Austral Announces PNG Asset Sale and Debt Reduction

WELLINGTON, New Zealand, March 25 /PRNewswire-FirstCall/ -- Austral
Pacific Energy Ltd. (TSX-V: APX; NZSX: APX; Amex: AEN) announces that it has
signed an agreement with Horizon Energy for the purchase of Austral's 28.92%
interest in Papua New Guinea petroleum retention license (PRL) 4 and 10.7%
interest in PRL 5. The offers are subject to the pre-emptive rights in the
relevant joint venture agreement, which give the existing joint venture
parties a 45 day period in which to take up an option to purchase a
proportionate share of Austral's interest on the same terms and conditions as
the Horizon agreement.
The Company plans to use the proceeds of sale to accelerate loan
repayments under the Company's debt facility with Investec. The amount
outstanding under the debt facility is US$18.65m. Under the arrangement,
Austral will, using the proceeds of sale, along with other scheduled
reductions and the set-off of funds being held in a reserve account, reduce
the company debt to US$11 million by May 31, 2008, a reduction of
$7.5 million.
Commenting on the early repayment and asset sale, Company CEO Mr. Jewell
said, "Now is a good time to reduce the company's debt profile, strengthen the
balance sheet, and retain its focus on the growth of production from our core
assets including the Cheal field development, Kahili Gas Development and
Cardiff appraisal. To facilitate this, Austral has completed a review of its
inventory of projects and will monetize non-core assets where the divestment
can take advantage of the value cycle of the asset and deliver economic value
to the company." Mr. Jewell also said, "Austral has funding and plans in place
to drill additional wells in the Cheal field in the second quarter of this
year."
Additionally Austral and the holders of $10 million in redeemable
preferred shares convertible at $1.30 have agreed to swap those shares for an
unsecured $10 million debenture with the same economic terms as the preferred
shares. The preferred shares are currently carried within Austral accounts as
long-term debt under generally accepted accounting principles.
Web site: www.austral-pacific.com
Email: ir@austral-pacific.com
Phone: Thom Jewell, CEO +64 (4) 495 0880 or
Brad Holmes: +1 (713) 304 6962

None of the Exchanges upon which Austral Pacific's securities trade have
approved or disapproved the contents hereof. This release includes certain
statements that may be deemed to be "forward-looking statements" within the
meaning of applicable legislation. Other than statements of historical fact,
all statements in this release addressing future production, reserve
potential, exploration and development activities and other contingencies are
forward-looking statements. Although management believes the expectations
expressed in such forward-looking statements are based on reasonable
assumptions, such statements are not guarantees of future performance, and
actual results or developments may differ materially from those in the
forward-looking statements, due to factors such as market prices, exploration
and development successes, continued availability of capital and financing,
and general economic, market, political or business conditions.
See our public filings at www.sedar.com and
here for further information.
SOURCE Austral Pacific Energy Ltd.

Thom Jewell, CEO, +64 [4] 495 0880, or Brad Holmes, +1-713-304-6962, both of
Austral Pacific Energy Ltd., ir@austral-pacific.com