On the sanford site. Been very patient with this LT holdAN OIL...

On the sanford site. Been very patient with this LT hold

AN OIL AND GAS EXPLORER LOOKING PROSPECTIVE IN COOPER BASIN

Sydney - Monday - December 10: (RWE Aust Business News)
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OVERVIEW
********

The Bell Potter report on Great Artesian Oil and Gas Ltd
(ASX:GOG) suggests the company is very likely to become the next Cooper
Basin oil and gas producer, putting a valuation of 36c on the stock.
The broking firm noted that GOG received a conditional $20
million Federal grant to assist with the development of a new efficient
gas plant, which will economically remove CO2 prior to geo-sequestration.
This makes cash flow from gas and gas liquids highly likely while
the company has 'promising upside for oil', the report states.
Great Artesian is expected to start drilling at the end of this
week on its high-prospectivity oil permit, PEL 92, in South Australia's
Cooper Basin.
The first of two wells is just to the north of Cooper
Energy/Beach Petroleum's recent Callawonga oil discovery which flowed
over 5,000 barrels per day.
Bell Potter's confidence in the stock led to it underwriting a
one-for-five rights issue.
The report contains a 'what if' model of the likely value of an
oil strike in PEL 92 and a further analysis of a strike in GOG's offshore
EPP 27 in the Otway Basin, SA, expected to be drilled next year.
Some background information is needed to show the company's
progress in recent times.
A string of successful gas discoveries was made in PEL 106 during
2004-2006 and the company's focus has been on commercialising them. These
include Smegsy, Middleton, Udacha, Paprika, Rossco and Cadenza.
Middleton tested at 11.8 million cubic feet per day (mmcfd) and
Smegsy flowed at 5mmcfd, two of the better tests from the program. The
gas was liquids rich, with about 30 barrels/mmcf of condensate and a
similar amount of LPG. On the negative side, the CO2 content of the gas
is up to 35 per cent, which needs to be managed.
Aggregate 2P reserves from these discoveries amount to 17PJ of
gas and about 1mb of liquids.
GOG's equity interests vary from 37.5 to 75 per cent but the bulk
of the reserves are held 50 per cent.
GOG is pursuing two different options to commercialise these
reserves.
The first option is to sell the gas through Santos's Moomba plant
facilities for a tolling fee, which is estimated to be in the $2/GJ
region. This would be the simplest and least demanding capital cost
alternative but the tolling fee represents a high operating cost.
The second option would require the joint venture to build its
own gas plant with 20mmcfd capacity and a feasibility study with Cool
Energy has been undertaken.
A capital cost of $100 million has been estimated, incorporating
new technology that captures the CO2 in a cost-efficient manner.

SHARE PRICE MOVEMENTS
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Shares of Great Artesian Oil and Gas sold steady at 25c on
Friday. Rolling high for the year is 34.2c and low 19c. The company has
153.2 million shares on issue with a market cap of $38.3 million.
Commercialisation of existing gas discoveries is progressing.
Six existing gas discoveries in PEL106 add up to 17PJ Proven &
Probable (2P) reserves, and possible (3P) reserves of 50PJ.
Individually, the gas discoveries are relatively small, but have
good liquids content, as well as high CO2.
The company is progressing commercialisation by either building a
new efficient gas plant with partners Beach Petroleum (ASX:BPT) and Cool
Energy or by selling the gas to major Cooper basin operator Santos
(ASX:STO).
The Bell Potter analysis suggests the condensate and LPG content
is the most valuable part of these discoveries.
Further drilling is planned in 2008, following the recent
completion of an extensive $8 million 3D seismic program.

BACKGROUND
**********

Great Artesian has a strategic spread of petroleum exploration
acreage in Australia's most prolific onshore oil and gas province, the
Cooper-Eromanga Basin (Cooper Basin), as well as prime offshore areas in
the Otway Basin and Gippsland Basin.
The company joined the Australian Stock Exchange list on August
5, 2003.
Great Artesian is an upstream petroleum company formed to explore
and develop the conventional petroleum potential of a number of highly
prospective areas specifically selected because of their potential to
either yield significant discoveries and early cash flow or provide
potential for high impact, "company maker" discoveries.
This mix is designed to enable Great Artesian to become, in the
short term, a significant and sustainable, medium-size player in
Australia's oil and gas industry.
Great Artesian currently holds working interests in its own right
in the following areas:
* PELs 91, 106 and 107 - Cooper Basin, SA;
* ATPs 539 and 549 (West and Cypress Blocks) - Cooper Basin, Qld;
* ATP 552 - Bowen-Surat Basin, Qld;
* EPP 27 - Offshore Otway Basin, SA; and
* VIC/P63, VIC/P64 and T/46 - Gippsland Basin, Bass Strait.
Growth Strategy is based on organic growth by acquiring
additional acreage.
The company develops cash flow from production.
To achieve its goal of becoming a medium-size player in the
Australian oil and gas industry, the company's management will complement
its high equity in low-risk interests with low-exposure participation in
potentially high-impact areas with large up-side potential, such as its
interests in EPP 27 offshore Otway Basin and the Gippsland Basin.
Great Artesian's well-positioned Cooper Basin permits, coupled
with company-maker offshore oil areas, are its key strength.
Early entry enabled farmouts to fund drilling, while maintaining
high equity in the areas.
Great Artesian's growth strategy includes acquisition of
'brownfields' areas and use of modern technology to provide an
exploration edge.
The exploration focus on 'brownfields' areas reduces geological
risk and provides access to reduce exploration costs and production can
be fast-tracked.
Oil production from the Kiana-1 well in PEL 107 provides modest
production but important cashflow.
The company is now examining production options for several gas
discoveries in PEL 106 (Middleton-1, Udacha-1, Rossco-1, Paranta-1 and
Cadenza-1).
Great Artesian Oil and Gas is busy with exploration activities in
its onshore areas.
Offshore, a farmin by Oilex, Videocom and Gujarat State Petroleum
Corporation has carried out a seismic survey and is preparing to drill
one well in the Otway Basin in 2008.
ENDS