Current Projects

The Octanex Group holds working interests in 10 petroleum exploration permits and residual and royalty interests in a further 3 such permits, all situated in the offshore basins of Australia. All but one of the permits is on the Greater North West Shelf offshore from Western Australia and are located in regions of moderate to intense exploration activity.

The Octanex Group also holds a 100% working interest in a permit in the offshore Taranaki Basin of New Zealand, a region of intense exploration activity.
The information provided in this section covers the background to each permit (including location, lead and prospect maps where relevant), the remaining work obligations and the Participants in each Joint Venture and their respective interests.

References in this section to the Octanex Group are references to Octanex and its wholly-owned subsidiaries. The policy underlying the management of the Octanex Group permits, investments and related interests is a cohesive policy which, insofar as is practical and both legally and commercially expedient, does not differentiate between whether they are owned by Octanex directly, or indirectly through one or more of its wholly-owned subsidiaries.

SUMMARY OF OIL AND GAS EXPLORATION INTERESTS

GENERAL INFORMATION ON AUSTRALIAN OFFSHORE PERMITS
Australian petroleum exploration permits are initially issued for six years. Under the terms of each permit, the exploration work obligations nominated for the first three years must be met. The permit holder may withdraw from the permit at the end of the third permit year, or at the end of any subsequent permit year, provided all the exploration work obligations up to the date of withdrawal have been met.

An individual permit year may be extended beyond 12 months if circumstances arise where the relevant work obligation for that year cannot be met in time. In such circumstances, the final expiry date of the permit will also be extended, normally by the same period of time.

Provided all work obligations are carried out during the initial term of a permit, it may be renewed for two further 5-year terms upon relinquishment of 50% of the original permit area. This renewal is again available to the permit holder at the end of the first 5-year permit term, with the same requirement to relinquish 50% of the already reduced area. Any Retention Lease or Production License that is granted in relation to a discovery within a permit is excluded from the calculation of the relinquishment areas. Therefore, subject to the prescribed requirements, a permit can have a potential 16-year life, or longer if one or more individual permit years has been extended.

GENERAL INFORMATION ON NEW ZEALAND OFFSHORE PERMITS
New Zealand petroleum exploration permits are initially issued for five years. Under the terms of each permit, the exploration work obligations nominated for each permit period (which may be a year or a longer period) must be met or the permit surrendered in whole or in part. The permit holder may withdraw from the permit at the end of any permit period, provided all the exploration work obligations up to the date of withdrawal have been met.

An individual permit period may be extended if circumstances arise where the relevant work obligation for that period cannot be met in time. In such circumstances, the final expiry date of the permit will also be extended, normally by the same period of time.

Provided all work obligations are carried out during the initial term of a permit, it may be renewed for a further 5-year term upon relinquishment of 50% of the original permit area. Any Production Licence that is granted in relation to a discovery within a permit is excluded from the calculation of the relinquishment area. Therefore, subject to the prescribed requirements, a permit can have a potential 10-year life, or longer if one or more individual permit period/year has been extended.

PERMIT BACKGROUND AND DETAILS
WA-329-P - EXMOUTH SUB-BASIN - OFFSHORE WESTERN AUSTRALIA

Background:
The Octanex Group holds a 100% interest in the permit.

The permit was granted by the Designated Authority for and on behalf of the Commonwealth – Western Australia Offshore Joint Petroleum Authority for a period of six years. The permit comprises 9 graticular blocks or part thereof (approximately 1,440 km² or 355,830 acres in total) in the Exmouth Sub-basin, offshore Western Australia Maps.

During the first five years of the initial term of the permit, a range of existing reports and open file seismic data was obtained and mapping, interpretation and revision of analyses and concepts for the area undertaken. In addition, BHP Billiton and Apache Energy carried out extensive 3D seismic surveys during a period when they held a combined 100% working interest in the permit, those working interests having since been conveyed to the Octanex Group.

