december activies statement

A major production milestone was reached this quarter with the Tui Area Oil Project producing its 5 millionth barrel of oil in early December, approximately four months after production started on 30 July 2007. Oil production for the quarter was up 65% on last quarter figures with production of approximately 3.95 million barrels (PPP share approximately 395,000 barrels). Total production to date was approximately 6.4 million barrels at 31 December 07.
For the quarter, oil production averaged 43,000 barrels a day, although this increased to an average of over 48,000 barrels a day for December following modifications to equipment on the Umuroa Floating Production Storage and Offloading vessel. Current oil production remains at this level, with well capacity in excess of the Umuroa’s processing and storage capacity. Water production continues to be less than forecast, which should extend the plateau production period.
The strong field performance since the commencement of production resulted in an upward revision of the Tui project’s oil production target for the financial year ending 30 June 2008, from 10 million barrels to approximately 11 million barrels, and this may increase by a further 10-20% given continued high oil production rates. It has also allowed the joint venture partners to significantly increase the project’s reserve base to 41.7 million barrels, nearly 50% more than the initial estimated reserves on which approval of the project was based. The increase in proved and probable (2P) reserves was based on a combination of re-processed 3D seismic, a more detailed assessment of the Kapuni reservoir and integration of production data from the producing wells. The higher estimate assumes production from the existing four wells plus one new well which is expected to be drilled in 2009.
The project final capital cost estimate stands at US274.4 million which is a minimal increase of 2% on the estimated final capital cost expenditure of US$269 million as previously reported.
During the quarter the accidental discharge of contaminated water from the FPSO Umaroa required the clean-up of minor oil contamination on the Taranaki coastline, which was effectively and promptly achieved, with appropriate reporting to regulatory authorities.

Tui-4H Project
In December, the Tui joint venture approved a FEED budget to assess drilling, completion and tie-in designs for a possible additional Tui development well. The study will be conducted by the same contractor who successfully executed the Tui project (Alpha Petroleum Services) and should run for about 4 months.
TARANAKI - EXPLORATION DRILLING
Toke permit, (PEP38499) Taranaki Basin (PPP interest 10%)
Assessment of the seismic data previously reported has commenced and it is anticipated that an initial interpretation of the data will be available
by the end of February 08.
WESTERN AUSTRALIA – FIELD APPRAISAL DRILLING
WA-33R (PPP interest 10%)
Early in the December quarter the Maitland-3H horizontal well was drilled and tested at a constrained rate of 6 million cubic feet per day. This followed confirmation of the gas column in Maitland-2 and collection of two cores in a sidetrack well. The joint venture is in the process of incorporating the results of these wells into development planning. This work has focused on optimising the design of future horizontal drilling and assessing the requirement for further appraisal drilling prior to drilling production wells. It is expected that the evaluation will be completed during the March quarter leading to the possibility of drilling two further appraisal wells later in 2008.
NEW VENTURES
With tangible benefits flowing in from Tui production, the board and management of the company are actively assessing possible new opportunities for PPP. Directors consider the strong performance and robust cash flows derived from the Tui Project places the company in an excellent position for further growth.