13 Oct 2007
Austral Pacific Energy Ltd. has commissioned its Cheal oil and gas production facility in onshore Taranaki, New Zealand. The production facility was officially opened this week by New Zealand's Associate Energy Minister, Harry Duynhoven, who labeled it a springboard for further growth for the company. The $NZ30 million facility is unique in New Zealand; it has been purpose-built to facilitate the extraction, production and transportation of Cheal oil, which is waxy and similar to that found in the onshore Ngatoro/Kaimiro and offshore Maari fields.
To date, Cheal has produced more than 212,000 barrels of oil at rates of up to 1000 barrels per day from the "A" and "B" sites. Daily production is currently around 400 barrels as Austral Pacific, as the field operator, follows the asset management plan and moves off cost-inefficient temporary equipment to allow the installation of permanent connections between the main 'A' site and the satellite
"We believe that preserving long term asset value should be an integral part of a timetabled asset management plan, and there is little point in producing oil at high costs, now that we have commissioned our own state of the art facility less than 2km away," said the Company's Chief Executive Officer and President Thompson Jewell.
"Once we have connected in the 'B' site over the coming weeks, we will bring our production back up to rates of between 850-1000 barrels per day. The next step is to drill and complete two more wells at the 'A' site which are planned to increase daily production by a further 50%."
With the production station now complete, there is also considerable scope to further increase daily production when the play trend is further tapped into over the coming year. "There is significant potential for further upside in this project and we are excited at the prospects for further growth," said Jewell.
The presentation given at the opening ceremony, the Associate Minister's Speech and a presentation given at the IPAA Oil and Gas Investment Symposium are available for download at www.austral-pacfic.com.
Update on Corporate Matters
Further to the Company's news release of July 6, 2007, Austral confirms that it has now completed the placement of 7,698,308 Series 1 preferred shares to two international investment funds. Proceeds will be used in connection with the Cheal field development and for working capital purposes. Consequent upon the closing, the company has allocated 150,000 three-year common share purchase warrants at an exercise price of US$1.30 to Morgan Keegan & Company Inc. All these securities have a restricted period in Canada until January 20, 2008. The preferred shares, warrants and any underlying common shares will not be offered or sold in the United States and will not be registered under the 1933 Securities Act (US).
In other news, the Company has satisfied all conditions relating to the transaction announced on August 8, 2007 - the purchase of all the shares of International Resource Management Corporation Limited, a small, privately held, New Zealand oil and gas exploration and production company whose principal asset is a 19.8% interest in the Cardiff gas field (PMP 38156).
The consideration for the IRM shares will be paid partly in cash, and partly by the issue of shares in the Company. The transaction will close upon issuance of 1,851,855 shares in the Company at a deemed price of US$1.21, which issuance is subject to regulatory approvals. The additional cash component is due for payment by January 25, 2008.
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