AZA - BMG 2P Reserves Increased to 74.2 MMboe

    RNS Number : 6270B
  Anzon Energy Limited
  19 August 2008
   

    ANZON ENERGY LIMITED (CODE: AEL)

    19 August 2008

    ANZON ENERGY LIMITED ANNOUNCES THAT ITS SUBSIDIARY
    ANZON AUSTRALIA LIMITED (ASX CODE: AZA) HAS TODAY MADE
    THE FOLLOWING ASX ANNOUNCEMENT

    BMG 2P RESERVES INCREASED TO 74.2 MMBOE 

    The Basker-Manta-Gummy (BMG) Joint Venture has completed a review of the hydrocarbon volumes in the Basker, Manta and Gummy fields
located in VIC/L26, VIC/L27 and VIC/L28 in the offshore Gippsland Basin, Victoria.  This review updates the certified reserves and resources
estimate released in August 2006 and follows a period of successful production (5 million barrels liquids), further appraisal including the
drilling of the Basker-6 and Basker-6ST1 wells, revised seismic interpretation and mapping using the results of recently reprocessed 3D
seismic data across the fields and entire license areas.

    The reserves methodology has been independently reviewed by Resource Investment Strategy Consultants (RISC) and the estimates for the
Proved plus Probable (2P) reserves have been audited and supported as being reasonable. 

    The BMG estimated ultimate recoverable volumes and reserves as at 30th June 2008 are summarized in the attached table at the Proved
(1P), Proved plus Probable (2P) and Proved plus Probable plus Possible (3P) levels of confidence.

    The 2P remaining reserves for the BMG fields are a total of 74.2 MMboe1, after allowing for cumulative production to 30th June 2008 of
7.7 MMboe (5 MMbbls liquids plus 2.7 MMboe gas flared or injected). The corresponding 1P and 3P remaining reserve numbers support a solid
minimum (42.9 MMboe), and substantial upside potential (167.1 MMboe) for the project. All of these numbers are substantial increases on
previously stated reserves2. The reclassification of the gas and associated liquids to reserves is the major reason for the increase. 

    Taking into consideration cumulative production, the original 2P reserves in the BMG fields are now estimated to be 81.9 MMboe compared
to the previously stated 104 MMboe (assuming gas best estimate contingent resources are aggregated as 2P reserves), an approximate 20%
reduction after the drilling of Basker 6 and Basker 6ST1 appraisal wells in the second quarter of this year.

    The results of the newly reprocessed 3D seismic have, in addition, upgraded the exploration prospectivity of the area, including the
particularly promising East Chimaera structure just north of Manta. This has potential to add new reserves when drilled as early as late
next year. 

    The existing development, comprising the use of the Crystal Ocean mini - Floating Production Storage and Offloading (FPSO) and Basker
Spirit shuttle tanker (see Figure 1), was originally based on 2P reserves of 25.4 MMstb with only minor volumes of gas and associated
liquids (total of 45.1 MMboe) in late 2004, when the project commenced. The higher than originally expected reserves (increase of 82% over
3.5 years) and the delineation of a significant gas resource have enabled the Joint Venture to justify a larger facility and more optimal
development including:

    *     a forecast doubling of current oil rate to around 20,000 bopd (commencing 2Q 2010)

    *     the offshore processing of gas (capacity 120 MMscfd) to sales quality for transport by high pressure pipeline 95 km to the onshore
Eastern Gas Pipeline (EGP) or reinjection into the reservoir for later production

    *     the offshore ship to ship transfer of liquids, eliminating logistical downtime

    *     an environmentally responsible development with zero flare discharge and zero onshore "footprint"

    *     improved reliability including redundant equipment

    As previously announced the Joint Venture is currently finalising contract negotiations with BW Offshore AS (BWO) for the design,
conversion, installation and operation of a purpose built FPSO vessel of Suezmax size (850,000 barrels), which will have the capability to
handle higher oil, water and gas rates than the present Crystal Ocean and Basker Spirit system.  The operating lease contract for the FPSO
is expected to be finalized before the end of September 2008, and commissioning in Bass Strait is expected 2nd quarter 2010.

    Planning continues for a major drilling campaign expected to commence end of this year. Using two rigs, it is planned to drill 4
development wells in the Basker and Manta fields targeting both Intra-Latrobe and Golden Beach sands, and possibly 1 or 2
appraisal/exploration wells plus some production well workovers. The development wells are planned to be connected by manifolds and risers
to the FPSO via a newly installed disconnectable Submerged Turret Production (STP) buoy and mooring.

