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Italy Gas Success Drives Po Valley To Expand Drill Targets To New Fields

May 21, 2007

Emerging Italian gas producer, Australia’s Po Valley Energy Limited, is targeting new onshore gas prospects in a significant expansion of its European business.

The Company announced today that it had identified eight new prospects for drilling from late next year. The prospects contain estimated resources ranging in size from 10 to 80 billion cubic feet of gas each.

All are contained within five new license areas around the northern cities of Milan and Bologna where the Australian gas developer has already established a nearterm production footprint in three gas fields.

“All of these prospects are in northern Italy and like our imminent production fields, are expected to benefit from high quality gas, close proximity to pipeline grids and high Italian gas prices,” Po Valley’s Chief Executive Officer, Mr Michael Masterman, said today.

“Detailed geological and geophysical studies are now underway over all eight prospects and are expected to be completed this year,” Mr Masterman said. “Target well locations will be identified as a result of these studies with a view to drilling the first of these new field projects towards the end of 2008.” Mr Masterman said the expansion of the Company’s northern Italian target and drilling schedule was designed to underpin with a longer-term growth platform, Po Valley’s existing reserve base in the province of Proven and Probable (2P) reserves of 105 billion cubic feet of gas.

More than half of this figure is in the Proven reserve category.

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 for which it has secured preliminary award ahead of final environmental clearances.

Three field production schedule
Mr Masterman also said today that while the Italian approval processes had proved longer than anticipated compared to other European jurisdictions, Po Valley expected formal grant of the Production Concession for its largest natural gas field discovered to date — Sillaro — to be approved in the second half of 2007. “We have decided to drill a second Sillaro well once the production concession is granted, to increase overall production rates, optimize total well reservoir field recovery and increase reserves at Sillaro,” Mr Masterman said.

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

The deeper Sillaro Miocene structure in the field, near Bologna, will be targeted in 2008 with the first half drilling of the 2600 metres deep Fantuzza-1 well, located two kilometres from the existing first wellhead site.

Mr Masterman said full grant of the production concession for the Castello (previously Vitalba) field near Milan is also now expected in the forthcoming second half of the year.

“We expect Castello to be our first field in commercial production with tenders already called for surface plant, and pipeline construction processes underway.” Po Valley successfully achieved flows on test of 2.8 million cubic feet a day on a quarter inch choke from the gas bearing San A1 and SanA2 levels within the field.

The company is shortly to lodge its production concession application to the Italian Hyrdocarbon Commission for a 2008 start to its third planned commercial field, Sant’ Alberto, north of Bologna.

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

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