Arc Energy Re-commences Hovea 8 Drilling Program

Drilling operations located in the Perth Basin, Australia at the Hovea 8 well have commenced. The Hovea 8 well is being drilled from the Hovea Production Facility as a horizontal well with the horizontal Dongara Sandstone section located between the Hovea 3 and Hovea 4 wells. The Hovea 8 well design incorporates the design and drilling parameters from the recent successful deviated well program together with a number of technically advanced drilling techniques. The well is designed to provide optimal drainage of the Hovea reserves, redundancy in the production system, and the ability to meet long term production targets.

The Hovea 9 well is also planned as part of the program. The final location of this well is yet to be agreed by the joint venture but it is likely to have the twin objectives of appraising the southern part of the Hovea Oilfield and of providing an additional water injection point to optimize recovery from both the Hovea and Eremia fields.

The commencement of the development drilling program will also provide the joint venture with access to the drilling rig for exploration wells in the L1/L2 area. Evaluation of exploration drilling targets is currently underway and it is ARC’s intention to propose exploration wells to the joint venture as soon as technical work is completed.

This technical work includes the final interpretation of the Hibbertia 3D seismic survey to the east of Hovea and the acquisition of a gravity survey in the oil fairway to the west and south of the Dongara Field. This gravity survey is expected to commence shortly when final environmental approvals are obtained. Preliminary feasibility studies for the acquisition of a 3D seismic survey over this area have also been completed and a recommendation for a 3D survey is also expected to be made to the joint venture shortly.

Participants in L1 and L2 production licenses (excluding the Dongara, Mondarra and Yardarino fields), and Hovea 8 are: Arc Energy as operator with 50% and Origin Energy with the other 50%.