Fourth Victorian Gas Discovery in 2001 3^rd May 2001

Santos Limited, as Operator for PEP 154 is pleased to announce its fourth new field discovery in the Victorian section of the Otway Basin in 2001.

The exploration wildcat well Lavers 1 has intersected an 11 metre gross gas column in the Cretaceous Waarre Sandstone over the interval 1542 metres to 1553 metres.

Wireline logs are currently being evaluated and indications are of 10 metres net of gas pay. After completion of wireline logs Lavers 1 will be cased and suspended as a future gas producer. The well reached a total depth of 1627 metres.

Commenting, Santos Limited Managing Director John Ellice-Flint said,

“Our success rate in the Otway Basin remains strong with a 100% success rate in PEP’s 153 and 154.”

“Proximity to existing infrastructure provides Santos with the ability to quickly bring the well into production. While Lavers is not as significant a discovery as the previous successes in this campaign we are currently evaluating the option of how to tie it with other discoveries in the Otway Basin.”

“This well, combined with the other recent discoveries during 2001 gives us continued confidence in the future potential of the onshore Otway Basin”

Currently Mylor 1, Penryn 1 and Fenton Creek 1 are on production through the Heytesbury facility. The Lavers 1 well is expected to come on production at 5-10 terajoules per day based on analogy with existing wells in the area.

The Lavers 1 well is located approximately 2 kilometres to the northwest of the recent McIntee 1 gas discovery and 16 kilometres northwest of the Heytesbury Gas Facility.

The rig is expected to be released by the end of the week and will be moved to Naylor 1, the final exploration well in the five well Otway Basin exploration program. The Naylor 1 well is expected to spud by 10 May 2001.

The participants in the Lavers 1 well are: