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AUSTRALIAN GAS EXPLORER FOCUSES ALL ITS ATTENTION ON ITALY

Sydney - Thursday - August 2: (RWE Aust Business News)
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OVERVIEW
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It's certainly unusual for a WA-based gas explorer not to put down a drill in its home country, preferring to use all its expertise and funds on a gas province in Italy.

Po Valley Energy Ltd (ASX:PVE) is preparing its three lead gas fields in northern Italy for maiden production in 2008, expand its Italian exploration in known gas provinces and move into gas storage opportunities in Europe in partnership with experienced gas storage
operator, Star Energy Group plc.

Chief executive officer, Michael Masterman, told RWE yesterday that the company should be producing gas by April/May/June of 2008.

Po Valley grabbed its opportunity through another Australian, David McDonald, the CEO of Lazmo, who saw the de-regulation of the Italian gas industry coming and and was instrumental in the emergence of
Po Valley - which takes its name from a region located about 20 minutes from Milan - as a prospective gas producer with a product that will be cheaper than that offered by the Russians.

"It comes at a time when Po Valley is gearing up for development investment in its maiden production fields and pursuing growth initiatives which have resulted in eight new northern Italy prospects - containing 10-80 billion cubic feet of gas each - for drilling from late 2007 and into next year," Mr Masterman said.

He disclosed that the company has gas reserves that stretch over 20 years.

Po Valley has done well with capital raising, reflected by an announcement to the ASX on Tuesday that international private equity investor, Harbinger Capital Partners, has further increased its investment in Po Valley Energy, providing it with additional funds as it
moves towards first gas production in Italy.

Po Valley has placed a further 450,000 ordinary shares with Harbinger at $1.65 per share to raise $742,500.
Harbinger will now hold 16.2 million shares - or a 17.9 per cent stake - in Po Valley.

"The placement to Harbinger will maintain its position as our largest institutional shareholder and bring our recent capital raising to a total of around $8 million," said Mr Masterman.

Po Valley last month completed a placement of 4.33 million shares at $1.65 per share to raise $7.136 million dollars.

That placement was assigned primarily to a United States pension and insurance company, Boston-based John Hancack Mutual Funds, as well as two Australian funds, hedge group Cranport Pty Ltd and current Po Valley major shareholder, Hunter Hall Investment Management.

SHARE PRICE MOVEMENTS
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Shares of Po Valley yesterday were unchanged at $1.60. Rolling high for the year is a record $1.95 and low $1.40. The company has 90.3 million shares on issue with a market cap of $144 million.

The Po region in northern Italy has historically been a prolific hydrocarbon province. Over 23tcf of gas has been produced from the province since it was brought into production in the early 1950s. It is three times the production of Australia's Northwest Shelf. Current output levels in the province are some 450bcf per annum which is similar to the levels of the Northwest Shelf. Total gas consumption in Italy during 2005 was four times the size of Australia's and has been growing at a rapid rate of 5 per cent per annum. Imports account for over 80 per cent of supply and Italy has
recently been severely affected by disruptions to the supply of natural gas from Russia following the Ukraine dispute in late 2005. Gas prices have risen over 54 per cent since the IPO of the company in December 2004.
Continued rapid gas consumption demand combined with import capacity constraints and Russian gas supply disruptions have significantly tightened market conditions.

BACKGROUND
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Po Valley Energy listed on the Australian Stock Exchange on December 2004. The company is a leading independent oil and gas company. It holds three exploration permits with discovery wells and in
progress to become production concessions and 130.4bcf of 3P gas reserves. In addition, the company had been awarded the rights to proceed forward, on an exclusive basis, with six gas and oil exploration licence
applications in north Italy.

The Po Valley, between the Alps and the Apennines, is the main gas production zone in Italy. All the Po Valley Energy fields are onshore and in a very close proximity to the pipeline and grid and major consumers in the north of Italy. Italian gas prices are high by world standards, transportation costs are negligible and capital costs are very low, resulting in highly
attractive development economics.

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