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Re: EMR - Emerald Oil and Gas

Check out this announcement by Arc - looks like they're confident

ASX ANNOUNCEMENT

Wednesday 15 August 2007

The Canning Basin exploration program ARC’s up

ARC announced on Monday 13 August the spudding of the Valentine-1 exploration well near

Derby in northwest Australia’s Kimberly region. Valentine-1 marks the start of a major oil and

gas exploration program in one of the most under-explored Palaeozoic aged basins in the

world – the Canning Basin.

ARC has rapidly established holdings in excess of 75,000 square kilometres in the Canning

Basin, giving it by far the largest acreage position in the Basin. ARC’s holdings include a wide

variety of geological play types, with more than 30 prospects and leads already identified with

very significant potential for substantial quantities of both oil and gas.

ARC’s interest in the Basin was sparked by its similarities to other Palaeozoic basins around

the world where prolific reserves of oil and gas have been discovered. Furthermore, the

factors that had previously made exploration in the Basin difficult have now been largely

overcome. ARC is now initiating the re-evaluation of the Basin with the spudding of Valentine-

1.

The Valentine-1 well is targeting a large gas-condensate prospect. It is the culmination of the

last 12 months of work by ARC to establish its commanding acreage position in the Canning

Basin, review and re-evaluate massive volumes of geological and geophysical data, identify a

series of high quality prospects and put in place the logistics for the start of a major exploration

program.

Commercial Potential

Exploration in the Canning Basin has historically been hampered by the region’s remoteness

and lack of infrastructure. However, the rapid development of the northwest has seen the

infrastructure put in place to facilitate modern and effective exploration and production of oil

and gas in onshore northern Australia. This has been amply demonstrated by the successful

and profitable production and export of oil from the Blina Field (now 100% owned and

operated by ARC).

ARC’s proven early production system for oil, developed and demonstrated by the company in

the Perth Basin, will allow even small volumes of oil discovered in the Canning Basin to be

quickly commercialised. For larger discoveries, ARC’s early production system will allow

immediate cash flow to fund the costs of a full field development.

The development of gas from the Basin will be underpinned by the gas sales contract with

Alcoa that ARC has already put in place. The existence of a firm offtake agreement with such

a significant customer will allow even modest gas discoveries to be rapidly developed.

Furthermore, the continued strengthening of the market for natural gas means gas falling

outside the contract with Alcoa will find a ready market.