tui increased to 41.7 million barrels

MINE: NZO: INCREASE IN RESERVES FOR TUI

Oil Reserves for the Tui Area Oil Project have been increased to 41.7 million
barrels, 30% above the previous estimate and nearly 50% above pre-development
predictions.

The new figure for proved and probable (2P) reserves compares with estimated
reserves of 27.9 million barrels on which the Tui Area Oil Project in
off-shore Taranaki was first sanctioned, and an interim re-estimate of 32
million barrels following completion of the development drilling campaign.

New Zealand Oil and Gas Ltd (NZOG) has a 12.5% share of the Tui Area Oil
Project. NZOG's share of the reserves has increased from 3.5 million barrels
(pre-development) to 5.2 million barrels.

Tui oil is a light sweet crude that is generally sold, with freight and
quality differentials, against the Tapis benchmark crude, which has recently
surpassed US$100 a barrel. The reserves upgrade for NZOG of 1.7 million
barrels, at current oil prices and exchange rates, has a gross value of more
than NZ$200 million.

The increase in reserves follows a reassessment of the field by the operator
(AWE) based on interpretation of re-processed 3D seismic, a more detailed
assessment of the Kapuni reservoir and the integration of the production data
from the fields since production began on 30 July 2007. The increased
reserves assume production from the existing four wells, plus the completion
of an additional development well in the Tui oil field, Tui-4H. Preliminary
planning for drilling of this well has begun, with drilling targeted for
2009.

Since the start of production on 30 July 2007, the Tui Area Oil Project has
produced approximately 4.4 million barrels of oil. Recent production rates of
up to 50,000 barrels of oil per day have been achieved, with the current well
capacity still substantially higher than the processing capacity of the FPSO
Umuroa. Water is being produced from the field, but at substantially lower
rates than expected. Based on the current reservoir and facility performance
and the upgrade in reserves, AWE has revised the Tui gross oil production for
the year to 30 June 2008 up from 10 million barrels to approximately 11
million barrels (approximately 1.4 million barrels net to NZOG).