GAS SHOW IN LOUISIANA WELL AS DIRECTORS STUMP UP NEW FUNDS...

GAS SHOW IN LOUISIANA WELL AS DIRECTORS STUMP UP NEW FUNDS

Sydney - Friday - June 27: (RWE Aust Business News) BYRON ENERGY (BYE) is the operator and 100% working interest holder of several blocks in the Gulf of Mexico prospective for oil and gas.

The executive team is experienced with a track record of growing shareholder wealth in the region.

Its success stems from being at the forefront of technology, particularly in seismic interpretation.

Shares in the company are listed on ASX under the code BYE.

In an update on drilling progress, the company advised that on June 25, one of its wells was drilling ahead at 7,952 feet (2,424 metres) measured depth and 7,883 feet (2,403 metres) true vertical depth when an 1,800 unit gas show resulted in 250 psi on the surface choke.

Currently, the drill pipe is 100 feet (31 metres) off bottom and is free and is circulating to clear the wellbore of gas.

At this time there is insufficient evidence to evaluate the commercial significance of this show.

SM 6 #1 BP01 well is located in South Marsh Island Block 6 (SM 6), offshore Louisiana, 216 km southwest of New Orleans, Louisiana, USA, in a water depth of about 65 feet (20 metres).

Byron, through its wholly owned subsidiary Byron Energy Inc. (the operator), has a 100% working interest and a 81.25% net revenue interest in SM 6.

Byron will provide further progress drilling reports as material information becomes available.



On June 20, the suspension of trading in the securities of Byron Energy Limited was lifted immediately, following receipt of an announcement in connection to a potential capital raising.

Yesterday, the company announced the finalisation of the share placement previously reported to the market on June 20.

Byron Energy disclosed the placement of an issue of 9,916,847 fully paid ordinary shares to sophisticated investors at 65c a shareto raise about $6.5 million before costs.

The placement shares were issued without disclosure to investors under Part 6D.2 of the Corporations Act.

SHARE PRICE MOVEMENTS

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Shares of Byron Energy yesterday gained 6c to 76c. Rolling high for the year is $1.10 and low is 40.5c. The company has 108.9 million shares and a market cap of $87.7 million.

On June 12,Byron Energy advised that the Byron Energy SM 6 #1 (SM 6 #1) well reached a measured depth of 7,738 feet (2,358 metres) with true vertical depth at 7,646 feet (2,330 metres).

Whilst at this depth and making a connection, the bottom-hole assembly packed off, circulation was lost and the drill pipe was stuck.

The company organising a number of tools to attempt to free the drill pipe and the down-hole logging tools.

Since the last drilling update, the company has drilled through a 350 feet salt lens.

Below the salt lens, the well bore encountered gassy shales and tight siltstones.

Indications are that the well is substantially up-dip from all other wells drilled in the block, however no commercial reservoirs had been encountered in the well.

The primary reservoir target, the G20 Sand is approximately 600 feet below the current depth of the well.

SM 6 #1 well is located in South Marsh Island Block 6 (SM 6), offshore Louisiana, 216 km southwest of New Orleans, Louisiana, USA, in a water depth of approximately 65 feet (20 metres).

Byron, through its wholly owned subsidiary Byron Energy Inc. (the operator), has a 100% working interest and a 81.25% net revenue interest in SM 6.

As a result of higher than originally expected drilling costs associated with SM 6 #1 well, Byron has agreed to enter into an unsecured loan agreement with three of Byron's existing directors, each a substantial shareholder, for a loan facility of up to $A 2 million.

The Loan facility further reinforced the directors' strong support of and commitment.

BACKGROUND

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All of Byron Energy's blocks are located in the shallow waters of the Outer Continental Shelf of the Gulf of Mexico, offshore Louisiana.

The blocks have attractive geological characteristics which are highly favourable for hydrocarbon generation, accumulation and commercial development.



Key features include:

* previous discoveries and production within most of the blocks; shallow water depths: 10 - 60m;

* variety of structures including salt domes, rollover closures, fault structures and anticlines;

* stratigraphic traps such as channel sands and bar sands; targets updip from known production, such as at South Marsh Island Block 6, where sands can be intersected updip by 110 - 300m to prior oil production from the same reservoirs; and

* sandstones have typically 30% porosity and permeabilities around 500 millidarcies, thus making these excellent reservoirs.