The June oil production was sold at US$24.76/barrel and will go a long way towards improving the company's balance sheet - at the end of June, KRZ's cash at bank stood at just $233,997. Total production from Bula for the quarter amounted to 47,300 barrels.

During the quarter the company paid $160,000 plus GST to finalise a "termination agreement" with former management outfit, Kalgoorlie Mine Management Pty Limited. It also paid $1 for the remaining 25% of Petroasia Ltd it did not own - Petroasia Ltd being a 100% wholly-owned subsidiary of Kalrez Energy.

In the Cooper Basin the company entered into a joint operating agreement with Victoria Petroleum NL for a 1.25% share of PEL 104. PEL 104 covers 1069 square kilometres and lies adjacent to Australia's biggest onshore oil field, with estimated reserves of 70 million barrels of oil and 340 billion cubic feet of gas.

Initial studies have outlined at least ten leads and prospects in the block that are anticipated to require only minor amounts of seismic and further work to become drillable.

At the Seram Joint Venture Area (KRZ 2.5%) production continued through a Temporary Production System throughout April and May and until June 23 when the TPS facility was shut down to commission the main production facility.