Beach, which will keep about 1.8% or 5.6 million shares in Anzon Australia, acquired the original shares through its A$10 million support of the company’s 2004 Initial Public Offering.

Proceeds from the A$28 million sale will be used by Beach to partly fund last week’s acquisition of a further 12.5% direct holding in the BMG project. The remainder was expected to be funded from a combination of existing cash reserves, cash flow and debt.

The sale of Beach’s Anzon shares was effected through the placement of 25 million shares at a placement price of A$1.12 each.

“Our primary interest is through our 50% stake in the BMG oil and gas project, as distinct from being a long-term cornerstone investor in Anzon Australia itself,” Beach Petroleum managing director Reg Nelson said.

“We have been delighted to have been part of Anzon Australia’s successful growth story and look forward to continued success by a joint venture which has worked very harmoniously to develop the BMG project.”

Nelson said the share transaction had delivered considerable upside on Beach’s original investment and it was now more strategically sound to increase its direct exposure in the BMG operation.

“In addition, we can deliver further benefits to shareholders because the capital gains on the transaction can be totally offset against capital losses held by Beach, adding to our profitability,” he said.

The A$28 million placement, handled by Perth's Euroz Securities, was to a range of institutional investors.

The Basker and Manta fields have proven and probable (2P) recoverable oil reserves of 30.1 million barrels. In addition, the venture has identified a contingent gas/condensate resource of 19.2 million barrels of oil equivalent in the Manta and

Gummy Fields.

Last month, the Basker-2 well moved to an Extended Production Testing regime, using a combination of the Crystal Ocean FPSO and oil transfers to the 650,000-barrel capacity Basker Spirit tanker moored 1.5 kilometres away, for storage and subsequent sale.

Basker-2 is currently producing at around 10,000 barrels of oil a day, with first oil sales expected mid next month. A six-month full field development drilling program of four oil wells is also expected to start soon. Full field production from Basker

Manta is scheduled for the third quarter of 2006.