Anzon Australia announced the Basker Manta Project is now finished and fully functional just two years after initiation. The Project is commissioned with all major equipment on the FPSO Crystal Ocean operating within design, all four oil wells production tested, the gas injection well performing as required and the new mooring system on the shuttle tanker Basker Spirit fully operational.

Total production to date since commissioning commenced on December 17, 2006 has been approximately 860,000 barrels. However production in the fields has now well exceeded one million barrels when the 868,000 barrels produced during the EPT is included.

The project was the first development to utilise a Floating, Production, Storage and Offtake (FPSO) vessel, the Crystal Ocean, in south east Australia. Anzon boasts the outstanding achievement of reaching the milestone of loading the first crude oil tanker after being publicly listed only a year earlier. The first tanker of oil left the Basker-Manta oil field in January 2006 and since commencement of production nearly one and a half million barrels of crude oil has now been produced out of the Proved plus Probable (2P) oil reserves of 40 million barrels.

The total cost for development of the Basker-Manta-Gummy fields was $330 million. In addition to the 2P oil reserves, there is a contingent condensate resource in Manta-Gummy of 19.3 million barrels and 385.4 petajoules (60 million barrels of oil equivalent (boe)) of contingent gas. This gives a total 2P ultimate recovery of approximately 120 million boe once the contingent resources are booked.

Basker Manta Oil Development (VIC/L26)

Anzon Australia Limited, the operator of the Basker-Manta-Gummy (BMG) Joint Venture, has clearly demonstrated its commitment to oil development in the Gippsland Basin. In the two years since listing on the ASX, the Company has achieved a number of notable results. These include:

• Obtaining a Production Licence in eight months

• Implementation of an innovative approach to oil production, a first in Bass Strait, utilising the FPSO, Crystal Ocean, together with the shuttle tanker, Basker Spirit

• First oil delivery 11 months after ASX listing

• Increase in the Proved and Probable oil reserves from 23.3 million barrels to 39.8 million barrels

• The second oil production Operator in the history of the Gippsland Basin (Bass Strait)

• Minimum footprint offshore, zero onshore

• First side-by-side, ship-to-ship cargo transfer in Australia

• Facilities that are predominantly Australian owned, designed, built and operated

• First 2007 cargo of oil delivered to refinery in Melbourne

Floating Facilities

Anzon, the first operator to use an FPSO in Bass Strait, has substantially upgraded facilities on the FPSO Crystal Ocean and it is now capable of performing a wide range of services which include oil production from multiple wells, water/gas/oil separation and water disposal, well intervention, gas dehydration and reinjection into the reservoir for later reproduction and the storage of crude oil. This upgrade was known as the Full Field Development (FFD) project. The FPSO can clean up the produced water to less than 15 ppm oil-in-water before discharge overboard. The gas is being recompressed back into the reservoirs using a centrifugal compressor driven by a 7500 HP gas-fired turbine. Plans are well under way to lay a pipeline to shore for delivery of sales quality gas to customers via the existing onshore Eastern Gas Pipeline infrastructure. Oil is presently pumped via an undersea pipeline to the waiting Basker Spirit shuttle tanker for shipment to the marketplace.

The unique benefits of on-board processing and storage cannot be understated but particularly in relation to the ability to develop otherwise marginal fields. A field of this nature and size would not have been able to support a costly fixed platform in nearly 200 m water depth.

The 240 metre Aframax-sized shuttle tanker, the Basker Spirit, has a capacity of 680,000 barrels. Located approximately 1.5 kilometres from the Crystal Ocean, the Basker Spirit is moored to a permanent three anchor single point buoy with the ability to disconnect and reconnect quickly, together with a dynamic positioning capability.

Development

Following the successful completion of the Extended Production Test (EPT), a Full Field Development (FFD) program was implemented that included drilling additional wells, modifications to the Crystal Ocean, modifications to the Basker Spirit mooring arrangement and installation of extensive facilities including a sophisticated electro-hydraulic manifold on the ocean floor. FFD of the Basker-Manta oil project which included management of the engineering design, procurement and construction aspects, culminated with the commencement of full oil production in December 2006.

The FFD program included drilling of the Manta-2A well and Basker-3, 4 and 5 wells. Drilling was completed by the semi-submersible drilling rig, the Ocean Patriot, utilising a batch drilling approach – designed to drill each section of the four development wells sequentially. One of the wells, Basker-4, is being used as a temporary gas injector and has been receiving up to 32 million standard cubic feet of gas per day. This well will become a producer once the gas to shore project is commissioned, estimated to be in early 2009.
Deck mounted facilities on the Crystal Ocean were modified so that gas associated with crude oil could be separated from the oil, dehydrated, compressed to a sufficiently high pressure and injected underground through the Basker-4 well. Most of this gas will be able to be recovered at a later date. Other modifications were designed to improve the performance of the Crystal Ocean. At the same time a 75 tonne, Melbourne built, manifold was lowered to and fixed to the ocean floor to enable management of oil production, gas injection and other well control functions. Installation work involved both divers and remotely operated vehicles (ROVs).

The tanker, Basker Spirit, the first to be moored in Bass Strait, demonstrated during the EPT phase that some improvements could be made to the detachable mooring, while the anchoring system proved to be entirely satisfactory. This improvement was achieved by building an extension onto the bow of the tanker at main deck level. This involved fabrication of major mechanical components in Melbourne and their installation in a Singapore shipyard. These Australian designed facilities have met the JV’s expectations.

Recent Success Summary

• Full Field Development (FFD) production commenced on December 17, 2006

• Successful completion and commissioning of the Basker-Manta oil development

• FFD production of approximately 83,000 barrels of oil up to December 31, 2006, 780,000 barrels at end of March 2007

• Total production approximately 1.5 million barrels of oil from the Basker-Manta fields (includes EPT production)

• Gross sales revenue of $12 million achieved in January 2007 from delivery of 167,000 barrels to Shell at its Melbourne refinery

Anzon Chief Operating Officer, Peter Henderson, highlighted the achievements of the BMG Joint Venture, stating “The Anzon/Beach team’s effort over the past two years have been justly rewarded with a substantial increase in reserves and recognition of the offshore project as one of the top 5 in the world in 2005.”

Future

Anzon Australia, together with Joint Venture Partner Beach Petroleum, is committed to developing the resources within the license area. This includes exploitation of known gas resources in Manta and Gummy and exploration within the acreage. Anzon has now embarked on the third stage of development of the BMG fields, an Integrated Oil and Gas Field Development Program (IFDP). With concept selection and preliminary engineering design work nearing completion, it is likely that a further five or six oil and gas wells will be drilled in the next two years and a pipeline installed to carry sales quality gas ashore for transmission to the market. A gas Sales Agreement with Alinta was signed in March 2007. The final investment decision (FID) on the development is expected to be announced in the second quarter of 2007.