• Gas and associated liquid hydrocarbons observed while drilling to 4,321 metres

• Operator continuing drilling operations with minor side-track around broken bit stuck in hole

In the past two weeks Apache Energy, the Operator of the Phoenix South-1 well, had drilled to a depth of 4,321 metres Measured Depth ("MD") and, as at 06:00 hours this morning, the well was preparing to side-track at around 4,000 metres MD to complete the drilling to the expected Total Depth ("TD") of 4,500 metres.

Managing Director, Adrian Cook said ; " The observance of gas and associated liquid hydrocarbons validates the conceptual exploration model created by the interpretation of the original Phoenix – 1 well outcome drilled by BP in the early 1980’s. These observations are encouraging , although I would caution that they are untested , unquantified and preliminary observations only .

"This outcome has provided Apache with the encouragement to continue drilling , justifying the additional cost and time delay associated with drilli ng a second side – track well bore . It is my intention to update the market once the estimated cost and time delay caused by the second sidetrack is known, however I can say that these delays are expected to be significantly less than the initial sidetrack.

"The plan is continue drilling to the target depth of 4,500 metres MD in order to test the sands that were observed to this depth in the Phoenix – 1 well.

"At this stage it is premature to make any conclusions around the quality of the observed gas or liquid hydrocarbons , their volumes or whether they will flow and accordingly whether they could result in any commercial development. Further drilling and evaluation is required before we are able to be more definitive and I will update the market as soon as we have the necessary information to hand".

The primary target within the Early to Middle Triassic Lower Keraudren Formation sands was intersect ed as expected at approximate 4,160 metres MD, around 10 metres high to prognosis. Elevated gas readings were observed through this sand, with gas peaks being encountered from around 4,170 metres MD as the sands being drilled were cleaning up.

The equity interest holders (upon satisfaction of the farm in agreement terms) are:

  • Carnarvon Petroleum 20%
  • Apache Energy (Operator) 40%
  • JX Nippon 20%
  • Finder Exploration 20%