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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION** Washington, D.C. 20549

FORM 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
  SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year ended December 31, 2003

Commission File No.:**0-29344**

AUSTRAL PACIFIC ENERGY LTD.
  (Exact name of Registrant as specified in its charter)

**Yukon Territory, Canada**
  (Jurisdiction of incorporation or organization)

**284 Karori Road, Karori 
  Wellington New Zealand, 6003**
  (Address of principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:None

Securities registered pursuant to Section 12(g) of the Act:

(Title of class) Common Shares

Securities for which there is a reporting obligation pursuant
  to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the Registrant's
  classes of capital or common stock as of 
  close of the period covered by the annual report:

7,739,324 Common Shares

Indicate by check mark whether the Registrant: (1) has filed
  all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
  Act of 1934 during the preceding 12 months (or for such shorter period that
  the Registrant was required to file such reports), and (2) has been subject
  to such filing requirements for the past 90 days:
  Yes   **x**         No
    ** ̈**

Indicate by check mark which financial statement item the Registrant
  has elected to follow.

Item 17   **x**         Item
  18   ** ̈**

The Index to the Exhibits is found at Page [86]

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TABLE OF CONTENTS

|         |          |                                                                                   | Page
|-------- | -------- | --------------------------------------------------------------------------------- | ----
|         |          | Glossary of Terms                                                                 | 3   
|Part I   |          |                                                                                   |     
|         | Item 1   | Identity of Directors, Senior
      Management and Advisers                       | 7   
|         | Item 2   | Offer Statistics and Expected
      Timetable                                     | 7   
|         | Item 3   | Key Information                                                                   | 7   
|         | Item 4   | Information on the Company                                                        | 13  
|         | Item 5   | Operating and Financial Review
      and Prospects                                | 25  
|         | Item 6   | Directors, Senior Management
      and Employees                                  | 36  
|         | Item 7   | Major Shareholders and Related
      Party Transactions                           | 43  
|         | Item 8   | Financial Information                                                             | 44  
|         | Item 9   | The Offer and Listing                                                             | 45  
|         | Item 10  | Additional Information                                                            | 47  
|         | Item 11  | Quantitative and Qualitative
      Disclosures About Market Risk-                 | 51  
|         | Item 12  | Description of Securities
      other than Equity Securities                      | 51  
|Part II  |          |                                                                                   |     
|         | Item 13  | Defaults, Dividend Arrearages
      and Delinquencies                             | 52  
|         | Item 14  | Material Modification to the
      Rights of Security Holders and Use of Proceeds | 52  
|         | Item 15  | Controls and Procedures                                                           | 52  
|         | Item 16  | Reserved                                                                          | 52  
|         | Item 16A | Audit committee financial
      expert                                            | 52  
|         | Item 16B | Code of Ethics                                                                    | 52  
|         | Item 16C | Principal Accountant Fees
      and Services                                      | 53  
|         |          |                                                                                   |     
|Part III |          |                                                                                   |     
|         | Item 17  | Financial Statements                                                              | 54  
|         | Item 18  | Financial Statements (Not
      Used)                                             | 54  
|         | Item 19  | Exhibits                                                                          | 54  
|         |          |                                                                                   |     
|         |          | Signatures                                                                        | 56  
|         |          | Financial Statements                                                              | 57  
|         |          | Index to Exhibits                                                                 | 86  
|         |          | Exhibits                                                                          | 87  

2

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GLOSSARY OF TERMS

The following terms as defined here are used throughout this
  filing:

Austral PacificorCompanyorRegistrantrefers toAustral Pacific Energy Ltd., a corporation organized and
  registered under the laws of Yukon, Canada, and includes its subsidiaries.

$or dollarrefers to the currency of the United
  States of America, unless otherwise noted in relation to a particular reference.

Basinis a segment of the crust of the Earth in which
  thick layers of sediments have accumulated over a long period of time.

Bblor Barrel is one stock tank barrel, of 42
  U.S. gallons liquid volume, used herein in reference to crude oil or other liquid
  hydrocarbons.

Bopdis a flow rate of one barrel of oil per 24 hour
  day.

Condensate refers to hydrocarbons associated with natural
  gas which are liquid under surface conditions but gaseous in the reservoir before
  extraction.

Depletion is the reduction in petroleum reserves due
  to production.

Development refers to the phase in which an oil or
  gas field is brought into production, usually by drilling and completing production
  wells, and the wells, in most cases, are connected to the petroleum gathering
  system.

Discovery is the location by drilling of a well of
  an accumulation of gas, condensate or oil reserves, the size of which may be
  estimated but not precisely quantified and which may or may not be commercially
  economic, depending on a number of factors.

Exploration Well is a well drilled in a prospect without
  knowledge of the underlying sedimentary rock or the contents of the underlying
  rock.

Farm In or Farm Out refers to a common form
  of agreement between or among petroleum companies where the holder of the petroleum
  interest agrees to assign all or part of an interest in the ownership to another
  party that is willing to fund agreed exploration activities which is usually
  equivalent to more than the proportionate interest assigned to such other party.

Fault is a fracture in a rock or rock formation along
  which there has been an observable amount of displacement.

Field is an area that is producing, or has been proven
  to be capable of producing, hydrocarbons.

Formation is a reference to a group of rocks of the
  same age extending over a substantial area of a basin.

GAAPGenerally accepted accounting principles.

Geology is the science relating to the history and
  development of the Earth, and is also used to refer to the make-up of the rocks
  in a particular area.

Hydrocarbon is the general term for oil, gas, condensate
  and other petroleum products.

Joint Ventureor JVrefers to a standard form
  of participation in petroleum exploration, via unincorporated joint arrangements
  between a number of industry participants, with one party operating the permit
  (ie managing the operations) on behalf of all the participants, and Joint Venturers
  has a corresponding meaning.

MbblsOne thousand barrels of crude oil or other liquid
  hydrocarbons.

MMcf


3

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NZSXis the New Zealand Stock Exchange.

Participating Interest or Working Interest is
  an equity interest, as compared to a royalty interest, in an oil and gas property
  whereby the participating interest holder pays its proportionate or agreed percentage
  share of development and operating costs and receives its proportionate share
  of the proceeds of hydrocarbon sales after deduction of royalties due on gross
  income.

Permit or Licence is an area that is granted
  for a prescribed period of time for exploration, development or production under
  specific contractual or legislative conditions.

Pipeline is a system of interconnected pipes that gather
  and transport hydrocarbons from a well or field to a processing plant or to
  a facility that is built to take the hydrocarbons for further transport, such
  as a gas liquefaction plant.

Prospect is a potential hydrocarbon trap which has
  been confirmed by geological and geophysical studies to warrant the drilling
  of an exploration well.

Proved Developed Reserves are Proved Reserves that
  can be expected to be recovered through existing wells with existing equipment
  and operating methods.

Proved Reserves are the estimated quantities of crude
  oil, natural gas and natural gas liquids which geological and engineering data
  demonstrate with reasonable certainty to be recoverable in future years from
  known reservoirs under existing economic and operating conditions.

Proved Undeveloped Reserves are Proved Reserves that
  are expected to be recovered from new wells on undrilled acreage or from existing
  wells where a relatively major expenditure is required for recompletion.

Reservoir is a porous and permeable sedimentary rock
  formation containing adequate pore space in the rock to provide storage space
  for oil, gas or water.

Royalty is the entitlement to a stated or determinable
  percentage of the proceeds received from the sale of hydrocarbons calculated
  as prescribed in applicable legislation or in the agreement reserving the royalty
  to the owner of the royalty.

Seismic refers to a geophysical technique using low
  frequency sound waves to determine the subsurface structure of sedimentary rocks.

Shut-inrefers to a well which is suspended from production,
  usually for operational reasons, such as in order to build up pressure in the
  reservoir.

Sole Riskrefers to a permit holder undertaking a project
  (usually a test well) within a permit, with which the other permit holders do
  not join, but giving such other parties the right to election to join in the
  project at a later date, on payment of their pro rata share of costs already
  incurred and a substantial premium (based on a multiple of the incurred costs).
  The premium is usually paid incrementally by the original sole risk party taking
  all production from the project, and setting off the value of the other party's
  share against the premium due, until the premium is fully paid.

Topfile Application is the procedure available in Papua
  New Guinea, whereby the current permit holders in a permit apply for a new permit
  over the same (or part of the same) area in their current permit, which if granted
  automatically cancels the current permit.

TSX-Vis the TSX Venture Exchange, part of the Toronto-based
  TSX Group, which includes the Toronto Stock Exchange.

Other Expressions


Metric and Imperial Units - Conversion from metric units into
  imperial equivalents is as follows:




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|Metric Units             | Imperial Units          
|------------------------ | ------------------------
|                         |                         
|hectare (ha)             | 2.471 acres             
|                         |                         
|meter (m)                | 3.281 feet              
|                         |                         
|kilometer (km)           | 0.621 miles (3,281 feet)
|                         |                         
|square kilometer (sq km) | 247.106 acres           

5

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PRESENTATION OF INFORMATION

Austral Pacific Energy Ltd. (the "Company") conducts its operations
  directly and through subsidiaries. The term "Austral Pacific" as used herein
  refers, unless the context otherwise requires, to the Company and its consolidated
  subsidiaries. Unless otherwise specified, all dollar amounts described herein
  are in United States currency. All references to daily production are before
  royalty, unless stated otherwise.

FORWARD LOOKING STATEMENTS


This Report contains forward looking statements within the
  meaning of the Private Securities Litigation Reform Act of 1995. These forward
  looking statements are not guarantees of Austral Pacific's future operational
  or financial performance and are subject to risks and uncertainties. Certain
  statements in this Report constitute forward looking statements. When used in
  this Annual Report, the words "estimate", "intend", "expect", "anticipate" and
  similar expressions are intended to identify forward-looking statements. Readers
  are cautioned not to place undue reliance on these statements, which speak only
  as of the date of this Annual Report. These statements are subject to risks
  and uncertainties that could cause results to differ materially from those contemplated
  in such forward-looking statements. Such risks and uncertainties include, but
  are not limited to, those identified under the subheading "Risk Factors" in
  Item 3 hereof.

Actual operational and financial results may differ materially
  from Austral Pacific's expectations contained in the forward looking statements
  as a result of various factors, many of which are beyond the control of the
  Company. These factors include, but are not limited to, unforeseen changes in
  the rate of production from Austral Pacific's oil and gas fields, changes in
  the price of crude oil and natural gas, adverse technical factors associated
  with exploration, development, product or transportation of Austral Pacific's
  crude oil and natural gas reserves, changes or disruptions in the political
  or fiscal regimes in Austral Pacific's areas of activity, changes in tax regimes,
  energy or other laws or regulations within the jurisdictions in which the Company
  operates, changes in significant capital expenditures, delays in production
  starting up due to an industry shortage of skilled manpower, equipment or materials,
  and cost of inflation.

6

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PART I

ITEM 1.                IDENTITY
  OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable

ITEM 2.                OFFER
  STATISTICS AND EXPECTED TIMETABLE

Not applicable

ITEM 3.                KEY
  INFORMATION

A.                Selected
  financial data

The selected historical financial information presented in
  the table below for each of the years ended December 31, 2003, 2002, 2001, 2000
  and 1999, is derived from the audited consolidated financial statements of Austral
  Pacific. The audited financial statements of Austral Pacific for the years ended
  December 31, 2003, 2002, and 2001 are included in this Filing. The selected
  historical financial information for the years ended December 31, 2000 and 1999
  presented in the table below are derived from audited financial statements of
  Austral Pacific that are not included in this Filing. The selected financial
  information presented below should be read in conjunction with Austral Pacific
  's consolidated financial statements and the notes thereto (Item 17) and the
  Operating and Financial Review and Prospects (Item 5) elsewhere in this Filing.

The selected consolidated financial data has been prepared
  in accordance with Canadian Generally Accepted Accounting Principles ("Canadian
  GAAP"). Selected financial data has also been provided under US GAAP to the
  extent that amounts are different. The consolidated financial statements included
  in Item 17 in this Filing are also prepared under Canadian GAAP. Included within
  these consolidated financial statements in Note 17 is a reconciliation between
  Canadian and US GAAP.

AUSTRAL PACIFIC ENERGY LTD.
  AND SUBSIDIARY COMPANIES 
  SELECTED FINANCIAL DATA AS OF AND FOR THE YEARS ENDED AS SHOWN(IN $000'S EXCEPT PER SHARE DATA)

|Selected Income Statement
      Data           |         
|---------------------------------------------- | --------
|Amounts in accordance
      with Canadian GAAP |         
|                                               |         
|                                               | Year    
|                                               | Ended   
|                                               | December
|                                               | 31      
|                                               | 2003    
|Oil and gas revenue                            | 173     
|Other income                                   | 58      
|Gain on license sales                          | 3,896   
|Royalty expense                                | (34     
|Operating expenses                             | (61     
|General and                                    | (656    
|administrative expenses                        |         
|Depletion and depreciation                     | (26     
|Litigation Costs and Settlement                | (2,250  
|Property write-downs                           | (909    
|Stock option compensation                      | (143    
|expense [1]                                    |         
|Income (loss) from Operations                  | 48      
|Other Items                                    | -       
|Income (loss) before income taxes  taxes       | 48      
|Income taxes                                   | -       
|Income (loss) for the
      year               | 48      
|Income (loss) per share                        | 0.01    
|Dividends declared per share                   | $0.00   

7

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[1] In 2002, the Company adopted the new recommendations of
  CICA handbook section 3870, stock option based compensation for the recognition,
  measurement and disclosure of stock option based compensation and other stock
  based payments made in exchange for goods and services.

Amounts in accordance with US GAAP

|General and administrative    | (1,165 | ) | (1,378 | ) | (1,640 | ) | (1,059 | ) | (533   | )
|----------------------------- | ------ | - | ------ | - | ------ | - | ------ | - | ------ | -
|expenses                      |        |   |        |   |        |   |        |   |        |  
|Income (loss) from Operations | (318   | ) | (3,297 | ) | 204    |   | (3,256 | ) | (1,012 | )
|Income (loss) for the year    | (318   | ) | (3,297 | ) | 204    |   | (3,186 | ) | (1,173 | )
|Comprehensive income / (loss) | (318   | ) | (3,297 | ) | 204    |   | (3,186 | ) | (1,173 | )
|Income (loss) per share       | (0.04  | ) | (0.48  | ) | 0.03   |   | (0.52  | ) | (0.21  | )

|Selected Balance Sheet Information             |         
|---------------------------------------------- | --------
|Amounts in accordance with Canadian
      GAAP |         
|                                               | As at   
|                                               | December
|                                               | 31      
|                                               | 2003    
|Working capital                                | 1,768   
|Current Assets                                 | 3,381   
|Due from Related Parties                       | -       
|Investments                                    | -       
|Oil and gas properties                         | 8,307   
|Property & Equipment                           | 30      
|Deferred offering costs                        | 408     
|Total assets                                   | 12,126  
|Long-term debt                                 | 944     
|Share Capital                                  | 20,478  
|Contributed surplus                            | 417     
|Accumulated deficit                            | (11,326 
|Shareholders' equity                           | 9,569   
|                                               |         
|Amounts in accordance with US GAAP             |         
|Current Assets                                 | 3,381   
|                                               |         
|Total assets                                   | 12,126  
|Share Capital                                  | 23,811  
|Accumulated deficit                            | (14,242 
|Comprehensive  Income                          | -       
|Adjustment                                     |         
|Shareholders' equity                           | 9,569   

B.                Capitalisation
  and indebtedness

Not applicable

C.                Reasons
  for the offer and use of proceeds

Not applicable

D.                Risk
  Factors

Industry Risks

The Company is subject to normal industry risks arising from its low level
  of cash flow and limited earnings to

8

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date, and the nature of the Company's involvement in the exploration
  for, and the acquisition, development and production of, oil and natural gas.
  Exploration for oil and natural gas involves many risks, which even a combination
  of experience, knowledge and careful evaluation may not be able to overcome.
  There is no assurance that further commercial quantities of oil and natural
  gas will be discovered by the Company.

The Company's operations are subject to the risks normally
  incident upon the operation and development of oil and natural gas properties
  and the drilling of oil and natural gas wells, including encountering unexpected
  formations or pressures, premature decline of reservoirs, invasion of water
  into producing formations, blow-outs, cratering, fires and oil spills, all of
  which could result in personal injuries, loss of life and damage to the property
  of the Company and others. Although the Company maintains insurance, in amounts
  and coverages which it considers adequate, in accordance with customary industry
  practice, the Company is not fully insured against all of these risks, nor are
  all such risks insurable, and, as a result, liability of the Company arising
  from these risks could have material adverse effect upon its financial condition.

The marketability and price of oil and natural gas that may
  be acquired or discovered by the Company may be affected by numerous factors
  beyond the control of the Company. The Company may be affected by the differential
  between the price paid by refiners for light, quality oil and various grades
  of oil produced by the Company. The Company is subject to market fluctuations
  in the prices of oil and natural gas, deliverability uncertainties related to
  the proximity of its reserves to pipeline and processing facilities and government
  regulation relating to prices, taxes, royalties, land tenure, allowable production,
  the export of oil and natural gas and many other aspects of the oil and natural
  gas business. The Company's operations will be further affected by the remoteness
  of, and restrictions on access to, certain properties as well as climatic conditions.

The Company is also subject to compliance with laws and regulations
  controlling the discharge of materials into the environment or otherwise relating
  to the protection of the environment. The Company is not aware of present material
  liability related to environmental matters. However, it may, in the future,
  be subject to liability for environmental offences of which it is presently
  unaware.

The operations and earnings of the Company and its subsidiaries
  are also affected by local, regional and global events or conditions that affect
  supply and demand for oil and natural gas. These events or conditions are generally
  not predictable and include, among other things, the development of new supply
  sources; supply disruptions; weather; international political events; technological
  advances; and the competitiveness of alternative energy sources or product substitutes.

There is no assurance that commercial quantities of hydrocarbons
  will be discovered. Geological conditions are variable and of limited predictability.
  Even if production is commenced from a well or field, production will inevitably
  decline over the course of time, reducing the operating profitability of the
  enterprise and eventually causing its termination.

The Company focuses its efforts mainly in the Taranaki region
  of New Zealand where large tracts of acreage can be accumulated, there is a
  positive history of oil exploration success but the acreage is relatively under
  explored, geological conditions are favorable for hydrocarbon accumulation,
  and where its limited manpower and technical resources are already deployed.

Oil exploration involves a high degree of technical and commercial
  risk and is characterized by a continuous need for fresh capital. The Company
  seeks to minimize and spread this risk by joint-venturing oil exploration projects
  with other companies and participating in properties exhibiting a range of risk
  profiles to reduce its cost exposure. The Company faces competition from other
  oil companies for oil and gas properties and investor dollars. The Company seeks
  to minimize these effects by not attempting to compete with the major oil companies
  but focuses on the market niches of exploration and small development stage
  properties where its technical competence and experience give it a credible
  advantage.

The Company's principal long term objective is to grow the
  Company into a oil and gas exploration, development and production company with
  internally generated oil and gas sales revenues sufficient to maintain a selective
  grass roots exploration program to replace produced reserves. Additional reserves
  and production growth are sought through carefully considered acquisitions of
  additional oil and gas properties by the purchase of existing properties from
  other companies. The Company intends to retain its focus in the Austral-Pacific
  area - primarily in the Taranaki region of New Zealand, and plans to expand
  as available cash flow and meritorious opportunities permit. Its long term goal
  is maximum capital appreciation of the Company's securities to reflect the true
  value of both its reserves base and of its potential resources not yet discovered.

9

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Risks Relating to Papua New Guinea

Beyond the risks inherent in the oil and gas industry, the
  Company is subject to additional risks resulting from doing business in Papua
  New Guinea. While the Company has attempted to reduce these risks, no assurance
  can be given that such risks have been mitigated. These risks can involve matters
  arising out of oil export or pipeline restrictions, foreign exchange fluctuations
  and currency controls, and other matters, such as a higher degree of lawlessness
  among Nationals than in some other countries. Operations in Papua New Guinea,
  therefore are subject to risks due to the potential for social, political, economic,
  legal and financial instability.

Oil and Gas Prices are Volatile


The Company's revenues, operating results, profitability,
  future rate of growth and the carrying value of its oil and gas properties depend
  heavily on prevailing market prices for oil and gas. Management of the Company
  expects the market prices for oil and gas to continue to be volatile. Any substantial
  or extended decline in the price of oil or gas would have a material adverse
  effect on the Company's financial condition and results of operations. It could
  reduce the Company's cash flow as well as the value of its reserves. Various
  factors beyond the Company's control will affect prices of oil and gas, including,
  worldwide and Australasian supplies of oil and gas, political instability or
  armed conflict in oil or gas producing regions, worldwide economic conditions,
  and marketability of production and other factors mentioned in "Industry
  Risks" above.

Uncertainty of Reserves Figures


There are numerous uncertainties inherent in estimating quantities
  of proved oil and gas reserves and their values, including many factors beyond
  the control of the Company. Although management believes the estimates provided
  in Item 4D.  Property, Plants and Equipment are reasonable, estimates
  of production, revenues and reserve expenditures will likely vary from actual,
  and these variances may be material. Estimates of oil and gas reserves are projected
  from geological, petrophysical and reservoir engineering interpretation of data.
  Such interpretations are inherently uncertain, as are the projections of future
  rates of production and timing of development expenditures. The accuracy of
  the reserves estimates is a function of the quality of available data, engineering
  and geological interpretation and judgment. Factors such as historical production
  from the area compared with production from other producing areas, assumed effects
  of governmental regulations, assumptions of future oil and gas prices, future
  operating costs, development costs and remedial and workover costs, will affect
  the estimates of economically recoverable quantities and of future net cash
  flow. Any significant variance in the assumptions could materially affect the
  estimated quantity and value of reserves.

Reliance on Expertise of Certain Persons


The Registrant is dependent on the capabilities of its employees
  and themanagement by its chief excutive officer, David Bennett, and, in the
  acquisition, exploration and development of petroleum properties, on the advice
  and project management skills of various consulting geologists, geophysicists,
  engineers retained by the Registrant from time to time. The Regristrant's current
  CEO is experienced in the acquisition, exploration and development of petroleum
  properties in New Zealand and other Austral Pacific countries, particularly
  Papua New Guinea and Australia. If the current CEO leaves the Registrant, the
  Registrant may have difficulty in immediately finding a person of comparable
  experience to manage the business of the Registrant. The Registrant does not
  currently maintain key person insurance on its CEO or any other employee.

Limited Financial Resources and Lack of Sufficient Capital

The Registrant's auditors for the 2003 fiscal year have expressed
  substantial doubt as to the Registrant's ability to continue to meet future
  commitments.In order to satisfy the required capital expenditures for
  the upcoming fiscal year to maintain the Registrant's interests in its permits,
  the Registrant has raised additional capital through the issuance of common
  shares, and will be looking to enter into agreements with third parties to fund
  permit obligations, or to renegotiate such obligations. There is no assurance
  that market conditions will continue to permit the Registrant to raise funds
  if required, or that the Registrant will be able to enter into agreements with
  third parties to fund permit obligations, or be able to renegotiate such obligations.
  If the Registrant is unable to fund the obligations by share issues or farmout
  agreements or to renegotiate them, the Registrant may be unable to carry out
  its plan of operations and may be forced to abandon some of its permit interests
  (See Title to Propertiesbelow).

10

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Title to Properties

In all cases, the terms and conditions of the permit or licence
  granting the right to the Registrant, or the party from which the Registrant
  acquired the right, to explore for, and develop, hydrocarbons prescribe a work
  program and the date or dates by which such work program must be done. Varying
  circumstances, including the financial resources available to the Registrant
  and reliance on third party operators of permits and licences, or circumstances
  beyond the control or influence of the Registrant, may result in the failure
  to satisfy the terms and conditions of a permit or licence and result in the
  complete loss of the interest in the permit or licence without compensation
  to the Registrant.

Such terms and conditions may be renegotiated with applicable
  regulatory authorities, but there is no assurance that if a term or condition
  of a licence or permit that is required to be satisfied has not been met, that
  such term or condition will be renegotiated with the applicable authority.

The Company participates in its permits or licences with industry
  participants some of whom have access to greater resources from which to meet
  their joint venture capital commitments. If the Company is unable to meet its
  commitments, the other joint venture participants may assume some or all of
  the Company's deficiency and thereby assume a pro-rata portion of the Company's
  interest in any production from the joint venture area. The Company is not a
  majority interest owner in most of its properties and does not have sole control
  over the future course of development in those properties. Property interests
  may be subject to joint venture and other like agreements which can give rise
  to interpretive disputes with other parties who are financially interested in
  the property.

