Release: Novus seeks clarification of bid conditions

The following is a letter sent by Novus Petroleum Limited by facsimile to Hilmi Panigoro (Chief Executive Officer of PT Medco Energi Internasional Tbk) on Wednesday, 24 December 2004.

24 December 2003

Dear Mr Panigoro

I refer to the announcement by PT Medco Energi Internasional Tbk ("Medco Energi") dated 22 December 2003 that it intends to make an off-market takeover bid for all the issued ordinary shares in Novus Petroleum Limited ("Novus"). The announcement foreshadows that Medco Energi's offer will be subject to a number of conditions including a condition seeking confirmation from the Novus Board in relation to 'Novus' US Notes', in particular that the break fees payable by Novus will not exceed US$5 million.

The terms of Novus' US$80 million Notes provide that in circumstances where any person acquires beneficial ownership of more than 50% of Novus' shares, Novus is obliged, unless instructed otherwise by the Note Holders (or otherwise negotiated between the parties), to prepay all Notes by payment of the principal amount of such Notes together with any outstanding interest and a make whole payment.

The make whole payment is calculated as the difference between the future discounted cash flow obligations, both interest and principal, less US$80 million. The discount rate is based on US Treasury rates applicable to the remaining life of the Notes plus 50 basis points. Based on the current low US Treasury rates, Novus estimates that the maximum aggregate potential liability in respect of such make whole payment is between US$14 million and US$15 million.

Therefore, the confirmation sought by Medco Energi in relation to the Novus US Notes cannot be provided. In the interests of an orderly market, Novus requests prompt confirmation from Medco Energi (and in any event before you lodge your Bidder's Statement) whether this condition will be waived.

Yours faithfully,
R C Williams
Managing Director