The strong result was based on a 67% increase in gas production due to the completion of the Gocerler plant upgrade and the commencement of production from the Adatepe and Cayirdere fields.

However, the company is awaiting the outcome of the continuing fracture program at the Whicher Range Gas Field before finalising and releasing the full audited financial statements, as an adverse result at Whicher Range could result in a significant write-down of the carrying value of the assets.

A full write-down of the capitalized value of Whicher Range and related exploration assets could impact the financial statements by as much as $8.9 million. Any write-down would result in an increase in exploration expenditure written off and a corresponding decrease in deferred exploration expenditure.

To date the results from the fraccing program have been less than perfect with only poor flow rates from the first three zones, possibly indicating a lack of naturally occurring small scale fractures in the field that are needed to deliver the gas to the frac zone.

"Frac programs generally take a long time to clean out and so far we have only retrieved about 10% of the 3000 barrels of diesel and proppant that we put into the well, so naturally this would be inhibiting the flow rate. However, the slow recovery does seem to indicate a general lack of pressure in the zone," said Amity managing director Howard McLaughlin.

"We will continue with the fourth frac to determine the extent of the problem, whether it is localised or not, before finalising plans for the fifth and final zone."

Accordingly, the profit numbers referred to in this announcement are calculated prior to any exploration expenditure write-off, tax expense, depreciation or amortisation.

Amity Oil Limited’s operating profit for the half-year to 30 June 2004 was $7.1 million, the fourth half-year operating profit in succession following the commencement of sales from its Turkish operations in January 2002.