quarterly cashflow and activities reports

Cashflow quarterly, 31 March:
http://sa.iguana2.com/cache/a0155f5b7a4adbe94a5427b2b1cad93c/ASX-PVE-321013.pdf

Outflow: 5.135 mill of which 4.98 mill was exploration
Cash holding: 5.380 mill


Activities Report:
http://sa.iguana2.com/cache/775a48cd210cb04f86b71d2966ae0042/ASX-PVE-321011.pdf

KEY DEVELOPMENTS – GAS PROJECTS – NORTHERN ITALY
Sillaro
· 26% increase in Total reserves
· Good conversion of Probable reserves to Proven - 10.4bcf
· High quality dry gas quality confirmed
· Geological review complete
· Discussions on Pipeline Grid connection underway
· Preparation of Production Concession well advanced Vitalba
· 28% increase in Proven reserves
· Positive flow test on levels San 1 and San 2 of 2.8m cubic feet per day
· High quality dry gas quality confirmed Santa Maddalena
· Production concession application complete and ready for submission
Market Conditions
· Italian market gas prices continue to remain strong
· Cash at Bank 31 March 2006 – AUD5.38m

March Quarter 2006 Activities Report
Po Valley Energy (“PVE”) consolidated its position during the March Quarter,completing key geological work on the successful development fields, Sillaro and Vitalba, confirming upgrades in reserves and moving key projects forward towards first gas production in 2007.
Sillaro - east of Bologna

The major priority for Po Valley is to progress Sillaro to commercial gas sales.
Following successful tests late in December, 2005, the Sillaro geological model has been updated and reserves upgraded. As part of this work, well location for a second Pliocene well and a possible third Miocene well have been identified and well design has been progressed.
Tests of gas samples confirm that the Sillaro gas is of very high quality.

Work has begun on the production concession application to convert the licence from an exploration licence to a production licence. The final stage of this work including surface plant engineering and pipeline grid connection is underway, as is the environmental approval application.

Vitalba – east of Milan
Vitalba tested positive for gas flows in the San A1 and San A2 levels in January 2006.
Well test reports have been conducted on the results. Tests of the gas samples also confirmed dry high quality gas.
Work has commenced on the production concession application.

Santa Maddalena – north of Bologna
Joint Venture partner and operator, Edison Gas has completed the production concession application and the environmental approval documentation. The company expects Edison Gas to lodge this approval documentation shortly.

New Development Projects — Bezzecca 1 (aka Pandino) – southeast of Milan.
Design of the drilling program for Bezzecca 1 is underway, with the well location identified and orders placed for long lead equipment including casing and tubing.

Italian Gas Market
Prices in the Italian gas market have continued to remain strong in the March Quarter, accelerated by the tightening market conditions and rising oil prices.

Corporate
Cash at bank at the end of the December quarter was AUD5.38m

MICHAEL MASTERMAN
Chief Executive Officer

Website: http://www.povalley.com/Index.html