Trans-Orient Announces Drilling Commences on Two World-Class Oil Prospects in PNG

Trans-Orient Petroleum Ltd has announced the immediate drilling of two back-to-back exploration wells in Papua New Guinea. Both are considered to have the excellent prospects, with a combined potential of 1.3 billion barrels of oil.

Trans-Orient controls a 7.5% interest in the recently spudded Stanley-1 well located in Petroleum Prospecting License 157 in the foreland area of the Papuan Basin. Santos Ltd., a major Australian oil and gas company, is the operator on the project, and has estimated the oil discovery potential of the Stanley Prospect at up to 950 million barrels. The well has multi-level objectives, the primary one being the Toro Formation, a proven reservoir unit in the area. The Stanley-1 well is expected to take approximately 40 days to drill and is budgeted at US$7 million.

In addition to participating in the Stanley Prospect, Trans-Orient also controls a 7.5% interest in the entire 1.2 million-acre PPL 157 permit area, which has still been only lightly explored. Numerous other prospects identified for future exploration drilling give this permit rich ongoing potential. Also, recent developments in the planned PNG-to-Australia pipeline will allow Santos, Trans-Orient and other participants in the joint venture to evaluate development options for the two significant gas/condensate discoveries made within PPL 157 in 1990/91. A gas/condensate development project to take advantage of the planned pipeline could provide Trans-Orient with long-term cash flow at a future date.

Upon completion of Stanley-1 the drill rig will immediately be moved by helicopter to the Tumuli Prospect in Petroleum Prospecting License 106, in the Highland Fold Belt region about 80 miles northeast of PPL 157. The Tumuli-1 well will test a large seismically defined anticlinal structure estimated to hold potential reserves, on discovery, of up to 350 million barrels of oil. Trans-Orient holds a 5% interest in the Tumuli-1 well and in the 900,000-acre PPL 106 area, which also has considerable ongoing exploration potential. At least 30 other structures have been identified as possible future targets for drilling. The Tumuli-1 well is expected to take approximately 45 days to drill, at a cost of US$11 million.

Santos Ltd. also operates the PPL 106 license, holding a 35% interest. The remaining interests are held by a consortium of Australian-based companies. Most recently, Woodside Petroleum, a Shell subsidiary that focuses on exploration in Australasia, has acquired a 25% interest in the project, marking that company's first exploration endeavor in PNG. Other active explorers in the immediate area include Exxon, Conoco, Chevron and Arco.

Trans-Orient chairman Alex Guidi notes the exceptional quality and potential of these two new PNG exploration wells: "We are pleased to be partnered with some of the world's largest and most successful explorers. The Stanley and Tumuli prospects both have a good chance to bring in important oil discoveries, and could dramatically impact shareholder value."