Adelaide Energy Limited (ASX:ADE) Update On Otway Petroleum Project

Adelaide, Dec 29, 2010 AEST (ABN Newswire) - The Otway Petroleum Project is Adelaide Energy Limited's (ASX:ADE) (ADE's) 100% owned suite of integrated production, development and exploration oil and gas assets, which are located in the South Australian section of the onshore Otway Basin.

Petroleum Retention Lease 13 - further equity acquired

Adelaide Energy Ltd (ADE) recently executed an Agreement with Somerton Energy Ltd (SNE) to acquire its 20% interest in the PRL 13 retention lease ("Killanoola") in the South Australian part of the Otway Basin for consideration of A$110,000.

Following this acquisition, ADE will own 100% of this permit.

ADE plans to drill one or two wells in PRL 13 in the first half of 2011. This will be the first drilling in PRL 13 since Killanoola-1 produced oil in the low oil price environment of 1998.

Patrick-1 - production

The Patrick-1 well is now producing into sales. The added benefit apart from revenue is that it will allow the Company to monitor the well's performance over an extended period and get a better estimate of reserves in place.

2010 Gas Sales

ADE's gas sales volumes in calendar year 2010 have now exceeded the milestone of 1,000 TJ (one petajoule of gas).

Gas and Gas Condensate Sale Agreements renewal

ADE has recently negotiated 2 year renewals of its two Gas and Condensate Sale Agreements for sales ex its Katnook Plant. Although the terms of these contracts are commercial in confidence, there have been some key changes:

1. With respect to gas, there has been the introduction of seasonal gas pricing, with summer prices being reduced to reflect lower demand for gas in this period. Winter pricing is also marginally lower reflecting the recent additions of offshore gas to the SE Australian market.

2. With respect to condensate, sales prices will be more closely linked in with the oil price and revenues are expected to improve if oil prices rise in the short term.

Commenting on these recent developments, Carl Dorsch, ADE's Managing Director, said:

"The forthcoming Killanoola drilling program presents a low risk and low cost opportunity to add crude oil production to our Otway Petroleum Project. This, together with the liquids rich Jacaranda Ridge-2 well will re-weight our otherwise gassy production portfolio in the next few years.

On the gas side, our production this year has benefited both from new wells brought on line during the year as well as the careful management of older wells. Reaching a sales milestone of 1,000 TJ before year end (without any safety or environmental incidents) reflects very well on our production team, particularly when one considers that there are only a dozen companies that Operate gas production in Australia, and the others are generally either Super-Majors or multi-billion dollar Australian companies."

The Otway Petroleum Project (100% ADE) comprises:

a. PEL 255: contains the Jacaranda Ridge-2, Hollick-1 and Patrick-1 wells and 3 remaining targets

b. The Katnook Gas Assets consisting of:

- The Katnook Gas Processing Plant and associated infrastructure

- The Ladbroke Grove Gas Processing Plant and associated infrastructure

- Petroleum Retention Licences 1 (Wynn) & 2 (Limestone Ridge)

- Petroleum Production Licences 62, 168 & 202

- Existing gas pipelines to the Gas Plants from wells in the PPLs

- 13 Producing/shut in gas/gas liquids wells

c. PELs 494 and 496 - 2 exploration licences awarded to ADE on 24 March 2009

d. PRL 13 (50% ADE) - Killanoola Prospect (soon to be 100% ADE)

For the complete Adelaide Energy announcement including location map, please refer to the following link:

http://www.abnnewswire.net/media/en/docs/64914-ASX-ADE-181287.pdf

Contact

Carl Dorsch Managing Director Adelaide Energy Limited Mob:+61-0400-508-088 Email: c.dorsch@adelaideenergy.com.au Neil Young Chief Commercial Officer Adelaide Energy Limited Mob: +61-0417-850-245 Email: neil.young@adelaideenergy.com.au http://www.adelaideenergy.com.au