Kalrez Acquires Stake in Cooper Basin Permits

Kalrez Energy has entered into an agreement to acquire a 12.5% working interest in five exploration permits located onshore in the Cooper Basin, South Australia.

Kalrez considers this acquisition a logical adjunct to its recent farm in to permit PEL 104 in the same area. The company now has interests in six highly prospective permits with identified leads and prospects and with drilling to commence in the short term.

-Permits acquired are PEL 111, PEL 115, PEL 86, PEL 87, PEL 89
-Total permit area now over 15,000 square kilometers
-Range from low risk to lightly explored
-Adjacent to producing fields
-Over 60 prospects and leads identified
-Drilling expected to commence in 2nd quarter 2004
-9 wells planned

Kalrez purchased the interest from Victoria Petroleum on the same terms and conditions upon which Victoria had recently acquired the permits from Australian Crude Oil. This requires a cash payment of US $73,333 (Kalrez's share), an acceptance of the permit commitments and the payment of a 4% Royalty to ACOC. The royalty is calculated in the same way as the SA Government Royalty. In permit PEL 115 Kalrez has committed to be involved in the drilling of five wells. The agreement is subject to the relevant approvals of the South Australian Government.