The completed work programme for year 5 entailed further studies and the acquisition of 3D seismic data covering the permit\s. The year 6 work programme requires ongoing geotechnical studies and evaluation of the accumulated seismic data in an effort to identify suitable drilling targets.

The Octanex Group holds a substantial amount of 3D seismic data over the permit. The data includes coverage of approximately 95% of the permit’s area.

The process of interpreting and reassessing prospectivity is ongoing, with an emphasis on a number of Triassic features in the permit. The main prospects, Blackbird and Hornet Maps, are Triassic gas/condensate targets, strategically located offshore from Onslow, the site of two proposed LNG processing plants involving each of BHP and Chevron.

The Blackbird Prospect is interpreted as a 40 km² faulted closure, with a maximum closure height of 350m, with the top of the closure at 3,985m sub-seabed, in a water depth of 165m. Estimates of scope for recovery of hydrocarbons are in the range of 1.65TCF to 2.68TCF of gas, together with a condensate contribution.

The Hornet Prospect is interpreted as a 28 km² faulted closure, with a maximum closure height of 750m, with the top of the closure at 4,285m sub-seabed, in a water depth of 165m. Estimates of scope for recovery of hydrocarbons are in the range of 1.32TCF to 2.01TCF of gas, together with a condensate contribution.

Details of the Blackbird and Hornet Prospects as presently known are set out in a report provided to the Company by the independent consultants, RPS Energy Pty Ltd (“RPS”). In their report, RPS concluded that the volumetric estimates of undiscovered gas initially in place and prospective resources for the Blackbird and Hornet prospects are as presented in the following Tables.

Work Programme:
The permit is in year 6, where the work programme obligations are to carry out geotechnical studies, prior to an evaluation of the data obtained in the permit with a view to renewal.

WA-323-P & WA-330-P - DAMPIER SUB-BASIN - OFFSHORE WESTERN AUSTRALIA
Background:
The Octanex Group holds a 100% interest in both permits.

The permits were granted by the Designated Authority for and on behalf of the Commonwealth – Western Australia Offshore Joint Petroleum Authority, both for a period of six years. They each comprise 4 graticular blocks or part thereof (approximately 646 km² or 159,630 acres in total) in the Dampier Sub-basin, offshore Western Australia Maps.

The general region is proven for the formation, location and production of both oil and natural gas. Major commercial hydrocarbon discoveries in proximity to the permits include the giant gas and condensate fields of the North West Shelf; these being Goodwyn, North Rankin and Perseus, while the significant oil fields of Lambert, Wanaea and Cossack are in the north of the region. Recently, new and sizeable gas discoveries have been made at Julimar, Brunello, Brulimar, Xena, Pluto and Wheatsone, to the immediate west of the permits, while the Lady Nora and Pemberton discoveries have been made to the north.

New 2D and 3D seismic surveys have been carried out by the Octanex Group, as well as reprocessing of existing 2D and 3D surveys acquired by previous explorers within and adjacent to the permits. A range of existing reports and other open file data was also obtained to enable mapping, interpretation and revision of analyses and concepts for the overall area to be undertaken.

In year 3, the Octanex Group shot 1,578 line km of new 2D seismic. During year 4, an airborne magnetic impulse survey (“MIS”) was acquired over the Parker/Webley horst structure within permit WA-323-P. The objective of the MIS was to measure naturally occurring increases in the magnetic component of electromagnetic impulses associated with the secondary magnetic fields over REDOX cells, which may be caused by leakage above a hydrocarbon accumulation.

