Rift Helium Regulatory News (RIFT)

23 May 2008 07:00



Rift Oil plc

Rift Assumes 100% Ownership of Papua New Guinea Assets

Rift Oil Plc ("Rift"), the oil and gas exploration company with assets in Papua New Guinea ("PNG"), has reached an out of court settlement with its partner, Austral Pacific Energy Limited ("Austral"). This results in Rift assuming 100% ownership of Licences PPL 261 and PPL 235 which include the Douglas and Langia gas discoveries as well as the Coral Sea Drilling Rig for a total payment of US$5m.  The assets being acquired are 35% of PPL 235 and the rig plus 50% of PPL 261. 

The US$5m will be settled as follows;

The settlement is dependent on ministerial consent

All debts to Rift which currently exceed US$5m and future drilling and seismic cost obligations between Austral and Rift have will be cancelled on successful completion of the transaction. 

On 6 May, Rift disclosed that it was pursuing Austral for its share of exploration costs and that it was seeking to obtain compensation through the New Zealand High Court. The Board of Rift is pleased to have achieved a rapid conclusion to the dispute, enabling the Company to concentrate on drilling and assessing the size of its gas field at Puk Puk-1 part of the Douglas gas discovery area in PNG

Ian Gowrie-Smith, Chairman of Rift, commented:

"I am delighted that this dispute is behind us and that we now have total control of our gas fields and so can move forward as rapidly as possible. The recent dramatic oil and LNG price hikes has led to unprecedented interest in Rift's deposits in PNG, which together with the Company's existing MOU with Rio Tinto Alcan, give us the potential for a very exciting future." 

Drilling Update

Puk Puk-1, a separate structure from Langia and Douglas, is currently being drilled by the Coral Sea Rig and is on plan at 560m. The target depth is 2,100m.

Background

Drilling of Puk Puk-1 commenced earlier this month. This was a major milestone in the development and exploitation of PPL 235 in PNG, following on from the Douglas-1 gas discovery in 2006". Flow testing of Douglas-1 will follow the drilling and testing Puk Puk-1 leading to an assessment of the size of the fields. Depending on drilling and testing progress, the results of Puk Puk are expected to be known in June and of the Douglas-1 flow test in July.

Puk Puk-1 is Rift's second well in this drilling phase. The Company's independent expert has advised that this exploration target has a mean recoverable resource of 226 BCF gas in the event of success, and that the Douglas discovery, Langia and the un-risked prospects in PPL 235 including Puk-Puk are estimated to have a mean recoverable resource in the order of 800 BCF with gross high best estimates of up to 1.3 trillion cubic feet recoverable..

The Douglas discovery was made in May 2006. In March 2007, Rift and its then joint venture partner, Austral Pacific Energy Limited ("Austral"), signed a non-binding memorandum of understanding ("MOU") with Alcan to further investigate the supply of approximately 40 BCF per annum of gas to the Gove Alumina plant in Northern Territory, Australia for a period of 20 years following initial production. Supply is proposed to be via a direct pipeline from the Douglas discovery to Gove, subject to the joint venture establishing sufficient reserves. Under the terms of the tri-partite MOU, the joint venture stated its intention to carry out an active drilling programme during the first six months of 2008. As a result of the dissolution of the joint venture with Austral, Rift is now the sole MOU partner with Alcan.

Further enquiries:

Rift

David Lees, Ian Gowrie-Smith 020 7340 9970

Buchanan Communications

Tim Anderson, Isabel Podda 020 7466 5000

RBC Capital Markets

Andrew Smith, Sarah Wharry 020 7653 4000

The information presented in this announcement has been reviewed and verified by Peter Mikkelsen FGS, AAPG, non-executive Director. Mr Mikkelsen is the Qualified Person for the purposes of the AIM Guidance Note on Mining, Oil and Gas Companies dated March 2006. Mr Mikkelsen is a geologist with 30 years of upstream oil industry experience, including 15 years at exploration manager level or equivalent. He received a Bsc (Hons) degree in Geology from Oxford University in 1976.