Greymouth Petroleum Confirms Agreement

Greymouth Petroleum Confirms Agreement To Acquire New Zealand Oil And Gas Reserves And Production Facilities From Shell

Press Release by Greymouth Petroleum at 12:00 noon, 25/02/2002

New Zealand owned and operated Greymouth Petroleum confirmed today that it has reached agreement with Shell to acquire Southern Petroleum Ohanga Limited and Shell's interest in the Kaimiro oil and gas fields, for an undisclosed sum.

The assets purchased by Greymouth comprise interests in three onshore producing oil and gas fields, hydrocarbon-processing facilities with excess capacity, and pipelines connecting the fields and facilities with each other and to export pipelines, terminals and markets. The fields and facilities are located onshore in the Taranaki Basin, New Zealand.

Mark Dunphy, Chairman of New Zealand owned Greymouth Petroleum, noted, "We are delighted to be adding these strategic assets to our existing production and exploration operations. Greymouth is not only acquiring proved producing properties which immediately increase oil and gas production and cash flow, but more importantly adding significant facilities and infrastructure that can enhance the value of our existing Motoroa oil field and Eastern Margin exploration interests. With the Kaimiro field interest we will own and operate substantial additional oil and natural gas processing capacity. Significantly also, we hope to attract a number of key former Fletcher Energy oil and gas professionals to join our team in Taranaki."

ONGOING AGREEMENTS WITH SHELL

Greymouth has entered into agreements with Shell with regard to the use of oil storage facilities and for purchase of crude oil produced. Greymouth and Shell have also entered into a strategic agreement, which provides Shell with the right to participate in further development of the deeper Kapuni gas reservoirs present in the Kaimiro field.

The purchase by Greymouth will require various approvals and consents from New Zealand regulatory authorities and is expected to complete in 30 days.

The assets acquired include the Kaimiro and Ngatoro properties, which are located onshore in the Taranaki Basin of the North Island of New Zealand, approximately 10 miles East of Greymouth's Motoroa oil field. Greymouth is acquiring working interests in two Petroleum Mining Licences known as the Kaimiro (PML 38091) and Ngatoro (PMP 38148) Fields. The Kaimiro interest is an operated 100% interest in that field and the Ngatoro interest is a non operated 29.78% interest. Greymouth has entered into service agreements with a Shell affiliate, the owner of the Omata Tank Farm, to utilize the blending, storage and export capabilities of that facility. Greymouth and other users of the facility will transport crude oil to the farm and receive McKee blended crude oil. Greymouth has entered into an agreement with Shell who will purchase the crude oil using a reference price of APPI (Asian Petroleum Price Index) TAPIS, an internationally recognized crude oil index, which is quoted at least weekly.

"We look forward to a long term relationship with Shell in Taranaki under these various agreements." said Mr Dunphy.

CURRENT GREYMOUTH INTERESTS

Greymouth currently holds interests in two exploration permits in New Zealand including a 76% operated interest in the PEP 38464 block, in which Greymouth is undertaking a rejuvenation project on the Motoroa Oil Field, which was abandoned in the 1970's. Greymouth's second interest (as to 100%) is the Eastern Margin block PEP 38739, a large tract of Taranaki acreage, aligned North-South and adjacent to numerous recent discoveries. Together these permit interests approximate 2,083 km 2 and cover from coast to coast in Taranaki. The acquired Kaimiro and Ngatoro production interests comprise some 86.162 km2 held under long term petroleum mining licences.

ENDS

MAP AVAILABLE A map of the Taranaki Basin showing the relevant oil and gas fields is available by emailing Kate Gordon at Porter Novelli New Zealand Ltd - kateg@porternovelli.co.nz.

Issued by Greymouth Petroleum (25/2/02) by Porter Novelli New Zealand Ltd.

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