The Registrant does not maintain title insurance over its
  properties.

Competition


The Company encounters strong competition from other independent
  operators and from major oil companies in acquiring properties suitable for
  development, in contracting for drilling equipment and in securing trained personnel.
  Many of these competitors have financial resources and staffs substantially
  larger than those available to the Company. The availability of a ready market
  for oil and gas discovered by the Company depends on numerous factors beyond
  its control, including the proximity and capacity of natural gas pipelines and
  the effect of regional or national regulations.

Governmental Laws and Local Conditions


In the areas where the Company conducts activities, there
  are statutory laws and regulations governing the activities of oil and gas companies.
  These laws and regulations allow administrative agencies to govern the activities
  of oil companies in the exploration for, and development, production and sale
  of both oil and gas, including regulations relating to prices, royalties, allowable
  production, environmental matters, import and export of hydrocarbons, restriction
  on the withdrawal of capital from a country in which the Registrant is operating
  and protection of water resources and agricultural lands. Changes in these laws
  and regulations may substantially increase the costs of conducting any exploration
  or development project.

There is no assurance that these laws and regulations will
  not change in a manner that may materially and adversely affect the business
  of the Registrant. The Company believes that its operations comply with all
  applicable legislation and regulations and that the existence of such regulations
  have no more restrictive effect on the Company's method of operations than on
  similar companies in the industry.

General claims of aboriginal peoples in Australia, New Zealand
  and Papua New Guinea may adversely affect the rights or operations of the Registrant
  although the Registrant has not received any notice of any direct challenge
  to any of the Registrant's titles or tenures.

No Assurance of Earnings


The Registrant currently has two oil and gas properties in
  the pre-production stage, expected to generate revenues in third quarter 2004.
  Previously the Registrant had another oil and gas producing property, consisting
  of several separate producing pools, which, until December 31, 2000, did not
  generate enough revenue to meet the Registrant's expenses. During the 2001 fiscal
  year, such revenues did meet expenses, but did not do so in the 2002 fiscal
  year. The Registrant's rights to this oil and gas producing property were sold
  in 2003 and this sale resulted in the Registrant revenues meeting expenses in
  the 2003 fiscal year

11

---

(revenues did not meet expenses under US GAAP in the 2003
  fiscal year). The Registrant has a limited history of earnings and there is
  no assurance that the business of the Registrant will continue to be profitable.
  As at the end of the Registrant's last fiscal year ended December 31, 2003,
  the Registrant had an accumulated deficit of $11,326,461 (under US GAAP $14,241,559).
  The Registrant cannot guarantee that it will continue generating revenues in
  the future. A failure to generate revenues may cause the Registrant to eventually
  go out of business. The Registrant has not paid dividends at any time in its
  history to date and there is no assurance that the Registrant will pay a dividend
  at any time in the future.

Effect of Different Currencies for Revenue and Expenses

The Registrant currently holds the majority of its cash reserves
  in New Zealand dollars and receives the majority of its revenues in US dollars,
  but incurs the majority of its expenses and its petroleum property expenditures
  in Australian and New Zealand dollars. An increase in value of either or both
  the New Zealand and Australian dollar versus the US dollar has a detrimental
  effect to the Registrant as the Registrant's expenses incurred would, in turn,
  increase in US dollars. The Registrant does not currently hedge its exposure
  to currency rate changes, although it may choose to selectively hedge exposure
  to foreign currency exchange rate risk. The Registrant, however, has no specific
  policies relating to the foregoing, but has a history of managing this risk
  to some degree by shifting a portion of its excess cash from one currency to
  another in a timely fashion. See also Item 5.A.3  Foreign Currency
  Fluctuations.

Inadequacy of Public Market


There can be no assurance that a stable market for the Registrant's
  common shares will be achieved. If the Registrant fails to remain current in
  its filings with the SEC and Canadian and New Zealand regulatory authorities,
  the Registrant may lose its OTC BB quotation as well as its Canadian and New
  Zealand listings and the Registrant's shareholders may not be able to resell
  their shares in the public market within the United States as well as the overseas
  markets.

Dilution


The Registrant's Articles of Continuance authorize the issuance
  of an unlimited number of shares of common stock. The Company has several types
  of dilutive securities outstanding. The Registrant's Board of Directors has
  the power to issue any further shares without stockholder approval, but subject
  to compliance with the policies of the TSX-V. The Registrant's Board of Directors
  is likely to issue some of such shares to acquire further capital in order to
  carry out its intended operations or expand its current operations, or to provide
  additional financing in the future. The issuance of any such shares may result
  in a reduction of the book value or market price of the outstanding shares of
  the Registrant's common shares. If the Registrant does issue any such additional
  shares, such issuance will also cause a reduction in the proportionate ownership
  and voting power of all other shareholders. Further, any such issuance may result
  in a change of control of the Registrant. However, in such a case, TSX-V policies
  do require the Company to obtain shareholder approval of any transaction which
  will result in the creation of a new control person.

Conflict of Interest


The Registrant has acquired interests in some petroleum properties
  with, or from, or transferred interests to, other companies or their respective
  subsidiaries, being Trans-Orient Petroleum Ltd., TAG Oil Ltd. (previously called
  Durum Cons. Energy Corp.), Gondwana Energy Ltd. and AMG Oil Ltd., which have
  common or connected management, and certain common principal shareholders. Certain
  of the directors of the Company are or were directors and/or officers of these
  other corporations, or of other corporations engaged in the petroleum exploration
  and development industry. Currently, one director serving on the board is CFO
  and a Director of related resource companies. It is possible that conflict of
  interests may arise between their duties as director and CFO of the related
  Companies, and as director or officer of the Registrant. Under the Company's
  ByLaws and the relevant legislation, any such conflict of interest is required
  to be disclosed, any contract in which a director or officer has a material
  interest must be referred to the board of directors for approval and the interested
  director will not vote on any resolution given such approval.

The percentage participation of the Registrant and any other
  associated company in a property is determined by each board of directors of
  each such company independently, using the best business judgment of the board.

12

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Legal Proceedings Against Foreign Directors

The Company is incorporated under the laws of the Yukon Territory,
  Canada, and all of the Company's directors and officers are residents of Canada
  or New Zealand. Consequently, it may be difficult for United States investors
  to effect service of process within the United States upon the Company or upon
  its directors or officers, or to realize in the United States upon judgements
  of United States courts predicated upon civil liabilities under the United States
  Securities Exchange Act of 1934, as amended. Furthermore, it may be difficult
  for investors to enforce judgements of the U.S. courts based on civil liability
  provisions of the U.S. federal securities laws in a foreign court against the
  Company or any of the Company's non-U.S. resident officers or directors.

ITEM 4.                INFORMATION
  ON THE COMPANY

A.                History
  and Development of the Company

|1. | As of December 31, 2003 the Registrant's legal and
        commercial name is: Austral Pacific Energy Ltd. It was previously named
        "Indo-Pacific Energy Ltd".                                       
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. | The Registrant was incorporated on July 31, 1979
        under the name Pryme Energy Resources Ltd. under the Company Act (British
        Columbia, Canada), and has operated continuously since that time.
|  
|3. | The Registrant is now domiciled in the Yukon in
        Canada, and operates as a corporation under the Business Corporations
        Act (Yukon).                                                          

|    | Its registered office is in care of its Yukon attorneys:
|--- | --------------------------------------------------------
|    | Suite 200 Financial Plaza                               
|    | 204 Lambert Street                                      
|    | Whitehorse, YT                                          
|    | Y1A 3T2                                                 
|    | CANADA                                                  
|    |                                                         
|    | Its principal business offices are:                     
|    | Austral Pacific House                                   
|    | 284 Karori Road                                         
|    | Karori, Wellington                                      
|    | NEW ZEALAND                                             
|    | Telephone Number: (644) 476-2717                        
|    |                                                         
|4 . | Important Events / Company History                      

The Company announced on April 28, 2004 that it had signed
  a preliminary negotiation document with Genesis Power, a New Zealand State Owned
  Enterprise and the leading generator and retailer of electricity and gas in
  New Zealand, to drill Cardiff-2, a deep gas well, in Petroleum Exploration Permit
  PEP 38738 in the onshore Taranaki Basin, New Zealand. The Company and its present
  JV participants in PEP 38738 are negotiating to enter into commercial arrangements
  with Genesis, whereby Genesis will fund the drilling and flow-testing of the
  Cardiff-2 appraisal well to acquire a 40% equity interest in respect of the
  deep petroleum rights in Petroleum Exploration Permit 38738, and associated
  rights to purchase all deep gas. These arrangements are subject to finalisation
  of contracts. Austral Pacific and its present JV participants will retain all
  rights to shallow petroleum in PEP 38738, including the Cheal field and similar
  prospects.

On January 15, 2004 the Company announced that final agreements
  have been executed for the sale of gas from the Kahili gas-condensate field
  (PEP 38736) in the onshore Taranaki Basin, New Zealand. The Kahili-1B sidetrack
  well, drilled in November 2002, encountered a 115 feet gross hydrocarbon column
  in the Tariki sandstone. Analysis of pressure data from flow testing carried
  out on the uppermost 50 feet of this zone indicates sufficient gas-condensate
  reserves to justify development. A review of the development options available
  was completed. Natural Gas Corporation (NGC) will buy all gas produced from
  the field. NGC will construct, own and operate a separation plant to process
  the raw well stream and install 12 km of pipelines to connect Kahili gas to
  the existing NGC pipeline infrastructure. Kahili gas is expected to be available
  to the market in Third Quarter 2004.

13

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On January 2, 2004 the Company listed on the TSX-V. In conjunction
  with the TSX-V listing, the Company listed on the NZSX on 5 January 2004, raising
  approximately $5.2 million through the issuance of 4 million units. Each unit
  consisted of one common share and a half warrant  each full warrant entitling
  the holder to purchase one additional share, at any time on or before January
  5, 2005, at a price of approximately $1.37 (NZ$2.10) .

On December 31, 2003, to enable the TSX-V listing, a special
  meeting of shareholders was held to change the Registrant's name to Austral
  Pacific Energy Ltd. (previously Indo-Pacific Energy Ltd.).

On June 18, 2003, a private placement in one of the Registrant's
  New Zealand subsidiaries, Austral Pacific Energy (NZ) Limited (formerly Indo-Pacific
  Energy (NZ) Limited), was made by certain private investors for the issue of
  1,500,000 Special Class shares in that company, for a total of NZ$1,500,000
  (approx. US$943,525). The Special Class shares were exchanged for Units in the
  Company (each Unit comprising one common share and a half warrant) on January
  5, 2004, upon the listing of the Company on the TSX-V and the NZSX, at the rate
  of one common share for every 1.35 Special Class share, resulting in the issuing
  of 1,111,123 common shares, and 555,569 warrants exercisable at a price of NZ$1.85
  (approx. $1.20) any time before January 5, 2005.

On December 9, 2003 the Company announced that it had placed
  US $500,000 in unlisted convertible notes with Global Resource Investments Ltd
  ("GRIL"  a US based institutional resource investment fund and a significant
  international participant in the resources industry) conditional upon the TSX-V
  and NZSX listings occurring. On January 5, 2004, the Company issued two Convertible
  Notes for $250,000 each. Each Note is convertible, at the option of the holder,
  into Units at the conversion rate of $1.10 per Unit within 12 months of issue
  (by 5 January 2005). Each Unit on conversion will comprise one common share
  and one share purchase warrant permitting the holder to purchase an additional
  common share at a price of $1.15 per share, for a 12 month period from issuance
  date of the Note (by 5 January 2005). Interest is payable at a rate of 8% per
  annum from issue date to the earlier of conversion date or repayment date. Both
  of the Convertible Notes are unsecured.

The Company announced on June 30, 2003 that it had entered
  into an agreement with an Australian company, Horizon Oil NL, to purchase its
  equity interests in several onshore Taranaki (New Zealand) permits. The Company
  intended to purchase PEP 38716, PEP 38728 and PEP 38718 directly and to purchase
  all of the shares in Totara Energy Limited (formerly Bligh Oil & Minerals
  NZ Limited), which company owned a royalty interest in PEP 38738. The total
  price of approximately $575,000 was agreed to be paid as to 20% upon completion
  and the remainder ninety days later. PEP38728 was not included in the final
  purchase, that interest having been pre-empted (ie offered to current JV participants
  under a first right of refusal and sold to them) before settlement occurred.One
  permit interest was new to the Company  10% of PEP 38718. The other two
  consolidated interests already held by the Company  a further 28.34% of
  PEP 38716 and a royalty interest in PEP 38738. The transaction was completed
  in September 2003.

On June 16, 2003, the Company entered into an arrangement
  with Krystal Corporation Pte Ltd (Krystal), in relation to New Zealand Permit
  PEP 38753 with effect from May 30, 2003, whereby Krystal funded a portion of
  past costs and 26.4% of the Wawiri-1 well, and is obligated to fund 26.4% of
  the Akama deep gas test, when drilled, in order to earn a 20% interest in PEP
  38753. The Company's interest in PEP 38753 was 50%, so over half of the Company's
  capital commitment for these wells is to be and has been met by Krystal, and
  the Company's interest reduced to 30% as a result of the transaction.

In April 2003, a gas prepayment agreement was entered into
  with a New Zealand company, NGC New Zealand Limited (NGC), whereby NGC provided
  $1,258,033 towards the Company's ongoing exploration programs. This money was
  received on April 3, 2003. In return NGC are able to receive a prepurchase of
  the first $1,258,033 of gas supplied by the Company to NGC, under contracts
  to be negotiated at then prevailing market rates. The Company will negotiate
  in the first instance with NGC, and if no contract is entered into within a
  certain time period after notification, the Company is free to seek other markets
  for the gas. If the amount is not discharged through gas sales to NGC over a
  ten year period, it must either be repaid by the Company or may be converted
  into share equity in one of the Company's New Zealand subsidiaries, Austral-Pacific
  Energy (NZ) Limited.

On April 16, 2002, Greymouth Petroleum Acquisition Company
  Ltd. (GPAC') completed the acquisition of Shell's 59.56% interest in PMP
  38148, including Shell's rights to a share of the Goldie field, operated by
  the registrant's subsidiary Ngatoro Energy Ltd. (NEL'). On july 25, 2002,
  GPAC lodged a claim against NEL

14

---

regarding GPAC's entitlements with respect to the Goldie field.
  The Company disputed these claims, and judgement in the case was delivered on
  May 30, 2003. Three matters were lft undecided, for further argument and in
  some case evidence, if required.

On September 28, 2003 the Company announcedthat agreement
  had been reached with GPAC whereby GPAC purchased all the Company's assets in
  PMP38148, which included the Goldie-1 well and the Ngatoro fields. The purchase
  transaction had an effective date of July 1, 2003 and received regulatory approval
  on Friday, September 26, 2003. A separate agreement settled all outstanding
  claims between the GPAC and Austral Pacific companies.




During the last 3 fiscal years the Registrant has made several
  significant expenditures on its oil and gas properties in the normal course
  of operations, having participated in the drilling of a number of wells in that
  time. The significant expenditures on the properties are detailed in Item 4.D
  Property, Plants and Equipment.

In addition to these expenditures in the normal course of
  operations:

The Company entered into an agreement with Trans-Orient Petroleum
  Ltd. ("Trans-Orient") to acquire all of its participating interests in 13 oil
  and gas permits and licences effective January 1, 2000. The total consideration
  to Trans-Orient originally included the grant of gross overriding royalties
  over any future production and the issuance of 836,845 units in the Company,
  with an agreed value of $2.50 per unit. Each unit consisted of one common share
  and a two year share purchase warrant (an "A" Warrant), exercisable at a price
  of $2.50 in the first year and $3.75 in the second year. The warrant also stipulated
  that if a commercial petroleum discovery is made on any of the permits transferred
  from Trans-Orient under the agreement, the Company was required to issue Trans-Orient
  additional one year warrants ("B" Warrants) to acquire additional shares at
  a price of $2.50 per share, equal to the number of original "A" warrants exercised.

In January 2002, the parties agreed to vary that agreement
  to assign the gross overriding royalties from Trans-Orient to the Company, in
  exchange for the terms of the warrants issued to Trans-Orient being amended
  to extend the availability of the first year price to 31 December 2002 and the
  second year price to 31 December 2003, and to reprice the "A" warrants to $1.25
  and $1.40 respectively. In addition, series "B" warrants to be acquired in the
  event of discovery, equal in number to the number of "A" warrants exercised,
  were repriced to $2.50 and expiry was extended to the later of 31 December 2003
  or one year after issuance. The fair value of the royalties assigned was nominal.

In December 2003, the parties further agreed to extend the
  terms of the "A" Warrants fo 5 January 2005 in consideration for an increase
  in the exercise price to $1.50 and cancellation of the "B" Warrant right.

7.Public
  Takeovers

The Registrant is not aware of any planned takeover of its
  shares by third parties, nor is the Registrant planning any takeover of another
  company.

B.                Business
  Overview

1.Nature
  of Operations

The Registrant is an oil and gas exploration and production
  company incorporated in Canada, and based in Wellington, New Zealand. The Registrant
  is involved in the exploration for commercial quantities of hydrocarbons and,
  to a lesser extent, the development and production of hydrocarbons. The Registrant's
  focus is on the acquisition, exploration and development of properties in the
  Australasian region. The Company currently holds varying net interests equivalent
  to approximately 2.6 million acres of exploration permits in New Zealand (gross
  4.2m), 0.44 million acres of exploration permits in Australia (gross 0.5m),
  and 0.8 million acres of exploration interests in Papua New Guinea (gross 1.8m)
  . The Company's primary focus is the acquisition and exploration of oil and
  gas properties; and the majority of the Company's permits are in the exploration
  stage. The Company's policy is to acquire interests, and, where possible, to
  minimize its risk exposure by farming out or joint venturing property interests
  to other industry participants.

The Registrant sells oil and gas from producing properties
  in which it holds an interest. During 2003, the

15

---

Registrant sold its interest in its producing property in
  Taranaki, New Zealand - the PMP 38148 "Ngatoro" Mining Permit, refer to Item
  4.A.4 - Important Events / Company History. Arrangements have been finalised
  for a development program for the discovery in PEP 38736 "Kahili" Exploration
  Permit, also located in the Taranaki region. The Kahili discovery is not yet
  in production, but is expected to be in third quarter 2004.




The Registrant currently does not have any oil or gas production
  to sell. Previously the Registrant sold all of its oil production to Energy
  Exploration NZ Limited (a subsidiary of Shell Petroleum NZ Ltd) and its gas
  production to Greymouth Petroleum Acquisition Company Ltd. The oil was sold
  into the Australasian market. The gas was sold via the Kaimiro treatment station
  into the New Zealand reticulation system. Details of revenues, by geographic
  region and by category, are included in Item 4D.  Property, Plants and
  Equipment.




The Registrant's business is generally not seasonal, and is
  generally reliant on international oil prices and local gas prices in New Zealand.
  Gas prices do not vary under the current sales contracts, whilst oil prices
  vary in line with international prices, for which there have been, in past years,
  seasonal highs in the summer months (for the "US driving season") and in the
  winter months (for the northern hemisphere heating oil season).




The Registrant does not have a reliance on raw materials,
  as it operates in an extractive industry.

5.Marketing
  channels

As the Registrant's oil and gas are sold under single contracts,
  different marketing channels are not currently required.

6.Patents
  or licences

The Registrant does not have a reliance on any significant
  patents or licences, apart from the use of certain software programs.

7.Company's
  competitive position

The Registrant competes with other companies in bidding for
  the acquisition of petroleum interests from various state authorities, and in
  exploring and producing oil and gas in the Australasian region. The Company
  does have a competitive position in being the holder of the largest acreage
  in onshore licences in New Zealand and in the position of several of its key
  properties in New Zealand, Australia and Papua New Guinea.

8.Material
  effects of government regulations

The Registrant is subject to government regulation of the
  oil and gas properties it holds and of the operations it conducts on those properties.
  The effects of those regulations are detailed in Item 3.D  Risk Factors,
  and in Item 4.D  Property, Plants and Equipment.

C.                Organizational
  Structure

The Registrant (a Canadian company listed on the OTCBB in
  the USA, TSX-V in Canada and NZSX in New Zealand) is the parent company of and
  conducts all its operations through several wholly owned subsidiaries, as follows:

|Subsidiary:                             |  | Country of Incorporation |  | Ownership & Voting Power | 
|--------------------------------------- |  | ------------------------ |  | ------------------------ | 
|                                        |  |                          |  |                          | 
|Source Rock Holdings Limited            |  | New Zealand              |  | 100%                     | 
|Austral Pacific Energy (NZ) Limited [2] |  | New Zealand              |  | 100%                     | 
|Millennium Oil & Gas Limited            |  | New Zealand              |  | 100%                     | 
|Ngatoro Energy Limited                  |  | New Zealand              |  | 100%                     | 
|Rata Energy Limited [1]                 |  | New Zealand              |  | 100%                     | 

16

---

|Totara Energy Limited [3]              |  | New Zealand      |  | 100% | 
|-------------------------------------- |  | ---------------- |  | ---- | 
|Odyssey International Pty Ltd          |  | Australia        |  | 100% | 
|Indo-Pacific Energy Australia Pty Ltd. |  | Australia        |  | 100% | 
|Trans-Orient Petroleum (Aust) Pty Ltd  |  | Australia        |  | 100% | 
|ZOCA 96-16 Pty Ltd                     |  | Australia        |  | 100% | 
|Trans-Orient Petroleum (PNG) Ltd       |  | Papua New Guinea |  | 100% | 
|Indo-Pacific Energy (PNG) Ltd.         |  | Papua New Guinea |  | 100% | 

|[1] | Rata Energy Limited changed its name from PEP 38716
        Limited on February 7, 2003.                                                                                                                                                                                                                                                            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|[2] | During the reporting period, Austral Pacific Energy
        (NZ) Limited (formerly Indo-Pacific Energy (NZ) Limited, name changed
        January 19,2004) issued 1,500,000 Special Class shares, as reported in
        Item 4.A.4  Important Events/Company History. These shares were
        later converted into securities of the Registrant.
|   
|[3] | Totara Energy Limited (formerly Bligh Oil &
        Minerals (NZ) Limited, name changed November 3, 2003) was purchased during
        the year from Horizon Oil NL. Details are under Item 4.A.4  Important
        Events/ Company History.                                                                                                      

D.                Property,
  Plants and Equipment

The Registrant's major operations and principal activities
  are in the oil and gas exploration and production business. The Company has
  operated in three countries in the past three years: New Zealand, Australia
  (including the Zone of Cooperation Area A between Australia and East Timor),
  and Papua New Guinea. Apart from Petroleum Properties, the Registrant has only
  minor office assets held for the purpose of operating the business and some
  oilfield equipment and materials.

