Amid the gloom, there had been some positive news from BassGas (AWE 30%) with operator Origin Energy recently announcing Yolla 2P reserves had been upgraded by 19%.

But AWE chairman Bruce McKay acknowledged there overall BassGas had been very disappointing.

“This time last year I advised shareholders that despite disappointing delays and some construction contract issues, the BassGas project should start production before the end of the year and commence delivering significant cash flow to AWE,” McKay told shareholders at the company’s AGM today.

“I regret that now 12 months later we are still giving similar advice. It has been very frustrating for us all but the operator has announced that rectification works are nearing completion and gas should flow by the end of the year.

“The project delays have cost the company through increased capital, lost revenue and payments for hedges. We will all feel a sense of relief and achievement, albeit deferred, when we really do deliver this project for our patient shareholders.”

Against that disappointment, the developments at Casino (AWE 25%) in the Otway Basin, offshore Victoria and Cliff Head (AWE 27.5%) in the offshore Perth Basin were proceeding on schedule and AWE looked forward to bringing these fields onto production by late March 2006.

“With the commencement of production from three projects, our bottom line financial results will certainly be better than the loss reported in 2004-05,” McKay said.

In New Zealand, the Tui Joint Venture has committed to the development of the Tui Area Oil Project (AWE 20%) with a final investment decision confirmed this week.

“AWE has consolidated its acreage holdings in the Taranaki Basin and identified very encouraging prospects which we hope to drill at the time of the Tui Area development wells starting in late 2006,” McKay said.

The company would also undertake follow-up prospect drilling around its other developments in the next year.

In the 15 months, the company had achieved 100% success with wildcat exploration drilling at pateke-1, Trefoil-1, Martha-1 and Henry-1.

“We are optimistic about further prospects for additional commercial accumulations,” McKay said.

“Coupled with other exploration wells in the Timor Sea – to commence drilling early next month – and the Canterbury Basin – to start drilling next year – we have a program that continues to provide exposure to significant upside potential and organic growth opportunities.”