Avery operator begins start-up at Toparoa-1

Mr. David Little reports

AVERY RESOURCES PREPARES FOR AUSTRALIAN PRODUCTION STARTUP AND PROVIDES EXPLORATION UPDATE

Avery Resources Inc.’s operator at its Toparoa-1 oil discovery has begun production start-up operations in the South Australian sector of the Cooper basin. Avery has a 32.67-per-cent interest in the well. An arrangement was made to produce the Toparoa-1 oil into the recently built-out pipeline system, rather than trucking the oil, and Avery has received a $1.4-million cash payment as compensation for the necessary timeline revision. With regard to exploration activity, Avery is planning a three-well back-to-back drilling program in December, 2006, in the Queensland sector of the Cooper basin, and an additional seven wells are planned in the Cooper basin throughout 2007 and into the first quarter of 2008.

“Avery is looking forward to a busy and exciting fourth quarter in Australia,” said David Little, chairman and chief executive officer of Avery Resources. “With our first Australian production coming on stream and a busy seismic and drilling program planned, we are working hard to add value for our shareholders.”

Production
Production from Toparoa-1, located in the Murteree block of PEL 113 (Avery 35 per cent) in the South Australian sector of the Cooper basin, is expected imminently, subject to crew scheduling by the field operator, Santos Ltd. In recognition of the Toparoa-1 production delays and in accordance with the production arrangement, Avery negotiated and received a payment of $1.4-million. Production via pipeline will eliminate the increased risk of downtime associated with trucking, including adverse weather and difficult roads, in this outback location.

Toparoa-1 drill stem tested at 1,814 barrels of oil per day (bopd). The well will initially free flow into an on-site storage tank, prior to diverting to the flow line. An ESP (electric submersible pump) is planned to increase production by late October. It will produce from the Hutton sandstone formation similar to the adjacent Derrilyn oil field, 1.3 kilometres to the northeast, which is also operated by Santos. With approximately the same net pay interval, Derrilyn-1 produced approximately 500,000 barrels of oil from the formation in its first 12 months of production.

Exploration
Avery is planning substantial fourth quarter 2006 seismic and drilling activity in the Barta and Wompi licence blocks located in the Queensland sector of the Cooper basin. Avery has the right to earn up to 50 per cent in the Barta/Wompi project.

Avery and its partners have reserved a rig to embark on a three-well back-to-back program in the ATP 752P Wompi block (236,700 acres). Drilling of the wells is expected to begin in December. The three wells will be Maracoonda-2, Nora-1 and Gamma-1. With potential for an extended accumulation up dip, Maracoonda-2 will test an interpreted three metres of net oil pay in the Hutton sandstone first detected in Maracoonda-1. Nora-1 will test a robust structure that is along trend with the Watson and Watson South oil fields. These fields are located in the adjoining production licence and they have produced more than three million barrels of oil to date. Gamma-1 will test a structure that is located up dip from two wells that had strong oil shows in multiple horizons (Rho-1 and Rho East-1).

Avery has seismic programs planned in the ATP 752P Barta block (631,100 acres), beginning in October, 2006. A 3-D seismic survey is being conducted over the Cook oil field adjacent to the licence boundary, and Avery and its joint venture partners will acquire an extension into the Barta block, aimed at detailing two potential field extension structures. On completion of the 3-D survey, the joint venture will acquire a 100-kilometre 2-D infill survey over the Vancouver and Bligh series of structures. The 3-D and 2-D surveys will be used to determine drilling locations planned for the second quarter of 2007.

Also, beginning in October, 2006, Avery will participate in a 3-D seismic survey in block AC/P24 of the Timor Sea offshore Australia, to determine an appraisal well location for the Katandra-1 oil discovery. Avery has a 10-per-cent interest in Katandra.