Petroleum Properties in New Zealand, Australia and Papua
  New Guinea

The Registrant holds a number of government issued permits
  in the jurisdictions of Australia, New Zealand and Papua New Guinea, which authorize
  prospecting and exploration for hydrocarbons.

|Property Location                     | Working Interest | 
|------------------------------------- | ---------------- | 
|Developed                             |                  | 
|PEP
      38736 (Kahili)              | 45.00%           | 
|                                      |                  | 
|Undeveloped                           |                  | 
|New Zealand                           |                  | 
|PEP
      38256 (Canterbury)          | 30.00%1          | 
|PEP
      38258 (Offshore Canterbury) | 75.00%           | 
|PEP
      38330 (East Coast)          | 44.23%           | 
|PEP
      38480 (Offshore Taranaki)   | 75.00%           | 
|PEP
      38716 (Taranaki)            | 42.40%           | 
|PEP
      38718 (Taranaki)            | 10.00%2          | 
|PEP
      38738 (Taranaki)            | 33.50%3          | 
|PEP
      38741 (Taranaki)            | 30.00%           | 
|PEP
      38746 (Taranaki)            | 50.00%           | 
|PEP
      38748 (Taranaki)            | 25.00%           | 
|PEP
      38753 (Taranaki)            | 30.00%           | 
|PEP
      38765 (Taranaki)4           | 27.50%           | 
|PEP
      38766 (Taranaki)5           | 25.00%           | 
|PEP
      38768 Taranaki)5            | 50.00%           | 
|                                      |                  | 
|Australia                             |                  | 
|AC/P19                                | 100.00%          | 
|AC/P316                               | 100.00%          | 
|AC/P267                               | 50.00%           | 
|                                      |                  | 
|Papua
      New Guinea                |                  | 
|PRLs
      4&5                        | 7.50%            | 
|PPL
      2358                        | 100.00%          | 
|PPL 2289                              | 10.00%           | 

17

---

|[1] | Permit interest will increase to 34.62% on completion
        of governmental approval procedures.                                                                                                 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[2] | Permit interest will increase to 12.5% completion
        of governmental approval procedures.                                                                                                     
|[3] | Permit interest will change to 36.5% interest in
        shallow formations and 25.1% deep formations, subject to completion of
        farm-out negotiations and governmental approval procedures.
|[4] | Permit replaced PPP 38761 after the end of the reporting
        period.                                                                                                                           
|[5] | Permits acquired after the end of the reporting
        period.                                                                                                                                    
|[6] | Government authority notice of intent to cancel
        has been appealed, outcome pending.                                                                                                        
|[7] | Relinquishment pending, subject to completion of
        negotiations and governmental approval procedures. Option right in one
        prospect retained for 2 years.                             
|[8] | Replaced PPL 192 and 215 during the year.                                                                                                                                                          
|[9] | Permit will be surrendered upon acceptance of a
        top file application for a further permit over a similar area.                                                                             

General

Except for the Kahili discovery in PEP38736 in New Zealand,
  the properties of the Registrant are Exploration Permits or Licences and have
  no proven hydrocarbon reserves.

Interests are quoted as at June 12, 2004.

Exploration Permits or Licences have work obligations as described
  below.

At June 12, 2004, the Registrant has no encumbrances, liens
  or mortgages on the properties, except as follows:

a right of participation in favor of Lonman Pty Ltd ("Lonman"), which
      applies over the Registrant's interestin AC/P 19 . Lonman may, prior to
      the first well or farm-in to the first well, exercise an option to acquire
      5%of the Registrant's interest by repayment of past costs and contribution
      pro-rata to ongoing costs. Alternatively, if a farmout at a premium is made
      to a third party prior to the first well, Lonman shall begranted a Carried
      to Production equity amounting to 5% of the free carried equity of the Original
      Parties insuch farmout. Lonman will be required to repay all past costs
      associated with this equity out of its share ofproduction revenue.
    a security interest granted by Millennium Oil & Gas Limited to NGC
      New Zealand Limited overMillennium's 25% interest in PEP38736, to secure
      performance of the Registrant under the gasprepayment agreement referred
      to at Item 4.A.4  Important Events/Company History.
    PEP 38738 was acquired in return for the grant of a 25% net profits royalty.
      The burden of this royalty wasshared by all the existing JV participants
      in their participating interest shares. In September 2003, the Company purchased
      the net profit royalty back  see Item 4.A.4  Important Events/Company
      History. As a result of a reorganisation of the net profit royalties, the
      Company currently holds a 6.25% net profit royalty on gross production that
      is to be met by one of the other permit participants. At report date, an
      agreement to cancel the royalty in return for further equity in the permit
      is being negotiated.


For details of work planned to be done before December 31,
  2004 on each property and estimated cost thereof, see Item 5.B  Liquidity
  and Capital Resources. For further detail on each property and previous work
  done, refer to the Company's Financial Statements (Item 17).

For definitions of technical terms used in the description
  of properties, see the Glossary of Terms on page 3.

New Zealand


Unless otherwise indicated, petroleum exploration permits
  granted in New Zealand provide for the exclusive right to explore for petroleum
  for an initial term of five years, renewable for a further five years over one-half
  of the original area. The participants are allowed to exceed the committed work
  programs for the permits or apply for extensions or reductions of such work
  programs for any particular year. Any production permits granted will be for
  a term of up to 40 years from the date of issue. The New Zealand government
  has reserved a royalty of the greater of 5% of net sales revenue or 20% of accounting
  profits in any one year from the sale of petroleum products. No performance
  bond is required, but if the permit holder(s) do not satisfy the regulatory
  agency that they have met the performance obligations of the committed work
  program (or such

18

---

variation as may have been agreed with the regulatory agency),
  the government has the power to cancel the permit.

Developed

New Zealand, Onshore Taranaki Basin, North Island

The Taranaki Basin is located on the west coast of the North
  Island. The sediments in the Taranaki Basin encompass a depth of some 25,000
  feet with complex structure and geology. Compression across the eastern portion
  of the Basin created a thrusted fold belt up to ten miles wide, which contains
  the McKee, Tariki, Ahuroa and Waihapa-Ngaere fields. Further west in the onshore
  region are the fault bounded Kapuni, Ngatoro and Kaimiro fields. All these fields
  are currently in production.

New Zealand Permit PMP 38148

By the end of June 2003, the Ngatoro wells (excluding Goldie-1)
  had produced over 3.6 million barrels of oil and 8.4 billion cubic feet of gas.
  Gas continued to be sold under long-term contract, and oil was sold on a monthly
  basis at world market reference prices. At the end of June 2003, production
  from the Ngatoro field was averaging 516 barrels of oil per day (Company share
  26 barrels per day) compared to 800 bopd (Company share 40 bopd) at June 2002,
  and 2.1 million cubic feet of gas per day (Company share 0.10 million cubic
  feet of gas per day). The Goldie-1 well within PMP 38148 remained shut-in throughout
  the year, up to the effective date of sale of PMP 38148 by the Company.

On September 26, 2003 the Company gained regulatory approval
  to sell its interest and entitlement to petroleum in PMP 38148 to Greymouth
  Petroleum Acquisition Company Limited and Southern Petroleum (Ohanga) Limited.
  The effective date of the sale was July 1, 2003.

New Zealand Permit PEP 38736 (45%)

The Kahili-1 well was drilled during December 2001. The well
  recovered a minor amount of oil during a short term open-hole test. Kahili-1A
  was directionally drilled to test an up-dip location in October 2002, but the
  target sands were found to be faulted out in this well bore.

The Kahili-1B sidetrack well was drilled in November 2002,
  and encountered a 115 feet gross hydrocarbon column in the Tariki sandstone.
  Analysis of pressure data from flow testing carried out on the uppermost 50
  feet of this zone indicates sufficient gas-condensate reserves to justify development.
  Test production sales (during 2002) of condensate (light oil) from this initial
  test totalled $16,253 from approximately 613 barrels. A subsequent test after
  the end of the reporting period (in April/May 2003) recovered an additional
  1236 barrels of condensate over a seven day period.

A review of the development options available was completed,
  with the development and sale of gas contract being signed with NGC Holdings
  in January 2004. See Item 4.A.4  Important Events/Company History. It
  is anticipated that Kahili-1A/B will commence production in Third Quarter 2004.

Oil and gas information for the Registrant's last three
  fiscal years:

Summary of Oil and Gas Sales, Net of Royalties, by Country

|                                                                                                                                           | Year Ended December 31, 2003                         | Year Ended December 31, 2002                              | Year Ended December 31, 2001                             
|------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------- | --------------------------------------------------------- | ---------------------------------------------------------
|Revenues:                                                                                                                                  |                                                      |                                                           |                                                          
|New Zealand                                                                                                                                | $                                                    | $                                                         | $                                                        
|Sales
      revenue  Oil              Sales
      revenue  Gas              Less
      Royalties              Sales
      net of royalty | 159,112 
      13,603 
       (33,543)
      139,172 | 1,823,142 
      22,783 
       (184,207)
      1,661,718 | 3,733,298 
      10,738 
       (369,536)
      3,374,500
|Australia                                                                                                                                  | -                                                    | -                                                         | -                                                        
|Papua New Guinea                                                                                                                           | -                                                    | -                                                         | -                                                        
|Revenue net of royalty                                                                                                                     | 139,172                                              | 1,661,718                                                 | 3,374,500                                                

19

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|                 | Year EndedDecember 31, 2003 | Year Ended December
      31, 2002 | Year Ended December
      31, 2001
|---------------- | --------------------------- | ---------------------------------- | ----------------------------------
|                 | Oil & Liquids               | Natural Gas                        | Oil & Liquids                     
|                 | (Bbls)                      | (MMcf)                             | (Bbls)                            
|Sales:           |                             |                                    |                                   
|New Zealand      | 5,792                       | 17.1                               | 85,358                            
|Australia        | -                           | -                                  | -                                 
|Papua New Guinea | -                           | -                                  | -                                 

Reserves


The December 31,2003 reserves quoted for the undeveloped Kahili
  Gas and Condensate field are from an evaluation completed by Sproule International
  Limited on data provided by the Company and from public sources, and have an
  effective date of December 31, 2003 in constant US dollar prices and costs.
  The accuracy of reserves estimates and associated economic analysis is, in part,
  a function of the quality and quantity of available data and of engineering
  and geological interpretation and judgment. As a well matures and new information
  becomes available, revision may be required which may either increase or decrease
  the previous reserve assignments. Sometimes these revisions may result not only
  in a significant change to the reserves and value assigned to a property, but
  also may impact the total company reserve and economic status. The reserves
  and forecasts provided above were based upon technical analysis of the available
  data using accepted engineering principles. However, they must be accepted with
  the understanding that further information and future reservoir performance
  subsequent to the date of the estimate may justify their revision.

The reserves quoted for the Ngatoro oil field are from the
  field Operator's estimated reserves, which are supplied annually to the New
  Zealand Ministry of Economic Development. The field Operator is an independent
  company, New Zealand Oil & Gas Limited, which employs its own independent
  petroleum-engineering experts. The Registrant also contracted Johnston Consulting
  of Wellington, New Zealand, independent petroleum engineering consultant, to
  evaluate the Company's New Zealand reserves at December 31, 2002 following the
  Kahili discovery, and December 31, 2000 and at April 30, 2001, following the
  Goldie-1 discovery. The main difference between the reported Reserves at December
  31, 2003, 2002, and 2001, is due to the sale of PMP 38148 (Ngatoro and Goldie
  fields), production from Ngatoro in the intervening interval and the addition
  of Kahili at end 2002.

|Reserves, Working Interest Before
      Royalties                                                                                                                  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------
|As at:                                                                                                                                                             
|                                                                                                                                                                   
|Proven        New Zealand: 
                 Ngatoro developed 
                 Kahili-undeveloped  
           Australia        Papua New Guinea                
|Total proven                                                                                                                                                       
|                                                                                                                                                                   
|Standardized Measure of Undiscounted Net Cash
      Flows:  New Zealand:        Revenue 
            Less future production      
            And development costs
|Net Revenue    
         Less Taxes                                                                                                                                
|Net income    
         Less 10% discount                                                                                                                          
|Standardized Measure                                                                                                                                               

20

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Apart from the Kahili discovery, which is not yet in production,
  all previous oil reserves quoted are developed reserves, as they are from producing
  formations in the producing wells.

All reserves for New Zealand permits are quoted before royalties,
  in accordance with reserves figures published by the Ministry for Economic Development
  in New Zealand. Royalties payable to the New Zealand government are calculated
  on an annual basis as the greater of 5% of net sales revenue or 20% of accounting
  profits from the sale of petroleum products, the amount (and percentage) of
  royalty attributable to the reserves is unable to be precisely calculated, and
  therefore reserves are quoted before royalties.

The December 31, 2003 undiscounted future net cash flow from
  proved producing oil and natural gas reserves is largely based on information
  provided by in-house reserve calculations and have been calculated with the
  inclusion of all estimated future production and development costs, before royalties
  . A discount factor of 10% was applied to estimated future cash flows to compute
  the estimated present value of proved oil and natural gas reserves. This valuation
  procedure does not necessarily result in an estimate of the fair market value
  of the Company's oil and natural gas properties. The December 31, 2003 undiscounted
  and discounted future net cash flow have been evaluated by Sproule International
  Limited in accordance with standards set out in the Canadian Oil and Gas Evaluation
  Handbook (the "COGE Handbook") and have an effective date of December 31, 2003.

The standardized measure of discounted net cash flows from
  production has been calculated on the Registrant's 45% interest in the undeveloped
  Kahili gas and condensate field as this is the only interest the Company holds
  in proven oil and gas properties, as at December 31, 2003.

The December 31, 2002 undiscounted future net cash flow from
  proved producing oil and natural gas reserves is largely based on information
  provided by in-house reserve calculations. A discount factor of 10% was applied
  to estimated future cash flows to compute the estimated present value of proved
  oil and natural gas reserves. This valuation procedure does not necessarily
  result in an estimate of the fair market value of the Company's oil and natural
  gas properties. The standardized measure of discounted net cash flows from production
  has been calculated on the Registrant's 5% interest in the producing Ngatoro
  oil field and 40.43% working interest (but current 100% revenue interest) in
  the Goldie pool, as these were the only interests the Company holds in proven
  and developed oil properties, as at December 31, 2002.

Undeveloped

Detailed 2003 expenditure per permit is shown in Note 4 in
  the financial statements. (Item 17.)

New Zealand, Canterbury Basin, South Island


New Zealand Permit 38256 (30%); Onshore Canterbury
  A magnetotelluric survey completed in September 2003, fulfilled the work obligation
  to the end 2003. One JV party has withdrawn from this permit and another has
  served notice that it wishes to do so at the end of the relevant permit year.
  The Company has taken up a further 10% from the party that withdrew. The Company
  is considering the amount of interest it will take up from the party that wishes
  to withdraw. Prospects and leads are identified in the vicinity of the Rakaia
  River, and will be the focus of ongoing evaluation to identify a prospect for
  drilling before the end of the permit term in August 2007. The Salmon structure
  may extend into the adjacent PEP 38258.

New Zealand Permit PEP 38258 (75%); Onshore/Offshore Canterbury
  This permit was granted to the Company and an associated company, Durum Energy
  (New Zealand) Limited, on August 18, 2003. Work commitments for the first two
  permit years consist of seismic reprocessing and reinterpretation. Several prospects
  and leads were identified on the extensive existing seismic data obtained by
  previous holders of permits over this area. These include Schooner, Corvette
  and Frigate, this latter being relatively near shore in relatively shallow water.
  The onshore Salmon structure appears likely to lie partly within the onshore
  area of PEP 38258.

New Zealand, East Coast Basin, North Island New Zealand Permit PEP 38330 (44.23%)


21

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A permit variation was applied for, and was accepted, whereby
  the participants reprocessed certain existing seismic, and conducted seismic
  field trials prior to April 2004, and considered whether or not to subsequently
  acquire new seismic data. Several exploration targets are identified in the
  Tolaga Bay area; but all are likely to require further seismic surveys before
  a decision to drill is made. A well is targeted for drilling before the end
  of the permit term in July 2006.

New Zealand Permits PEPs 38328 & 38332 (0%)
  These permits did not require the Company to incur minimum exploration expenditures
  for the 2003 fiscal year. The Company and its joint venture participant agreed,
  during the period, to relinquish these permits as on the basis of the work to
  date they are not presently considered to be prospective.

New Zealand, Taranaki Basin, North Island


New Zealand Permit PEP 38480 (75%); Offshore Taranaki
  
  In February 2003 the Company undertook a 2D seismic program to detail prospects
  in the permit area. Specialised processing and interpretation of the 2003 seismic
  and other data over the Orca and Humpback Prospects are the focus of ongoing
  work.

New Zealand Permit PEP 38716 (42.40%)
  During 2003, the Company completed the purchase of a further 28.34% interest
  in the permit. The Huinga-1B well was commenced in April 2002, and later suspended.
  This well must be completed for production or plugged before the end of the
  second permit term (January 2006). The main prospects remaining in the permit
  are Makino (Tariki Sands level), the Oru/Wingrove Prospect, and Huinga-1B itself,
  where oil was flowed, although engineering problems precluded definitive assessment.
  The Company now operates the permit, and intends to complete the geotechnical
  studies deemed appropriate to justify a target to be drilled before the end
  of the permit term in January 2006.

New Zealand Permit PEP 38718 (10%)
  The Company acquired a 10% interest in the permit in September 2003. Permit
  work obligations to the government to December 2003 were to acquire new seismic,
  or deepen Tuihu-1, and commit to further geological and geophysical work to
  be completed by 1 December 2005, or surrender the permit. The joint venture
  agreed to deepen Tuihu-1 and Tuihu-1A was drilled to 4845m during the year,
  but was plugged and abandoned in late October as a dry hole.

New Zealand Permit PEP 38738 (33.5%)
  This permit was originally granted on January 15, 2000 and was acquired by the
  Company in October 2002, in return for the grant of a 25% net profit royalty.
  In September 2003 the Company purchased the net profit royalty back. As a result
  of a reorganisation of the net profit royalties, the Company now holds a 6.25%
  net profit royalty on gross production that is to be met by one of the other
  permit participants. At report date, an agreement to cancel the royality in
  return for further equity in the permit is being negotiated.

In May 2003, the participants re-entered the Cheal-1 well,
  originally drilled in 1995, which at that time had tested oil and gas from a
  shallow secondary target. A test of the Cheal-1 well in July 2003 flowed gas
  at rates up to 4.5 mmscfd in a one day test period. Further testing was deferred
  until suitable production test equipment was installed. Extended flow testing
  commenced in October, in order to establish developable reserves. Analysis of
  the test results indicates that this well is only accessing gas and oil reserves
  from within a few hundred metres of the wellbore. Oil reserves could not be
  estimated conventionally, despite steady oil production during the test. A means
  of selling or disposing the gas will now be sought in order to enable long term
  oil production to continue.

The Cheal-A3X well spudded in April 2004. This well was deviated
  500m north from the existing Cheal-1 site to intersect both the Urenui and the
  deeper Mt Messenger sandstones. A decision to flow-test both these intervals
  was made, on the basis of information acquired during drilling. This flow-test
  program commenced in June 2004.

The Company is currently negotiating to fund drilling of the
  deep gas well Cardiff-2 in this permit area  refer discussion at Item
  4.A.4  Important Events/Company History.

New Zealand Permit PEP 38741 (30%)
  The Company has completed a 3D seismic survey over PEP 38741 and the adjacent
  permit areas. The

22

---

Honeysuckle-1 well spudded on June 15, 2004, and is to be
  drilled to 1700m (5,500 feet) to test Mt Messenger targets mapped from the 2003
  3D seismic survey.

New Zealand Permit PEP 38746 (50%)
  The Bluff-1 exploration well was drilled in October 2003 but was unsuccessful.

New Zealand Permit PEP 38748 (25%)
  This permit was granted on August 8, 2002, with an interest to the Company of
  37.5% . The Company transferred 12.5% to one of the current JV participants
  during the 1st quarter of 2003. An application to extend the area of this permit
  to encompass adjoining areas previously covered by PEP 38723 was approved by
  the Government, on February 13, 2003. On September 1, 2003, from the Company
  to another of the JV parties.

The Company and its other joint venture participants acquired
  the Kaimata 3D seismic survey data over the entire permit in early 2003, and
  have identified a number of potential drilling targets from this data. No drilling
  commitment is required in the second year of the permit, but at least one exploration
  well is expected to be drilled in 2004.

New Zealand Permit PEP 38753 (30%)
  This permit was granted on August 8, 2002. Seismic reprocessing and interpretation
  was completed in early 2003 as precursor work to the drilling of an exploration
  well. The Wawiri-1 exploration well was drilled in September 2003 but was unsuccessful.

In May 2003, the Company reduced its interest from 50% to
  30% by a farm-out to Krystal Corporation  see Item 4.A.4  Important
  Events/Company History.

New Zealand Permit PEP 38765 (previously PPP 38761) (27.5%)
  The Company completed the Kaimata 3D seismic survey over PPP 38761 and adjacent
  areas in early 2003. The term for PPP 38761 was set as the earlier of one year
  after grant or the closing of bids for acreage which includes the area covered
  by this permit. Such bids were invited; the closing date for which was October
  31, 2003, so PPP 38761 expired on that date. The same joint venture participants
  submitted a bid for this acreage which was successful, and the resultant permit
  was granted on February 4, 2004 as PEP 38765. The Miromiro-1 exploration well
  is scheduled for drilling in PEP 38765 in late 2004.

New Zealand Permit PEP 38766 (25%)
    This permit was granted on February 4, 2004 for an initial five year term. New Zealand Permit PEP 38768 (50%)
    This permit was granted on February 4, 2004 for an initial five year term.


Australia


Offshore exploration permits granted in Australia provide
  for the right to explore for petroleum within Australia's territorial waters
  for an initial term of six years. Exploration permits are generally renewable
  for a five-year term over a permit area of approximately one-half of the remaining
  area at each renewal. In order to maintain an exploration permit, the permittee
  must undertake an exploration work program prescribed by the authorities. The
  authorities may grant the permittee the right to suspend the committed work
  programs for a permit and to apply for an extensions or reductions of such work
  programs for any particular year. Any production permits granted before July
  30,1998 will be for a term of 21 years from the date of issue, renewable for
  a further 21 years whilst production permits granted after July 30, 1998 will
  be for an indefinite term. Upon the finding of petroleum the holder of an exploration
  permit may apply for a production licence. In addition to general Australian
  taxation provisions, most offshore production projects, including future production
  permits granted over the Company's exploration permits, will be subject to a
  tax assessment under the Petroleum Resource Rent Tax Assessment Act 1987.
  Any tax payable at the rate of 40% on a project's net income after deduction
  of allowable project and exploration expenditures, with eligible undeducted
  exploration expenditures compounded forward at the Long-Term Bond Rate ("LTBR")
  plus 1.15 and eligible project expenditures at LTBR plus 1.05. The Company is
  not required to lodge a performance bond to ensure the completion of it's obligations
  under the exploration permits, however there is an obligation to ensure activities
  performed under a permit, maintained as directed by the authorities from time
  to time. Further, in the event that the permit

23

---

holder(s) do not satisfy the regulatory agency that they have
  met the performance obligations of the committed work program (or such variation
  as may have been agreed with the regulatory agency), the regulatory authorities
  have the power to cancel the permit.

Offshore Permits AC/P 19 and AC/P 31 (100%); Timor Sea
  These permits are adjacent and operated in conjunction with each other. The
  Company was required to drill one exploration well in AC/P 19 by December 29,
  2003. This was not done, however, both the Ursa and Dorado Prospects are ready
  for drilling. A variation to the permit was sought and granted to allow the
  Company an extension until July 29, 2004 to drill a well, due to the lack of
  availability of a suitable drilling rig. AC/P 31 required the acquisition of
  a minimum of 40 kms of new 2D seismic in Years 3 and 4, ending September 2003.
  This was not completed, but purchase of data was offered instead and a deferral
  of the seismic commitment until July 2004 was sought. The Regulator has rejected
  the Company's application and the Company has appealed that decision. At the
  time of this Filing, no determination of this appeal has been reached by the
  regulatory agency.

Offshore Permit AC/P 26 (50%); Timor Sea
  The Company's share of the committed work program for the 2003 fiscal year did
  not require any expenditures to be incurred. The company decided to withdraw
  from this permit in June 2004, but retains the option to participate at 20%
  contributing and beneficial interest level in the Anson West prospect if it
  is drilled within 2 years of the Company's withdrawal.

Papua New Guinea


Petroleum Prospecting Licences in Papua New Guinea are granted
  for a standard 6-year term, on the basis of an acceptable program of work. If
  the permit holder(s) do not satisfy the regulatory agency that they have met
  the performance obligations of the committed work program (or such variation
  as may have been agreed with the regulatory agency), the government has the
  power to cancel the permit, and to require forfeiture of a licence bond of Kina
  100,000 (3.89 Kina = approx $1). A Petroleum Prospecting Licence awards the
  exclusive right to explore for petroleum for an initial six year term, extendable
  for a further five year term over 50% of the original area, and the exclusive
  right to enter into a production agreement upon a discovery. A production agreement
  provides the right to produce any oil and gas discovered for a period of up
  to 25 years from discovery, extendable for a further period of not more than
  20 years, subject to a maximum 22.5% participating interest that can be acquired
  by the Government of Papua New Guinea, which includes a two per cent participating
  interest that can be acquired by the affected project area landowners and the
  affected Local Level Governement.

Papua New Guinea Licence PPL 192 (60%) and 215 (80%); Onshore
  Papuan Basin
  These two permits were relinquished and replaced by PPL 235 in August 2003.

Papua New Guinea Licence PPL 235 (100%); Onshore Papuan
  Basin
  The Company was awarded this permit in August 2003. PPL 235 covers most of the
  prospective part of the acreage previously held under PPL 192 and PPL 215.

