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AWE burns A$113m on unsuccessful exploration

Tuesday 24th August 2010

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Tui oilfield participant AWE expressed disappointment today about the lack of success in its high profile season of exploration in New Zealand Australia, and Indonesia.

The shares fell 3.7% to A$1.58 on the Australian Stock Exchange, after announcement of a statutory net loss after tax of A$28.9 million for the year to June 30. ASX-listed AWE shares have fallen 39% in the last six months, as a string of unsuccessful, capital-intensive exploration announcements came through.

The most recent, falling outside the last financial year, was the Tuatara-1 well off D’Urville Island, and two unsuccessful side-well plays in the highly prospective Tui licence, already a producing oil and gas field, also came up short, although one may be useful in future as a gas injection reservoir.

Exploration write-offs of A$113.1 million are “largely related to unsuccessful drilling activity in New Zealand, Australia and Indonesia,” the company said in a statement to the ASX.  A significant abnormal item relates predominantly to asset impairments ($23.4 million in the onshore Perth Basin). After adjustment for abnormal items, the underlying net loss after tax was $21.1 million.

The year to June 2010 had been disappointing, said outgoing chairman Bruce McKay.

“Whilst revenues and cashflows remained solid, the high-profile exploration program did not produce the anticipated results.”

While AWE’s total 2011 production is expected to be higher than 2010, the Tui oilfield is on a production wind-down after three years of high production.

Also announced were the appointments of Bruce Phillips as the new chairman and Nick Jukes as a non-executive director.

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