Various operational and weather problems mean Phase one will not be completed until next month, but the expected production outcome is ahead of the independent expert Ryder Scott development plan schedule for the project, according to Farrell.

“A significant reclassification within 3P reserves is indicated, reflecting movement of Possible and Probable into the Proved (1P) category, especially with West Flour Bluff Gas Field,” he said.

“Overall 52% of 3P reserves are now in the Proved category as against 29% a year ago. It is expected that this trend will continue in the phase two development program.”

On that basis, Sun Resources is looking at increasing its 12.5% interest in the project. Two other Perth-based juniors, Victoria Petroleum and Aurora Oil & Gas, also have 12.5% stakes in the project.

A post-drill estimate by the operator, Texas Crude Energy, says the project could contain a total recoverable reserve potential of 190 billion cubic feet of gas and 3.57 million barrels of oil. This includes 3P (proved, probable and possible) of 88.4 billion cubic feet of gas and 1.74 million barrels of oil, with additional potential of 102 BCF gas and 1.83 million barrels of oil, Sun Resources said.

Phase two, expected to start in January next year and finish in May 2007, involves nine new wells and a possible workover, the company said.

Farrell said he believed production could exceed 30 million cubic feet of gas per day at the end of the second development year in February 2007.

“Lessons learned from the phase 1 program of getting fracs right and having two-to-three-fold flow outcomes should result in a substantial production increase,” he said.

To date three new wells have been drilled on the project, while four well recompletions and workovers are being completed to finalise phase one.

Sun Resources said the new well results were mixed. EFB D-24 on East Flour Bluff also has an excellent individual well recoverable reserve of 4.098 billion cubic feet of gas and 90,402 barrels of oil.

The East Flour Bluff E-10 well targeted the shallow Frio “Massives”, which were shown to be pressure depleted by previous production. Currently the E-10 well is being completed on younger Miocene sands with a possible 0.4 billion cubic feet of gas well reserve potential.

The Flour Bluff Gas Project is a substantial gas project involving the redevelopment of a near depleted giant gas field at Flour Bluff, on the outskirts of Corpus Christi, Gulf Coast Texas, Sun Resources said. It has produced 1.3 trillion cubic feet of gas, with 60 million barrels of oil over the last 65 years.