The initial work stage of PPL 235 is to drill an exploration
  well within the first two years of the licence. A tested well will cost approximately
  US$10,000,000, and funding arrangements for this well will be made by farm-in
  or other avenues of financing. The Douglas Prospect is ready for drilling. In
  the event of discovery, it is located near a navigable river system suitable
  for import of necessary hardware and export of oil. Other prospects are identified,
  which would likely be drilled if the Douglas well is successful.

Papua New Guinea Licences PRLs 4 & 5 (7.5%)
  Gas-condensate discoveries have been established by the Elevala-1, Ketu-1 and
  Stanley-1 gas-condensate discovery wellswithin these retention licences. The
  joint venture is considering various options to develop the Elevala discovery,
  including gas-to-liquids conversion and condensate stripping/ gas re-injection.
  These would take advantage of infrastructure including logging roads and navigable
  river, to export condensate, gasoline or other liquid products to market. Should
  such studies indicate likely commercial viability, an Elevala-2 well will be
  considered for drilling in 2005.

Papua New Guinea Licence PPL 228 (10%)


24

---

The Amdi structure has been mapped as having major oil trapping
  potential. The PPL 228 joint venture lodged a top file application for a permit
  over a similar area, in July 2003. This is presently under consideration by
  the regulatory agency. If APPL 247 is successful in award of a licence, PPL
  228 will be relinquished.

ITEM 5.                OPERATING
  AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis is management's opinion
  of the Company's historical financial and operating results and should be read
  in conjunction with the audited consolidated financial statements of the Company
  (see Item 17) for the years ended December 31, 2003, 2002, and 2001, together
  with the notes related thereto. The financial statements have been prepared
  in accordance with Canadian GAAP, and a reconciliation to US GAAP is provided
  in Note 17 to the financial statements, under Item 17. All dollar values are
  expressed in U.S. dollars, unless otherwise stated. All references to daily
  production are before royalty, unless stated otherwise.

A.                Operating
  Results

Summary

The Registrant is in the exploration and evaluation stage
  on the majority of its oil and gas properties. The Registrant has experienced
  net income in the fiscal period to December 2001, (2001; net income of $1,108,799)
  but reported a loss for the 2002 year (2002; loss of $2,826,770). The 2003 fiscal
  period reported a net income of $47,616 (under US GAAP  loss of $318,070).
  Total losses incurred from incorporation to December 31, 2003 were $11,326,461
  (under US GAAP total losses of $14,241,559).

Discussion of Material Changes Production revenues and costs


Gross oil production revenue from the Company's 5% interest
  in New Zealand production permit PMP 38148 was $138,482 for the year ended December
  31, 2003 compared to $1,811,929 (includes Goldie-1 revenue) for the year ended
  December 31, 2002 (2001; $3,733,298). The Company sold its interest in PMP 38148
  in September 2003 with an effective date July 1, 2003. As a result there is
  no PMP 38148 oil revenue from July 1, 2003. Production from the Goldie-1 oil
  discovery was also "shut-in" as from August 30, 2002, and this is the other
  reason for the decrease in revenues. Additionally, PEP 38736 and PEP 38738 had
  oil sales of $20,630 in 2003 (2002- $11,213) from "test" production.

Sales volumes have decreased from 85,358 barrels in 2002 to
  5,792 barrels in 2003 (2001; 163,900 barrels) because of the shut-in and sale
  of interest. The average crude oil selling price increased from an average of
  US$21.47per barrel of oil (2002) to US$28.54 per barrel (2003) over the comparable
  period. Natural gas production revenues were $13,603 compared to $22,783 for
  2002 (2001; $10,738).

Direct production costs and royalties were $94,675 versus
  $957,012 (2001; $1,021,776) and the Company realized net production revenues
  of $52,110 compared to $782,422 (2001; $2,455,931), subsequent to recording
  $25,930 (2002 - $106,491, 2001; $266,329) of depletion.

The reduction in net production revenue for the period was
  mainly due to Goldie-1 well shut-in from August 30, 2002 and the sale of interest
  in the PMP 38148 permit effective from July 1, 2003 (see Item 4.A.4  Important
  Events/Company History).

The Company's gross profits are likely to be materially affected
  by any changes in exchange rates between (in particular) the US, Canadian and
  New Zealand dollars, in oil prices and in gas prices. See Item 3.D  Risk
  Factors  Oil and Gas Prices, Item 5.A.3  Foreign Currency
  Fluctuations and Item 5.D  Trend Information.

Costs and Expenses


General and administrative expenses were $656,216 as compared
  to $634,353 for 2002 (2001; $735,624). The increase was mainly due to non-capitalised
  listing expenditure, an increase in Wages and Benefits along with a general
  increase in most other expenses. This was partially offset by an unrealized
  foreign exchange gain of $673,909 and an increase in cost recovery from joint
  ventures totaling $477,439. Administrative expenses included wages and benefits
  of $544,366, non-capitalized listing expenditure of $344,332 and Office

25

---

and miscellaneous expenditure of $320,447. Additionally, Litigation
  Costs and Settlement expenditure in defending and finally settling the PMP 38148
  ("Goldie") claim were incurred totaling $2,250,463. This was more than offset
  by the gain on sale of PMP 38148 of $3,896,306. Additionally, stock option compensation
  expenses were $143,312 as compared to $274,080 for 2002 (2001: Nil).

The 2003 results included Oil and Gas Properties write offs
  of $908,433 compared to write-offs in 2002 of $2,783,734 (2001 write off; $706,462).
  The write-offs on Oil and Gas Properties for the 2003 year were mainly due to
  various wells drilled in the 4th quarter being "plugged and abandoned". Details
  of those wells and permits adjustments are:

|1. | Bluff-1 exploration well (PEP 38746) was plugged and abandoned in October
      2003.  
|-- | ---------------------------------------------------------------------------------------
|2. | Waiwiri-1 exploration well (PEP 38753) was plugged and abandoned in October
      2003.
|3. | Tuihu-1A exploration well (PEP 38718) was plugged and abandoned in October
      2003. 

Interest Income

These results included interest income earned on surplus cash
  balances of $57,624 (2002 - $29,518; 2001 -$94,954). Interest earned has increased
  in line with the increased balance of cash on deposit.

Interest expense

The Registrant finances its business primarily from the issuance
  of common shares and from the receipt of petroleum revenues. The Registrant
  has not previously effected any borrowing and has consequently not incurred
  any interest expense.

Capital Expenditure

Oil and Gas Property expenditure for the 2003 fiscal period
  amounted to $1,717,643 (2002; $2,470,865, 2001; $3,346,950). Detailed 2003 expenditure
  per permit may be obtained from Note 4 in the financial statements.

2.
  Inflation

The Registrant operates in New Zealand, Australia and Papua
  New Guinea, where inflation for the Registrant's operational costs has been
  at low levels in recent times  i.e. in the 2-5% range.




The Registrant currently holds the majority of its cash reserves
  in NZ dollars and has in the past received the majority of its revenues from
  its Ngatoro field in US dollars, but incurs the majority of its expenses and
  its petroleum property expenditures in Australian and New Zealand dollars. During
  2003 and subsequent to the reporting date, the value of both the Australian
  and New Zealand currencies has increased against the value of the US currency
  to the detriment of the Registrant during that period. NZD to US$ foreign exchange
  rates have changed by approximately 20% from January 1, 2003 to June 12, 2004
  from 0.5252 to 0.6313.The Registrant does not currently hedge its exposure
  to currency rate changes, although it may choose to selectively hedge exposure
  to foreign currency exchange rate risk. Additionally, the Registrant has some
  expenses payable in US dollars and has a natural hedge by using its US dollar
  account. The Registrant, however, has no formal policy relating to the foregoing.




The Registrant is subject to foreign governmental regulations
  that relate directly and indirectly to its operations including title to the
  petroleum interests acquired by the Registrant, production, marketing and sale
  of hydrocarbons, taxation, environmental matters, restriction on the withdrawal
  of capital from a country in which the Registrant is operating and other factors.
  There is no assurance that the laws relating to the ownership of petroleum interests
  and the operation of the business of the Registrant in the jurisdictions in
  which it currently operates will not change in a manner that may materially
  and adversely affect the business of the Registrant. There is no assurance that
  the laws of any jurisdiction in which the Registrant carries on business may
  not change in a manner that materially and adversely affects the business of
  the Registrant.




26

---

The Registrant is subject to changes in accounting standards.
  These financial statements have been prepared in accordance with Canadian generally
  accepted accounting principles ("Canadian GAAP") which conform in all material
  respects with United States generally accepted accounting principles ("U.S.
  GAAP"). However there are some exceptions and these are detailed below.

|a) | Liabilities         
|-- | --------------------
|  
|   | i)                  
|  
|   |                     
|  
|   | ii)                 
|  
|   |                     
|  
|   |                     
|  
|   |                     
|  
|   |                     
|  
|b) | Stockholders' Equity
|  
|   | i)                  

27

---

| |  | option compensation cost of $143,312 (2002: $274,080
        ; 2001: $nil) being recorded in these financial statements for the 2003
        year.
      The Company, for purposes of US GAAP, follows Accounting
        Principles Board Opinion No. 25, Accounting for Stock Issued to Employees
        APB 25 to account for all stock options granted to employees. Under APB
        25, the intrinsic value model is followed and compensation cost is recognized
        if the market price of the company's common shares exceeds the exercise
        price on the date of grant. During 2001 the Company repriced all outstanding
        options. The repriced options are accounted for under variable accounting
        and compensation cost is recognized for the difference between the exercise
        price and the market price of the common shares until such time as the
        options are exercised, expired or forfeited. During 2002 the Company granted
        300,000 performance options to employees. No compensation cost has been
        recognized for these options as the performance criteria have not yet
        been met. Compensation cost will be recognized if and when the performance
        criteria are met, based on the excess of market price over exercise price
        at that date.
      For non-employees for US GAAP and Canadian purposes,
        the Company uses the fair value model for determining stock option compensation
        cost of options granted. Both standards require that the options be revalued
        each period (and cumulative compensation cost adjusted accordingly) until
        earned. The additional compensation costs recognized under US GAAP resulted
        from revaluation of options granted prior to the adoption of the Canadian
        standard.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

28

---

| | December 31,                              | 2003      |   | 2002      |   | 2001      | 
| | ----------------------------------------- | --------- | - | --------- | - | --------- | 
| |                                           |           |   |           |   |           | 
| | Contributed surplus under Canadian GAAP   | 417,392   |   | 274,080   |   | -         | 
| |                                           |           |   |           |   |           | 
| | Less compensation stock (Canadian GAAP)   | (417,392  | ) | (274,080  | ) | -         | 
| |                                           |           |   |           |   |           | 
| | Stock option compensation cost (recovery) |           |   |           |   |           | 
| | Employees                                 | 174,316   |   | 35,524    |   | 584,036   | 
| | Non-employees                             | 21,681    |   | (69,921   | ) | 320,489   | 
| | Common stock and warrant issuance expense | -         |   | 778,750   |   | -         | 
| | Cumulative historical adjustments         | 2,823,492 |   | 2,079,139 |   | 1,174,614 | 
| | Debt discount on prepaid gas revenue      | 688,282   |   |           |   |           | 
| | Compensation expense of new Series A      |           |   |           |   |           | 
| | warrants                                  | 260,303   |   | -         |   | -         | 
| |                                           |           |   |           |   |           | 
| | Additional paid-in capital under US GAAP  | 3,968,074 |   | 2,823,492 |   | 2,079,139 | 

The Common Stock and Warrant issuance
  expense comprises a discount on shares issued to insiders on September 12, 2002
  and the fair value of warrants issued on the same date. The discount on the
  1,250,000 common shares was calculated as the difference between the market
  value at the date of issue ($1.10) and the discounted share price ($0.80) and
  applied to the total number of shares issued. The fair value of each warrant
  is estimated using the Black-Scholes pricing model with the following assumptions:

| | Expected dividend yield   | 0.00%     
| | ------------------------- | ----------
| | Expected price volatility | 55.76%    
| | Risk-free interest rate   | 2.96%     
| | Expected life of option   | 0.67 years

Under US GAAP, the amendment to the
  terms of Series A warrants is considered a grant of new warrants. Consequently,
  $260,303 compensation expenses is recorded for this amendment. The compensation
  expenses were calculated using the Black Scholes pricing model with the following
  assumptions:

| | Expected dividend yield   | 0.00%     
| | ------------------------- | ----------
| | Expected price volatility | 55.76%    
| | Risk-free interest rate   | 1.28%     
| | Expected life of option   | 1.04 years

28

---

| | ii) | Accumulated Deficit                                                   
| | --- | ----------------------------------------------------------------------
|
| |     | The effects of 5 (a) and (b)(i) on accumulated deficit are as follows:

| | December 31,                                      | 2003        |   | 2002          |  
| | ------------------------------------------------- | ----------- | - | ------------- | -
| |                                                   |             |   |               |  
| | Accumulated deficit under Canadian GAAP           | (11,326,461 | ) | (11,374,077   | )
| |                                                   |             |   |               |  
| | Add back compensation stock (Canadian GAAP)       | 417,392     |   | 274,080       |  
| |                                                   |             |   |               |  
| | Stock option compensation cost (US GAAP)          |             |   |               |  
| | Employees                                         | (174,316    | ) | (35,524       | )
| | Non-employees                                     | (21,681     | ) | 69,921        |  
| | Common stock and warrant placement expense        | -           |   | (778,750      | )
| | Accretion of debt discount                        | (46,966     | ) | -             |  
| | Compensation expense of new Series A warrants     | (260,303    | ) | -             |  
| | Interest expense on the redemption value
      of |             |   |               |  
| | special class shares                              | (5,732      | ) |               |  
| |                                                   | (11,418,067 | ) | (11,844,350   | )
| | Cumulative historical adjustments                 |             |   |               |  
| | required under
      US GAAP                      | (2,823,492  | ) | (2,079,139    | )
| |                                                   |             |   |               |  
| | Accumulated deficit under U.S. GAAP               | (14,241,559 | ) | ($ 13,923,489 | )

|c) | Net Profit (Loss) for the Year                                                                                        
|-- | ----------------------------------------------------------------------------------------------------------------------
|  
|   | The following are the effects of 5 (a) and (b) on
        Net Income (Loss) for the 2003, 2002, and 2001 fiscal years:

| | December 31,                                      | 2003     |   | 2002       |   | 2001      |  
| | ------------------------------------------------- | -------- | - | ---------- | - | --------- | -
| |                                                   |          |   |            |   |           |  
| | Net profit (loss) for the year under              |          |   |            |   |           |  
| | Canadian GAAP                                     | 47,616   |   | (2,826,770 | ) | 1,108,799 |  
| | Add back Canadian
      GAAP compensation cost    | 143,312  |   | 274,080    |   | -         |  
| | Stock Option compensation cost                    |          |   |            |   |           |  
| | Employees                                         | (174,316 | ) | (35,524    | ) | (584,036  | )
| | Non-employees                                     | (21,681  | ) | 69,921     |   | (320,489  | )
| | Common stock and warrant issuance expense         | -        |   | (778,750   | ) | --        |  
| | Accretion of debt discount                        | (46,966  | ) | -          |   | -         |  
| | Compensation expense of new Series A              |          |   |            |   |           |  
| | warrants                                          | (260,303 | ) | -          |   | -         |  
| | Interest expense on the redemption value
      of |          |   |            |   |           |  
| | special class shares                              | (5,732   | ) | -          |   | -         |  
| |                                                   |          |   |            |   |           |  
| | Net profit (loss) for the year U.S. GAAP          | (318,070 | ) | (3,297,043 | ) | 204,274   |  

|d) | Statements of Cash Flows                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Under US GAAP, the Prepaid Gas Revenue is considered
        a loan and thus should be reflected as a financing activity in the Statement
        of Cash Flows. As a result, the cash used in operating activities for
        the year ended December 31, 2003 should be increased by $1,258,033 to
        ($3,736,626) under US GAAP and the cash provided from financing activities
        should be increased by the same amount to $1,793,475 under US GAAP.

29

---

|e) | Earnings (Loss) per ShareThe following is a reconciliation
        of the numerators and denominators of the basic and diluted earnings/(loss)
        per share calculations for the 2003, 2002, and 2001 fiscal years:
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | December 31,                                           | 2003      |   | 2002        |   | 2001      | 
| | ------------------------------------------------------ | --------- | - | ----------- | - | --------- | 
| |                                                        |           |   |             |   |           | 
| | Numerator, net profit(loss) for the year               |           |   |             |   |           | 
| | under US GAAP                                          | ($318,070 | ) | ($3,297,043 | ) | $204,274  | 
| |                                                        |           |   |             |   |           | 
| | Denominator: - Basic                                   |           |   |             |   |           | 
| | Weighted average
      number of shares                |           |   |             |   |           | 
| | under
      Canadian GAAP                              | 7,739,324 |   | 6,869,461   |   | 6,489,324 | 
| | Adjustment required
      under US GAAP                | -         |   | -           |   | -         | 
| | Weighted average number of shares                      |           |   |             |   |           | 
| | under US GAAP                                          | 7,739,324 |   | 6,869,461   |   | 6,489,324 | 
| | Basic earnings(loss) per share under U.S. GAAP         | ($0.04    | ) | ($0.48      | ) | $0.03     | 
| |                                                        |           |   |             |   |           | 
| | Denominator: - Diluted                                 |           |   |             |   |           | 
| | Weighted average
      number of shares                |           |   |             |   |           | 
| | under
      Canadian GAAP                              | 7,739,324 |   | 6,869,461   |   | 6,680,384 | 
| | Adjustment required
      under US GAAP                | -         |   | -           |   | -         | 
| | Weighted average number of shares                      |           |   |             |   |           | 
| | under US GAAP                                          | 7,739,324 |   | 6,869,461   |   | 6,680,384 | 
| |                                                        |           |   |             |   |           | 
| | Diluted earnings(loss) per share under U.S.
      GAAP | ($0.04    | ) | ($0.48      | ) | $0.03     | 

|   | Due to net losses incurred in 2003 and 2002, stock
        options and share purchase warrants outstanding were not included in the
        computation of diluted loss per share as the inclusion of such securities
        would be antidilutive in those years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|f) | New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   | In January 2003, the FASB issued FIN No. 46, "Consolidation
        of Variable Interest Entities, an Interpretation of ARB 51." The primary
        objectives of FIN No. 46 are to provide guidance on the identification
        of entities for which control is achieved through means other than voting
        rights (variable interest entities or "VIEs") and how to determine when
        and which business enterprise should consolidate the VIE. This new model
        for consolidation applies to an entity for which either: (1) the equity
        investors do not have a controlling financial interest; or (2) the equity
        investment at risk is insufficient to finance that entity's activities
        without receiving additional subordinated financial support from other
        parties. In addition, FIN No. 46 requires that both the primary beneficiary
        and all other enterprises with a significant variable interest in a VIE
        make additional disclosures. As amended in December 2003, the effective
        dates of FIN No. 46 for all non small business issuers are as follows:
        (a) For interests in special-purpose entities: periods ended after December
        15, 2003; and (b) For all VIEs created before January 31, 2003: periods
        ending after December 15, 2004 (c) For all VIEs created after January
        31, 2003, FIN 46 is applicable immediately. The December 2003 amendment
        of FIN No. 46 also includes transition provisions that govern how an SBI
        which previously adopted the pronouncement (as it was originally issued)
        must account for consolidated VIEs.
|  
|   | The implementation of this new standard is not expected
        to have a material effect on the Company's financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

6. Critical
  Accounting Estimates

The application of GAAP involves the exercise of varying degrees of judgment.
  While the resulting accounting

30

---

estimates will, by definition, not always precisely equal
  the related actual results, these estimates involve more judgment than others.



The Company follows the full cost method of accounting for
  oil and gas operations whereby all costs associated with the acquisition, exploration
  and development of oil and gas reserves are capitalized in cost centers on a
  country-by-country basis. Such costs include property acquisition costs, geological
  and geophysical studies, carrying charges on non-producing properties, costs
  of drilling both productive and non-productive wells, and overhead expenses
  directly related to these activities.

Depletion is calculated for producing properties by using
  the unit-of-production method based on proved reserves, before royalties, as
  determined by management of the Company or independent consultants. Sales or
  dispositions of oil and gas properties are credited to the respective cost centers
  and a gain or loss is recognized when all properties in a cost center have been
  disposed of, unless such sale or disposition significantly alters the relationship
  between capitalized costs and proved reserves of oil and gas attributable to
  the cost center. Costs of abandoned oil and gas properties are accounted for
  as adjustments of capitalized costs and written off to expense.

A ceiling test is applied to each cost center by comparing
  the net capitalized costs to the present value of the estimated future net revenues
  from production of proved reserves, net of the effects of future costs to develop
  and produce the proved reserves, plus the costs of unproved properties net of
  impairment. Any excess capitalized costs are written off to expense. The calculation
  of future net revenues is based upon prices, costs and regulations in effect
  at balance date.

The Company has included the asset retirement obligations
  in the capitalized cost of the full cost pool and included the related liability
  as a reduction of the carrying amount of the capitalized costs. The Company
  has also included in the calculation of the full-cost ceiling limitation the
  cash outflows that are needed to settle the recorded asset retirement obligations.

Unproved properties are assessed for impairment on an annual
  basis by applying factors that rely on historical experience. In general, the
  Company may write-off an unproved property under one or more of the following
  conditions:

|(i)   | there are no firm plans for further drilling on
        the unproved property;                                     
|----- | -------------------------------------------------------------------------------------------------------------------
|     
|(ii)  | negative results were obtained from studies of the
        unproved property;                                      
|     
|(iii) | negative results were obtained from studies conducted
        in the vicinity of the unproved property; or         
|     
|(iv)  | the remaining term of the unproved property does
        not allow sufficient time for further studies or drilling.

The Company had $25,930 of depletion relating to its proven
  properties and $908,433 of write downs relating to its unproven properties as
  of December 31, 2003.

Stock Options

The Company has recognized stock based compensation expense
  based on the following:

All stock option based awards granted on or after January
  1, 2002 are measured and recognized in these consolidated financial statements
  using a fair value based method. Fair value is based using the Black-Scholes
  option-pricing model and the compensation cost is amortized over the vesting
  period. Compensation associated with unvested options is remeasured on each
  balance sheet date using the Black Scholes option pricing model.

The Company measures compensation expense for the options
  where there has been a substantive change or modification to such options on
  each balance sheet date.

This has resulted in a stock option compensation cost of $143,312
  being recorded in these financial statements for the 2003 year. Further details
  are discussed in A. 5. b). above.

31

---

B.                Liquidity
  and Capital Resources

1. Liquidity

In order to satisfy the required capital expenditures for
  the upcoming fiscal year, the Registrant will need to raise additional capital
  from outside sources, or to farm-out capital expenditures, or to reschedule
  and defer commitments. The Registrant relies on its ability to raise additional
  capital through the issuance of common shares, which has a dilutive effect on
  the Registrant's shareholders. It is uncertain whether the Registrant will be
  able to secure outside sources of capital in an amount that is sufficient for
  it to continue with its current operations on its permits. The Registrant has
  issued convertible notes (see Item 4.A.4 - Important Events/Company History)
  and has obtained a gas prepayment (see Item 4.A.4 - Important Events/Company
  History),which are forms of loan funding and the Regristrant may utilize loan
  funding as an alternative source of funding if this can be achieved in terms
  that are beneficial to the Registrant.

The Company had cash and short-term deposits of $2,234,287
  at December 31, 2003 compared to $1,292,827 as of December 31, 2002 (2001; $3,282,007).
  Working capital as at December 31, 2003 was $1,767,967 versus $1,774,680 for
  December 31, 2002 (2001; $2,738,719).

The Company used cash of $2,478,593 in operating activities
  during the year ended December 31, 2003 compared to cash used in operating activities
  of $839,105 in 2002 (2001; cash provided of $2,282,702). $20,028 was used for
  purchases of property and equipment compared to $11,259 in 2002 (2001; $12,710)
  and $2,147,426 was expended on the Company's exploration activities versus $2,313,445
  for the year ended December 31, 2002 (2001; $1,927,199).

Cash was provided by the sale of licences for $5,000,000 during
  the year ended December 31, 2003 compared to cash provided of $198,299 in 2002.
  Financing activities raised $535,442 for the year ended December 31, 2003 compared
  to $1,000,000 for 2002. Cash of $52,065 that was due from related parties was
  received compared to $23,670 that was paid to related parties in 2002 (2001:
  $51,443 received from related parties).

