Austral’s 69.5% share of test production from Cheal during the latest quarter generated revenue of $US782,499 for the Wellington-headquartered junior.

Yesterday Austral posted a $US2.2 million ($A2.7 million) loss for the March 2007 quarter, compared with a net loss of almost $3.4 million for the corresponding 2006 quarter.

Austral said the decreased loss was primarily attributable to net production increasing by $358,195 and foreign exchange movements changing from a $1.3 million loss in the March 2006 quarter to a $124,123 gain in the 2007 quarter.

Other significant revenue included joint venture recoveries and interest, which totalled $390,703 for the quarter.

The company said it did not actively hedge its foreign currency exposure.

But last December, Austral entered into several put options and forward sales contracts for the future sale of Cheal crude oil. It said the fair value of the derivates had decreased for the latest quarter, resulting in a net loss of $862,226.

Austral also said there had been a decrease in impairment of oil and gas properties of $881,227, primarily because of the company focusing on the development of Cheal.

The company added that it had increased the number of staff to let it dedicate sufficient resources to operational and administrative activities in order to implement the company’s growth strategy.

Earlier this year, Austral said it was employing four management-administration and three subsurface personnel with the aim of growing to become a significant player in New Zealand and Papua New Guinea.

Yesterday, Austral said it and Cheal partner Canadian-listed junior TAG Oil (30.5%) were progressing well with the construction of production facilities at the Cheal A wellsite, with the plant expected to be commissioned by July.

Negotiation of the commercial arrangements for the transportation, processing and sale of the crude oil were underway and initial total production, of about 1900 barrels of oil per day, was expected to be achieved during the third quarter.

From last July to March, a total of 44,776bbl of oil (100%) was produced and transported to the Waihapa production station where it was sold to Swift Energy New Zealand.

Gas produced in association with crude oil production was used to generate electricity for onsite use or sold.

Austral further said it planned an aeromagnetic survey, followed by 2D seismic, over its new licence PEP 38524 in the southern offshore Taranaki Basin.

Austral operates and holds a 100% interest in PEP 38524 located west and north of D’Urville Island, near the northern tip of the South Island.

In PNG, Austral and British firm Rift Oil (operator with a 65% interest) were continuing to investigate ways to commercialise their 2006 Douglas gas discovery in onshore licence PPL 235.

They were likely to conduct a production test of the suspended Douglas-1 well during the third quarter to further test the gas-bearing columns encountered in the Jurassic-aged Alene and Toro sandstones.