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PCL BLO ITC AWE - ASX Company Announcement
$enr2 THIS IS A PRIORITY ITEM
3 September 2002
Part 1/1
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PANCONTINENTAL OIL & GAS NL
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HOMEX - Perth
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N.Z.Huinga 1-B Drilling & Project Status Update

EP 38716, TARANAKI BASIN PANCONTINENTAL: 6.6%

The Company has been advised by the operator that during the last
week an acid wash was performed on the perforated Kapuni sandstone
4387 - 4409 m interval to remove the effects of cementing the casing
and lost circulation material that could be impeding the flow of
hydrocarbons. A nitrogen lift was subsequently conducted and the well
swabbed to encourage the Kapuni sandstones to flow. Daily,
intermittent, increasing gas flows have been flared at the surface,
and produced in association with spent acid, drilling mud and
filtrate.

This is consistent with expectations, given the large volumes of mud
and lost circulation material lost during drilling operations. The
recovery of 21 barrels of oil from this interval during the open-hole
DST#1 demonstrated that this interval is oil productive. Swabbing of
the Kapuni will continue in order to increase gas and subsequent oil
flows.

The operator has indicated this morning that they believe gas cut
water recovered from the well to be formation water and that it now
interprets the previously recovered oil from the open hole DST of the
Kapuni formation originated from Basal fractures in the Murihiku.
Pancontinental has not seen any data to support such interpretation,
and accordingly, considers it is premature to make such
interpretation and awaits further results and information.

After testing the Kapuni formation, the overlying Murihiku Formation
fracture zone perforated interval of 4261 - 4285m interval will be
acid washed and flow tested separately, over a period of several
weeks. The Murihiku fractured zone, because of the severe lost
circulation problems encountered while drilling, is indicative of
high permeability, and is expected to flow at higher rates than the
Kapuni interval.

These extended tests will provide critical data on reserves,
production rates, reservoir characteristics, the quality and nature
of the hydrocarbons and formation fluids in the Kapuni sandstones and
the extensive fractures within the Murihiku Group metasediments.

The production test data will also assist in determining the possible
total thickness of the current (minimum) 237 meter gross oil column,
as no oil/water contact and no clear indication of a gas oil contact
has been established to date. This also provides a significant upside
to the potential reserves of the Huinga discovery.

The DST#1 over the 4370-4428 meter Kapuni sandstone interval
recovered 21 barrels of 42 degree API oil from the middle of the
4263m to 4500 metres gross interval. The top of the Kapuni Group is
interpreted at 4378 meters.

Sales contracts for oil produced during the Huinga testing program
have been negotiated on an interim basis, with the option to extend
once specific volumes are defined by the testing program.

In the Taranaki Basin, oil and gas are produced at commercial rates
from Kapuni sandstone reservoirs as well as fractured limestones of
the Tikorangi formation. Many large commercial oil and gas fields,
both overseas and within Australia produce from fractured reservoirs.

PEP 38716 hosts all or part of three structures related to the
eastern bounding fault of the Taranaki Basin, all being similar to
that of the major Rimu/Kauri oil and gas discovery 18 kilometres
south which is currently under development. The structures are named
Huinga and Huinga South, both entirely within the Permit, and Makino,
which is partly within the Permit but mostly within PEP38728, which
adjoins to the south.

(ASX* listed) Participants in the PEP 38716 EQUITY %
joint venture are:

*Pancontinental Oil & Gas NL 6.6%
(through subsidiary Euro Pacific Pty
Ltd)

*Marabella Enterprises Ltd (Operator) 24.8%
(Subsidiary of Bligh Oil & Minerals NL)

*AWE (New Zealand) Pty Ltd 12.5%
(Subsidiary of Australian Worldwide
Exploration Ltd)

*Springfield Oil & Gas Ltd (1) 4.8%
(Subsidiary of Impress Ventures Ltd)

Preussag Energie GmbH 24.00%

Swift Energy NZ Limited 15.00%

Indo Pacific Energy (NZ) Limited 7.30%

PEP38716 Limited 5.00%

(1)Subject to Joint Venture and government approvals; Springfield Oil
& Gas Limited is a wholly owned subsidiary of Impress Ventures Ltd.

Enquiries:
Andrew Svalbe
DIRECTOR,CEO

Tel: 08 9227 7178
Fax: 08 9227 9079
Email: svalbepancon.com.au

It is advised in accordance with Australian Stock Exchange Limited
Listing Rule 5.11 that the report on the above project has been
prepared by Mr Andrew Svalbe, AAPG, PESA, ASEG, FESWA who has had
more than the required five years experience and is a competent
person as
defined in the Listing Rules of Australian Stock Exchange
Limited and has consented in writing to the inclusion of this report
as it appears here.