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Ballance Eyes Gas Exploration As Option

13 December 2004
Media Release

Ballance Eyes Gas Exploration As Option

Statement made by Larry Bilodeau, Chief Executive,
Ballance Agri-Nutrients Ltd

Ballance Agri-Nutrients is to become involved in on shore oil and gas exploration in Taranaki in an attempt to secure future gas supplies for its Kapuni urea manufacturing plant.

The initiative is just one of a number we are taking to potentially broaden future supplies of natural gas.

Kapuni is a major user of natural gas, converting some 7 petajoules of natural gas a year into 260,000 tonnes of urea to supply New Zealand farmers with nitrogen fertiliser.

Our existing supply contracts for natural gas come to an end in mid 2006. In addition to being in ongoing discussion with gas field owners regarding future supplies, we are in a modest way also looking at becoming partially self sufficient. Our investment is under $1million which makes good commercial sense when we are seeking to protect a manufacturing investment that contributes more than $90 million in urea sales to our annual turnover.

Earlier this year we purchased the rights to an on shore exploration permit ( # 38742 ) which covers 68 sq kilometers of north and central Taranaki.

Subject to the New Zealand Government approval, Ballance will transfer a 60% working interest in the permit area to Swift Energy Company, an experienced energy partner. Swift will also become the operator of the permit and manage the permit on behalf of a newly formed Ballance Swift Joint Venture. This includes the drilling of the Karaka –A 1 well in early 2005 targeting the already productive Mt Messenger formation.

Our interest in exploration is to give us access to long term gas supplies, and one way we could achieve this is through a minority interest in a producing field.

While the licence area is well researched, it has not been subject to exploratory drilling.

Note: Swift Energy was founded in 1979 and is headquartered in Houston, Texas. It is a developer, explorer, acquirer and operator of gas and oil properties in Texas, Louisiana and New Zealand.

Ends

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