Mosaic Oil N.L. has signed an agreement with Santos Ltd to acquire Santos’ interest in several production licences with the associated pipeline licences, production facilities, gas sales contracts and exploration permits in the southern Surat-Bowen Basin. The agreement has an effective date of 1 January 2009. All production licences, pipeline licences and exploration permits involved in this transaction are currently operated by Mosaic Oil.

Mosaic Oil’s Managing Director Lan Nguyen said the acquisition was of both commercial and strategic value to the Company. “The Surat-Bowen Basin is of vital importance to Mosaic Oil and this is an exciting deal for the Company. Having full control of the Churchie Field extends our project pipeline potential. The Churchie Field has only been partially developed and there is significant upside potential for Mosaic Oil to appraise and further develop the existing gas/condensate producing upper Tinowon Sandstone reservoir together with the proven but non-producing gas/condensate reservoirs in the Permian lower Tinowon Sandstone and Triassic Rewan Formation.”

“The acquisition will be earnings per share accretive from day one and has significant upside for the shareholders of Mosaic Oil. The transaction represents an effective price of 9.8 cents per GJ for 3P reserves which compares very favourably to other acquisitions of Queensland onshore gas reserves transacted in the last 12 months.” Mr Nguyen said.

Outright ownership of the Churchie and the Churchie West Fields will allow Mosaic Oil to control the development of these fields and this greatly increases the development options for the Company. The current daily production from the interest being acquired is about 2.0 TJ/d of gas and 25 bbl/d of oil/condensate.

The total estimated 3P (Proven plus Probable and Possible) reserves to be acquired are approximately 64 PJ of sales gas and 1.1 MM bbls of associated oil/condensate which comprises approximately 29 PJ of sales gas and 0.57 MM bbls of oil/condensate in 2P (Proven plus Probable) reserves.

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