Pryme Oil and Gas Limited (ASX: PYM) (Pryme) is pleased to announce that it has entered into an agreement to farm out a 50% interest in the Atocha Project to Future Corporation Australian Limited (ASX: FUT) (Future Corp).

The Atocha Project, located in East Baton Rouge and East Feliciana Parishes in Louisiana, covers 6,400 contiguous acres within the up-dip fairway of the Tuscaloosa Trend. Pryme has a 100% working interest in Atocha and has spent over US$1.4 million on building its land position, carrying out technical reviews and planning a program to test the project. The project is prospective for oil and gas. A more detailed description of the Atocha Project is appended to this announcement.

The first Atocha prospect will be tested by re-entering an existing well bore, the HM Brian No.1 which was drilled by Shell Oil in 1980, to test a bypassed 125 feet thick pay zone.

On completion of the test of the first Atocha prospect it is intended that Pryme and Future Corp will develop additional prospects for exploration within the highly prospective Atocha project area.

Success in the Atocha Project has the potential to significantly increase earnings and greatly increase the value of Pryme.

The Atocha Project � key points

• Up-dip to the Port Hudson field in the heart of the prolific Tuscaloosa Trend
• 6,400 contiguous acres project area which is close to existing oil and gas infrastructure
• Project area is prospective for oil and gas with a target size of 1.2 Trillion Cubic Feet Equivalent (TCFE) of recoverable gas equivalent for the entire Pryme acreage
• First prospect test
• Re-entry, to a depth of 17,700 feet, of existing well drilled by Shell Oil 
• Prospect defined by a grid of reprocessed 2D seismic
• Mud log indicates 125 feet of bypassed pay with oil and gas potential
• Work on the re-entry is expected to begin within 30 days
• Prospective for oil and gas with target size up to 28 Billion Cubic Feet Equivalent (BCFE) of recoverable gas equivalent
• Project area has potential for additional prospects

Material terms of the agreement

• Cash reimbursement to Pryme of 50% (approximately US$700,000) of project costs to date 
• Future Corp will carry Pryme for a 1/8th (12.5%) proportionate interest though to production on the first prospect test - the re-entry of the HM Brian No.1 well
• Pryme will retain a 3% overriding royalty interest in production from the prospect and, where achievable, and overriding royalty throughout the entire 6,400 acres
• Following the re-entry, drilling and development of all subsequent Atocha project prospects will be on a �heads up� basis

Drilling of the re-entry is scheduled to commence prior to the end of October.

Pryme has been approached by a second company which is interested in farming into a 25% working interest in the Atocha project. The proposal is subject to financing. The Board of Pryme will consider this proposal. However, it is the Company�s intention that the re-entry of the HM Brian No.1 will proceed as planned and that, regardless of any future proposal to participate in the project, Pryme�s final working interest in the Atocha project will be between 25 and 50 percent including its carried working interest.

�We are delighted to welcome Future Corp as a partner in the Atocha Project and look forward to the re-entry work beginning in October,� said Justin Pettett Pryme�s Managing Director. �The Atocha Prospect presents an opportunity to confirm the production potential of an existing well with approximately 125 feet of by-passed gas and significant upside potential. The resource estimates are representative of estimates for existing producing fields within only five miles of the prospect. With thirty-two years of drilling history in the area, a very large amount of information is available regarding production, reservoir attributes, geophysics, geology, and drilling. Reservoirs across the Tuscaloosa Trend exhibit world class characteristics at attractive depths.�

To read more and download a copy of the announcement, please click on the link below.
http://www.prymeoilandgas.com.au/announce.htm

Further information about Pryme Oil and Gas is available at www.prymeoilandgas.com

Thank you.

Administration Contact Us:
info@prymeoilandgas.com or +61 7 3371 1103

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