AED Oil Limited: Rombebai farm-out adviser appointment

(17 May 2010)--AED Oil Limited (AED), on behalf of its subsidiary AED Rombebai BV (AEDR), is pleased to announce the appointment of Macquarie Capital Advisers (Macquarie) as the financial adviser in relation to the farm-out and the potential opportunity to acquire an interest in AEDR?s 100% operating interest in the Rombebai Production Sharing Contract, located onshore in Papua, Indonesia.

Farm - Out Process
As mentioned in the AED March quarterly report, the Gesa structure is the primary drilling target within the Rombebai PSC. Based on new interpretation of recent seismic data (2007), AEDR has determined the Gesa structure has the potential to be a world class gas and oil resource. The prospective resource of the primary Gesa target has been assessed to contain in excess of 7Tcf (P50) in-place gas with upside potential of more than double this estimate. Further to the gas potential, this prospective resource may also contain substantial volumes of oil in-place (potentially over 1 billion barrels; but with a consequent reduction in gas volumes), or a combination of oil and gas. AEDR plans to drill an exploration well on the Gesa structure late 2010 / early 2011.

Following recent approaches from major oil and gas companies, AEDR is commencing a formal search for a partner to participate in the Gesa focused exploration drilling program. This farm-out process will proceed through a series of steps, the first of which is to invite interested parties to submit Expressions of Interest to receive the Information Memorandum and to gain access to the Data Room. A farm-out flyer has been prepared and is being distributed to interested parties.

AEDR intends to retain a significant interest in the Rombebai PSC in order to participate in the success that it believes will result from the upcoming exploration drilling program.

Asset Overview
The Rombebai Contract Area lies within the Waropen Basin and contains attractive hydrocarbon plays, with the largest being the Gesa structure. Based on new interpretation by AEDR of recent seismic data (2007), AEDR has determined that the Gesa structure has the potential for a world class gas and oil resource.

The prospective resource of the primary Gesa target has been assessed to contain in excess of 7Tcf (P50) in-place gas with upside potential of more than double this estimate. A discovery of this magnitude would underpin a world scale LNG development.

Further to the gas potential, this prospective resource may also contain substantial volumes of oil in-place or a combination of oil / gas. The oil prospectivity is based on geochemical evidence available from wells within and outside the Area, the presence of oil seeps to the east of the Area and oil shows in the Gesa 1 well.

Historically, five wells have been drilled within the Area, with four encountering hydrocarbons including two within the Gesa structure. Further interpretation by AEDR of the recent seismic data indicates that the previous Gesa wells reached total depth prior to intersecting a prominent seismic event (the main Gesa target).

Encouraged by this new data and the results from recent technical studies, AEDR plans to drill a well (Kare 1) into the prospective Gesa structure (deeper than the initial Gesa wells) during late 2010 / early 2011 to further appraise the major feature. As noted above, this first well, Kare 1, is targeting in excess of 7Tcf (P50) gas in-place. Subject to the results of Kare 1, AEDR also plans to drill an additional well immediately after Kare 1.

In Place Prospect Resources
Provided below is AEDR?s estimate of undiscovered prospective resources of Gas In-Place resources (in accordance with SPE guidelines) classified by different slope fans:

Formation		P90 - In Place	P50 - In Place	P10 - In Place
upper Pliocene Fan	Gas (Tcf)	6.3	7.7	9.4
middle Pliocene Fan	Gas (Tcf)	5.5	6.4	7.6

The upper Pliocene Fan is the primary target for the Kare 1 well. It should be noted that the 2 middle Pliocene Fan may be intersected by the deepening of the Kare 1 well or by further wells.

As discussed above, the feature may also contain significant volumes of oil in-place. Whilst the source section has not been intersected within the Area, a combination of oil and gas is possible.

At this stage, the geological chance of success of Gesa is interpreted to be in the order of 1 in 4. (end of release)