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VARIATION OF SETTLEMENT AGREEMENT

|BETWEEN | Dr David Bennett (the Chief Executive
      Officer)
|------- | ------------------------------------------------------
|AND     | Austral Pacific Energy Ltd. (the Employer)          

BACKGROUND

|A. | The parties entered into an agreement dated 23 December
      2005 for the retirement of the Chief Executive Officer and settlement of
      matters between the parties (Settlement Agreement).
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                   
|B. | The parties have now agreed to vary the settlement as it
      relates to the stock options granted to the Chief Executive
  Officer.                                                             

IT IS AGREED:

1.        The Settlement
Agreement is varied by deleting clauses 5, 6 and 7, and inserting the following
in their place:

| | 5. | The Chief Executive Officer agrees to waive all rights
      to, and allow the Employer to cancel, the 600,000 vested options and the
      300,000 performance options which he would otherwise be entitled to
      retain.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | In consideration for the Chief Executive Officer agreeing
      as set out in clause 5, the Employer agrees to grant to the Chief
      Executive Officer 750,000 options with effect from 2 February 2006, vested
      immediately, at an exercise price of US$1.20, expiry 2 February
    2008.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 7. | [Not Used] 
| | -- | ------------

2.        The Employer
agrees to issue an Option Commitment granting the options as set out in clause 6
of the Settlement Agreement as amended, immediately upon execution of this
variation to the Settlement Agreement.

3.        The Employer will
sign a consultancy agreement with the Chief Executive Officer, substantially in
the terms of the Employers standard consultancy agreement, with a guaranteed
minimum period of two years from 2 February 2006, at an annual rate of NZ$1,
payable in advance as a basic retainer for merely being available for
consultation to the Company. All hours actually worked under such arrangements
to be paid by the Employer at prevailing market rates for such services. The
extent and timing of such additional services, if any, shall be in the
Employers sole discretion. The Employer may terminate the agreement without
cause anytime after July 1, 2007 on thirty days notice and any unexercised
options then held by the Chief Executive Officer at the end of such thirty day
period shall lapse without any payment due in consideration thereof.

3.        Except as amended
by this variation, the Settlement Agreement is confirmed by both parties as
remaining in full force, and this variation is subject to the confidentiality
obligations set out in the Settlement Agreement.

Dated at Wellington
this           day of February
2006

__________________________ Dr David Bennett

__________________________ for Austral Pacific Energy Ltd.

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