A new gas field discovery in Taranaki was confirmed on 14 March, 2003 by New Zealand owned and operated Greymouth Petroleum. The Kaimiro 19 well, completed recently, has also confirmed the extension of the Goldie oil field discovery into the Kaimiro Petroleum Mining Permit.

Kaimiro 19 is flowing oil and gas under a programme designed to assess the productivity of the deeper reservoirs, which have been encountered in the well. All gas and oil produced is being processed through the Kaimiro Production Station.

John Sturgess, Greymouth's Chief of Operations said; "We are delighted with the results of Kaimiro 19. It confirms that we can add new gas reserves through our drilling programme to meet the gas market window. It also confirms that the seismic and other data we hold over this strategic area of the Taranaki basin, is of good quality and can be relied on as we go about the balance of our development and exploration programme for the year. Kaimiro 19 has allowed us to more accurately define the areal extent of the Goldie accumulation."

A map showing the location of Kaimiro 19 is attached. It is anticipated that discussions on unitization of the Goldie field will occur after agreement has been reached on the required protocols. Greymouth has proposed to the operator of the Goldie well that, as the first step in unitization data sharing, an integrated 30 day pressure test programme be run involving both Kaimiro 19 and Goldie 1. In addition to its Kaimiro 19 100% interest, Greymouth holds the major interest in the Goldie field. The New Zealand Government Ministry of Economic Development has indicated support for this unitization initiative.

GREYMOUTH DEVELOPMENT AND EXPLORATION PROGRAMME

Greymouth has plans to drill a number of additional wells in its licences in the next few months. Additional wells are planned in the Kaimiro licence, and a new deep gas well is planned in the PEP 38464 block, which will be drilled with joint venture partners the Ngati Te Whiti Hapu Society. In May, the PEP 38464 venture will re-enter the Motoroa 2 oil well, being redrilled in New Zealand's first producing oil field, Motoroa, as part of a detailed appraisal programme designed to gather information ahead of the second stage development of that oil field. In the second half of the 2003 calendar year, appraisal drilling of the Goldie structure to the South and East of Goldie-1 is planned.

Construction activities are continuing on new pipeline developments in the Ngatoro field. The first pipelines being constructed are a gas injection line and a multiphase (gas, oil and water) offtake pipeline, which ties in the Ngatoro B site and wells Ngatoro 2 (Drilled November, 1991), Ngatoro 9 (Drilled July, 1998) and Ngatoro 11(Drilled July, 1998). Up until 31 March, 2003, all gas production from these three wells has been flared. The smaller interest holders (NZOG and Indo Pacific) in the Ngatoro joint venture have so far declined to participate in the Ngatoro B site development activities.

Subject to approval of the minor parties, Greymouth has proposed the sidetracking of the Tabla 1 well. Tabla 1 was drilled in December, 2002 and is interpreted to be in a downdip transition zone location of the potential Tabla pool. Production testing of Tabla 1 has been concluded to be sub-economic given the insignificant continuous net pay section encountered by the well.

Greymouth continues to seek the commitments of the other parties in the Ngatoro field to the Second stage Development plan for the Ngatoro field proposed by Greymouth on the 20th of November, 2002. Features of this Development include full gas lift and waterflood facilities, development of a number of new gas pipelines, the production of all gas produced from the field for sale, major reductions in the cost of site operations and the drilling of new development wells. The technical merit and competency of the Greymouth plan has been assessed and supported in a January, 2003 review by Helix RDS. Copies of the Helix RDS review are available on request.

Greymouth has proposed that the Ngatoro-8 well (currently suspended) be developed as the first Ngatoro water injection well and has proposed a test injection programme for approval by the joint venture. Injection into N-8 has been supported by reputable independent engineers because it represents the low cost solution with which to initiate flank injection, and because N-8 is clearly in communication with the main producing sands in the field. Up to two Development wells are currently planned in the Ngatoro field in execution of the Development plan. Greymouth has further proposed development of the Ngatoro-5 well (also suspended).

The environmental benefits of the Greymouth Development are that all gas flaring will stop, as will the practice of disposal into surface streams of the salty water, which is produced by the existing wells together with the gas and oil.

Greymouth acquired assets from Shell in April, 2002 including an interest in the Goldie oil and gas field. Shell had paid close to $2 million in 2001 as its contribution to the cost of the Goldie-1 well, which gave Shell the right to participate in revenues from Goldie when net revenues exceed a six times multiple of Goldie-1 well costs.

Competing for the purchase from Shell, and the under bidder, was Indo Pacific Energy Limited (operator of the Goldie property). Greymouth formed the view the Kaimiro, Ngatoro and Goldie oil field assets were important and strategic assets, and priced its purchases accordingly. Greymouth made the purchase relying on its entitlement to have the Goldie oil and gas field asset managed properly and prudently.

Indo Pacific Energy decided, after it became aware it had missed out on the purchase from Shell, that it would manage the Goldie field without reference to Greymouth's interests and without giving Greymouth a say. Greymouth litigated to preserve the value of its interest and to enforce its contractual entitlements.

The case was heard in the High Court in Wellington in March, 2003 and judgement was reserved. Whilst the decision will turn on the interpretation of the joint venture agreement, central to the Greymouth case is the principal that oil and gas companies are required to manage their assets in a way which maximises the ultimate recovery of hydrocarbons for all companies and stakeholders involved. Other stakeholders in Goldie along with Greymouth are the New Zealand Crown (which derives royalty income) and NZOG (who participate when production revenues reach a 15 times multiple of Goldie-1 well costs). The well costs are in dispute. Greymouth claims the costs were about $2million whilst IndoPacific have said the costs were over $3 million.

IndoPacific had received over $11.3 million of oil revenue from Goldie-1, but had produced Goldie in such a way that all gas produced has been flared and wasted, and the oil production methods had not been optimised. As a consequence, significant volumes of oil had been left undrained, costs had been excessive and the reservoir had quickly become depleted. Greymouth has claimed damages from IndoPacific in recompense for the way IndoPacific has produced Goldie.

Copies of the opening and closing submissions by counsel for Greymouth can be accessed through the Greymouth website at www.greymouthpetroleum.co.nz.

Greymouth produces oil and gas from the Kaimiro (PML 38091, 100% interest) and Ngatoro (PMP 38148, 60% interest) fields, which together comprise some 86.162 km2 and are held under long term petroleum mining licences. In addition, Greymouth has three New Zealand exploration permits including a 98% operated interest in the PEP 38464 block, in which Greymouth is undertaking a rejuvenation project on the Motoroa Oil Field, a 100% operated interest in PEP 38739, a large tract of Taranaki acreage, aligned North-South and adjacent to recent discoveries and a 100% interest in PEP 38747. Together these exploration permit interests approximate 2,109 km 2 and cover from coast to coast in Taranaki.

For further information please contact Greymouth Petroleum Ph +64 9 366 3634 or email charlotte@greymouthpetroleum.co.nz