The work programme for year 5 entailed carrying out a further new seismic survey and continuing the various geotechnical studies already underway.
In meeting that year 5 work programme commitment to acquire new seismic data, the Octanex Group entered into a US$9.75 million agreement with Geokinetics (Australasia) Pty Ltd and acquired an off-bottom cable (“OBC”) 3D seismic survey within both permits and over the Winchester Prospect Maps. The total outline area of the survey was some 195 km², of which approximately 82 km² was the subject of high-fold data acquisition, while the remaining surveyed area will provide further but less intensive seismic data. Sophisticated processing of the Winchester OBC 3D seismic data followed the acquisition. This work is highly complex, involving advanced level algorithms, and is being done in the Geokinetics laboratory in Calgary, where the resources capable of carrying out the processing task are available.

A variation of the permit term for both WA-323 and WA-330-P was granted which extended the conclusion of year 5 and varied the year 6 work programme for each permit. The year 6 programmes now entail geotechnical studies and have moved the well obligations into the renewed permits’ terms, should a renewal be sought.

The Octanex Group is working to identify suitable drilling targets centred on the Winchester Prospect, which straddles both permits. The main area of exploration focus is the Parker/Webley faulted horst structure. This feature has been identified and named the Winchester Prospect. The Parker/Webley horst is seen as having potential for Triassic structural traps. Additional exploration potential is present on the Wilcox/Rankin fault block trend in the northwest part of WA-323-P, where AVO anomalies have been interpreted to occur in sands of Triassic age, similar to those penetrated in the Wilcox-1 well to the southwest.

The aim of the Octanex Group is to determine whether there is a large and viable structure at Winchester, with potential Triassic Mungaroo reservoirs and with sufficient potential for liquids rich gas to warrant drilling. In the vicinity of Winchester there are two wells and five penetrations that include side-tracks (“ST”), Parker-1 & ST1 (drilled in 1979/80 within WA-330-P) and Webley-1, ST1 & 1A (drilled in 1998/99 within WA-329-P) Maps.

The Octanex Group believes that the Parker well penetrations made by Woodside in 1979/80, demonstrated a gas discovery in the Triassic. None of the shallow Webley-1 well penetrations were deeper than the upper part of the Early Cretaceous regional seal. Those Webley penetrations were therefore entirely irrelevant as regards their actual and deeper Jurassic/Triassic targets. The target previously seen by others in the Webley well remains undrilled.

The Parker-1 & ST1 well penetrated thick Middle Jurassic shales in the hanging wall of a fault terrace before crossing the fault into stacked sands in the footwall block. These sands persisted to target depth (“TD”) and, although interpreted as Early Jurassic at the time of drilling, have been subsequently dated as Late Triassic in age and belong to the prospective Mungaroo Formation. Due to drilling problems this sandy Mungaroo section was not logged. The well was then side-tracked but again the sands were not logged, this time due to rig stability (an anchor chain broke) and subsequent drilling problems. The sands in the Parker-1 well and Parker-ST1 both contained strong gas shows Maps.

Regional geological studies, including well and seismic correlations, indicate the potential for the Triassic Mungaroo sands to occur higher within the Parker/Webley horst structure, well above the Parker-1 & ST1 penetration of Triassic sands through the footwall fault. The Octanex Group regards the Parker-1 & ST1 penetrations as a Triassic gas discovery in the Mungaroo Formation sands.

The Winchester Prospect comprises a fault block trap with stacked sand/shale reservoir/seal pairs, as occurs in the adjacent Wilcox Field, but the extent of the closure to the north-east along the Parker/Webley horst is not well defined on the existing Parker 3D and Tourmaline 2D seismic surveys. It is anticipated that the existence of closure to the north-ease may be resolved through the interpretation of the recently acquired Winchester OBC 3D survey. It is likely a combination of structural dip to the north-east and lateral sealing of fluvial channel sands, as occurs in the Wilcox Field, may be present. A combination of multi-stacked reservoir seal pairs within the Parker/Webley horst structure provides the potential for a significant gas accumulation within the Winchester Prospect.

The prime purpose for the acquisition of the Winchester OBC 3D seismic survey was to improve seismic resolution over the Winchester Prospect and enable better definition of trap and closure. The log data included in the Maps section illustrates the gas shows in the Parker-1 well compared with the similar gas shows in the Wilcox-1 gas discovery and the absence of shows in the dry Wilcox-2 well.

