The review, which assessed Po Valley’s recently drilled Sillaro and Vitalba development fields, also reported total 2P (proven and probable) reserves at 104.6 bcf and 3P reserves (proven, probable and possible) at 130.4 bcf.

Sillaro and Vitalba are two of three fields currently being developed by Po

Valley and which are planned to supply the company’s first sales into the Italian gas market at the end of this year or early 2007. A fourth field, Bezzecca (formerly Pandino), south-east of Milan, is also planned for drilling around this time.

Po Valley chief executive Michael Masterman announced the reserve upgrade today after a review by Italian-based consulting geologists, Ecopetrol, based on results from the company’s 2005 exploration program.

“This increase in Proven reserves clearly establishes the success of our business model of targeting low-risk, economically attractive gas prospects in this highly productive gas province,” Masterman said.

“It means we, as a new Australian energy company, are now well placed to become a gas supplier into the high price European gas markets.”

Masterman added that when Po Valley listed on the ASX in December 2004, it owned three development fields and only 12% of its reserves were proven.

“Today, we have expanded our boundaries to have four development fields, three of which have been successfully drilled, our proven and probable reserves have increased by 70% and of these, 28% are in the proven category,” he said.

The 100%-owned Sillaro gas field was drilled in the second half of last year, and a significant gas discovery in the primary target (Pliocene) was successfully tested in the past two months. A new geological model of the field developed by Ecopetrol raised overall reserves for the Pliocene by 26% to 15.8bcf, with 66% classified as proven.

“Not only have we established a significant proven reserve and increased our total reserves, the flow rates at Sillaro range between 3.5 and 5.4 million cubic feet per day across the three productive levels – confirming the Sillaro Pliocene as a significant asset for the company,” Masterman said.

A production concession is now being prepared for the Sillaro-1 well, with first commercial production expected to start late this year or early 2007.

Meanwhile, Po Valley’s 100%-owned Vitalba gas field, also drilled in the second half of 2005, was successfully tested last month. Ecopetrol’s review increased proven reserves by 28% to 4.6 bcf, while probable reserves decreased by two thirds to 1.7 bcf. Total 2P reserves were 2.3 bcf lower at 6.3 bcf.

“Vitalba carried a definable exploration risk as we were drilling up dip from the proven reserves,” Masterman said.

“While unsuccessful in establishing this reserve extension, it was a risk we were well prepared for, with the drill rig set to enable the immediate directional drilling towards the proven reserves which we not only established, but increased.”

Po Valley is also preparing the production concession for Vitalba-1, with first gas set to flow late in 2006-early 2007 from the single existing well.

“We are continuing to evaluate the potential of this field as a gas storage reservoir,”

Masterman said.

“Gas storage facilities have become a high priority in Italy, given the recent import shortages which required the release of strategic reserves, and the switching of gas-fired power stations to fuel oil over the winter season.”