fyi ... salty.MORE DRILLING NEWS AHEAD While much attention is...

fyi ... salty.

MORE DRILLING NEWS AHEAD

While much attention is focused on offshore Mauritania, where Woodside, Hardman, Roc Oil and Fusion shareholders are eagerly awaiting drilling results, this week also sees the commencement of the offshore New Zealand drilling program in which Australian Worldwide Exploration (AWE)
holds a stake.

Last week the company confirmed its third offshore New Zealand discovery with the intersection of a 13m oil column from the Pateke-2 well in the Kapuni F Sand primary target.

The share price received a boost from this news, particularly in light of the company’s comments that the well demonstrates the same characteristics as the nearby Tui and Amokura wells and that reservoir quality was excellent.

In UBS’ eyes, a combined Pateke, Amokura, Tui (20% AWE) development now looks promising with the possibility that the Pateke and Amokura wells drilled into the same pool of oil, as the oil and water contacts were the same.

It is too early to tell if one pool extends the full 8km, or if there is a saddle between the two, but the analysts expect this to be determined in around 5-7 weeks.

On current estimates UBS feels the combined development could contain around 25 mmbbls of recoverable oil, but if no saddle exists this figure could be as high as 50 mmbbls.

On Merrill Lynch’s estimates, the area could have a resource potential of 40-60 mmbbls and that a commercial discovery could be worth 10-20c per share to the stock.

AWE’s partner in the project, New Zealand Oil & Gas has commented that the field will rapidly progress to development with first oil expected within the next 24 months and Merrill Lynch believes that such a timeframe is reasonable.

Due to start any day now is drilling at the Kiwi-1 well (20% AWE), around 4km south west of Amokura, which, if successful, the analysts at Merrill Lynch estimate could bring the resource potential total to the top end of the 40-60 mmbbl range.

The permit containing the existing discoveries in the area also allows for three more prospects, but the analysts feel these will not be drilled until a later date.

Although the oil columns intersected so far have been relatively thin and that clearly presents some associated risk, the analysts at CSFB remain confi dent that the field will be declared commercial.