As well as providing a gas log comparison to the Parker-1 well gas shows, the Wilcox-1 well provides encouragement for the concept that the Winchester Prospect may provided a liquids rich gas. The comparative gas log data suggests that gas from the Wilcox-1 well carries 66 to 79 barrels of condensate per million cubic feet of gas. Such a ratio would be a highly attractive element in any decision to test the feature, as the liquids would constitute a value in excess of the value of the gas.

In summary, the Octanex Group undertook the Winchester OBC 3D seismic survey in order to better visualise structure and stratigraphy over the Winchester Prospect, in the anticipation that Winchester may amount to a sizeable and attractive drilling target.

The proximity to WA-323-P and WA-330-P of existing infrastructure and likely future infrastructure extensions, as well as new infrastructure, bodes well for any discovery that may be made, whether that be oil or gas. Significant future demand for gas to supply both domestic demand and the proposed Wheatstone and Pluto LNG developments are anticipated. Therefore, any potential gas discovery made in the permits is seen as being valuable and capable of monetisation, particularly so if such a gas discovery were to be rich in gas liquids.

From the work carried out to date, the independent consultants, RPS Energy Pty Ltd, have made a probabilistic calculation of volumetrics for the Winchester structure as displayed in the following Tables.

Work Programme:
The permits are both in year 5, where the (completed) work programme obligations are to acquire new 2D seismic surveys and carry out geotechnical studies. This is followed in year 6 by geotechnical studies in each permit, prior to an evaluation of the data obtained in the permits with a view to renewals.

WA-342-P – BROWSE BASIN - OFFSHORE WESTERN AUSTRALIA
Background:
The Octanex Group holds an 8% interest in the permit and the Operator of the Cornea Joint Venture is Exoil Group.

The original permit was granted by the Designated Authority for and on behalf of the Commonwealth – Western Australia Offshore Joint Petroleum Authority on 29 May 2003 for a period of six years. That permit term ended on 28 November 2009, following a six month extension being granted in year 3. The original permit comprised a total of 42 graticular blocks or part thereof (approximately 3,290 km² or 812,975 acres in total) in the Browse Basin offshore Western Australia Maps.

The Cornea oil and gas accumulation was discovered by Shell within the early exploration wells Cornea-1, 1B and 2. The wells are considered to have established the presence of a 25m gas column and a 22.2m oil column in the Albian sandstones of the Jamieson Formation. The field is a large drape feature. It accumulated 22 to 24 degree API oil derived from Early Cretaceous, Echuca Shoals Formation and possibly Late Jurassic source rocks in the Heywood Graben, located over 60km to the west. The field is split into three main structural components – Cornea South and Cornea Central, both with gas and oil, and Cornea North with gas and no underlying oil presence Maps.

The Cornea Joint Venture will utilise the Songa Venus rig to drill the Cornea-3 exploration/appraisal well in the vicinity of Cornea-1 and Cornea-1B, in order to determine the potential for oil produceability from Cornea. The well is scheduled to be drilled in late 2009/early 2010.

Other features are apparent in the WA-342-P permit where on reprocessed Cornea 3D seismic, similar Albian sandstone drape features have been recognised in the Pupil, Koolan and Koolan South leads in a basement high trend, parallel with the Cornea structure. These drape leads occur over lower basement topography than in the Cornea structure and, as such, also have the better quality Early Albian to Aptian sandstone reservoirs draped over basement, with the intervening seal interpreted to be intact as has been proved in the Focus-1 oil discovery within WA-342-P. This potentially allows stacked hydrocarbon pools, as indicated by the AVO anomaly in the Pupil Lead.

