OIL & GAS

Powder River Basin Oil & Gas Holdings (PRB) is a U.S. subsidiary of Australian Gold Holdings Limited, an unlisted Australian public company.
It holds a prospective position in certain oil and gas leases in the Powder River Basin in Wyoming. It is the belief of management that these leases incorporate geological structures which have significant hydrocarbon bearing potential.
Key operational strategies include working over existing wells and drilling new targets in the existing producing field, drilling new targets in a prospective new oil & gas field, and establishing farm-ins and joint ventures. The highlights of the oil & gas project include:

• Existing revenue from producing oil wells.
• Low cost exploration to expand the existing oil field.
• Increased production possible from stimulation (refracture) of existing wells at low cost.
• Identification of a new shallow oil field which has the potential to contain 4 million barrels of oil. Low cost exploration to promote discovery. Further land amalgamation is required.
• Petroleum Engineers report (dated August 1991) on a deep prospect (Solomon’s Ridge) with estimated potential reserves of 81.9 million barrels of oil, (half of which is under PRB’s holdings), generated from historical Exxon & Conoco seismic data and time-to-depth conversions.
• An encouraging (due diligence) 3rd party report (by way of a petroleum engineers report of May, 2006) has been obtained in a review of the above referenced report.
• Assuming potential reserves (noted above) exist, and for the purpose of understanding the commerciality of the project, a full economic cash flow and federal tax model was completed by a consultant engaged by the Company, together with an estimate of value, which describes a Present Value (PV10) of US$1.291 billion (half of which is under PRB’s holdings). Note clearly that these reserves are unproven and are classified as P3 Possible Reserves.
• A neighbouring oil company, American Oil & Gas (AEZ) www.americanoilandgasinc.com, has recently made a significant oil & gas discovery just 4 miles to the Northwest of PRB’s acreage position in the same formation (depth range) targeted by PRB.  The operator has initially reported rates exceeding 20 million cubic feet of gas per day (MMSCFD). It is reported that the operator plans several hundred wells in the area. Encouraging discussions have commenced with AEZ on a joint venture arrangement on PRB’s acreage.
• Recent high level of activity on acquisitions adjoining PRB’s acreage position has taken place by Chesapeake Energy www.chesapeakeenergy.com (#1 independent gas producer in North America).  
• PRB is in the process of seeking a financial partner, with management and industry expertise.
• Exponential upside potential exists in the Company’s oil & gas holdings. A focused strategy is required in moving forward, to realise this potential.