Karoon Gas Australia Ltd. reported Monday that its Echidna-1 well in Block S-M-1102, Santos Basin offshore Brazil has intersected an oil bearing section in Paleocene sands, as shown on mudlog and Logging While Drilling data. The mudlog shows elevated gas readings and oil florescence in sandstones. Wireline logging will now be conducted to ascertain the extent of the gross and net columns.

As at 1230 hrs AEST April 12, the Echidna-1 exploration well had reached the planned total depth of 7,805 feet (2,379 meters) rotary table (RT). Since it was spud March 31, the well was drilled to its total depth.

The presence of a Paleocence oil column needs to be confirmed with data from the planned wireline logging program to be undertaken immediately. The wireline program will involve taking pressure data, reservoir fluids sampling and petrophysical logging.

Additional intervals of elevated mudlog gas and oil florescence have been observed in the Maastrichtian section and will further be further evaluated during the wireline logging program.

Karoon holds 65 percent interest in and is operator of the jointly held block S-M-11-2, Santos Basin, Brazil. Pacific Rubiales Energy Corp. holds the remaning 35 percent working interest.

UPCOMING WELL PROGRAM

The current exploration and appraisal drilling campaign, operated by Karoon, is using the Olinda Star (mid-water semisub) for the entire campaign.

The rig contract provides Karoon with one additional option well allowing flexibility for further appraisal of the Kangaroo oil discovery, or possibly targeting other prospects.