Work Programme:
The permit has completed its initial 6-year term and the Joint Venture has made application to the Delegated Authority for the first 5-year renewal to be granted. The Joint Venture has proposed a work programme for the guaranteed period (years 1 to 3 inclusive) that includes an exploration well. It is planned for that well to be Cornea-3.

WA-362-P, WA-363-P, WA-386-P & WA-387-P – EXMOUTH PLATEAU - OFFSHORE WESTERN AUSTRALIA

Background:
The Octanex Group holds an aggregate 40% interest in each of these four permits and the Operator of all of them is OMV Australia Pty Ltd.

The permits were granted by the Designated Authority for and on behalf of the Commonwealth – Western Australia Offshore Joint Petroleum Authority, all for a period of six years. They comprise a total of 457 graticular blocks or part thereof (approximately 37,795 km² or 9,339,350 acres in total) over the Exmouth Plateau offshore Western Australia Maps.

The permits are on the northern margin of the Exmouth Plateau, 300 to 400 kms north-west of the Western Australian coastline. The Exmouth Plateau is the largely unexplored deepwater frontier of the Carnarvon Basin, Australia’s largest petroleum basin, which includes the giant gas resources of the North West Shelf (Rankin Trend), the Greater Gorgon region and Io/Janz.

In August 2007, three Octanex Group companies entered into four separate Joint Ventures (“JV’s”) with OMV Australia Pty Ltd (“OMV”) and ENI Australia Limited (“ENI”), one relating to each permit. As a result, the Octanex Group now holds an aggregate 40% interest in each of these permits and in their respective JV’s, subject to the farmin arrangements.

As part of the farmin arrangements, OMV and ENI agreed to acquire and process sufficient 2D seismic data in each permit that would meet all the current and future seismic work obligations for the four permits. From the outset, OMV and ENI indicated their intention to comprehensively explore these four Exmouth Plateau permits and, to that end, they have acquired approximately 7,407 kms of new 2D seismic data, known as the Klimt 2D Marine Seismic Survey (“MSS”). These data are currently being interpreted for the JV’s by OMV and by the other JV participants independently.

The next decision point for OMV and ENI is that by 1 January 2010 they must commit to the drilling of a well in any one of the permits or re-assign their entire 60% interest in all four permits back to the Octanex Group.

Under the terms of the farmin agreement, OMV and ENI also have the right to earn a further 20% interest in each permit from the Octanex Group companies by electing to meet all the costs of the first two wells that they may elect to drill in that permit. This would leave the Octanex Group with a residual 20% interest in each permit where such a commitment is made.

The final leg of the farmin arrangements provides that, if the Octanex Group does not wish to participate in a well (i.e. by being carried through its share of drilling costs) that OMV and ENI may elect to drill at their discretion on any one of the four permits, the Octanex Group has a right, exercisable within 60 days of receiving a formal notice from OMV and ENI of their intention to drill a well, to elect to assign their 40% interest in the relevant permit to OMV and ENI for US$16,000,000. This option is available to the Octanex Group in each of the four permits.

The independent consultants, RPS Energy Pty Ltd, reported that they have evaluated 11 leads within three of the permits, WA-362-P, WA-363-P and WA-386-P. The majority of the mapped structural closures are potentially substantial, with giant gas fields possible. The results of the RPS volumetric analysis and geological risking are shown in the following Tables.

Work Programme:
The permits are all effectively in year 4, where the work programme obligations are to interpret the extensive data acquired by the new Klimt 2D MSS, continue the geotechnical studies and identify drilling targets in each permit by 31 December 2009, as required by the farmin terms. Depending on the drilling decision made regarding each permit, year 5 will entail preparation for the drilling of a well in each one, with drilling to take place in that year or year 6 and then followed by an evaluation of the data obtained in the permits with a view to renewals.

It is expected that OMV and ENI will commit to acquiring some thousands of km² of new 3D seismic data before drilling takes place.

