stokes update

UPDATE ON THE TESTING PROGRAMME FOR THE STOKES BAY-1 WELL IN EP
104/R1, CANNING BASIN, WESTERN AUSTRALIA
Empire Oil & Gas NL is pleased to announce that it has been advised by the Operator, ARC Energy
Limited that equipment and crew are currently being mobilised to the Stokes Bay-1 well location to
complete road works that will enable testing of the cavernous reef system intersected in the well in
November 2007.
Final technical work on the testing programme concluded that Nitrogen is the best fluid for circulation of
the heavy muds above the reservoir section in the well. Nitrogen will be used to reduce the pressure on
the formation in an effort to induce a flow and replaces the surfactant previously proposed to be
circulated in the well with fresh water.
This testing programme is to test the lost circulation zones (where drilling fluid was lost to the
formation) intersected while drilling the Nullara Formation. While trying to control the lost circulation,
the well had intermittently flowed into the wellbore during flow checks. Flows into the Stokes Bay-1
wellbore have been recorded at rates of up to 4 barrels of fluid per minute of 5,760 barrels of fluid per
day, demonstrating very good reservoir parameters. There have been some hydrocarbon indications
interpreted to be from the Nullara Formation. While controlling the well and circulating the wellbore, a
gas peak of 3816 units was recorded (mud gas peaks of up to 10%). This gas was interpreted to be
very dry, being 97% methane and coming from the Nullara Limestone. Tubing and a wellhead were
installed.
The Test Programme is designed to lift the heavy drilling fluids and lost circulation drilling material from
the wellbore to evaluate the Nullara Formation for hydrocarbons. If Stokes Bay-1 successfully tests
hydrocarbons, then Empire interprets this Nullara Trend of hydrocarbons could extend 4.5 kms to the
south east to Point Torment (where Nullara Formation limestones flowed 134,000 cubic feet of gas per
day with a trace of oil) and up to 7 kms to the north west.
Empire, contributing with its 14.8% in the Stokes Bay-1 Test Programme, is looking forward to the
commencement of this Test Programme of Stokes Bay-1 where it is 80 metres high to the Nullara gas
test at Point Torment. There is drilled to date a 40 to 45 metre intersection of the Nullara limestones in
Stokes Bay-1. The areal closure could be up to 17 km2.
The Stokes Bay-1 testing to date has not provided any formation fluids from the Nullara and this Test
Programme is designed to determine the presence of hydrocarbons and the extent of the reservoir
parameters.
Based on the completion of the road works and the availability of the Nitrogen equipment, testing on
the well is now expected to occur in October 2008. Once the results of this operation have been
obtained and reviewed, the next steps in the programme will be considered by the Parties to the Joint
Venture.