The net effect of the above noted transactions was an increase
  of cash of $941,460 for the year ended December 31, 2003 compared to a decrease
  of $1,989,180 for the comparable 2002 year (2001; increase of $394,236).

The audit report on the Registrant's December 31, 2003 financial
  statements recorded that there is substantial doubt regarding the ability of
  the Registrant to continue to meet all its future commitments in relation to
  the properties it holds.

On January 5, 2004 the Company successfully raised on the
  NZSX $5.2 million through the issuance of 4 million common shares (see Item
  4.A.4 - Important Events/Company History). In addition, the Company issued on
  January 5, 2004, two convertible notes for $250,000 each (see Item 4.A.4 - Important
  Events/Company History). Since balance date, the Company has increased its cash
  reserves by approximately $5.7 million through the fund raising mentioned above.
  This has significantly increased the Company's cash balances to help fund its
  future commitments.

The Company and its joint venture participants in PEP 38736
  agreed in January 2004 on the sale of gas from the Kahili gas-condensate field
  to NGC New Zealand Limited (see Item 4.A.4 - Important Events/Company History).
  It is the joint venture's intention that production will commence in third quarter
  2004.

For fiscal 2004, the Registrant originally estimated that
  it would require cash of $7.5 million to carry on its operations. Due to farmout,
  relinquishment and other arrangements already made and work already completed
  as at June 12, 2004, that total has been revised for the remainder of fiscal
  2004, to $1.8 million of required work obligations and $9 million of planned
  other work. Of this total of $10.8 million, the Registrant estimates that $1.8
  million will be generated from existing cash available and revenue from operations,
  and the Registrant plans to raise the balance of $9 million by seeking farmout
  agreements with third parties or raising investment funds.

Subsequent to the end of the reporting period, the Registrant
  has met all permit commitments, either by direct funding or by farm-out of parts
  of its permit interests to third parties or extension of permit work program,
  except in relation to AC/P 31 in Australia, where it has not been granted an
  extension to the permit work program. This non-extension of AC/P 31 work program
  is currently subject to appeal by the Company. The

32

---

Registrant's working capital had been increased to approximately
  $6,498,948 at the end of March 2004.




The Registrant's capital resources have been comprised primarily
  of private investors, including members of management, who are either existing
  contacts of the Registrant's management or who come to the attention of the
  Registrant through personal and business contacts, financial institutions and
  other intermediaries. Conventional bank financing of exploration projects is
  generally unavailable to resource companies which are in the exploration stage,
  in the absence of significant producing properties that can be used as collateral.
  The Registrant's previously producing property (PMP 38148) has been of too small
  a scale to be used for such purpose. The Registrant's access to capital is always
  dependent upon general financial market conditions, especially those that pertain
  to venture capital situations such as oil and gas exploration companies.

At the end of the reporting period, the Registrant had binding
  agreements with subscribers to the New Zealand public offer, and with GRIL for
  issue of two convertible notes respecting additional financing. After the end
  of the reporting period, the Registrant completed those agreements (see Item
  4.A.4  Important Events/Company History) and entered into a gas sales
  agreement with NGC (see Item 4.A.4  Important Events/Company History).

As at the date of this Filing, the Registrant has no binding
  agreements with management, investors, shareholders or anyone else respecting
  additional financing.

Due to the speculative nature of the Registrant's business
  and its limited revenue generating assets, potential investors are generally
  limited to those willing to accept a high degree of risk. Therefore the numbers
  of outside sources of capital for the Registrant are somewhat limited. Other
  than the foregoing, there are no other trends in the nature of its capital resources
  that could be considered predictable.

3. Capital
    Commitments Plan of Operations


The Registrant is required to carry out the following significant
  work obligation projects by the following date(s):

Anticipated Total Work Obligation Before December 31, 2004
  (As at 31 December 2003. Where marked as completed', has been completed
  by June 12, 2004.)

|Property                          | Description of Work          | (US$)     | Source of funds
|--------------------------------- | ---------------------------- | --------- | ---------------
|                                  |                              |           |                
|Undeveloped                       |                              |           |                
|PEP 38256                         | Permit Maintenance           | 0         | Working capital
|PEP 38258                         | Seismic & Permit Maintenance | 189,600   | Working capital
|PEP 38330                         | Seismic & Permit Maintenance | 12,500    | Working capital
|PEP 38480                         | Permit Maintenance           | 0         | Working capital
|PEP 38716                         | Seismic (completed)          | 238,700   | Working capital
|PEP 38718                         | Permit Maintenance           | 0         | Working Capital
|PEP 38736                         | Permit Maintenance           | 21,300    | Working capital
|PEP 38738                         | Well (completed)             | 263,300   | Working capital
|PEP 38741                         | Seismic (completed) & Well   | 314,700   | Working capital
|PEP 38746                         | Permit Maintenance           | 36,300    | Working capital
|PEP 38748                         | Permit Maintenance           | 9,000     | Working capital
|PEP 38753                         | Permit Maintenance           | 26,600    | Working capital
|PEP 38765                         | Well                         | 242,900   | Working capital
|PEP 38766                         | Permit Maintenance           | 9,000     | Working capital
|PEP 38768                         | Seismic & Permit Maintenance | 81,800    | Working capital
|PRLs 4&5                          | Permit Maintenance           | 2,200     | Working capital
|AC/P 19                           | Well & Permit maintenance    | 5,996,000 | Working capital
|                                  |                              |           | and farm-out   
|AC/P 26                           | Permit Maintenance           | 37,500    | Working capital
|AC/P 31                           | Seismic (cancelled)          | 37,500    | Working capital
|PPL 235                           | Permit Maintenance           | 0         | Working capital
|PPL 228                           | Permit Maintenance           | 0         | Working capital
|                                  |                              |           |                
|Total Work Obligation Commitments | $7,518,900                   |          

33

---

These estimates have been revised as at June 12, 2004, and the amendments are
  as follows:

|Property                          | Description of Work          | (US$)   | Source of Funds
|--------------------------------- | ---------------------------- | ------- | ---------------
|                                  |                              |         |                
|Developed                         |                              |         |                
|PMP 38153                         | Maintenance                  | 50,000  | Working capital
|                                  |                              |         |                
|Undeveloped                       |                              |         |                
|PEP 38256                         | Permit Maintenance           | 7,900   | Working capital
|PEP 38258                         | Seismic & Permit Maintenance | 126,000 | Working capital
|PEP 38330                         | Permit Maintenance           | 59,200  | Working capital
|PEP 38480                         | Permit Maintenance           | 70,000  | Working capital
|PEP 38716                         | Permit Maintenance           | 75,600  | Working capital
|PEP 38718                         | Permit Maintenance           | 20,500  | Working capital
|PEP 38736                         | Seismic & Permit Maintenance | 141,000 | Working capital
|PEP 38738                         | Production Testing           | 442,700 | Working capital
|PEP 38741                         | Well & Permit maintenance    | 232,400 | Working capital
|PEP 38746                         | Well & Permit maintenance    | 65,300  | Working capital
|                                  |                              |         | and farm-out   
|PEP 38748                         | Permit Maintenance           | 34,900  | Working capital
|PEP 38753                         | Well & Permit maintenance    | 30,600  | Working capital
|                                  |                              |         | and farm-out   
|PEP 38765                         | Well & Permit maintenance    | 284,300 | Working capital
|PEP 38766                         | Permit Maintenance           | 22,500  | Working capital
|PEP 38768                         | Permit Maintenance           | 63,300  | Working capital
|PRLs 4&5                          | Permit Maintenance           | 22,000  | Working capital
|AC/P 19                           | Well & Permit maintenance    | 30,000  | Working capital
|AC/P 26                           | Permit Relinquished          | 0       | Not required   
|AC/P 31                           | Permit Maintenance           | 34,800  | Working capital
|PPL 235                           | Permit Maintenance           | 30,000  | Working capital
|PPL 228                           | Permit Maintenance           | 5,000   | Working capital
|                                  |                              |         |                
|Total Work Obligation Commitments | $1,848,000                   |        

In addition to the above required work programs, the Registrant
  is planning to carry out the following significant projects during fiscal 2004:

Anticipated Planned Work Before December 31, 2004
  (As at June 9, 2004)

|Property      | Description of Work                | (US$)         | Source of funds   
|------------- | ---------------------------------- | ------------- | ------------------
|Developed     |                                    |               |                   
|Undeveloped   |                                    |               |                   
|PEP 38738     | Cardiff-2 Drill, Complete and Test | 9,000,000     | "Farm-out" Partner
|              |                                    |               |                   
|Total Planned | Program                            | $   9,000,000 |                   

The projects completed to date from the above programs are
  drilling of Cheal A3X and some permit and seismic work ($856,600) funded from
  working capital. The ACP/19 estimate has reduced to permit maintenance, as the
  intention is to farm out 100% of any well expenditure. PEP 38738 production
  testing is in progress as at the date of this report. Kahili-1B development
  will be funded by the gas purchaser and will require approximately $50,000 in
  G & A costs to be funded by the Registrant.

34

---

In addition to the above significant expenditures planned
  subsequent to June 2004, the Registrant anticipates various minor expenditures
  on geology and geophysics desk and field studies in various permits, which will
  total approximately $200,000 for fiscal 2004 and will be funded from working
  capital and/or farmout.

For the 5 months to May 31, 2004, the Registrant has successfully
  funded its projects from fundraisings, working capital, production revenues
  and/or farmout. The Registrant intends to continue to investigate the possibility
  of funding expenditure through farmouts to other exploration companies and/or
  by raising additional capital by private placement or public investment. If
  such funding does not become available as appropriate, the Registrant intends
  to seek deferral of projects until such time as funding is available. If none
  of these options are possible, the Registrant would then be required to relinquish
  certain properties.

C.                Research
  and development, patents and licenses

Not applicable

D.                Trend
  Information

Significant trend information since the latest financial year:

The most important trend for the Registrant is production
  and sales of oil. Trends which are also important are oil prices and exchange
  rates, as the revenue is subject to international prices and the Registrant's
  costs are mainly in NZ$, so the NZ$/US$ exchange rate is important.

There has been no Oil production and sales in the current
  fiscal year (2004). Oil prices and closing exchange rates for the months subsequent
  to December 31, 2003 are:

|Month       | Production
      (bbl) | Sales
      (bbl) | Oil price
      (US$/bbl) | Revenue
      (US$'000) | Exchange
      (NZ$/US$)
|----------- | ---------------------- | ----------------- | ------------------------- | ----------------------- | ------------------------
|January 04  | -                      | -                 | 32.40                     | -                       | 0.6702                  
|February 04 | -                      | -                 | 35.43                     | -                       | 0.6876                  
|March 04    | -                      | -                 | 35.03                     | -                       | 0.6575                  
|April 04    | -                      | -                 | 36.63                     | -                       | 0.6233                  
|May 04      | -                      | -                 | 39.15                     | -                       | 0.6319                  

E.                Off-Balance
  Sheet Arrangements

The Company has off-balance arrangements in the form of "farm-in"
  arrangements, whereby a third party will take part share of a permit for a premium
  to recognize the work previously undertaken. This is one of the options that
  the Company's has available to meet the exploration permit commitments. See
  item 5.B.1.  Liquidity.

Only one such material "farm-in" arrangement was in effect
  during the reporting period, relating to PEP 38738. The "farm-in" agreement
  was agreed March 5, 2003, whereby the current permit holders (Rata Energy Limited
  (a subsidiary of Austral Pacific Energy Ltd) and Cheal Petroleum Limited) jointly
  agreed to farm-out 16.5% to allow IRM (Malaysia) Inc. to obtain a 33% interest
  in PEP 38738 for a proportion of past costs and higher share of future drilling
  and testing costs for Cheal-1, Cheal-2 and Cheal-3 wells.

This "farm-in" arrangement has reduced the Company's current
  share of the expenditure required to meet the permit commitments in relation
  to this permit from approximately $225,000 to $80,000 in 2003, and will reduce
  the Company's expenditure for drilling of Cheal A3-X in the permit, in 2004.

F.                Tabular
  Disclosure of Contractual Obligations


As at December 31, 2003, the Company has the following commitments
  for Capital Expenditure:

|Contractual Obligations         | Payments Due by Period
|------------------------------- | ----------------------
|Total                           | Less than 1 year      
|Long Term Debt                  | -                     
|Capital Lease
      Obligations | -                     

35

---

|Operating Leases                       | 19,641     | 19,641    | -          | - | -
|-------------------------------------- | ---------- | --------- | ---------- | - | -
|Purchase Obligations                   | -          | -         | -          | - | -
|Other Long Term  
      Obligations(1) | 17,549,517 | 7,514,900 | 10,034,617 | - | -
|Total Contractual  
      Obligations  | 17,569,158 | 7,534,541 | 10,034,617 | - | -

(1) The Other Long Term Obligations that the Company has are in
  respect to the Company's share of expected exploration permit obligations.

G.

[RESERVED]

ITEM 6.                DIRECTORS,
  SENIOR MANAGEMENT AND EMPLOYEES

A.                Directors
  and senior management

The names, municipality of residence and position held of
  the directors and senior management of the Registrant are as follows:

|Name                     | Residence       | Position Held                                     
|------------------------ | --------------- | --------------------------------------------------
|                         |                 |                                                   
|David Newman [1] [3] [7] | Wellington,     | Chairman of the Board, Director                   
|                         | New Zealand     |                                                   
|                         |                 |                                                   
|Ronald Bertuzzi [12]     | Vancouver       | Director                                          
|                         | B.C., Canada    |                                                   
|                         |                 |                                                   
|Bernhard Zinkhofer [12]  | Richmond,       | Director, (Past Interim) Chairman of the Board [8]
|                         | B.C., Canada    |                                                   
|                         |                 |                                                   
|Garth Johnson [1] [2]    | Vancouver,      | Director                                          
|                         | B.C., Canada    |                                                   
|                         |                 |                                                   
|Peter Tapper [1] [3]     | Wellington,     | Director                                          
|                         | New Zealand     |                                                   
|                         |                 |                                                   
|David McDonald [6]       | Vancouver,      | Former Chairman of the Board, Director            
|                         | B.C., Canada    |                                                   
|                         |                 |                                                   
|Drew Cadenhead [5]       | Calgary         | Former Director                                   
|                         | Alberta, Canada |                                                   
|                         |                 |                                                   
|Dr. David Bennett        | Wellington,     | President, Chairman of the Board [9],             
|                         | New Zealand     | Chief Executive Officer, Director [4]             
|                         |                 |                                                   
|Jeanette Watson          | Wellington,     | Corporate Secretary                               
|                         | New Zealand     |                                                   
|                         |                 |                                                   
|Jenni Lean               | Wellington,     | Commercial Manager                                
|                         | New Zealand     |                                                   
|                         |                 |                                                   
|Dr. Terry Russell [10]   | Wellington,     | Exploration Manager                               
|                         | New Zealand     |                                                   
|                         |                 |                                                   
|Nigel Robinson [11]      | Wellington,     | Chief Financial Officer                           
|                         | New Zealand     |                                                   
|36                      

---

|[1]  | Current member of audit committee                                                        
|---- | -----------------------------------------------------------------------------------------
|[2]  | Appointed May 28, 2003 and appointed to audit committee on
      June 20, 2003.          
|[3]  | Appointed September 26, 2003 and appointed to audit committee
      on November 14, 2003.
|[4]  | Resigned from Board September 26, 2003                                                   
|[5]  | Appointed October 17, 2002 and resigned March 24, 2003.                                  
|[6]  | Resigned June 19, 2003.                                                                  
|[7]  | Elected Chairman on September 26, 2003.                                                  
|[8]  | Elected interim Chairman on June 23,2003 and replaced September
      26, 2003.          
|[9]] | Elected Chairman on June 20, 2003 and resigned June 23, 2003.                            
|{10} | Employed as Exploration Manager on February 1, 2003.                                     
|[11] | Appointed Chief Financial Officer on December 1, 2003.                                   
|[12] | Resigned from the audit committee November 14, 2003.                                     

Mr. David Newman

Mr. Newman was appointed to the Board in September 2003. Mr.
  Newman retired as Chief Executive Officer of the Institute of Directors in New
  Zealand in March 2004 after 6 years. He previously had a 22 year career with
  British Petroleum, culminating in four years as Chief Executive and Managing
  Director of BP New Zealand Limited (1990 - 1994). Mr. Newman's current directorships
  include Chairman of Finmedia Limited and of Wellington International Airport
  Limited, and Deputy Chairman of Infratil Limited. Mr. Newman's past directorships
  have included Chairman of Norwich Union and State Insurance Group in New Zealand,
  Chairman of the NZ Refining Company Limited, member of the advisory board of
  BP Australia, and a director of New Zealand Post Limited. Mr. Newman is a Chartered
  Accountant, who resides in the Wellington region of New Zealand.

Mr. Peter Tapper

Mr. Tapper was appointed to the Board in September 2003. Mr.
  Tapper has an honours degree in Civil Engineering from the University of Auckland,
  New Zealand and has had a career in the oil and gas industry, working for Royal
  Dutch Shell for 34 years (1956-1990). His career included a large number of
  overseas postings, working in Holland, Brunei, Indonesia, USA, Qatar, UK and
  Australia, and he is widely recognised for his extensive experience and expertise
  in offshore and large condensate fields. While employed by Shell, Mr. Tapper
  held senior management positions, which included Deputy Managing Director (and
  Technical Director) of Shell Brunei, and (on secondment from Shell) Executive
  General Manager of Woodside Offshore Petroleum (the operator of the North West
  Shelf Project, a joint venture between Shell, BP Chevron, BHP, Mitsubishi and
  Mitsui, and Woodside). Mr. Tapper's past directorships have included Dawson
  Group, and Chairman of Coplex Resources Limited. He is a Trustee of the Dilworth
  Board, a Fellow of the Institute of Engineers (Aust), a Fellow of the Institute
  of Petroleum (UK), a Chartered Engineer (UK) and a Member of the Institute of
  Professional Engineers of New Zealand. Mr. Tapper resides in Auckland, New Zealand.

Mr. Ronald Bertuzzi

Mr. Bertuzzi was a member of the board of directors from October
  2, 1992 to October 30, 1996 and was reappointed in March 1998. Mr. Bertuzzi
  received a Bachelor of Economics from the University of British Columbia in
  1965 and has worked in the medical sales and product development industries
  since that time. He has recently retired but for the 10 years previous, Mr.
  Bertuzzi was a sales manager with El Rad Services of Vancouver, British Columbia,
  Canada.

Mr. Bertuzzi is a past member of the board and a past president
  of Gondwana Energy Ltd. and is a past member of the board of AMG Oil Ltd. AMG
  and Gondwana are affiliated with the Company by virtue of having certain principal
  shareholders in common. Mr Bertuzzi resides in Vancouver, Canada.

Mr. Bernhard J. Zinkhofer

Mr. Zinkhofer was appointed to the board of directors in March,
  2001 after serving the Company for a number of years as legal counsel. Mr. Zinkhofer
  was educated at the universities of Calgary (B.Comm-1977) and Victoria (LL.B-1983)
  in Canada and is accredited as a Chartered Accountant (1980) and as a lawyer
  (1984). He has practised law as a partner at the Canadian law firm of Lang Michener
  LLP in their Vancouver, British Columbia office since 1992.

Mr. Zinkhofer has served as a director of two companies affiliated
  with the Company, namely Trans-Orient Petroleum Ltd (1997-2003), and TAG Oil
  Ltd. (previously called Durum Cons. Energy Corp.) (1997  2003). Mr. Zinkhofer
  also serves or has served on the boards of several other private and public
  companies in North America - Strategic Technologies Inc. (1995 to present),
  Helijet International Corp. (1996 to present), Foran

37

---

Mining Corp. (1997  2000), Caliente Capital Corp. (1999
   2003), Verida Internet Corp. (1999  2001) and Arrabbiata Capital
  Corp. (2002 to present). Mr Zinkhofer resides in Richmond, Canada.

Mr.Garth Johnson

Mr. Johnson was appointed as a director of the Company in
  May 2003. Mr. Johnson has been employed by an affiliate of the Company, TAG
  Oil Ltd, since 1997 as its corporate accountant and became its Chief Financial
  Officer in 2000 and a director in 2001. Mr. Johnson has been engaged in the
  administration of private and public companies since 1995 and is a Certified
  General Accountant.

Mr. Johnson serves as CFO, Corporate Secretary and a director
  of certain affiliates of the Company, namely Trans-Orient Petroleum Ltd., and
  TAG Oil Ltd., and is a former Treasurer and Corporate Secretary of Gondwana
  Energy Ltd. He is an employee of DLJ Management Ltd. which company provides
  administration services to the Company. Mr. Johnson resides in Vancouver, Canada.

Mr. David McDonald (former Non-Executive Chairman)

Mr. McDonald was a member of the board of directors and was
  Non Executive Chairman from February 2000 until his retirement from the board
  at age 71 on June 19, 2003.

Dr. David Bennett

Dr. Bennett has over 35 years exploration experience, together
  with various research posts. He joined the Company in 1996, subsequently becoming
  Chief Executive Officer, President and a director in October 1996. Prior to
  joining the Company, Dr. Bennett was exploration manager for New Zealand Oil
  and Gas Limited (NZOG) from 1982 to 1994. During this time NZOG discovered the
  Kupe South gas-condensate field in 1986, and the Ngatoro oil field in 1991.
  Under his leadership, Austral purchased a share of the Ngatoro field in 1996,
  sole risked the Goldie oil discovery in early 2001, and re-entered the Cheal
  gas discovery and drilled the Kahili gas discovery in late 2002. Dr. Bennett
  resides in Wellington, New Zealand.

Dr. Bennett formerly served on the boards of three companies
  affiliated with the Company, namely Trans-Orient Petroleum Ltd, AMG Oil Ltd.
  and TAG Oil Ltd. (previously called Durum Cons. Energy Corp.) He accommodated
  the addition of Messrs Newman and Tapper to the Board by resigning as a director
  of the Company in September 2003 but remains its President. He has been re-nominated
  to the Board at the next shareholders' meeting (to be held in late June 2004).Dr. Bennett's spouse, Ms Jenni Lean is also employed by the Company as Commercial
  Manager.

Ms Jeanette Watson

Ms. Watson was appointed as Company Secretary in 2000. Ms
  Watson has a B.Sc. (Geology) and an LLB from Victoria University in Wellington,
  New Zealand and is qualified as a lawyer. She has practised commercial and corporate
  law (1986 to 1989 and 1992 to 2000) at Rudd Watts & Stone (now called Minter
  Ellison Rudd Watts) at their Wellington office, and in the United Kingdom, at
  Slaughter and May (from 1989 to 1991).Ms Watson spends approximately
  40% of her total work time on behalf of the Registrant.

Dr. Terry Russell

Dr. Russell has a B.Sc (Hons) from Victoria University in
  Wellington, New Zealand and a PhD from the University of New England, New South
  Wales. He has over 25 years experience in oil and gas exploration, principally
  working with junior oil explorers. Dr. Russell joined the Registrant as Exploration
  Manager in 2002. Prior to joining the Company, he most recently worked for the
  Australian-based Bligh Oil & Minerals NL where he was responsible for managing
  Bligh's operated and non-operated permits in New Zealand and Tunisia. Dr. Russell
  has worked on exploration and/or development projects in New Zealand, Australia,
  the United States, Argentina and Tunisia. He has extensive experience in the
  development of exploration plays and prospect generation; seismic and drilling
  operations; and government liaison, project and joint venture management.

Ms Jenni Lean

Ms Lean has a B.Sc. and MBA from Victoria University in Wellington,
  New Zealand. She has experience as a computer programmer at the Australian National
  University in Canberra, taught mathematics and science in Wellington and has
  worked in the strategic planning division at New Zealand's government science
  research body. She has been Executive Officer for New Zealand's rural consultants
  body and an integral part of a forestry trading group in New Zealand. Since
  1995 she has been involved with the Registrant as part of the senior management
  team, latterly as Commercial Manager. Ms Lean's spouse, Dr. Bennett, is the
  Company's Chief Executive Officer.