WA-384-P, WA-385-P & WA-394-P – SOUTHERN EXMOUTH SUB-BASIN - OFFSHORE WESTERN AUSTRALIA

Background:
The Octanex Group originally had a 100% working interest in all three permits but, following a transaction with Shell Development (Australia) Pty Ltd (“Shell”), now holds only residual and royalty interests in each one.

The permits were granted by the Designated Authority for and on behalf of the Commonwealth – Western Australia Offshore Joint Petroleum Authority on 21 August 2006 (re WA-384-P and WA-385-P) and 21 February 2007 (re WA-394), all for a period of six years. They comprise a total of 134 graticular blocks or part thereof (approximately 10,628 km² or 2,626,235 acres in total) in the Southern Exmouth Sub-basin, offshore Western Australia Maps.

In February 2008, the Octanex Group entered into agreements with Shell for the disposition to Shell of a 100% working interest in the permits but retained certain rights. As part of the sale arrangements, and in order to meet the work programme obligations of the permits, Shell was required to acquire new seismic data in each one of them. This was achieved via the 3,440 kms of new 2D seismic data Shell acquired by the Guacamole MSS.

Specifically with respect to future related terms of the Octanex Group agreements with Shell:

• Shell has agreed it must either commit to a well before the start of year 5 of the permit (21 August 2010 in the case of WA-384-P and WA-385-P and 21 February 2011 in the case of WA-394-P) or reassign the 100% interest for nil consideration for any permit where no well commitment is made.
• Shell has agreed to make two tranches of Discovery Payments (being either (a) or (b) following) to the Octanex Group for any Discovery (as defined in the agreement) made in a permit but limited to a maximum of three Discovery Payments per permit. Within six months of having made a Discovery Shell must either:
  (a) Pay US$5,000,000 to the Octanex Group; or
  (b) Reassign to the Octanex Group a 100% interest in the permit in which the Discovery was made.
• Following an initial Discovery Payment as described above, if Shell:
  (a) spuds an appraisal well in respect of the Discovery; or
  (b) applies for a production licence or retention lease in respect of any Discovery,
  then Shell must pay a further US$5,000,000 to the Octanex Group.
• Shell has also granted the Octanex Group a 1% Overriding Royalty (as defined in the agreement) payable on the basis of the gross assessable petroleum receipts recovered from a permit.
• If at any time Shell wishes to exit from any of the three permits, a 100% interest in the relevant permit must be offered back to the Octanex Group.

Shell is a world class operator and is committed to the conduct of a thorough assessment of the exploration potential of the three permits. While the Octanex Group no longer has any direct equity interest in the permits, it retains significant access to the upside exploration potential in them through the mechanism of the Discovery Payments and the Overriding Royalty, as described above.

Work Programme:
The permits are all effectively in year 4, where the work programme obligations are to interpret and map the extensive seismic data acquired by Shell via the new Guacamole 2D MSS in year 3 of the permits. Shell can decide whether to continue in each permit, or withdraw and offer to re-assign the 100% interest as required by the farmin terms. Until such decisions are made, the Octanex Group has no exposure to costs, nor any work obligation to perform in any of the permits.

EPP 34 – OTWAY BASIN - OFFSHORE SOUTH AUSTRALIA

Background:
The Octanex Group holds a 30% interest in the permit and the Operator of the Western Otway Joint Venture is Exoil Group.

The permit was granted by the Designated Authority for and on behalf of the Commonwealth – South Australia Offshore Petroleum Joint Authority for a period of six years. It comprises 76 graticular blocks or part thereof (approximately 4,850 km² or 1,198,460 acres in total) in the Otway Basin, offshore South Australia Maps.

During years 1 and 2 of the initial 6-year term of the permit, a range of existing reports and open file seismic data was obtained and mapping, interpretation and revision of analyses and concepts for the area undertaken.

