News & ASX Releases

Initial Sillaro Test Results

July 12, 2005

Po Valley Energy (ASX: PVE) will re-assess exploration options for the Sillaro gas field in northern Italy following initial results from production tests conducted over the past five days in its 100%-owned appraisal well.

The Company’s Chief Executive, Mr Michael Masterman, said that while the initial results were disappointing for Sillaro 1’s primary target, the Pliocene formation, Po Valley would now revisit its geological model and examine how - with the substantial new information from the Sillaro 1 well - to approach exploration and appraisal of the Sillaro field.

“We were expecting to replicate the results of the nearby ENI drilled Budrio 2 well which tested commercial flows in the Pliocene. Our initial Sillaro 1 test has not replicated this result.” Mr Masterman said.

“However, Sillaro remains a prospective gas development prospect for Po Valley and we will suspend current drilling operations to take the time to more clearly understand how the Sillaro 1 results fit with the more promising results of ENI’s earlier discovery.”

“Deviations of our Sillaro 1 well towards the previously successful Budrio 2 and Budrio 3 wells will be carefully evaluated over the coming weeks.”

Po Valley said the Sillaro 1 well perforated the target Pliocene zone (PL 2B) on two levels from 2191.5 metres to 2202 metres and 2212 metres to 2224 metres. The well pressure was significantly higher than in Budrio 2.

While the production test showed initial gas production at a rate too small to measure and subsequently sand and water production, the Company said it appeared that there was water in level(s) of the thin beds and this water incursion had cut off gas production.

A separate test is being considered to assess if it is possible to isolate the water and produce dry gas.

The lower Miocene zone which logs had indicated was possibly gas bearing was perforated on one level from 2490metres to 2520 metres and also tested negative due to tight sands. The Sillaro 1 “Pliocene target” well was not an optimal location for drilling the Miocene and potential for productive Miocene gas producing levels remains towards the location of the Budrio 6 well drilled by ENI in 1982.

Michael Masterman Po Valley Energy 0417 851 303
John Field Field Public Relations (08) 8234 9555 / 0418 819 527

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