The company's 2004 program consists of a minimum of five exploration wells, including Stuart's first gas exploration well in Doreimus-1, and one Worrior appraisal well.

Key features of the program include the highly prospective Arwon-1 adjacent to the Worrior field, targetting in excess of 14.8 million barrels of oil in place and 10 BCF of gas in place; and the first drilling in PEL 113, considered Stuart's most prospective block for oil exploration.

Farmouts again feature in the program and a number are currently being finalised, although only one well, Hyperno-1 is contingent on farmout negotiations. Stuart is finalising equity participation factors for a prospect straddling PEL 113 and PEL 114. Santos will operate this well, Derrilyn-1, which is due to spud in April.

Stuart has also determined a policy with regard to managing the risk to its revenues arising from movements in crude oil prices and the exchange rate between $A and $US.

The company will utilise hedging instruments to a level which protects the cashflows required to fund the ongoing work program and to finance the company's debt.

This policy is consistent with Stuart's objective to fund it's ongoing commitments internally and avoid equity based capital raising which could result in a dilution of shareholder equity.

Currently this policy requires that, in the short term (up to six months), a minimum of 75% of production should be fully hedged against price and currency fluctuation. In the medium term (6 to 18 months forward) production should be hedged at 75% and the longer term (18 to 30 months forward) and (30 to 42 months) should be hedged at 50% and 25% of production respectively.

In the longer term, the company and its advisors are of the view that the A$ will settle back from its recent levels. Accordingly the longer term crude oil swap is written in US$ and supported by a concurrent currency option protecting against unforeseen continued strength in the exchange rate however allowing the company to benefit from expected A$ weakness in the longer term.

The longer term crude oil hedge rates are for relatively modest levels of expected production which will allow the company to participate in any strength in the crude oil markets at that time.