In Q2 2008, a 1,100 km seismic grid of new 2D data was acquired in the permit as the Trocopa 2D MSS. Processing of this new data was undertaken in conjunction with reprocessing of more than 1,500 km of existing 2D data acquired by earlier explorers. The focus of interpretation of the seismic data has been the northern shelfal section of the block, targeting the Early Cretaceous Pretty Hill Sandstone. The new seismic data acquired by the Trocopa MSS and the reprocessed older data are planned to provide extensive modern 2D coverage in the northern part of the permit and to open up to the Joint Venture the possibility of a series of gas and oil plays.

Parts of EPP 34 are parallel to the Morum Sub-basin Maps and the permit is thought to have excellent reservoir potential for stacked plays in thick Upper Cretaceous section. Because of this proximity to the Morum Sub-basin, the permit is postulated to have scope for marine influenced source rock in deep water.

A variation of the permit term has been applied for that seeks an extension to the conclusion of year 4 in order to allow time to refine, study and evaluate the Trocopa MSS data and other reprocessed seismic data in the permit. The reprocessing of a considerable amount of pre-existing 2D seismic data was delayed through the absence of vital navigation and similar information relevant to the data. This work needs to be completed in an effort to identify suitable drilling targets before a decision is made on whether to enter year 5 and commit to the well obligation. The Company is unable to advise when a decision will be made by the Designated Authority in relation to the variation application but if the variation is not granted, the Company will not enter year 5 unless the well obligation for the permit has been farmed out.

Work Programme:
The permit is in year 4 where the work programme obligation is to interpret the new Trocopa 2D MSS, reprocess pre-existing 2D seismic and continue with studies and mapping. This is followed in year 5 by preparation for and drilling of a well in the permit. The year 6 work programme obligation is an evaluation of the well and review of the studies and permit data obtained to date with a view to a renewal.

PEP 51906 – TARANAKI BASIN - OFFSHORE TARANAKI – NEW ZEALAND

Background:
The Octanex Group holds a 100% interest in the permit.

The permit was granted by the Designated Authority for and on behalf of the Government of New Zealand on 19 November 2009 for a period of five years. It comprises approximately 1,613 km² or 398,580 acres in total in the Taranaki Basin, offshore of the North Island province of Taranaki, New Zealand Maps.

PEP 51906 is strategically located in New Zealand’s only producing hydrocarbon basin, the Taranaki Basin. It is adjacent to three existing producing fields; the Maui gas/condensate field to the east, which has been in production since 1979, the Tui oil field to the north-east, which has been producing since 2008, and the Maari/Manaia fields to the south, which have been producing since the beginning of 2009. The location map shows the position of the permit area in the offshore basin, some of the existing leads within the area of the permit, the potential source rock areas and hydrocarbon migration paths Maps.

In anticipation of the permit being granted, Octanex undertook an extensive study of the permit area by reviewing the 2D seismic surveys of various vintages that had previously been acquired over parts of the permit. Despite this amount of data, there remain some weak seismic coverage areas, particularly in the central and south eastern areas of the permit Maps.

With regard to the permit’s prospectivity, the initial focus will be on four features that are visible on the older seismic data: Kakapo, Kea Deep, Toke and Matuku. Only one well has been drilled in the area of the permit, Kea-1. That well aimed to evaluate the hydrocarbon potential of the Kapuni sands, but was found to be water bearing. There remains potential in a deeper part of the Kea feature, adjacent to the bottom hole location of Kea-1 Maps.

In addition to Kakapo, Kea Deep, Toke and Matuku, there are a number of other potential features that may warrant the acquisition of further seismic in order to ascertain if they can be elevated to lead or prospect status.

Work Programme:
The permit is in its initial 18 month period where the work programme obligation is to undertake geological studies and reprocess existing 2D seismic data acquired by earlier explorers. In the following 12 months the obligation is to complete a new 2D seismic survey and then interpret that new data in the 12 months after that, with a view to then committing to drill a well by the end of year 4. The year 5 obligation is to complete geotechnical studies prior to making a decision on renewing the permit.