38

---

Mr. Nigel Robinson

Mr. Robinson has a B.Com (Accounting) from Otago University
  in Dunedin, New Zealand and is a Chartered Accountant member of the Institute
  of Chartered Accountants of New Zealand. He joined the Company in September
  2003 and was appointed Chief Financial Officer December 1, 2003. He has expertise
  in corporate reporting/accounting and business processes. Mr. Robinson has been
  a fishery officer, investigating accountant for the Ministry of Agriculture
  and Fisheries, assistant financial accountant, internal auditor, general accounting
  manager and external auditor. He has been involved in the down stream operations
  of the oil industry with roles as internal auditor and general accounting manager
  with Caltex New Zealand Limited, a Chevron/Texaco subsidiary.

Events Subsequent to December 31, 2003


On April 23, 2004, Mr. Newman, Mr. Johnson and Dr. Bennett
  were appointed to the Registrant's remuneration committee.

Indemnification of Directors and Officers

The Registrant has taken out liability insurance to cover
  Directors and Officers in the performance of their duties.

To date, no agreements to contractually provide indemnities
  have been executed or delivered.

B.                Compensation


The following table sets forth the aggregate compensation
  paid by the Company for services rendered during the last full financial year
  indicated, reported as at December 31, 2003:

39

---

|SUMMARY
      COMPENSATION TABLE
|--------------------------------
|                                
|Name and                        
|                                
|Position with Company           
|                                
|                                
|Dr. David Bennett,              
|President, Chief                
|Executive Officer               
|                                
|David Newman                    
|Chairman, Director              
|                                
|David McDonald                  
|Chairman, Director              
|                                
|Ronald Bertuzzi                 
|Director                        
|                                
|Bernhard Zinkhofer              
|Director                        
|                                
|Drew Cadenhead                  
|Director                        
|                                
|Garth Johnson                   
|Director                        
|                                
|Peter Tapper                    
|Director                        
|                                
|Jeanette Watson                 
|Corporate Secretary             
|                                
|Dr. Terry Russell               
|Exploration Manager             
|                                
|Nigel Robinson                  
|Chief Financial Officer         
|                                
|Jenni Lean                      
|Commercial Manager              
|                                

|[1] | David Bennett and Jenni Lean, via the DJ and JM
        Bennett Family Trust, own the building in which the Registrant's New Zealand
        offices are located. During the year, the Registrant paid $32,741 in office
        rental costs for the use of the building.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[2] | Stock Options vest over a period of 18 months                                                                                                                                                                                                                             
|[3] | Stock Options not subject to vesting provisions                                                                                                                                                                                                                           
|[4] | Common shares and common shares under vested options
        or exercisable warrants held directly or indirectly by directors or officers
        of the Registrant, as at June 17, 2004. Percentage calculated as a percentage
        of common shares issued.          
|[5] | Ms Lean and Ms Watson are contractors to the Company,
        not employees, and therefore do not receive salary payments.                                                                                                                                                
|[6] | Mr. Cadenhead resigned as a director from March
        24, 2003, so his options lapsed on May 8, 2003.                                                                                                                                                                   
|[7] | Vesting of Stock Options subject to performance
        measurement.                                                                                                                                                                                                      
|[8] | Options were granted on October 15, 2003, under
        substantially the same terms as the vesting options                                                                                                                                                               

40

---

|     | agreement of July 6, 2000, except that all vestings
        were accelerated to be completed by April 15, 2005.                                                                                                
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[9]  | In fiscal 2003, DLJ Management Ltd., a financial
        services firm of which Mr. Johnson is an employee, performed financial
        services for the Company and was paid $9,454 in fees for such services.
|[10] | Mr. McDonald resigned as a director from June 19,
        2003, so his options lapsed on August 3, 2003.                                                                                                       
|[11] | Common shares and common shares under vested options
        or exercisable warrants beneficially owned is less than one percent of
        total common shares.                                               
|[12] | David Bennett and Jenni Lean are spouses, so each
        individual's options and shareholdings are aggregated with the other's
        in calculating beneficial holdings.                                   
|[13] | In fiscal 2003, Lang Michener LLP, the law firm
        in which Mr. Zinkhofer is a partner, performed legal services for the
        Company, and was paid $95,980 in fees for such services.                 

Each Stock Option disclosed gives a right, when vested, to
  call for a common share. No purchase price was paid for any option.

Compensation of Directors


In 2003, the independent directors of the Company were entitled
  to receive Cdn$200 per meeting cash compensation for services rendered in their
  capacity as directors of the Company, and the Chairman US$10,000 per year. From
  September 2003, the Chairman (if non-executive) receives US$25,000 per year,
  the chairman of the audit committee receives US$20,000 per year and each other
  non-executive director (except Mr. Zinkhofer, who invoices time charges in lieu)
  receives US$5000 to US$7,500 per year.

In April 2004, the Board of directors established a remuneration
  committee, consisting of Mr. Newman (Committee Chair), Mr. Johnson and Dr. Bennett,
  to review and recommend to the Board on matters relating to compensation of
  directors and management.

510,000 options lapsed during fiscal 2003, without exercise,
  due to cessation of involvement with the Company.

There were no directors' or senior officers' options exercised
  in the years ended December 31, 2003 and 2002.

Options Granted During the Year

On October 15, 2003, the Registrant issued a further 50,000
  options to its new directors, without purchase price, as follows:

|Name         | Shares Underlying the Option | Exercise Price | Expiry Date 
|------------ | ---------------------------- | -------------- | ------------
|David Newman | 25,000                       | $1.25          | Oct 15, 2008
|Peter Tapper | 25,000                       | $1.25          | Oct 15, 2008

C.                Board
  practices

1.
  Term of office

All directors have a term of office expiring at the next annual
  general meeting of the Registrant, but are eligible for re-election, unless
  a director's office is earlier vacated in accordance with the by-laws of the
  Registrant or the provisions of the Business Corporations Act (Yukon). All officers
  have a term of office lasting until their resignation or their replacement by
  the board of directors.

|Name               | Period served in position
|------------------ | -------------------------
|                   | (as at June 12, 2004)    
|                   |                          
|David Newman [1]   | 9 months                 
|Ronald Bertuzzi    | 6 years                  
|Bernhard Zinkhofer | 3 years                  
|Garth Johnson [1]  | 1 year                   
|Peter Tapper [1]   | 9 months                 




---

|Dr. David Bennett                 | 8 years 
|--------------------------------- | --------
|Jeanette Watson                   | 4 years 
|Jenni Lean                        | 8 years 
|Dr. Terry Russell                 | 1 year  
|Nigel Robinson                    | 9 months
|                                  |         
|[1] Member of the Audit Committee |         

|2. | Directors' service contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | No director has a contract that provides for any
        benefits upon termination of his/her service as a director.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | In January 2002, the Company entered into a management
        agreement with a subsidiary, Austral Pacific Energy (NZ) Limited, which
        has an employment agreement with Dr. David Bennett, to manage all the
        Company's operations and its affiliates, including providing to the Company
        the services of Dr. Bennett as CEO and President. The severance terms
        of that employment agreement provide that, upon termination without cause,
        he will be paid two months severance for each year of service since October
        1997 (limited to a maximum of 24 months' pay) and six months severance
        in lieu of equivalent notice.
|  
|3. | Audit and remuneration committees
        List of Audit Committee members as at June 20, 2004: 
               Peter Tapper 
               David Newman 
               Garth Johnson
        List of Remuneration Committee members as at June 20, 2004: 
               David Newman 
               Garth Johnson 
               David Bennett                                                                                                                                                                                                                                                                                                                               

D.                Employees

As of December 31, 2003, the Registrant employed nine people
  full time in its Wellington, New Zealand office. The persons employed in the
  Wellington office are the president / chief executive officer and eight persons
  occupied with technical support, company and joint venture accounting, financial
  reporting, and office management. In addition another one or two persons have
  been employed in the 2003 year on a part time basis to assist in administrative
  support.

In addition to the foregoing, the Registrant also receives
  technical and administrative services from a number of contractors and consultants.

E.                Share
  Ownership

Share ownership and stock options granted and outstanding
  to officers and directors of the Company are outlined in the table in Item 6.B
  - Compensation.

The Company has, in the past, had no defined plan for involving
  employees in the capital of the Company. The Company has, at the discretion
  of the board of directors, granted incentive stock options to its officers,
  directors, employees and consultants, for the purchase of shares in the Company.
  Stock options are in consideration for services and are non-transferable. The
  Board of Directors of the Company determined the exercise price. Such options
  granted have a maximum term of five years and terminate 45 days after the termination
  of employment or other contracting arrangement of the option holder. Vesting
  of options may be made at the time of granting of the options or over a period
  of up to 18 months as set out in each option agreement. Once approved and vested,
  options are exercisable at any time until expiry or termination as above.

TSX-V policies require that the Company establish a share
  option plan for the granting of options to employees and service providers,
  which plan requires shareholder approval. The Board of directors has adopted
  a plan and was presented to the annual general meeting of the shareholders (to
  be held in late June

42

---

2004) for approval. The Plan provides for the Board to issue
  non-assignable, non-transferable options, with a term of up to 5 years, terminating
  within 90 days after the optionee ceases to be associated with the Company,
  at an exercise price not less than the TSX-V specified Discounted Market Price,
  such options vesting over 3 years.

The Plan, if approved by majority vote at the annual general
  meeting, will be filed with the TSX-V for approval, and it is not anticipated
  that the Plan will not be acceptable to the TSX-V.

ITEM 7.                MAJOR
  SHAREHOLDERS AND RELATED TRANSACTIONS

A.                Major
  shareholders


1. Beneficial
  Holders of More Than Five Percent of Outstanding Shares

To the knowledge of the Company, the only persons holding,
  directly or indirectly, five percent or more of the Registrant's Common Stock
  are listed below (as of June 1, 2004):

|Owner                          |  | Number of    |  | Percent  | 
|------------------------------ |  | ------------ |  | -------- | 
|                               |  | Shares       |  | of Class | 
|                               |  |              |  |          | 
|Trans-Orient Petroleum Ltd.[1] |  | 832,145[2]   |  | 6.47%    | 
|                               |  |              |  |          | 
|Alex Guidi                     |  | 1,169,792[3] |  | 9.10%    | 
|                               |  |              |  |          | 
|Peter Loretto                  |  | 1,444,595[4] |  | 11.28%   | 

|[1] | Trans-Orient Petroleum Ltd ("Trans-Orient") is a
        public company traded on the OTC Bulletin Board in the United States.
        Mr. Zinkhofer and Dr. Bennett (directors of the Company) are former directors
        of Trans-Orient. Mr. Johnson serves as CFO, Corporate Secretary and a
        director of Trans-Orient Petroleum Ltd.                                                          
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|[2] | Trans-Orient also holds 557,750 share purchase warrants
        and 836,845 Series "A" warrants to purchase common shares of the Company,
        at any time.                                                                                                                                                                                                                                              
|   
|[3] | Mr. Guidi is a former director of the Company. Mr.
        Guidi holds, directly, warrants to purchase a further 512,000 common shares
        of the Company, all of which are available for exercise within 60 days.                                                                                                                                                                                      
|   
|[4] | Mr. Loretto is a former director of the Company.
        Mr. Loretto holds, directly, warrants to purchase a further 336,000 common
        shares of the Company, all of which are available for exercise within
        60 days. Mr. Loretto is a principal shareholder of Trans-Orient and as
        such is also beneficially interested in all holdings disclosed in relation
        to Trans-Orient.

To the knowledge of the Company, there have been no significant
  changes in percentage share ownership held by any major shareholders, during
  the last three years. The Company's major shareholders do not have different
  voting rights.




To the knowledge of the Company, 4,209,880 common shares are
  held by 1,050 registered shareholders in the United States representing 32.75
  per cent of the total common shares outstanding as at June 1, 2004.

3. Controlling
  shareholders

Mr. Peter Loretto, a resident of Canada, directly and via
  his controlling position in Trans-Orient Petroleum Ltd, controls an undiluted
  17.75% shareholding in the Company.

To the knowledge of the Company, the Company is not directly
  or indirectly owned or controlled by another corporation, foreign government
  or person.




43

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To the knowledge of the Company, there have been no transfers
  of common shares of the Company which have materially affected control of the
  Company since the last Annual General Meeting of the Members of the Company
  held on June 17, 2003, and there are no other arrangements known to the Company
  the operation of which may at a subsequent date result in a change of control
  of the Company, except that Mr. Alex Guidi transferred his controlling shareholding
  in Trans-Orient Petroleum Ltd. to Mr. Peter Loretto in November 2003, thereby
  transferring control of a material portion of the Company to Mr. Loretto.

On June 18, 2003, a New Zealand subsidiary of the Company,
  Austral Pacific Energy (NZ) Limited, issued 1,500,000 Special Class shares in
  that company to certain private investors (see Item 4.A.4  Important Events/Company
  History). Such shares confer no voting rights, but did confer the right to convert
  such shares to units in a proposed listing of and issue of common shares in
  that company on the NZSX. If the listing did not proceed, the subscription agreements
  provided the right to exchange such Special Class shares for common shares in
  the Company. Subsequently, the Company decided not to proceed with the listing
  of that subsidiary.

On November 12, 2003, each Special Class shareholder signed
  a conditional share exchange agreement which agreed to transfer to the Company
  all of the Special Class shares in exchange for the issuance of Units by the
  Company. Each Unit comprised one common share and half a share purchase warrant.
  The Special Class shares where exchanged for such Units in the Company on January
  5, 2004, upon the listing of the Company on the TSX-V and the NZSX, at the rate
  of one common share for every 1.35 Special Class share resulting in the issuing
  of 1,111,123 common shares, and 555,569 warrants exercisable at a price of NZ$1.85
  any time on or before January 5, 2005, which issuance did not result in a change
  in control of the Company.

B.                Related
  party transactions

In fiscal 2003, office rents of $32,741 were paid to the DJ
  & JM Bennett Family Trust controlled by Dr. David Bennett. These amounts
  were fair market payments.

The Company entered into an agreement with Trans-Orient Petroleum
  Ltd ("Trans-Orient") to acquire all of its participating interests in 13 oil
  and gas permits and licences effective January 1, 2000. See Item 4.A.5 Principal
  Capital Expenditures.

In January 2002, the parties agreed to vary that agreement
  (see Item 4.A.5  Principal Capital Expenditures) In December 2003, the
  parties agreed to further vary that agreement (see Item 4.A.5  Principal
  Capital Expenditures).

One participant in the Company's oil and gas properties has
  directors, officers and/or principal shareholders in common with the Company.
  That participant is TAG Oil Ltd. (formerly called Durum Cons. Energy Corp.).

At December 31, 2003, the Company was owed $Nil (2002: $52,065)
  by certain public companies with directors, officers and/or principal shareholders
  in common with the Company (being AMG Oil Ltd., TAG Oil Ltd. (formerly called
  Durum Cons. Energy Corp.) and Gondwana Energy, Ltd.). As at June 9, 2004, the
  related party amounts outstanding totaled $Nil.

C.                Interests
  of experts and counsel

Not applicable

ITEM 8.                FINANCIAL
  INFORMATION

A.                Consolidated
  Statements and Other Financial Information

Consolidated financial statements are provided under PART
  III. Item 17. Financial Statements.

There are no material legal proceedings to which the Registrant
  is subject or which are anticipated or threatened.

The Company has never paid dividends to shareholders nor is
  there a policy in place to do so. All cash flow derived by the Company is re-invested
  in oil and gas exploration and development.

44

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B.                Significant
  Changes

The Company announced on April 28, 2004 that it had signed
  a preliminary negotiation document with Genesis Power, a New Zealand State Owned
  Enterprise and the leading generator and retailer of electricity and gas in
  New Zealand, to enter into negotiations regarding an agreement to drill Cardiff-2,
  a deep gas well, in Petroleum Exploration Permit PEP 38738 in the onshore Taranaki
  Basin, New Zealand, as reported in Item 4.A.4  Important Events/Company
  History.

On January 15, 2004 the Company announced that final agreements
  have been executed for the sale of gas from the Kahili gas-condensate field
  (PEP 38736) in the onshore Taranaki Basin, New Zealand, as reported in Item
  4.A.4  Important Events/Company History.

On January 2, 2004 the Company listed on the TSX-V. In conjunction
  with the TSX-V listing, the Company listed on the NZSX on January 5, 2004, raising
  approximately $5.2 million through the issuance of 4 million units as reported
  in Item 4.A.4  Important Events/Company History.

On June 18, 2003, a private placement in one of the Registrant's
  New Zealand subsidiaries, Austral Pacific Energy (NZ) Limited (formerly Indo-Pacific
  Energy (NZ) Limited), was made by certain private investors for the issue of
  1,500,000 Special Class shares in that company, for a total of NZ$1,500,000
  (approx. US$943,525). With the listing on the TSX-V and NZSX, the Special Class
  shares in Austral Pacific Energy (NZ) Limited were exchanged for Units in the
  Company on January 5, 2004, as reported in Item 4.A.4  Important Events/Company
  History.

On December 9, 2003 the Company announced that it had privately
  issued US $500,000 in unlisted convertible notes with Global Resource Investments
  Ltd , which transaction was completed on January 5, 2004, as reported in Item
  4.A.4  Important Events/Company History.

No other significant changes material to the business of the
  Company have occurred since the date of the annual financial statements.

ITEM 9.                THE
  OFFER AND LISTING

A.                Offer
  and Listing Details

1, 2 & 3. Not Applicable

4. Price History of the stock

Summary trading by year, in United States dollars per share,
  for the five most recently completed fiscal periods ending December 31, 2003:

|Year | OTCBB   | OTCBB  | NZSX (5)  | NZSX | TSX-V(6)  | TSX-V
|---- | ------- | ------ | --------- | ---- | --------- | -----
|     | High(1) | Low(2) | High      | Low  | High      | Low  
|     |         |        |           |      |           |      
|1999 | 6.41    | 1.55   | -         | -    | No trades |      
|2000 | 4.75    | 0.63   | 3.75      | 2.45 | No trades |      
|2001 | 2.75    | 0.71   | 1.55      | 1.55 | No trades |      
|2002 | 1.50    | 0.63   | No trades |      | No trades |      
|2003 | 1.55    | 0.35   | No trades |      | No trades |      

Summary trading by quarter for the two most recently competed fiscal periods
  ending December 31, 2003:

45

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|Year      | OTCBB   | OTCBB  | NZSX (5)  | NZSX | TSX-V(6)  | TSX-V
|--------- | ------- | ------ | --------- | ---- | --------- | -----
|          | High(1) | Low(2) | High      | Low  | High      | Low  
|          |         |        |           |      |           |      
|2002      |         |        |           |      |           |      
|Quarter 1 | 1.16    | 0.91   | No trades |      | No trades |      
|Quarter 2 | 1.23    | 0.88   | No trades |      | No trades |      
|Quarter 3 | 1.50    | 0.80   | No trades |      | No trades |      
|Quarter 4 | 1.50    | 0.63   | No trades |      | No trades |      
|          |         |        |           |      |           |      
|2003      |         |        |           |      |           |      
|Quarter 1 | 1.02    | 0.35   | No trades |      | No trades |      
|Quarter 2 | 1.02    | 0.55   | No trades |      | No trades |      
|Quarter 3 | 1.20    | 0.78   | No trades |      | No trades |      
|Quarter 4 | 1.55    | 0.81   | No trades |      | No trades |      
|          |         |        |           |      |           |      
|2004      |         |        |           |      |           |      
|Quarter 1 | 2.50    | 1.15   | 1.79      | 1.34 | 2.73      | 1.31 

Summary trading for the six most recently completed months ending May 31,
  2004

|Year          | OTCBB   | OTCBB  | NZSX (5)  | NZSX | TSX-V(6)  | TSX-V
|------------- | ------- | ------ | --------- | ---- | --------- | -----
|              | High(1) | Low(2) | High      | Low  | High      | Low  
|              |         |        |           |      |           |      
|December 2003 | 1.55    | 1.28   | No trades |      | No trades |      
|January 2004  | 1.90    | 1.15   | 1.47      | 1.34 | 1.88      | 1.32 
|February 2004 | 1.48    | 1.30   | 1.48      | 1.38 | 1.54      | 1.31 
|March 2004    | 2.50    | 1.38   | 1.79      | 1.37 | 2.43      | 1.42 
|April 2004    | 2.52    | 1.80   | 1.90      | 1.58 | 2.55      | 1.86 
|May 2004      | 2.68    | 1.70   | 2.00      | 1.71 | 2.73      | 1.72 

|(1) | OTCBB quotations may reflect interdealer prices,
        without retail markup, markdown or commission and may not necessarily
        reflect actual transactions.                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | All OTCBB quotes are from www.nasdaq.com. All TSX-V and NZSX (listed) trades prices are from www.finance.yahoo.com. All NZSE Unlisted trades prices are from www.directbroking.co.nz.                     
|(3) | Quotations are provided from the date the Registrant's
        shares were re-listed for trading on the OTCBB, on May 23, 2001 (after
        being de-listed on August 21, 2000), as reported in Item 9C.
|(4) | The Registrant implemented a 5 for 1 share consolidation,
        with effect from July 23, 2001. The market prices quoted above have been
        restated to reflect this consolidation.                
|(5) | The Registrant was listed on the NZSX's unlisted
        market board until the end of 2003. From January 6, 2004, the Company
        was quoted on the NZSX main board.                                 
|(6) | The Registrant only listed on the TSX-V from January
        2, 2004.                                                                                                                                     

B.                Plan
  of Distribution

Not applicable

C.                Markets

The authorized capital of the Company consists of an unlimited
  number of Common Shares without par value, of which 12,854,447 Common Shares
  are issued as of June 12, 2004.

The shares of the Registrant traded on the Vancouver Stock
  Exchange ("VSE") in Vancouver, British Columbia, Canada until September 12,
  1996. Beginning in January, 1996, the shares of the Registrant traded on the
  OTC Bulletin Board ("OTCBB") under the symbol "INDX"and, from October 9, 2001,
  until December 31, 2003 on the New Zealand Unlisted Board under the symbol "IPE".

On August 21, 2000, the National Association of Securities
  Dealers (the "NASD") removed the Registrant's Common Shares from trading on
  the OTCBB because the Registrant did not meet NASD eligibility rule 6530(b)(1).
  On April 19, 2001, the Registrant regained eligibility under NASD rule 6530(b)(1),
  applied for relisting on the OTCBB and was re-listed on May 23, 2001.

On re-listing, the Company was listed on the OTCBB under the
  symbol "INDXF". On completion of the Company's share consolidation on 23 July
  2001, the post-consolidation shares in the Company were listed under the symbol
  "INDOF". The Registrant's shares now trade on the OCTBB under the symbol APXYF".

46

---

On January 2, 2004, the Company was listed on the TSX-V under
  the symbol "APX". Following this listing on the TSX-V, on January 6, 2004, the
  Company was listed on the NZSX under the symbol "APX". With the listing on the
  NZSX the Company issued 4 million units (4 million shares and 2 million warrants
   see Item 4.A.4  Important Events/Company History). The 2 million
  warrants are tradable on the NZSX only and are listed under the symbol "APXWA".

D., E. & F.Not
  applicable

ITEM 10.                ADDITIONAL
  INFORMATION

A.                Share
  Capital

Not applicable

B.                Memorandum
  and Articles of association

The Articles of Association were previously filed with Form
  10-12G for the Year Ended December 31, 1997, dated April 8, 1998. The relevant
  provisions have not changed since that time.

At a special general meeting of the shareholders on December
  31, 2003, the Company adopted a new form of Bylaws, which is attached as Exhibit
  1.3.

C.                Material
  contracts

Other than the variation of the agreement with Trans-Orient
  Petroleum Ltd, and agreements with subscribers to Austral-Pacific Energy (NZ)
  Limited (APENZ) and to the Company summarized in Item 4.A  History and
  Development of the Company, and contracts entered into in the ordinary course
  of business including agreements for substantial acquisitions or disposals with
  Krystal Corporation Pte Ltd, Natural Gas Corporation Holdings Limited, Horizon
  Oil NL, and Greymouth Petroleum Acquisition Company Limited, which are summarized
  in Item 4.D  Property, Plants and Equipment, the Registrant has not entered
  into any material contracts in the two years prior to the date hereof which
  can reasonably be regarded as being out of the ordinary course of the Company's
  business (which ordinary course includes the routine purchase and farmin/farmout
  of oil and gas properties, and settlement of claims).

