Australia: AWE’s 4 Q 2010 Production Slips 3 %

Oil and gas production reached 1.53 million BOE for the quarter, a 3% decline on the previous period. Production was impacted by some operational issues at Tui, BassGas and Casino, which were all successfully resolved by the end of the period.

AWE’s share of sales revenue rose by 14% to $72 million. Realised oil prices lifted slightly to approximately $83 per barrel. Following the reduction in costs associated with the Pateke workover ($4 million in the current quarter versus $18 million in the previous quarter), EBITDAX for the period increased by 83% to $42 million.

Oil production rose by 10%, following 12% increases in oil production at both the Tui and Cliff Head projects. Gas production was constrained by the operational issues at BassGas and Casino, which issues were rectified by the end of the quarter. The reduced gas output also resulted in a small fall in associated LPG and condensate production.

Tui production was higher, following the completion of workover activity on the Patake-3H well which resumed production in October 2010. A planned short duration maintenance and process improvement shutdown also reduced output slightly in an otherwise strong quarter.

Oil production from Cliff Head was higher due to the maintenance work in the previous quarter. Gas production from the onshore Perth Basin was essentially flat, consolidating the gains made in the previous quarter following the commissioning of gas production from the Redback-2 discovery. Gas sales into the Synergy contract have now commenced.

Exploration expenditure declined to $16 million in the December quarter, as the exploration program slowed, with drilling activity limited to only the Bass Basin and Yemen. Development expenditure increased to $21 million, as activity accelerated at BassGas, the Sugarloaf AMI and the onshore Perth Basin, where the recent discoveries in the Redback area were tied in.

At the end of the quarter, AWE’s cash level was $65 million.

> Development activity accelerated in the Sugarloaf AMI in the USA. A further 12 wells are planned for the coming six months, which will significantly lift output rates.

> Quarterly sales revenue rose 14% to $72 million. Oil and gas production was slightly lower for the quarter, at 1.53 million BOE.

> AWE reported on the estimated potential of the Shale Gas initiative in the Perth Basin where the middle interval of the Carynginia Shale holds a gross Gas in Place of

13-20 Tcf. Further exploration and appraisal work to test this large potential gas resource is planned to commence by mid 2011.

> The Al Meashar-2 appraisal well was drilled and tested with modest oil flows being seen during pumping activities. The well was suspended as a potential future oil producer, pending evaluation of the well results.

> Bruce Phillips was appointed Non-Executive Chairman of AWE at the conclusion of the Annual General Meeting in November 2010.

> Bruce Clement will commence his role as Managing Director of AWE Limited on February 1, 2011.

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Source: AWExplore, January 31, 2011;