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Australia's Po Valley Lets A$10M Surface Plant Contract For Italian Gas Fields

October 29, 2007

A A$9.6 million contract to install surface production plant has been awarded by Australia’s Po Valley Energy to bring its first Italian gas outputs onstream early in the third quarter of next year.

Po Valley announced today the contract had been awarded to SEMAT Spa for surface production plant for the Company’s Castello and Sillaro gas wells in northern Italy. The wells will be the first to come into production for Po Valley which is increasingly expanding its footprint of gas exploration and development projects amid the widespread gas production and distribution networks of northern Italy.

Po Valley announced today that SEMAT Spa - a Brescia-based constructor of equipment for the petrochemical and hydropower industries - had won the contract after a heavily contested tender process. Major items of equipment supply under the contract will include the manufacture and installation of well head separation units, dehydration and Glycol regeneration units, heat exchangers and associated civil works.

SEMAT Spa is a subsidiary of the prominent Italian industrial and civil construction group, Trombini.

“The contract is on an engineering, procurement, construction and installation basis and we expect to have skid-mounted equipment ready for delivery to both well sites during May next year, with installation and testing over the following three months,” Po Valley’s Chief Executive Officer, Mr Michael Masterman, said today.

“Castello, east of Milan, is expected to be the first plant on stream next year followed by Sillaro facility which will be installed after the drilling of the Sillaro 2 production well. The capital costs of EUR2.7 million for Castello and EUR3.3 million for Sillaro are exceptionally low for gas field surface development and reflect the very high quality of the gas and the good reservoir pressures in the field.” Mr Masterman said.

The Company announced last week that it had also signed a contract with HydroDrilling International Spa to employ it’s Ideco M1200 rig to drill up to three wells in northern Italy over a three month period from April next year.

Hydrodrilling has previously undertaken the successful drilling of the initial Sillaro and Castello wells.

Po Valley has identified eight new prospects in its fields, containing estimated resources ranging in size from 10 to 80 billion cubic feet of gas.

All are contained within five new licence areas around the northern cities of Milan and Bologna where the Australian gas developer has established its near-term production footprint in three gas fields.

Po Valley has an existing reserve base in the province of Proven and Probable (2P) reserves of 105 billion cubic feet of gas. The Company has entitlements to 3P reserves from its three fields of 130 bcf.

It currently has a 100% interest in the five new licence areas.

Sillaro is the Company’s largest natural gas field discovered to date and the 2008 drilling program will include a second Sillaro well to increase overall production rates, optimize total well reservoir field recovery and increase reserves.

Sillaro-2 will be drilled from the existing Sillaro-1D drill site and prior to maiden field production commencing.

The deeper Miocene structure in the field, near Bologna, will be targeted in 2008 with second quarter drilling also of the 2.6 kilometers deep Fantuzza-1 well, located two kilometers from the existing first wellhead site.

Michael Masterman Po Valley Energy 0417 851 303
Kevin Skinner Field Public Relations (08) 8234 9555 / 0414 822 631

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