Ferrets Stock to Watch: SUNSHINE GAS LIMITED08:50, Thursday, 27...

Ferrets Stock to Watch: SUNSHINE GAS LIMITED
08:50, Thursday, 27 July 2006

A COMPANY STEPPING UP DRILLING ACTIVITY WITH 14 WELLS

Sydney - Thursday - July 27: (RWE Aust Business News)
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OVERVIEW
********

There has been a lot of movement in this camp recently and the
company appropriately named Sunshine Gas Ltd (ASX:SHG) looks to be
getting its act together without a cloud in the sky.

Yesterday Sunshine reported to the Australian Stock Exchange
that it will step up activity throughout the company's portfolio of
prospective tenements in Queensland and abroad over the coming six
months.

Sunshine Gas managing director Tony Gilby says up to 14 wells
are planned over the next two quarters, including the drilling of the
company's UK North Sea Wellington oil prospect now due to spud in
mid-August.

Mr Gilby said Sunshine Gas had entered a "particularly active"
exploration phase as part of its strategy to add value and build
shareholder wealth after bringing in new partners through farm-outs
and raising $23 million to fund the current program.

"Sunshine Gas is very well placed to capitalise on the active
forward work program planned for the remainder of 2006 and into 2007,"
he said.

"This diverse program addresses both a consolidation in base
business activities in Queensland as well as the high growth potential
offered by our international acreage," he pointed out.

Sunshine Gas has extensive exploration activities underway and
planned across an area of greater than 35,000 sqkm in central Queensland
as well as the United Kingdom.

Other key projects in the exploration program include drilling
the Champagne Creek deep prospect funded by Beach Petroleum, the Red
Rock 2 gas exploration well (100 per cent SHG), a Coal Seam Gas pilot
at Lacerta (100 per cent SHG), CSG pilots at Paranui and Tilbrook
(Westside Farm-out), and deepening of Overston 1.

Stanwell Corporation and its wholly owned subsidiary ZeroGen Pty
Ltd also expects to complete a three-well program on Sunshine Gas
tenement ATP 722P during the current quarter as part of a
geosequestration trial to evaluate the suitability of the deep
geological section for long-term CO2 storage.

Sunshine Gas sold its Roma Shelf assets to Santos during the June
quarter as part of its funding and capital management strategy.

Under the sale agreement, Sunshine retained the prospective oil
interests in the Alton area in the southern Surat Basin.

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

Shares of Sunshine yesterday slipped 2c to 44c. Rolling high for
the year has been 57c and low 29c. The company has 193.5 million shares
on issue with a market cap of $81 million.

Sunshine Gas's sale of its Roma Shelf assets to Santos, for a
consideration of $10 million cash plus additional benefits to Sunshine,
was effective from May 1.

The sale marks a significant increase in the value of the asset
over acquisition price paid by Sunshine of $4 million in 2003.

The sale has allowed Sunshine to focus on establishing the
Walloon Coal Seam Gas play within its adjacent 100 per cent-owned ATP
795P and ATP 767P acreage, which began in the current quarter.

The Lacerta Coal Seam Gas core hole program targeting Jurassic
Taroom and Juandah Coal Measures within ATP 795P has now been completed.

Follow-up permeability testing will be conducted early next
quarter that will allow the company to determine the most prospective
seams and areas to implement a CSG pilot well program.

Preliminary stratigraphic data from core and wireline log data
is consistent with pre-drill expectations while the ongoing acquisition
of gas content data from the cored coal intervals is continuing.

ATP 795P is considered to be highly prospective for coal seam
gas and is located immediately north of the gas-producing Roma Shelf.

This permit contains an extension of the Walloon Coal Seam Gas
play which is currently undergoing pilot well drilling in the adjacent
ATP 336P as part of Sunshine's recently sold Roma Joint Venture asset.

The Lacerta project allows Sunshine to leverage off encouraging
results from the Roma Shelf while maintaining a 100 per cent interest and
operatorship in ATP 795P.

The Pegasus prospect within ATP 767P will assess the potential
of deeper Permian coals situated in the north of the permit with close
proximity to existing infrastructure.

In May Sunshine announced that James McKay had replaced James
Hudleston as chairman.

Mr Hudleston will continue as a director of the company.

Mr McKay has a strong commercial background in finance, business
management and legal expertise.

He has degrees in commerce and law, and been involved in the
establishment and development of a number of other businesses.

BACKGROUND
**********

Sunshine Gas was listed on the Australian Stock Exchange on
July 3, 2002, as an oil and gas explorer operating in Australia and the
United Kingdom.

The company employs a small and highly skilled team of
experienced professionals along with consultants providing maximum
workforce flexibility.

Sunshine has has interests in 13 Authorities to Prospect (ATPs)
for petroleum - both awarded and under application - covering an area in
excess of 35,000 sqkm.

The company is exploring for coal seam gas in the Bowen and Surat
Basins in Queensland.

Several other projects are in various stages of development,
including the Overston project in ATP 645P.

These are expected to lead to strong earnings growth over the
coming years.

The company's strategy is to:

* acquire prospective exploration properties at attractive
prices;

* harness the exceptional skills and experience of its
management and staff to add value to this acreage, and

* at the appropriate time in each project's life cycle,
introduce partners with the capacity to bring it into production.

ENDS