UPDATED GAS RECOVERY ESTIMATE IN LIU LIN, CHINA PROJECT
Further to Fortune Oil PLC’s previously announced volumetric update (29th January 2007), Molopo has
completed its internal review of the recent Shanxi Coal Bureau study of the Liulin CBM Block and recent
exploration well results. As a consequence, Molopo has increased its most likely Gas in Place (GIP)
estimate to 1.2 trillion standard cubic feet (Tscf) from its previous estimate of 0.7-0.8Tscf.
Recovery expectations for the block have now trebled. Vertical fracced well development methods would
have been expected to only recover some 30% to 40% of the previous GIP or approximately 0.2-0.3Tscf.
Horizontal well-based development methods already employed by Molopo and other operators in Australia
and now being introduced to China, can be expected to recover some 50% to 70% of the GIP or
approximately 0.6-0.9Tscf, which is triple previous Molopo expectations.
China represents a significant development opportunity for Molopo given the higher gas prices obtained
for onshore production and the significantly increasing demand for gas and other energy sources. Gas
prices in China are currently 50% to 75% higher than Australia, and are expected to continue to increase in
coming years.
Fortune Oil and Molopo recently finalised the transaction for the Liu Lin Project. Molopo’s share of the
area after the CUCBM back-in rights will be 20%, equating to a most likely resource potential of
approximately 150 billion standard cubic feet.
Current activities are focused on further delineation of the block and securing reserves certification from
the PRC authorities before March 2008 and subsequent development commitment. Currently two vertical
wells are on test in their dewatering stage, and a further three exploration core holes are being planned
along with consideration of a horizontal pilot programme.
Issued by: Molopo Australia Ltd
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