Ferret's Stock to Watch: LONGREACH OIL LIMITED08:25, Tuesday, 18...

Ferret's Stock to Watch: LONGREACH OIL LIMITED
08:25, Tuesday, 18 July 2006

OIL EXPLORER ALWAYS IN THE THICK OF IT BUT NO SUCCESS

Sydney - Tuesday - July 18: (RWE Aust Business News)
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OVERVIEW
********

It's rare that Ferret would taken up the cudgels for all almost
worn out oil explorer called Longreach Oil Ltd (ASX:LGO).

The name of Longreach has been around for more than 50 years
although the company in its present form was listed in 1981.

Maybe it's not the company's fault that it has not struck
something worthwhile in the intervening years but just simply a case of
bad luck.

On its background it hasn't been for the want of trying.

It has a lot of right addresses around the world but no results.

The shares are indicative of its prospects, lying around 3c or
less for year after year.

Chairman and managing director Boris Ganke, who has been around
in the market as long as Longreach has been searching, has also never
cracked the jackpot.

Why Longreach is worth a look is the signs of the times and
anything that might one day produce oil should not be disregarded.

And there is a bit of movement in the camp that just might
produce a resurgence.

On June 6 the ASX was informed that Sunvest Corporation Ltd
which has an office in London and Australia, picked up 16 million shares
at 2.5c a share for an outlay of $400,000.

Sunvest now holds a total of 22,170,000 shares in Longreach
following this placement, which represents 10.4 per cent of the enlarged
capital on Longreach.

Two days later Longreach reported that an agreement has been
entered into with a Singaporean-based company in respect of potential
oil production in Indonesia.

That overseas company will, subject to approvals, hold interests
in several oil concessions on the island of Sumatra.

It is proposed that a new joint venture company will be formed,
which will initially acquire a 50 per cent interest in that company.

The new joint venture company will be 50 per cent held by an
overseas group and 25 per cent each will be held by Longreach Oil and
Southern Cross Exploration NL (ASX:SCX).

Planned operations on the concessions will relate to the
re-working of existing oil fields, with several wells which have been
shut-in for about two decades.

If the project proceeds to completion, the initial amount of the
investment by Longreach Oil will be in the region of $1 million

SHARE PRICE MOVEMENTS
*********************

Shares of Longreach yesterday stood at 3.1c. Rolling high for
the year has been 3.8c and low 1.2c. The company has 175 million shares
on issue with a market cap of $5.4 million.

Mr Ganke announced on January 18 that Longreach had formed a
company named Austex Oil Ltd, to be used for the acquisition of various
oil properties in the USA, initially in Oklahoma and Texas.

It is proposed that Austex Oil will be owned jointly by the
interests of the US group and Longreach Oil.

An invitation to sophisticated investors to participate by way
of seed capital in Austex Oil will be made in the near future.

There are several oil properties in Oklahoma which are ready to
be re-worked and the proposed program will be implemented as soon as the
acquisition and funding are completed.

It is proposed that Austex Oil will proceed with an IPO when
some petroleum production commences.

Shareholders in Longreach Oil will be entitled to priority
application.

"The exact date will be announced when the prospectus for Austex
Oil Ltd will become available," Mr Ganke said.

BACKGROUND
**********

Longreach Oil Ltd was incorporated in New South Wales in 1954 as
an oil exploration company.

It is a public company and listed on the Australian Stock
Exchange in 1981.

The company became also involved in gold exploration and changed
its name to Longreach Gold Oil Ltd

In the 1990s the company's subsidiary, South Pacific Pty Ltd,
acquired an interest in an oil exploration area in Myanmar.

1994 saw Longreach acquire an interest in an exploration licence
in Victoria, prospective for gold and also entered into a joint venture
in Russia, involving a diamond exploration project.

1995 The Overseas Petroleum Investment Corporation (OPIC) farmed
into the oil project in Myanmar, with a program of spending up to $US5
million to earn a 50 per cent interest. OPIC has since withdrawn from
this project.

1996 Longreach entered into agreements in respect of three
alluvial diamond concessions in northeast Angola.

1999 Force majeure was invoked by Longreach in respect of the
Angolan joint ventures, in view of renewed hostilities in that country.

2000 Various exploration prospects prospects in Australia and
overseas were examined.

2001 June - directors resolved to revert to the original
objectives of the company and to re-focus principally on oil and gas
exploration.

In November 2001 the company name reverted to Longreach Oil Ltd
to reflect the re-focus on oil and gas exploration.

A month later Longreach acquired an interest in Brisbane
Petroleum NL, which holds producing petroleum leases 18 & 40 in the
Surat Basin, Queensland.

2002 Longreach was involved with a joint venture drilling of an
onshore well in the Carnarvon Basin, Western Australia - Carlston No 1 -
and Longreach became entitled to 100 per cent of three onshore
exploration licences in the Carnarvon Basin.

2003 Longreach applied for an onshore area in the Surat Basin,
jointly with Brisbane Petroleum NL. Also applied for an exploration
licence in Sydney for group eight minerals.

In March of 2004 applications for renewal of 50 per cent of
those three permits were approved and the permits were renewed for a
further five years.

October 2004 drilling by Enterprise Energy NL commenced under a
farm-out agreement on a development well, Yellowbank Creek #4, on
petroleum lease 18 in the Surat Basin.

November 2004 Longreach increased its equity interest in the
share capital of Brisbane Petroleum NL to 22 per cent.

December 2004 application made for a further oil exploration
area in the Surat Basin was granted - EPP-755.

Application 16/00-1 for an exploration permit in the onshore
Carnarvon Basin in Western Australia - EP 439 was granted in February
2005.

In May of 2005 a new subsidiary - Offshore Oil Pty Ltd - was
incorporated.

ENDS