    A schematic of the planned full field development is shown in Figure 2.

    The recent confirmation of reserves and the planned expanded development is a continuation of the success of this innovative oil and gas
development which has been the foundation for Anzon Australia's growth from IPO in December 2004 to one of Australia's most successful mid
tier production and exploration companies.

    The participants in the BMG Joint Venture are:

    Anzon Australia Limited                                 40%    (Operator)
    Beach Petroleum Limited                                 30%
    CIECO Exploration and Production (Australia) Pty Ltd    20%
    Sojitz Energy Australia Pty Ltd                         10%

    To view schematic Figures 1 and 2 of this announcement please visit the Anzon Australia Limited website www.anzon.com.au

    Notes:

    1     MMboe = million barrels of oil equivalent (adding oil, condensate and gas
      together)
    
2    In accordance with the SPE/WPC/AAPG/SPEE Petroleum Resource Management System 
     (PRMS)


    The information contained in this announcement was based on information compiled by Mr Arvo Nagel, Senior Reservoir Engineer of Anzon
Australia Limited. Mr Nagel's qualifications include degrees in Electrical Engineering and Petroleum Engineering from the University of
Tasmania and University of Texas, USA, respectively, and more than 30 years experience practicing petroleum engineering. Mr Nagel works full
time for Anzon leading the subsurface technical group and he has consented in writing to the inclusion of the information in the Reserves
Update in the form and context in which it appeared.


    FOR FURTHER INFORMATION PLEASE CONTACT:

    Anzon Energy Limited: Mr Tony Strasser +61 2 9024 3555

    Grant Thornton UK LLP: Fiona Owen +44 20 7383 5100




    BASKER / MANTA / GUMMY
    ESTIMATED ULTIMATE RECOVERY AND RESERVES
    AS AT JUNE 30TH 2008

                                 Proved                Proved +              Proved +
                                                       Probable              Probable
                                                                             +
                                                                             Possible
 ESTIMATED ULTIMATE RECOVERY
 OIL (MMstb) 
 Basker                                  17.7                  24.6            39.0
 Manta                                   2.0                   5.3             16.3
 Total                                   19.7                  30.0            55.3
 GAS (PJ) 
 Basker                                  93.9                 118.0           162.8
 Manta                                   52.0                 134.7           423.4
 Gummy                                   11.5                  13.5            26.0
 Total                                  157.4                 266.2           612.1
 CONDENSATE (MMstb) 
 Basker                                  2.2                   2.7             3.5
 Manta                                   1.4                   3.2             10.3
 Gummy                                   0.3                   0.3             0.6
 Total                                   3.8                   6.2             14.4
 TOTAL LIQUIDS (MMstb) 
 Total                                   23.6                  36.2            69.7
 TOTAL OIL EQUIVALENT (MMboe) 
 Total                                   50.6                  81.9           174.9
 RESERVES
 OIL (MMstb) 
 Basker                                  14.8                  21.7            36.0
 Manta                                   0.6                   3.9             14.9
 Total                                   15.3                  25.6            50.9
 GAS (PJ) 
 Basker                                  79.0                 103.1           147.9
 Manta                                   49.9                 132.5           421.3
 Gummy                                   11.5                  13.5            26.0
 Total                                  140.4                 249.2           595.1
 CONDENSATE (MMstb) 
 Basker                                  1.8                   2.3             3.1
 Manta                                   1.3                   3.2             10.3
 Gummy                                   0.3                   0.3             0.6
 Total                                   3.4                   5.7             13.9
 TOTAL LIQUIDS (MMstb) 
 Total                                   18.7                  31.3            64.8
 TOTAL OIL EQUIVALENT (MMboe) 
 Total                                   42.9                  74.2           167.1
 Notes: 
 1. Volumes are stated on a gross 100% interest basis.
 2. Differences in total may be due to rounding.
 3. Gas volumes are presented on a sales gas energy value (PJ) basis. These include
 provision for sales gas conditioning (removal of liquids and CO2) and fuel and
 flare.
 4. Production from the Basker field through June 30th 2008, including the Extended
 Production Test, has been 2.9 MMstb oil, 0.4 MMstb condensate and 14.9 PJ gas.
 5. Production from the Manta field through June 30th 2008, has been 1.5 MMstb oil,
 0.1 MMstb condensate and 2.1 PJ gas.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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