The agreement to purchase petroleum properties from Trans-Orient
  Petroleum Ltd. has been filed under Form 8-K, and its first amendment, together
  with the agreements with Horizon Oil NL, Krystal Corporation Pte Ltd, and Natural
  Gas Corporation Holdings Limited have been filed under previous Forms 20-F.
  The terms of the TSX-V and NZSX listings including the terms of issuance of
  shares and warrants to New Zealand investors were filed under Forms 6-K. The
  agreements with Greymouth Petroleum Acquisition Company Limited for a substantial
  disposal of a permit and related assets, the proposed share option plan, the
  terms of the convertible notes, the share exchange agreements entered into by
  APENZ and the Company, and the second amendment to the agreement to purchase
  petroleum properties from Trans-Orient Petroleum Ltd. have been filed under
  this Form 20-F.

D.                Exchange
  controls


The Registrant is a corporation incorporated pursuant to the
  laws of the Province of British Columbia, Canada. There is no law or governmental
  decree or regulation in Canada that restricts the export or import of capital,
  or affects the remittance of dividends, interest or other payments to a non-resident
  holder of common shares of the Registrant (the "Common Shares"), other than
  withholding tax requirements. Any such remittances to United States residents
  are generally subject to withholding tax, however no such remittances are likely
  in the foreseeable future. See "Taxation", below.

There is no limitation imposed by the laws of Canada or by
  the charter or other constituent documents of the Registrant on the right of
  a non-resident to hold or vote its common shares, other than as provided in
  the Investment Canada Act (Canada) (the "Investment Act"). The
  following discussion summarizes the material features of the Investment Act
  for a non-resident who proposes to acquire a controlling number of the Registrant's
  common shares. It is general only, it is not a substitute for independent advice
  from an investor's own advisor, and it does not anticipate statutory or regulatory
  amendments. The Registrant does not believe

47

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the Investment Act will have any affect on it or on
  its non-Canadian shareholders due to a number of factors including the nature
  of its operations and the Registrant's relatively small capitalization.

The Investment Act generally prohibits implementation
  of a "reviewable" investment by an individual, government or agency thereof,
  corporation, partnership, trust or joint venture (each an "entity") that is
  not a "Canadian" as defined in the Investment Act (i.e. a "non-Canadian"),
  unless after review by the Minister responsible for the Investment Act
  is satisfied that the investment is likely to be of net benefit to Canada. An
  investment in the Registrant's common shares by a non-Canadian (other than a
  "WTO investor" as that term is defined in the Investment Act and which
  term includes entities which are nationals of or are controlled by nationals
  of member states of the World Trade Organization) when the Registrant was not
  controlled by a WTO investor, would be reviewable under the Investment Act
  if it was an investment to acquire control of the Registrant and the value of
  the assets of the Registrant, as determined in accordance with the regulations
  promulgated under the Investment Act, was over CDN$5 million, or if an order
  for review was made by the federal cabinet on the grounds that the investment
  related to Canada's cultural heritage or national identity, regardless of the
  value of the assets of the Registrant. An investment in the Common Shares of
  the Registrant by a WTO investor, or by a non-Canadian when the Registrant was
  controlled by a WTO investor, would be reviewable under the Investment Act
  if it was an investment to acquire control of the Registrant and the value of
  the assets of the Registrant, as determined in accordance with the regulations
  promulgated under the Investment Act, was not less than a specified amount,
  which for 2004 exceeds CDN$237 million. A non-Canadian would acquire control
  of the Registrant for the purposes of the Investment Act if the non-Canadian
  acquired a majority of the Common Shares of the Registrant. The acquisition
  of less than a majority but one-third or more of such Common Shares would be
  presumed to be an acquisition of control of the Registrant unless it could be
  established that, on the acquisition, the Registrant was not controlled in fact
  by the acquiror through the ownership of the Common Shares.

The foregoing assumes the Registrant will not engage in the
  production of uranium or own an interest in a producing uranium property in
  Canada, or provide any financial service or transportation service, as the rules
  governing these businesses are different.

Certain transactions relating to the Common Shares of the
  Registrant would be exempt from the Investment Act, including

|(a) | an acquisition of the Common Shares by a person
        in the ordinary course of that person's business as a trader or dealer
        in securities,                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | an acquisition of control of the Registrant in connection
        with the realization of security granted for a loan or other financial
        assistance and not for a purpose related to the provisions of the Investment
        Act, and                                                        
|   
|(c) | an acquisition of control of the Registrant by reason
        of an amalgamation, merger, consolidation or corporate reorganization
        following which the ultimate direct or indirect control in fact of the
        Registrant, through the ownership of the Common Shares, remained unchanged.

E.                Taxation


Certain Canadian Federal Income Tax Information for United
  States Residents

The following summarizes the principal Canadian federal income
  tax considerations generally applicable to the holding and disposition of common
  shares of the Company by a holder (a) who, for the purposes of the Income Tax
  Act (Canada) (the "Tax Act"), is not resident in Canada, deals at arm's length
  with the Company, holds the common shares as capital property and does not use
  or hold the common shares in the course of carrying on, or otherwise in connection
  with, a business in Canada, and (b) who, for the purposes of the Canada-United
  States Income Tax Convention (the "Treaty"), is a resident of the United States,
  has never been a resident of Canada, has not held or used (and does not hold
  or use) common shares in connection with a permanent establishment or fixed
  base in Canada, and who otherwise qualifies for the full benefits of the Treaty.
  Holders who meet all such criteria in clauses (a) and (b) are referred to herein
  as a "U.S. Holder" or "U.S. Holders", and this summary only addresses such U.S.
  Holders. The summary does not deal with special situations, such as particular
  circumstances of traders or dealers, limited liability companies, tax-

48

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exempt entities, insurers, financial institutions (including
  those to which the mark-to-market provisions of the Tax Act apply), or otherwise.

This summary is based on the current provisions of the Tax
  Act and the regulations thereunder, all proposed amendments to the Tax Act and
  regulations publicly announced by the Minister of Finance (Canada) to the date
  hereof, the current provisions of the Treaty and the current administrative
  practices of the Canada Customs and Revenue Agency. It has been assumed that
  all currently proposed amendments will be enacted as proposed and that there
  will be no other relevant change in any governing law, the Treaty or administrative
  policy, although no assurance can be given in these respects. This summary does
  not take into account provincial, U.S. or other foreign income tax considerations,
  which may differ significantly from those discussed herein. The summary also
  assumes that the Company will be treated as a resident of Canada for purposes
  of the Tax Act.

This summary is not exhaustive of all possible Canadian income
  tax consequences. It is not intended as legal or tax advice to any particular
  holder of common shares and should not be so construed. The tax consequences
  to any particular holder of common shares will vary according to the status
  of that holder as an individual, trust, corporation or member of a partnership,
  the jurisdictions in which that holder is subject to taxation and, generally,
  according to that holder's particular circumstances. Each holder should consult
  the holder's own tax advisor with respect to the income tax consequences applicable
  to the holder's own particular circumstances.

Dividends
  Dividends paid or deemed to be paid or credited by the Company to a U.S. Holder
  are subject to Canadian withholding tax. Under the Treaty, the rate of withholding
  tax on dividends paid to a U.S. Holder is generally limited to 15% of the gross
  dividend (or 5% in the case of corporate shareholders owning at least 10% of
  the Company's voting shares).

Disposition
  A U.S. Holder is subject to tax under the Tax Act in respect of a capital gain
  realized on the disposition of a common share unless the U.S. Holder is entitled
  to relief under the Treaty. Relief under the Treaty is generally available unless
  the value of the common shares is derived principally from real property situated
  in Canada. Management of the Company believes that the value of the Company's
  common shares is currently not derived principally from real property situated
  in Canada.

Even where a U.S. Holder is not subject to tax under the Tax
  Act by virtue of the Treaty relief referred to above, the Tax Act requires the
  U.S. Holder to file a Canadian income tax return for the taxation year of disposition,
  claiming any applicable Treaty relief in that return. In addition, the Tax Act
  imposes a separate obligation on a purchaser (wherever resident) of common shares
  of the Company who acquires common shares of the Company from a non-resident
  of Canada. Unless an appropriate tax clearance certificate has been obtained
  from the Canadian tax authorities, the purchaser will become liable to pay 25%
  of the purchase price of such common shares to the Canadian tax authorities
  as tax on behalf of the non-resident, and will be entitled to impose appropriate
  withholding. U.S. Holders should consult their own tax advisors in advance of
  a sale or other disposition or deemed disposition of common shares to determine
  the appropriate way of dealing with the Canadian reporting and filing requirements
  under the Tax Act.

U.S. Taxation Effects


The following is a general discussion of the material United
  States Federal income tax laws for U.S. holders that hold common shares in the
  Registrant as a capital asset, as defined under United States Federal income
  tax law and is limited to discussion of U.S. Holders that own less than 10%
  of the common stock. This discussion does not address all potentially relevant
  U.S. Federal income tax matters and it does not address consequences peculiar
  to persons subject to special provisions of U.S. Federal income tax law, such
  as those described below as excluded from the definition of a U.S. Holder. In
  addition, this discussion does not cover any state, local or foreign tax consequences.

The following discussion is based upon the sections of the
  U.S. Internal Revenue Code of 1986, as amended to the date hereof (the "Code"),
  Treasury Regulations, published Internal Revenue Service ("IRS") rulings, published
  administrative positions of the IRS and court decisions that are currently applicable,
  any or all of which could be materially and adversely changed, possibly on a
  retroactive basis, at any time. In addition, this discussion does not consider
  the potential effects, both adverse and beneficial, of any future legislation
  which, if enacted, could be applied, possibly on a retroactive basis, at any
  time. The following discussion is for

49

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general information only and it is not intended to be, nor
  should it be construed to be, legal or tax advice to any holder or prospective
  holder of common shares of the Company and no opinion or representation with
  respect to the United States Federal income tax consequences to any such holder
  or prospective holder is made. Accordingly, U.S. holders and prospective U.S.
  holders of common shares of the Company should consult their own tax advisors
  about the U.S. Federal, state, local, and foreign, tax consequences of purchasing,
  owning and disposing of common shares of the Company.

U.S. Holders
  As used herein, a "U.S. Holder" is a holder of common shares of the Company
  who or which is a citizen or individual resident (or is treated as a citizen
  or individual resident) of the United States for U.S. federal income tax purposes,
  a corporation or partnership created or organized (or treated as created or
  organized for U.S. federal income tax purposes) in the United States, including
  only the States and District of Columbia, or under the law of the United States
  or any State or Territory or any political subdivision thereof, or a trust or
  estate the income of which is includable in its gross income for U.S. federal
  income tax purposes without regard to its source, if, (i) a court within the
  United States is able to exercise primary supervision over the administration
  of the trust and (ii) one or more United States trustees have the authority
  to control all substantial decisions of the trust. For purposes of this discussion,
  a U.S. Holder does not include persons subject to special provisions of U.S.
  Federal income tax law, such as tax-exempt organizations, qualified retirement
  plans, financial institutions, insurance companies, real estate investment trusts,
  regulated investment companies, broker-dealers and Holders who acquired their
  stock through the exercise of employee stock options or otherwise as compensation.

Distributions on common shares of the Company
  U.S. Holders receiving dividend distributions (including constructive dividends)
  with respect to common shares of the Company are required to include in gross
  income for United States Federal income tax purposes the gross amount of such
  distributions to the extent that the Company has current or accumulated earnings
  and profits, without reduction for any Canadian income tax withheld from such
  distributions. Such Canadian tax withheld may be credited, subject to certain
  limitations, against the U.S. Holder's United States Federal income tax liability
  or, alternatively, may be deducted in computing the U.S. Holder's United States
  Federal taxable income by those who itemize deductions. (See more detailed discussion
  at "Foreign Tax Credit" below). To the extent that distributions exceed current
  or accumulated earnings and profits of the Company, they will be treated first
  as a return of capital up to the U.S. Holder's adjusted basis in the common
  shares and thereafter as gain from the sale or exchange of the common shares.
  Preferential tax rates for long-term capital gains are applicable to a U.S.
  Holder which is an individual, estate or trust. There are currently no preferential
  tax rates for long-term capital gains for a U.S. Holder which is a corporation.

Dividends paid on the common shares of the Company will not
  generally be eligible for the dividends received deduction provided to corporations
  receiving dividends from certain United States corporations. A U.S. Holder which
  is a corporation may, under certain circumstances, be entitled to a 70% deduction
  of the United States source portion of dividends received from the Company if
  such U.S. Holder owns shares representing at least 10% of the voting power and
  value of the Company. The availability of this deduction is subject to several
  complex limitations which are beyond the scope of this discussion.

Foreign Tax Credit
  A U.S. Holder who pays (or has withheld from distributions) Canadian income
  tax with respect to the ownership of common shares of the Company may be entitled,
  at the option of the U.S. Holder, to either a deduction or a tax credit for
  such foreign tax paid or withheld. Generally, it will be more advantageous to
  claim a credit because a credit reduces United States Federal income taxes on
  a dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income
  subject to tax. This election is made on a year-by-year basis and applies to
  all foreign taxes paid by (or withheld from) the U.S. Holder during that year.
  There are significant and complex limitations which apply to the credit, among
  which is the general limitation that the credit cannot exceed the proportionate
  shares of the U.S. Holder's United States income tax liability that the U.S.
  Holder's foreign source income bears to his or its world-wide taxable income.
  In the determination of the application of this limitation, the various items
  of income and deduction must be classified into foreign and domestic sources.
  Complex rules govern this classification process. There are further limitations
  on the foreign tax credit for certain types of income such as "passive income,"
  "high withholding tax interest," "financial services income," "shipping income"
  and certain other classifications of income. The availability of the foreign
  tax credit and the application of the limitations on the credit are fact specific
  and holders and prospective holders of common shares of the Company should consult
  their own tax advisors regarding their individual circumstances.

50

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Disposition of common shares of the Company
  A U.S. Holder will recognize gain or loss upon the sale of common shares of
  the Company equal to the difference, if any, between the amount of cash plus
  the fair market value of any property received, and the Holder's tax basis in
  the common shares of the Company. This gain or loss will be capital gain or
  loss if the common shares are a capital asset in the hands of the U.S. Holder.
  Any capital gain will be a short-term or long-term capital gain or loss depending
  upon the holding period of the U.S. Holder. Gains and losses are netted and
  combined according to special rules in arriving at the overall capital gain
  or loss for a particular tax year. Deductions for net capital losses are subject
  to significant limitations. For U.S. Holders which are individuals, any unused
  portion of such net capital loss may be carried over to be used in later tax
  years until such net capital loss is thereby exhausted. For U.S. Holders which
  are corporations (other than corporations subject to Subchapter S of the Code),
  an unused net capital loss may be carried back three years from the loss year
  and carried forward five years from the loss year to be offset against capital
  gains until such net capital loss is thereby exhausted.

F.                Dividends
  and paying agents

Not applicable

G.                Statement
  by experts

Not applicable

H.                Documents
  on display

Certain documents concerning the Company which are referred
  to in this document may be inspected at the offices of Austral Pacific Energy
  Ltd., at Austral Pacific House, 284 Karori Road, Karori, Wellington, New Zealand
  or at the registered office at Suite 200 Financial Plaza, 204 Lambert Street,
  White Horse, YT, Y1A 3T2, Canada.

Documents referred to in this document are filed with the
  US Securities Commission ("SEC"), and are available for view on the SEC website
  at: http//www.sec.gov.

I.                Subsidiary
  information

A list of subsidiaries of the Company is identified in Note
  2 in the notes to the consolidated financial statements in Item 17, and in Item
  4.C  Organizational Structure. During the reporting period, the Company
  acquired one subsidiary changed the name of that company from Bligh Oil &
  Minerals (N.Z.) Limited to Totara Energy Limited.

One of the Company's New Zealand subsidiaries, Indo-Pacific
  Energy (NZ) Limited, changed its name after the end of the reporting period,
  to Austral Pacific Energy (NZ) Limited.

ITEM 11.                QUANTITATIVE
  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 12.                DESCRIPTION
  OF SECURITIES OTHER THAN EQUITY SECURITIES



51

---

PART II

ITEM 13.                DEFAULTS,
  DIVIDEND ARREARAGES AND DELINQUENCIES

None

ITEM 14.                MATERIAL
  MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None

ITEM 15.                CONTROLS
  AND PROCEDURES

As required by Section 302(a) of the Sarbanes-Oxley Act of
  2002, the Company's Chief Executive Officer and Chief Financial Officer will
  be making certifications related to the information in our annual report on
  Form 20-F. As part of such certification, the Chief Executive Officer and Chief
  Financial Officer must certify that they are responsible for establishing and
  maintaining disclosure controls and procedures to ensure that material information
  with respect to the Company is made known to them and that they have evaluated
  the effectiveness of the Company's disclosure controls and procedures as of
  December 31, 2003. Disclosure controls and procedures are intended to ensure
  that information required to be disclosed by the Company in its annual report
  is recorded, processed, summarized and reported within the time periods required.
  The Company has adopted or formalized such controls and procedures as it believes
  are necessary and consistent with its business and internal management and supervisory
  practices.

Evaluation of Disclosure Controls and Procedures

The Company's Chief Executive Officer and Chief Financial
  Officer, after evaluating the effectiveness of the Company's disclosure controls
  and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) as
  of December 31, 2003, have concluded that, as of such date, the Company's disclosure
  controls and procedures were adequate and effective to ensure that material
  information relating to the Company would be made known to them by others within
  the Company.

Changes in Internal Controls

There were no significant changes during the period covered
  by this report in the Company's internal controls or in other factors that could
  significantly affect the Company's internal controls, nor does the Company believe
  that there are any significant deficiencies or material weaknesses in its internal
  controls. As a result, no corrective actions were required or undertaken.

ITEM 16.

A.                Audit
  committee financial expert

The Registrant's Board of Directors has determined that it
  has one independent audit committee financial expert serving on its audit committee.
  This financial expert is Mr Garth Johnson who is accredited in Canada as a Certified
  General Accountant.

B.                Code
  of Ethics

The Registrant has adopted a code of ethics that applies to
  the Chief Executive Officer and the Chief Financial Officer, as well as to all
  other staff. The Registrant has made available its code of ethics on its website,
  www.austral-pacific.com/ethics.php .

A copy of the Registrant code of ethics is available, free
  of charge, from the offices of Austral Pacific Energy Ltd., at Austral Pacific
  House, 284 Karori Road, Karori, Wellington, New Zealand and this can be requested
  in writing, addressed to the Company Secretary.

52

---

C.                Principal
  Accountant Fees and Services

|Principal Accountant Service (1) | For the fiscal year endedDecember
      31, 2003 | For the fiscal year ended December 31, 2002
|-------------------------------- | ------------------------------------------------ | -------------------------------------------
|Audit Fees                       | 89,724                                           | 58,937                                     
|Audit Related Services           | 12,072                                           | -                                          
|Tax Fees                         | 2,109                                            | 2,778                                      
|All Other Fees                   | 27,562                                           | 46,459                                     

|(1) | With effect from December 31, 2003 the Principal
        Accountant changed from BDO Spicers to BDO Dunwoody LLP in relation to
        the December 31, 2003 audit.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

The nature of the services provided by BDO Spicers and BDO
  Dunwoody LLP under each of the categories indicated in the table is described
  below.

Audit Fees

Audit fees were for professional services rendered by BDO
  Dunwoody (BDO Spicers in 2002) for the audit of the Regristrant's annual financial
  statements and services provided in connection with statutory and regulatory
  filing or engagements.

Audit-Related Fees


Audit-related fees were for assurance and related services
  reasonably related to the performance of the audit or review of the annual statements
  or bi-annual statements that are not reported under "Audit Fees" above.

Tax Fees


Tax fees were for tax compliance, tax advice and tax planning
  professional services. Thjese services consisted of: tax compliance including
  the review of tax returns, and tax planning and advisory services relating to
  common forms of domestic and international taxation (i.e. income tax, capital
  tax, goods and services tax, payroll tax and value added tax).

All Other Fees

Fees disclosed in the table above under the item "all other
  fees" were incurred for services other than the audit fees, audit-related fees
  and tax fees described above. These services consisted of assistance in the
  review and documentation of processes and controls.

Pre-Approval Policies and Procedures


It is within the mandate of the Registrant's Audit Committee
  to approve all audit and non-audit related fees. The Audit Committee has pre-approved
  specifically identified non-audit related services, including tax compliance,
  review of tax returns, documentation of processes and controls as submitted
  to the Audit Committee from time to time. The auditors also present the estimate
  for the annual audit related services to the Committee for approval prior to
  undertaking the annual audit of the financial statements.

D.                Exemptions
  From the Listing Standards for Audit Committees

N/A

E.                Purchases
  of equity Securities by the Issuer and Affiliated Purchasers

N/A

53

---

PART III

ITEM 17.                FINANCIAL
  STATEMENTS.

INDEX TO FINANCIAL STATEMENTS

|                                                                    | Page
|------------------------------------------------------------------- | ----
|Auditors' Report                                                    | 58  
|Consolidated Balance Sheets                                         | 60  
|Consolidated Statements of Operations
      and Deficit             | 61  
|Consolidated Statements of Changes
      in Stockholders' Equity    | 62  
|Consolidated Statements of Cash
      Flows                         | 63  
|Consolidated Schedules of General
      and Administrative Expenses | 64  
|Notes to the Consolidated Financial
      Statements                | 65  

ITEM 18.                FINANCIAL
  STATEMENTS

Not Applicable

ITEM 19.                EXHIBITS

List of Exhibits

|Exhibit Reference | Exhibit Description                                                                                                              | Page Number
|----------------- | -------------------------------------------------------------------------------------------------------------------------------- | -----------
|1.1               | Articles of Continuance of the Registrant
      [1]                                                                              | N/A        
|1.2               | Certificate of Amendment of the Registrant
      [2]                                                                             | N/A        
|1.3               | 2003 Bylaws of the Registrant                                                                                                    | 87         
|2.1.1             | TSX-V listing application [3]                                                                                                    | N/A        
|2.1.2             | NZSX Prospectus and Investment Statement
      [4]                                                                               | N/A        
|4.1.1             | Asset Purchase Agreement between the
      Registrant and Trans-Orient Petroleum Ltd. [5]                                        | N/A        
|4.1.2             | Variation to Asset Purchase Agreement
      between the Registrant and Trans-Orient Petroleum Ltd. [6]                           | 104        
|4.1.3             | Warrant Amendment Agreement                                                                                                      | N/A        
|4.2               | Form of Stock Option Agreement for all
      vesting options granted to named directors and officers [7]                         | N/A        
|4.3               | Stock Option Agreement with David Bennett
      for performance vesting options [7]                                              | N/A        
|4.4               | Farm-out Agreement between the Registrant
      and Krystal Corporation Pte Ltd [7]                                              | N/A        
|4.5.1             | Form of Subscription Agreement between
      the Registrant, Indo-Pacific Energy (NZ) Limited and subscribers to
      IPENZ [7] | N/A        
|4.5.2             | Form of Share Exchange Agreement between the
      Registrant, Indo-Pacific Energy (NZ) Limited and subscribers to IPENZ         | 112        
|4.6               | Gas Pre-purchase and Option Agreement
      between the Registrant and NGC New Zealand Limited [7]                               | N/A        
|4.7.1             | Form of Asset Purchase Agreement 
      for each of PEP 38716, PEP 38728 and PEP 38716 [7]                                      | N/A        
|4.7.2             | Agreement for Sale & Purchase of
      Data and Shares in Bligh Oil & Minerals NZ Limited [7]                                    | N/A        
|4.8               | 2004 Share Option Plan                                                                                                           | 127        

54

---

|4.9.1  | Settlement agreement  GPAC                                          | 139
|------ | -------------------------------------------------------------------- | ---
|4.9.2  | Sale of PML 38148  GPAC                                             | 154
|4.10   | Report of Reserves Form 51-101F1 [8]                                 | N/A
|4.11   | Form of Convertible note issued by the Registrant
      January 2004 | 176
|8      | List of Subsidiaries of the Registrant                               | 200
|11     | Code of Ethics [9]                                                   | N/A
|14.1   | Auditor's report for the fiscal years 2001
      and 2002 [7]        | N/A
|14.2.1 | Change of auditor papers January 2004 [10]                           | N/A
|14.2.2 | Change of auditor papers April 2004 [11]                             | N/A
|31.1   | Section 302(a) Certification of CEO                                  | 201
|31.2   | Section 302(a) Certification of CFO                                  | 202
|32     | Section 906 Certifications                                           | 203

|[1]  | Incorporated by reference as previously included
        in Form 10-12G filed April 8,1998.                          
|---- | ---------------------------------------------------------------------------------------------------------------------
|[2]  | Incorporated by reference as previously included
        in a Form 6-K filed December 31, 2003.                      
|[3]  | Incorporated by reference as previously included
        in a Form 6-K filed January 6, 2004.                        
|[4]  | Incorporated by reference as previously included
        in a Form 6-K filed November 28, 2003.                      
|[5]  | Incorporated by reference as previously included
        in our Form 8-K filed on April 13, 2000.                    
|[6]  | Incorporated by reference as previously included
        in our Form 20-F filed for the year ended December 31, 2001.
|[7]  | Incorporated by reference as previously included
        in our Form 20-F filed for the year ended December 31, 2002.
|[8]  | Incorporated by reference as previously included
        in a Form 6-K filed April 23, 2004.                         
|[9]  | Available on the Registrant's website at www.austral-pacific.com                                                     
|[10] | Incorporated by reference as previously included
        in a Form 6-K filed January 22, 2004.                       
|[11] | Incorporated by reference as previously included
        in a Form 6-K filed May 27, 2004.                           

