Austral to drill two wells in New Zealand

Austral Pacific Energy Ltd. (Austral) announces the upcoming drilling of the A6 and A7 wells in the onshore Taranaki Cheal Oil Field (PMP38156-01), Stratford, New Zealand.

The new wells will target the same shallow oil producing Mt Messenger sands that are currently generating substantial revenue for the Cheal Joint Venture. It is anticipated that successful drilling will result in completion and tie-in in time to deliver increased oil production prior to year end 2008. The Joint Venture has also reached agreement to undertake a comprehensive programme of technical studies to support the drilling of the Greater Cheal Trend.

The agreement to drill the wells is part of an arrangement between the Cheal Joint Venture Parties to resolve disputed costs related to the construction of the Cheal Production Station. The agreement includes a full and final settlement of all claims, a commitment to drill the A6 and A7 wells as a joint operation and best efforts approach to creating a production JVOA (Joint Venture Operting Agreement) to guide future work programs.

The resolution includes a net payment to Cheal Petroleum Limited (a subsidirary of TAG Oil Limited) of $US1.6 Million in a combination of cash, Austral stock and expected forward production from the A7 well. Subject to TSX-V approval, Austral will issue 2.273 million ordinary shares to TAG with anti-dilutive protection provided for a period of six months and in return TAG has agreed not to dispose of these shares for a period of twelve months.

Source : http://www.austral-pacific.com/