Bounty Oil Farms Out Stake in Great South Basin

Bounty Oil & Gas and its co-venturers have farmed out a 25% interest in PEP 38215 in New Zealand's Great South Basin. UK-based Electro Silica has agreed to fund the acquisition of 2,000 kilometers of 2D seismic in the permit to earn a 25% interest in the permit and an option to drill an exploration well to earn a further 50%. The seismic is presently scheduled to be acquired in the first half of 2004.

Tom Fontaine, Bounty's Managing Director, said the partnership with Electro Silica confirms the Joint Venture's belief in the prospectivity of the permit.

"We are very optimistic about exploring in this permit. The permit contains a large structure called Toroa that was drilled in 1976 but not tested – we believe this may hold commercial quantities of recoverable gas. We have also identified a number of features that each have the potential to hold in excess of a billion barrels of oil.

"Our discussions with potential customers for the gas have so far received a strong response. Methanex New Zealand Limited has already provided an Expression of Interest.

"The next step for us is to acquire the seismic to allow us to optimize our drilling location – once we have done that, we plan to bring in a rig and drill our best prospect."

The PEP 38215 permit covers 13,614 square kilometers in the Great South Basin off the south coast of New Zealand. Probable recoverable gas reserves of 0.9 Trillion cubic feet (Tcf) and additional possible recoverable gas reserves of 2.2 Tcf have been estimated in the Toroa structure. Elsewhere in the permit, structures with multi-billion barrel oil potential have been identified.

Seismic reprocessing of more than 6,200 kilometers of available seismic data in the permit was completed early this year. Reinterpretation and remapping of the data has identified a number of large untested structures.

Interests in PEP 38215 are Bounty Oil as operator with 26.25%; Hardman Resources with 33.75%; Albatross Energy with 7.5% and Electro Silica with 25% (subject to farm-in).