Kairiki Energy Limited (ASX:KIK) Tindalo Tests Oil At Over 18,500 bbls/d

Perth, June 8, 2010 AEST (ABN Newswire) - Kairiki Energy Limited (ASX:KIK) has been advised by Nido Petroleum Limited (ASX:NDO), the Operator of SC54A, that an extensive drill-stem testing programme (DST) has now been completed on the Tindalo-1 well with a maximum oil flow rate measured of 18,689 bbls/d, surpassing Kairiki's pre-test flow rate expectations. Tindalo production commenced on 6th June at an approximate flow rate of 15,000 bbls/d. The well will be produced at various flow rates in the short term to determine the optimum reservoir management strategy for the well.

Highlights

- Testing of Tindalo-1 commenced at 11:08 hours (Manila time) on 30 May 2010 with the perforation of approximately 44 metres of reservoir followed by stimulation with acid.

- A maximum oil flow rate of 18,689 barrels of oil per day was achieved with a 136/64th inch choke and a flow tubing head pressure of 59 psig during a multi-rate production test. This was achieved on natural flow without use of the down-hole pump that has been installed. The oil flow rate was limited only by the capacity of the tubing installed in the well.

- Preliminary analysis of oil quality indicates 27 degree API with no wax. Extensive sampling of the oil is being undertaken for reservoir fluid characterisation and crude marketing purposes.

- Only minor associated gas of approximately 13 scf/bbl.

- Further analysis of the test data will be performed to determine the long-term optimal production rate of the well. Some water has been produced to surface which may be fluid introduced to the reservoir during the drilling and completion process that is being produced back or alternatively formation water. Accordingly, the well will be produced at various flow rates during the early stages of production to determine the optimum reservoir management strategy.

- The SC54A Joint Venture partners have now exercised their 10 month option on the jack-up drill rig 'Aquamarine Driller' to produce the oil from the Tindalo field.

- Oil commenced production on June 6th at a rate of approximately 15,000 bbls/d and is currently being produced at varying rates. The oil is accumulating in the tanks of the FSO 'Tove Knutsen'.

Kairiki's Managing Director, Dr. Mark Fenton, said "This is an excellent result. The maximum flow rate of over 18,500 bbls/d of oil is better than expected. Bringing Tindalo into production is a seminal day for Kairiki as it marks the point of Kairiki's transition to an Exploration and Production company. Our thanks go out to the Operator, Nido Petroleum, for their efforts in developing this field, as well as our SC54A Joint Venture partners for their support.

Tindalo's full-field recoverable volumes have previously been estimated by the Operator to be in the range of 1.5 - 9.1 million bbls with a mid-case of approximately 5.1 million bbls. The cash-flow derived from Tindalo will enable Kairiki to re-invest in an aggressive shallow water development programme in SC54A where there are a number of discoveries similar to Tindalo and other low-risk exploration prospects. The cash flow from Tindalo will also accelerate our plans to drill the large Gindara exploration prospect in SC54B as soon as possible."

Please refer to the following link for the complete Kairiki announcement:

http://www.abnnewswire.net/media/en/docs/63033-ASX-KIK-493596.pdf

Contact

Mark Fenton Managing Director Kairiki Energy Limited Tel: +61-8-9388-6711 www.kairikienergy.com