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Origin and Contact Acquire Oil & Gas Assets

Joint ASX/NZX/Media Release

20 December 2007

Origin Energy and Contact Energy Acquire Swift Energy Oil & Gas Assets in New Zealand

Origin Energy and Contact Energy announced today they will purchase certain of Swift Energy’s New Zealand oil and gas assets for approximately US$87.8 million (approximately NZ$115 million), delivering a range of benefits and synergies to each company. The effective date of the acquisition is December 1, 2007.

The Swift Energy assets being acquired include their two main producing areas in the onshore Taranaki Basin, some additional permits and inventory. The assets are:

  • The Tariki, Ahuroa, Waihapa and Ngaere (TAWN) fields;

  • Waihapa Production Station;

  • Rimu, Kauri and Manutahi fields;

  • Rimu Production Station;

  • Separate oil and gas pipelines from Waihapa production station to New Plymouth;

  • Offshore exploration permits; and

  • Inventory of equipment and supplies.

Under a separate arrangement between Contact Energy and Origin Energy, Contact Energy will contribute approximately NZ$54 million to the total purchase price for the right to own and develop the Ahuroa field as an underground gas storage facility and purchase the remaining gas and LPG reserves in the Ahuroa reservoir.

Origin Energy Managing Director Grant King said the purchase of the assets would deliver greater operational synergies with Kupe, increased exploration opportunities and create valuable gas storage facilities for Contact. In addition, the assets will provide immediate production and earnings.

“The TAWN and Rimu/Kauri/Manutahi assets are an attractive mix of mature producing fields with prospects for in-fill drilling and potential oil and gas upside. In addition Origin is acquiring two gas, oil and LPG production facilities and two strategic transmission pipelines connecting the TAWN assets to New Plymouth. Gas produced from the TAWN fields and all LPG is contracted to Contact Energy. The assets also contain a potential gas storage reservoir opportunity in the Ahuroa field.

“Origin has also acquired a 50% interest in two exploration permits, which lie immediately offshore from the Rimu production facility and adjacent to our Kupe gas field development,” Mr King said.

Contact Energy Chief Executive David Baldwin said “the deal demonstrates the value of a close working relationship between Origin and Contact, giving Contact a much sought after potential gas storage option, delivering greater flexibility in managing its long-term natural gas supply options.

“Contact has been investigating natural gas storage options for more than two years, as the flexibility in natural gas supply contracts has been replaced with ‘take or pay’ contracts.

“The ability to develop a gas storage facility in the Ahuroa field will enable the company to use its gas-fired power stations as and when required, mitigating the financial consequences of not using natural gas under ‘take or pay’ contracts, and the costs of using gas when there are more cost effective generation options.

“Reservoir modelling of the Ahuroa field suggests it would make an excellent gas storage option. We expect to have the facility fully operational by mid 2010,” he said.

Contact and Origin will also enter into various agreements to enable Contact to develop the gas storage facility, with Origin providing a range of project management, processing, operation and maintenance services.

In light of Origin’s ownership interest in Contact, Contact’s participation in the Swift acquisition and the arrangements between Origin and Contact for the delivery of technical services from Origin to Contact were, and will continue to be, overseen by Contact’s independent directors.

The transaction is expected to be complete in the first quarter of 2008 and is conditional on the consent of the Overseas Investment Office.

In certain parts of one field, Swift Energy will have an option to take-up a 30% working interest within 10 years. In some fields Swift Energy will earn a 10% over-riding royalty interest once a production volume threshold is exceeded. In other fields Swift Energy will earn a 10% overriding royalty plus an option to convert this to a 30% working interest within 10 years - once again, if production volume thresholds are exceeded. All these rights are of a contractual nature only.

About Contact Energy Ltd

Contact Energy is one of New Zealand’s largest listed companies, and New Zealand’s largest listed electricity generator and retailer. Contact generates more than a quarter of New Zealand’s total electricity and retails electricity, gas and LPG to around 635,000 customers.

About Origin Energy

Origin is the Ethical Investor 2007 Sustainable Company of the Year and one of Australasia’s leading integrated energy companies focused on gas and oil exploration and production, power generation and energy retailing. Listed in the ASX top 50, with a market capitalisation of around $7.5 billion, Origin is both a producer and retailer of energy. Our strengths come from our integration across the supply chain, from exploration and production to the supply of energy to over 3 million customer accounts. Origin’s portfolio of assets together with our 3,000 employees, provide flexibility, stability and significant opportunities for growth in the ever changing energy industry. Origin Energy is also the major shareholder in New Zealand’s Contact Energy.

ENDS

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