AUSTRALIAN OIL COMPANY TO DRILL IN PNG

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Up to six exploratory wells planned

PORT MORESBY, Papua New Guinea (PNG Post-Courier, July 22, 2009) – Junior oil and gas company New Guinea Energy Ltd (NGE) says it has reached agreement with a major multi-national oil company to fund substantial seismic programs and up to six exploration wells in Papua New Guinea.

Under the joint venture, a wholly owned subsidiary of the new partner will undertake and fund seismic and drilling activities in NGE’s 100 per cent owned PPL 269 and PPL 268 exploration licences in the Papuan Basin.

[PIR editor’s note: New Guinea Energy Ltd. is an Australian company focusing on oil and gas exploration and production in central Papua New Guinea.]

A binding agreement is expected by August 31 at which time full details of the joint venture will be announced, NGE said in a statement on Monday.

It said the identity of its JV partner will not be revealed until a binding agreement is signed.

NGE said negotiations were continuing on farm-in terms for PPL 267.

It said the parties also intended to enter into a technical support agreement whereby the partner would provide services to NGE including a geological and strategic review of the NGE’s remaining Papua New Guinea portfolio, subsurface technical support and community and government support.

"It is anticipated that the seismic acquisition will be completed by end 2009 with drilling starting in mid 2010," NGE said.

It said the key terms of the heads of agreement were outlined in the announcement that was made to the Australian Stock Exchange on Monday.

NGE said it had six highly prospective onshore petroleum prospecting licences (PPLs) in Papua New Guinea covering 52,000 square kilometres, the largest exploration footprint of any oil and gas company in the country.

It said the farm-in agreement would allow NGE to fast-track seismic, exploration and drilling programs across its portfolio with the aim of ultimately commercialising oil and gas for both the PNG domestic and export markets.

The company said it started a formal process last year seeking farm-in and funding proposals from potential joint venture partners suited to assisting NGE in developing its PNG licences.

"NGE has to date undertaken a multi-million dollar infrastructure and exploration program in its PPLs, which are adjacent to licences containing discoveries of one billion barrels of oil and 15TCF of gas," the company said.

"The existing prospects within NGE’s portfolio have the potential for undiscovered resources of between 616 and 641 MMBOE."

NGE’s executive chairman Michael Arnett said the announcement was a significant step forward for the company’s PNG operations.

"We are delighted to have reached this agreement with a partner whom we believe is well suited to meet the financial, technical and commercial challenges of developing these assets in PNG," Mr. Arnett said.

"This agreement represents a strong endorsement of the potential of our PNG licences and successfully completes the enormous efforts over the last two years."

The dual-listed NGE closed steady at K0.16 on the Port Moresby Stock Exchange yesterday.

 

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