ann out 1135bopd production 2 wells

ANNOUNCEMENT TO THE AUSTRALIAN STOCK EXCHANGE: 26 MAY 2008
PRODUCTION RATES REACH 1135 BOPD AT NORTH SAN ARDO
♦ Production reaches 1135 bopd after 2 new wells
♦ Two further horizontal wells not yet on production
♦ Further development drilling to increase production, scheduled for third quarter 2008
Oil production rates at Salinas Energy's 100% owned North San Ardo oil field (NSA) are increasing
progressively as new horizontal production wells are brought on line.
So far two of the four new horizontal producers being drilled have been brought into production, the
Lombardi 10-27H and Lombardi 13-27H. These wells are currently producing at rates above
expectations and over the past week have lifted the average field production rate to 1135 bopd. Two
additional horizontal producers have yet to be completed and brought on line to further increase
Oil production for the year is forecast to continue to increase after the current horizontal wells are
brought on line with drilling of a further series of horizontal production wells scheduled for late in the
third quarter. Planning is underway to secure another drilling rig for this second production drilling
Commenting on the increasing production levels Salinas Managing Director John Begg said:
"The field is performing exceptionally well and so far the new wells are delivering primary production
beyond expectations, without the need for steam. This means that not only are we achieving
progressively higher production rates but we are also able to keep our operating costs down resulting
in very high margins per barrel.
We hope to be able to measure the impact of two more horizontal producers within the next month
and it is clear that we will be achieving record rates during a period of record oil prices.
The value of NSA continues to climb, giving us confidence in our oil field redevelopment strategy and
in the potential of the other projects in our portfolio"
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