Perth, July 7, 2008 (ABN Newswire) - ARC as the operator of the EP104/R1 Joint Venture have advised Empire Oil & Gas NL (ASX:EGO)(PINK:EOLGF) that it has undertaken well inspection operations at the Stokes Bay-1 well to assist in the design of the definitive testing program.

On inspecting the location it was noted that there is minor flood damage to the roadway and pad with access currently possible for light vehicles and relatively minor repairs required for heavy vehicle access.

Operations at the well included removal of the back pressure valve on the well and installation of the well head and pressure gauges. The well head pressure was noted to be 1200 psi. On opening the well to the test pit, it flowed gas for approximately six minutes before slugging mud and gas with flow ceasing after some 30 minutes.

After an overnight shut-in the well head pressure was noted as 250 psi but there was no significant flow. The well has now been shut-in and the crew has demobilised.

These results are interpreted to be very encouraging with the gas flowing either from the Laurel gas sands below the 7 inch casing shoe or from the Nullara reef section.

The noted presence of gas and well-head pressure will assist in the evaluation of the best method to undertake a definitive test of the reservoir. ARC will now undertake this evaluation for review by the joint venture.

Participants in Stokes Bay 1 (post earning) are:

Empire Oil and Gas NL    14.80%
ARC Energy Limited       38.95% (Operator)
Emerald Oil & Gas NL     12.75%
Pancontinental Oil & Gas 10.00%
Phoenix Resources PLC    10.00%
First Australian 
Resources Limited         8.00%
Indigo Oil 5.50%