Central Petroleum has announced the execution of a formal agreement with newly formed Helium focussed group He Nuclear Limited.

The farmout by Central will involve the funding by He Nuclear of additional predrilling seismic and an exploration well in each of the Mt Kitty (EP125) and the Magee (EP 82) Prospects in the Amadeus Basin. The whole initial programme is anticipated to cost in the order of A$10 million with He Nuclear funding A$5 million under an industry standard farmin agreement and Joint Operating Principles.

He Nuclear will fund the programme at the 50% level to earn a 25% participating interest in each of the Prospects and a small area of surrounding acreage leaving room for other parties to potentially farmin to parts of the remaining acreage in the Exploration Permits concerned.

The exploration concept is based on the Heavitree Quartzite, a formation immediately under the Gillen Salt Member of the Bitter Springs Group in the southern Amadeus Basin. The target formation has only been drilled once before despite its widespread relatively shallow distribution and its favourable occurrence under the efficient salt seal of the Gillen Member. The Magee 1 well drilled by Pacific Oil and Gas in 1992 to a TD of 2,400m in 22 days using air and air hammer drilling techniques and costing $1.3 million at the time encountered gaseous hydrocarbons with let fractions?and most importantly a concentration of Helium over 6%, about twenty times the usual minimum required for commercial extraction.

The excellent sealing characteristics of the Gillen Salt Member were evidenced by the entrapment of Helium, the second most mobile element in the periodic table. The Heavitree Quartzite at the Magee location had a porosity of over 9% but was too thin to provide substantial and commercial pay. Further to the north and to the west the Heavitree is expected to be much thicker with a higher porosity.

The Mt Kitty Prospect has interpreted closure of over 500 square kilometres and independent geologists have estimated P10 (right potentially recoverable resources of 1.7 TCFG which at 6% Helium would contain over 100 BCF of Helium. The USGS reported that last year, 2005, private industry sales of pure Helium in the USA ranged from $67-73 USD/MCFG compared with c.$2.50- $2.90 USD/MCFG for petroleum gas received in Australia.

Helium is used as a cooling medium in 4G pebble bed nuclear reactors, cryogenics, superconductor research, medical, deep water and missile guidance applications.

Central has conducted a long ranging scoping study with Holt Campbell and Payton Pty Ltd, Consulting Engineers on the pre-feasibility of a Gas to Liquids plant located at Alice Springs in the Brewer Industrial estate with the intention of processing hydrocarbon gases to a range of middle distillates such as zero sulphur diesel, jet fuel and naphtha. It is proposed that were such a plant be built that product could be shipped via the newly established rail link from Alice Springs direct to port facilities at Darwin for export to either domestic and/or international markets.

Central also has a Memorandum of Understanding with BOC, the world抯 biggest suppliers of Helium gas aimed at joint extraction and marketing of any Helium resources that Central may discover.

The combined conventional hydrocarbon prospective resources of the Mt Kitty and Magee prospects if present at the right estimate of Mulready Consultant, could support a 10,000 bbl/day GTL plant of the type envisaged for over 25 years.