Exploration/Development news briefs�May 12

Australian Geological Survey Organization � Beach Petroleum NL � Vintage Petroleum Inc. � Adair International Oil & Gas Inc. � Yemen Hunt Oil Co. � Occidental Petroleum Corp. � Perez Companc

May 12th, 2000

A record 86 new offshore exploration permits have been offered to the Australian petroleum industry by the federal government, it was announced this week. This is 28 more blocks than last year�s release. Sixty-seven of the permits on offer lie in West Australian waters, with six in the Timor Sea near the Ashmore and Cartier reefs. There are also five new permits off the West Victoria coast, one in Bass Strait, four off the Northern Territory, and three in the Gulf of Carpentaria. The government hopes to capitalize on strong oil prices. The Department of Industry, Science, and Resources also this week aired proposals for changing the management of offshore petroleum areas by the reintroduction of cash-bonus bidding as an option in the bidding process. The industry is strongly opposed to such a move, which it sees as an attempt by the government to extract revenue from the industry at both the exploration and production stage. Cash-bonus bidding was briefly introduced and enacted by the Hawke Labor government in 1987. However, most licensing rounds since then have been conducted under the work program bidding system.

Australia�s oil and condensate reserves have reached a 10-year high of 3.5 trillion bbl, according to a report by the Australian Geological Survey Organization (AGSO). This is an increase of 6% over 1997 estimates. The current natural gas reserves are put at 98 tcf, an 18% rise over 1997 reserves. The figures are based on 1998 data, and several large gas discoveries made during 1999 are likely to significantly add to the reserves totals. Although Australia is a small oil producer, accounting for less than 1% of world output, it is the fourth largest holder of natural gas reserves in Asia, behind Malaysia, Indonesia, and China.

Vintage Petroleum Inc. said the first of three wells in its S-1 Damis Block in Yemen found 100 ft of net pay in two Alif zones and about 40 ft of potential pay in an upper dolomite section, according to its interpretation of open-hole logs. On test, An Naeem No. 1 flowed a combined 47.7 MMcfd of gas and 1,265 b/d of condensate from the two primary Alif zones. The upper dolomite interval flowed 7.7 MMcfd of gas and 245 b/d of condensate, but there is no market for the gas in Yemen, says Vintage. The well was drilled to evaluate a possible extension of Halewah oil field, which produces 25,000 b/d from an oil rim under a gas cap, also from the Alif, on an adjacent concession. The company is moving the drilling rig to a second prospect to drill the Harmel No. 1 well, 5 miles southwest of An Naeem No. 1. Vintage will test a separate Alif prospect which, like the An Naeem, was identified through the interpretation of recently acquired 3D seismic. The program's third well will be drilled either on the Fordus prospect or on a prospect that is an offset to the An Nagyah well, drilled by Royal Dutch/Shell in the early 1990s. Vintage operates the block with a 75% interest.

Perez Companc, Argentina, signed a 2-year technical evaluation agreement Apr. 28 with Perupetro SA covering Peru�s recently formed north coast Block XVII in the Sechura basin. The block adjoins US-based Olympic Peru Inc.�s Block XIII, where three gas finds have been made since start of exploration in March 1996. Perez Companc has 2 years in which to carry out field work and laboratory studies in the TEA before taking a decision to sign an exploration and development contract for the block.

Adelaide-based Beach Petroleum NL has raised $11 million (Aus.) to fund an oil and gas exploration program in Australia. The company this week spudded the first of 13 new wells as part of an accelerated drilling program over the next 18 months. The well, Canterbury-1, is in Permit ATP 548P in the Cooper-Eromanga basins of southwest Queensland. It is about 40 km northwest of the producing Inland oil field. This well will be followed by the Taipan-1 wildcat on a nearby oil prospect. There will be a further five wells drilled by Beach in the Cooper-Eromanga, plus two in the Otway basin on either side of the South Australia-Victoria border, and four wells in the Browse and Bonaparte basins off northwestern Western Australia.

Adair International Oil & Gas Inc., Houston, has been named operator during the exploration phase of Block 20 in the Republic of Yemen. Block 20, which contains about 500,000 acres, is located in the heart of the production area operated by Yemen Hunt Oil Co. Those properties are currently producing 160,000 b/d of oil. Cumulative production from the area is projected to approach 1 billion bbl by the end of 2005. The pipelines and export facilities in place will be able to bring any oil discovered in Block 20 quickly to market at minimal cost. Adair postulates that the block could contain 340 million bbl of recoverable oil reserves. Adair's partner in the block, Occidental Petroleum Corp., will become operator of the block if a commercial discovery is made.

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