitious exploration and development programs and to actively pursue other oil and gas opportunities.

AWE's managing director, Bruce Wood said, "AWE has completed the first half of 2008/09 financial year in excellent financial shape
and with a number of growth opportunities still ahead."

"AWE's production assets continue to perform well though like all resource companies, AWE will be impacted by the collapse in international oil prices.

"AWE will maintain its traditional focus on delivering value from its existing assets and at the same time delivering growth to shareholders primarily from successful exploration.

Wood continued, "AWE is about to embark on an exciting 15 well exploration program, in 5 proven geological basins, and in 4 countries. In New Zealand AWE will drill at least 4 wells in the offshore Taranaki basin, to follow up on the success enjoyed in Tui. In the Bass Basin we are very hopeful of success in the Trefoil and Rockhopper wells. Indonesia and Yemen where a total of 4 wells are planned also hold out opportunities for AWE."

The turmoil in financial markets and the sharp decrease in international oil prices, will impact of AWE's financial results for the full financial year. However in spite of this we are confident that with AWE’s strong financial position and with no debt, with ongoing cash generation and an exciting exploration program, that AWE can position itself well to continue to deliver growth to its shareholders."