Origin's High Cliff Sandstone In Hovea 2 Flows Gas

Origin Energy Resources Limited advises that an open hole drill stem test of the High Cliff Sandstone in Hovea 2 over the interval 2370 meters to 2419 meters, flowed gas at a stabilized rate of 16.5 million cubic feet per day through a 3/4 inch choke at a flowing tubing head pressure of 1220 psi. No water was recovered during the test.

Interpretation of the reservoir pressure available from the testing, while encouraging, does not conclusively confirm the commerciality of the zone tested and further analysis will be required before a final decision on completing the well can be made. Hovea 2 will be now be deepened to evaluate the potential of further reservoirs expected before economic basement is encountered. Once total depth is reached, additional logging and/or testing of the High Cliff gas zone will be undertaken before a decision is made on the future of the well.

Commenting on the new gas discovery, Origin Energy’s General Manager Exploration, Dr Rob Willink, said “Until additional analysis of well results is undertaken we cannot determine the commerciality of this discovery. However, it is clearly significant in that it is the first discovery of gas in this particular combination of reservoir and structural setting, and so opens new exploration possibilities within our acreage in the Perth Basin”.

The Hovea 1 well drilled in October 2001 discovered oil in the Dongara Sandstone. The Hovea 2 well surface location is located 830 meters to the northeast of Hovea 1 and was initially designed to have two objectives:

• A vertical exploration well to test the potential of deeper plays in the Early Permian section below the oil zone intersected at Hovea 1. This vertical well was interpreted to intersect the Dongara Sandstone in a fault block separate from the Hovea 1 oil discovery and was therefore unlikely to appraise the initial discovery; and

• In the event the vertical well did not discover hydrocarbons, a sidetrack from the vertical well to appraise the extent of the oil pool discovered by Hovea 1 at the level of the Dongara Sandstone.

Preliminary review of the Hovea 2 well data indicates that, in line with expectations, the Hovea 2 vertical well has intersected the Dongara Sandstone in a separate fault block to that drilled by the oil discovery well Hovea 1. In Hovea 2 the Dongara Sandstone is below the oil water contact established in Hovea 1, and therefore, as expected, is water bearing.

A decision on the sidetrack of Hovea 2 to appraise the Hovea 1 Dongara Sandstone oil pool will now be made once the vertical well has been drilled to total depth and data over the gas zone and deeper levels has been more fully analyzed.

Hovea 2 is currently at a depth of 2475 meters. The current operation is running in hole after a bit change, before drilling ahead to the final total depth at 2730 meters.

Origin Energy holds a 50% interest in Hovea 2 under a farm-in agreement and Arc Energy holds the other 50% interest.

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