* Confidential portions as marked in the Exhibit have been omitted pursuant
  to a request for confidential treatment

55

---

SIGNATURES

The Registrant certifies that it meets all of the requirements
  for filing on Form 20-F and that it has duly caused and authorized the undersigned
  to sign this Annual Report on its behalf.



|                    | AUSTRAL PACIFIC ENERGY LTD.
|------------------- | ---------------------------
|                    |                            
|Date: June 29, 2004 | By:                        
|                    |                            
|                    | Name:                      
|                    |                            
|                    | Title:                     

56

---

AUSTRAL PACIFIC ENERGY LTD. 
  (Formerly Indo-Pacific Energy Ltd.)

CONSOLIDATED FINANCIAL STATEMENTS 
  (Expressed in United States Dollars)

DECEMBER 31, 2003

57

---

|Auditor's Report
|----------------
|                

To the Shareholders ofAustral Pacific Energy Ltd.(formerly Indo-Pacific Energy Ltd.)

We have audited the Consolidated Balance Sheet of Austral
  Pacific Energy Ltd. (formerly Indo-Pacific Energy Ltd.) as at December 31, 2003
  and the Consolidated Statements of Operations and Deficit, Changes in Stockholders'
  Equity and Cash Flows for the year then ended. These financial statements are
  the responsibility of the Company's management. Our responsibility is to express
  an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Canadian generally
  accepted auditing standards and the standards of the Public Company Accounting
  Oversight Board (United States). Those standards require that we plan and perform
  an audit to obtain reasonable assurance whether the financial statements are
  free of material misstatement. An audit includes examining, on a test basis,
  evidence supporting the amounts and disclosures in the financial statements.
  An audit also includes assessing the accounting principles used and significant
  estimates made by management, as well as evaluating the overall financial statement
  presentation.

In our opinion, these consolidated financial statements present
  fairly, in all material respects, the financial position of the Company as at
  December 31, 2003 and the results of its operations and its cash flows for the
  year then ended, in accordance with Canadian generally accepted accounting principles.

The Consolidated Balance Sheet as at December 31, 2002 and
  the Consolidated Statements of Operations and Deficit and Cash Flows for the
  years ended December 31, 2002 and 2001 were reported upon by other auditors.
  Their report covered the years ended December 31, 2002 and 2001, contained no
  reservations and was dated April 16, 2003.

|Comments by the Auditors
      for U.S. and New Zealand Readers onCanada-U.S. and New Zealand Reporting Differences
|-------------------------------------------------------------------------------------------------------------------
|                                                                                                                   

In the United States and New Zealand, reporting standards for
  auditors require the addition of an explanatory paragraph (following the opinion
  paragraph) when the financial statements are affected by conditions and events
  that cast substantial doubt on the Company's ability to continue as a going
  concern, such as those described in Note 1 of the consolidated financial statements.
  United States reporting standards also require the addition of an explanatory
  paragraph when changes in an accounting policy, such as those involving asset
  retirement obligations described in Note 2, have a material effect on the consolidated
  financial statements. Our report to the shareholders dated March 5, 2004, is
  expressed in accordance with Canadian reporting standards, which do not permit
  a reference to such conditions and events in the auditors' report when these
  are adequately disclosed in the financial statements.

"BDO Dunwoody, LLP"

Chartered Accountants

Vancouver, Canada 
  March 5, 2004

58

---

|Auditor's Report
|----------------
|                

We have audited the consolidated balance sheet of Austral
  Pacific Energy Ltd. (formerly Indo-Pacific Energy Ltd.) as at December 31, 2002
  and the consolidated statements of operations and deficit, changes in stockholders'
  equity and cash flows for the years ended December 31, 2002 and 2001. These
  financial statements are the responsibility of the company's management. Our
  responsibility is to express an opinion on these financial statements based
  on our audits.

We conducted our audits in accordance with Canadian generally
  accepted auditing standards and the standards of the Public Company Accounting
  Oversight Board (United States). Those standards require that we plan and perform
  an audit to obtain reasonable assurance whether the financial statements are
  free of material misstatement. An audit includes examining, on a test basis,
  evidence supporting the amounts and disclosures in the financial statements.
  An audit also includes assessing the accounting principles used and significant
  estimates made by management, as well as evaluating the overall financial statement
  presentation.

In our opinion, these consolidated financial statements present
  fairly, in all material respects, the financial position of the company as at
  December 31, 2002 and the results of its operations and its cash flows for the
  years ended December 31, 2002 and 2001, in accordance with Canadian generally
  accepted accounting principles.

"BDO Spicers"

Chartered Accountants

Wellington, New Zealand
  April 16, 2003

|Comments by the Auditors
      for U.S. and New Zealand Readers onCanada-U.S. and New Zealand Reporting Differences
|-------------------------------------------------------------------------------------------------------------------
|                                                                                                                   

In the United States and New Zealand, reporting standards
  for auditors require the addition of an explanatory paragraph (following the
  opinion paragraph) when the financial statements are affected by conditions
  and events that cast substantial doubt on the Company's ability to continue
  as a going concern, such as those described in Note 1 of the consolidated financial
  statements. United States reporting standards also require the addition of an
  explanatory paragraph when changes in an accounting policy, such as those involving
  stock option based compensation described in Note 2, have a material effect
  on the consolidated financial statements. Our report to the shareholders dated
  April 16, 2003 is expressed in accordance with Canadian reporting standards,
  which do not permit a reference to such conditions and events in the auditors'
  report when these are adequately disclosed in the financial statements.

"BDO Spicers"

Chartered Accountants

Wellington, New Zealand
  April 16, 2003

59

---

|AUSTRAL
      PACIFIC ENERGY LTD. (formerly Indo-Pacific Energy Ltd.)
|---------------------------------------------------------------------
|Consolidated Balance Sheets (Expressed in United States Dollars)     

|December 31                                  | 2003        |   | 2002        |  
|-------------------------------------------- | ----------- | - | ----------- | -
|                                             | $           |   | $           |  
|                                             |             |   |             |  
|Assets                                       |             |   |             |  
|                                             |             |   |             |  
|Current                                      |             |   |             |  
|Cash and cash equivalents                    | 2,234,287   |   | 1,292,827   |  
|Accounts receivable (Note 5)                 | 872,532     |   | 709,895     |  
|Inventory                                    | -           |   | 5,423       |  
|Prepaid expenses and deposits                | 273,994     |   | 150,112     |  
|                                             | 3,380,813   |   | 2,158,257   |  
|                                             |             |   |             |  
|Deferred offering costs (Note 13)            | 408,083     |   | -           |  
|Due from related parties (Note 6)            | -           |   | 52,065      |  
|Property and equipment (Note 3)              | 30,323      |   | 28,455      |  
|Oil and gas properties (Note 4)              | 8,306,448   |   | 7,523,168   |  
|                                             |             |   |             |  
|Total Assets                                 | 12,125,667  |   | 9,761,945   |  
|                                             |             |   |             |  
|Liabilities                                  |             |   |             |  
|                                             |             |   |             |  
|Current                                      |             |   |             |  
|Accounts payable and accrued liabilities     | 354,813     |   | 383,577     |  
|Prepaid gas revenue (Note 12)                | 1,258,033   |   | -           |  
|                                             | 1,612,846   |   | 383,577     |  
|                                             |             |   |             |  
|Special Class Shares of Subsidiary (Note 10) | 943,525     |   | -           |  
|                                             |             |   |             |  
|Total Liabilities                            | 2,556,371   |   | 383,577     |  
|                                             |             |   |             |  
|Commitments and Contingencies(Notes 1 and 7) |             |   |             |  
|                                             |             |   |             |  
|                                             |             |   |             |  
|Stockholders' Equity                         |             |   |             |  
|                                             |             |   |             |  
|Common stock without par value (Note 8);     |             |   |             |  
|unlimited number of shares authorized;       |             |   |             |  
|Issued and outstanding 7,739,324 shares      | 20,478,365  |   | 20,478,365  |  
|Contributed surplus                          | 417,392     |   | 274,080     |  
|Accumulated deficit                          | (11,326,461 | ) | (11,374,077 | )
|                                             |             |   |             |  
|Total Stockholders' Equity                   | 9,569,296   |   | 9,378,368   |  
|                                             |             |   |             |  
|Total Liabilities and Stockholders' Equity   | 12,125,667  |   | 9,761,945   |  

|Approved by the Directors: |  |                | 
|-------------------------- |  | -------------- | 
|                           |  |                | 
|"David Newman"             |  | "Peter Tapper" | 
|Director                   |  | Director       | 

See accompanying notes to the consolidated financial statements

60

---

|AUSTRAL
      PACIFIC ENERGY LTD. (formerly Indo-Pacific Energy Ltd.)                
|-------------------------------------------------------------------------------------
|Consolidated Statements of Operations and Deficit(Expressed in United States Dollars)

|For the years ended December 31              | 2003        |   | 2002        |   | 2001       |  
|-------------------------------------------- | ----------- | - | ----------- | - | ---------- | -
|                                             | $           |   | $           |   | $          |  
|Production Income:                           |             |   |             |   |            |  
|Oil and gas sales                            | 172,715     |   | 1,845,925   |   | 3,744,036  |  
|Production operating costs                   | (61,132     | ) | (772,805    | ) | (652,240   | )
|Royalties                                    | (33,543     | ) | (184,207    | ) | (369,536   | )
|Depletion                                    | (25,930     | ) | (106,491    | ) | (266,329   | )
|                                             |             |   |             |   |            |  
|Net production income                        | 52,110      |   | 782,422     |   | 2,455,931  |  
|                                             |             |   |             |   |            |  
|Expenses                                     |             |   |             |   |            |  
|General and administrative (Schedule)        | (656,216    | ) | (634,353    | ) | (735,624   | )
|Litigation Costs and Settlement (Note 7)     | (2,250,463  | ) | -           |   | -          |  
|Stock option compensation expense (8(b))     | (143,312    | ) | (274,080    | ) | -          |  
|Write-off of oil and gas properties (Note 4) | (908,433    | ) | (2,783,734  | ) | (706,462   | )
|Gain on License Sales (Note 4)               | 3,896,306   |   | 53,457      |   | -          |  
|                                             |             |   |             |   |            |  
|Total Expenses                               | (62,118     | ) | (3,638,710  | ) | (1,442,086 | )
|                                             |             |   |             |   |            |  
|Net Income (loss) for the year before Other  | (10,008     | ) | (2,856,288  | ) | 1,013,845  |  
|Income                                       |             |   |             |   |            |  
|Other Income                                 |             |   |             |   |            |  
|Interest income                              | 57,624      |   | 29,518      |   | 94,954     |  
|                                             |             |   |             |   |            |  
|Net income (loss) for the year               | 47,616      |   | (2,826,770  | ) | 1,108,799  |  
|                                             |             |   |             |   |            |  
|Deficit, beginning of year                   | (11,374,077 | ) | (8,547,307  | ) | (9,656,106 | )
|                                             |             |   |             |   |            |  
|Deficit, end of year                         | (11,326,461 | ) | (11,374,077 | ) | (8,547,307 | )
|                                             |             |   |             |   |            |  
|Basic earnings (loss) per share(Note 9)      | 0.01        |   | (0.41       | ) | 0.17       |  
|                                             |             |   |             |   |            |  
|Diluted earnings (loss) per share(Note 9)    | 0.01        |   | (0.41       | ) | 0.17       |  

See accompanying notes to the consolidated financial statements

61

---

|AUSTRAL
      PACIFIC ENERGY LTD. (formerly Indo-Pacific Energy Ltd.)                         
|----------------------------------------------------------------------------------------------
|Consolidated Statements of Changes in Stockholders' Equity(Expressed in United States Dollars)

|                                               |              |  |             |  |             |  |               |   | Total      |  
|---------------------------------------------- | ------------ |  | ----------- |  | ----------- |  | ------------- | - | ---------- | -
|                                               | Common Stock |  | Contributed |  | Accumulated |  | Stockholders' |  
|                                               | Shares       |  | Amount $    |  | Surplus     |  | Deficit       |   | Equity     |  
|                                               |              |  |             |  |             |  |               |   |            |  
|Balance at January 1, 2001                     | 6,489,324    |  | 19,478,365  |  | -           |  | (9,656,106    | ) | 9,822,259  |  
|                                               |              |  |             |  |             |  |               |   |            |  
|Net income for the year                        | -            |  | -           |  | -           |  | 1,108,799     |   | 1,108,799  |  
|                                               |              |  |             |  |             |  |               |   |            |  
|Balance at December 31, 2001                   | 6,489,324    |  | 19,478,365  |  | -           |  | (8,547,307    | ) | 10,931,058 |  
|                                               |              |  |             |  |             |  |               |   |            |  
|Issuance of common shares for cash (Note 8(a)) | 1,250,000    |  | 1,000,000   |  | -           |  | -             |   | 1,000,000  |  
|Stock Option Compensation (Note 8(b))          | -            |  | -           |  | 274,080     |  | -             |   | 274,080    |  
|Net loss for the year                          | -            |  | -           |  | -           |  | (2,826,770    | ) | (2,826,770 | )
|                                               |              |  |             |  |             |  |               |   |            |  
|Balance at December 31, 2002                   | 7,739,324    |  | 20,478,365  |  | 274,080     |  | (11,374,077   | ) | 9,378,368  |  
|                                               |              |  |             |  |             |  |               |   |            |  
|Stock Option Compensation (Note 8(b))          | -            |  | -           |  | 143,312     |  | -             |   | 143,312    |  
|Net income for the year                        | -            |  | -           |  | -           |  | 47,616        |   | 47,616     |  
|                                               |              |  |             |  |             |  |               |   |            |  
|Balance at December 31, 2003                   | 7,739,324    |  | 20,478,365  |  | 417,392     |  | (11,326,461   | ) | 9,569,296  |  

See accompanying notes to the consolidated financial statements

62

---

|AUSTRAL
      PACIFIC ENERGY LTD. (formerly Indo-Pacific Energy Ltd.)    
|-------------------------------------------------------------------------
|Consolidated Statements of Cash Flows(Expressed in United States Dollars)

|For the years ended December 31                                        | 2003       |   | 2002       |   | 2001       |  
|---------------------------------------------------------------------- | ---------- | - | ---------- | - | ---------- | -
|                                                                       | $          |   | $          |   | $          |  
|                                                                       |            |   |            |   |            |  
|Operating Activities                                                   |            |   |            |   |            |  
|Net income (loss) for the year                                         | 47,616     |   | (2,826,770 | ) | 1,108,799  |  
|Adjustments to reconcile net income (loss) to                          |            |   |            |   |            |  
|cash applied to operating activities:                                  |            |   |            |   |            |  
|Depletion                                                              | 25,930     |   | 106,491    |   | 266,329    |  
|Write-off of oil and gas properties                                    | 908,433    |   | 2,783,734  |   | 706,462    |  
|Amortization                                                           | 18,160     |   | 53,007     |   | 67,342     |  
|Stock option compensation                                              | 143,312    |   | 274,080    |   | -          |  
|Gain on license sales                                                  | (3,896,306 | ) | (53,457    | ) | -          |  
|Foreign exchange loss (gain)                                           | (673,909   | ) | (151,049   | ) | 8,128      |  
|                                                                       |            |   |            |   |            |  
|(Increase) decrease in assets                                          |            |   |            |   |            |  
|Accounts receivable                                                    | (162,637   | ) | (394,587   | ) | (95,471    | )
|Prepaid expenses and deposits                                          | (123,882   | ) | (48,588    | ) | (62,796    | )
|Inventory                                                              | 5,423      |   | (5,423     | ) | -          |  
|Increase (decrease) in liabilities                                     |            |   |            |   |            |  
|Accounts payable and accrued liabilities                               | (28,766    | ) | (576,543   | ) | 283,909    |  
|Prepaid gas revenue                                                    | 1,258,033  |   | -          |   | -          |  
|                                                                       | (2,478,593 | ) | (839,105   | ) | 2,282,702  |  
|Financing Activities                                                   |            |   |            |   |            |  
|Share issue                                                            | -          |   | 1,000,000  |   | -          |  
|Issuance of special class shares                                       | 943,525    |   |            |   |            |  
|Deferred offering costs                                                | (408,083   | ) | -          |   | -          |  
|                                                                       | 535,442    |   | 1,000,000  |   | -          |  
|Investing Activities                                                   |            |   |            |   |            |  
|Due from related parties                                               | 52,065     |   | (23,670    | ) | 51,443     |  
|Proceeds from Sale of Licenses                                         | 5,000,000  |   | 198,299    |   | -          |  
|Purchase of property and equipment                                     | (20,028    | ) | (11,259    | ) | (12,710    | )
|Oil and gas properties                                                 | (2,147,426 | ) | (2,313,445 | ) | (1,927,199 | )
|                                                                       | 2,884,611  |   | (2,150,075 | ) | (1,888,466 | )
|                                                                       |            |   |            |   |            |  
|Net increase (decrease) in cash during the year                        | 941,460    |   | (1,989,180 | ) | 394,236    |  
|Cash and cash equivalents, beginning of year                           | 1,292,827  |   | 3,282,007  |   | 2,887,771  |  
|Cash and cash equivalents, end of year                                 | 2,234,287  |   | 1,292,827  |   | 3,282,007  |  
|                                                                       |            |   |            |   |            |  
|Supplemental Disclosure of Non-cash Financing and Investing Activities |            |   |            |   |            |  
|                                                                       |            |   |            |   |            |  
|Interest and taxes paid                                                | -          |   | -          |   | -          |  
|The following transactions which did not result in Cash                |            |   |            |   |            |  
|Flows have been excluded from financing activities                     |            |   |            |   |            |  
|Stock option compensation (Note 8(b))                                  | 143,312    |   | 274,080    |   | -          |  

See accompanying notes to the consolidated financial statements

63

---

|AUSTRAL
      PACIFIC ENERGY LTD. (formerly Indo-Pacific Energy Ltd.)              
|-----------------------------------------------------------------------------------
|Schedule of General and Administrative Expenses(Expressed in United States Dollars)

|For the years ended December 31                           | 2003      |   | 2002      |   | 2001      |  
|--------------------------------------------------------- | --------- | - | --------- | - | --------- | -
|                                                          | $         |   | $         |   | $         |  
|                                                          |           |   |           |   |           |  
|Audit                                                     | 88,912    |   | 72,313    |   | 38,340    |  
|Accounting                                                | 39,258    |   | 49,963    |   | 62,602    |  
|Consulting fees                                           | 75,479    |   | 114,542   |   | 95,887    |  
|Corporate relations and development                       | 114,531   |   | 112,056   |   | 91,672    |  
|Listing Expenditure  Non-capitalized                     | 344,332   |   | -         |   | -         |  
|Amortization                                              | 18,160    |   | 53,007    |   | 67,342    |  
|Directors fees                                            | 20,986    |   | 12,001    |   | -         |  
|Filing and transfer agency fees                           | 5,979     |   | 9,431     |   | 3,786     |  
|Foreign exchange loss (gain)                              | (673,909  | ) | (151,049  | ) | 8,128     |  
|Legal                                                     | 96,068    |   | 55,397    |   | 214,604   |  
|Office and miscellaneous                                  | 320,447   |   | 262,862   |   | 117,581   |  
|Printing                                                  | 49,180    |   | 38,835    |   | 24,226    |  
|Rent (Note 6)                                             | 32,741    |   | 24,245    |   | 35,307    |  
|Telephone                                                 | 25,562    |   | 20,050    |   | 25,764    |  
|Travel and accommodation                                  | 31,563    |   | 41,871    |   | 46,516    |  
|Wages and benefits                                        | 544,366   |   | 322,283   |   | 275,692   |  
|                                                          |           |   |           |   |           |  
|                                                          | 1,133,655 |   | 1,037,807 |   | 1,107,447 |  
|                                                          |           |   |           |   |           |  
|Less:        Recovery of
      general and administrative | (477,439  | ) | (403,454  | ) | (371,823  | )
|expenses
      from joint ventures                        |           |   |           |   |           |  
|                                                          |           |   |           |   |           |  
|General and administrative expenses                       | 656,216   |   | 634,353   |   | 735,624   |  

See accompanying notes to the consolidated financial statements




---

NOTE 1 - NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS
  A GOING CONCERN

The Company was incorporated under the Company Act (British
  Columbia) and continued its jurisdiction of incorporation to the Yukon Territory
  under the Business Corporations Act (Yukon). On December 31, 2003 the Company
  changed its name from Indo-Pacific Energy Ltd. to Austral Pacific Energy Ltd.

The accompanying financial statements have been prepared on
  a going concern basis which contemplates the realization of assets and the satisfaction
  of liabilities and commitments in the normal course of business. The Company
  has incurred losses to date of $11,326,461 which includes net income for the
  current year of $47,616.

The Company's cash balances and working capital are not sufficient
  to fund all of its obligations with respect to its ongoing work program requirements
  related to the exploration permits (Note 7). The continued operation of the
  Company and recoverability of amounts relating to oil and gas properties is
  dependant upon the existence of economically viable reserves, farming out oil
  and gas interests to other participants and obtaining additional equity financing.

The Company is primarily engaged in the acquisition, exploration
  and development of oil and gas properties in New Zealand, Papua New Guinea and
  Australia. With the exception of PEP 38736, the Company has yet to determine
  whether its properties contain oil and gas reserves that are economically recoverable.
  The recoverability of the amounts capitalized for oil and gas properties is
  dependent upon the completion of exploration work, the discovery of oil and
  gas reserves in commercial quantities and the subsequent development of such
  reserves.

On January 5, 2004 the Company successfully raised on the
  New Zealand Stock Exchange $5.2 million through the issuance of 4 million common
  shares (Note 13a). In addition the Company issued on January 5, 2004, two convertible
  notes for $250,000 each (Note 13b). This has significantly increased the Company's
  cash balances to help fund its future commitments.

The Company and its joint venture participants in PEP 38736
  agreed in January 2004 on the sale of gas from the Kahili gas-condensate field
  to NGC New Zealand Limited (Notes 12 and 13). It is the joint venture's intention
  that production will commence mid-2004.

Since balance date the Company has increased its cash reserves
  by approximately $5.7 million through the fund raising mentioned above. The
  Company will continue to seek additional funds as it sees necessary to support
  its ongoing operations and commitments. However the Company does recognize that
  there is no assurance in terms of the generation of funds, resulting from the
  existence of economically viable reserves, farming out oil and gas interests
  to other participants and obtaining additional equity financing, to meet its
  current ongoing commitments. The inability to obtain one or other of the aforementioned
  would have an adverse material effect on the Company's business which raises
  substantial doubt about the validity of the going concern assumption.

The Company has made significant steps in 2004 to ensure sufficient
  funds are readily available to the Company to help meet its obligations.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

|a) | Accounting Principles and Use of Estimates
      These financial statements are prepared in conformity
        with Canadian generally accepted accounting principles, which requires
        management to make informed judgments and estimates that affect the reported
        amounts of assets and liabilities and disclosures of contingent assets,
        commitments and contingent liabilities at the date of the financial statements
        and the reported amounts of the revenues and expenses for the year reported.
        Specifically estimates were utilized in calculating depletion, amortization
        and impairment write-downs. Actual results could differ from these estimates
        and the differences could be material.
      Material differences between Canadian, New Zealand and
        United States generally accepted accounting principles which affect the
        Company are referred to in Notes 16 and 17.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

65

---

|b) | Basis of Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | These consolidated financial statements include
        the accounts of Austral Pacific Energy Ltd. and its wholly- owned subsidiaries:
        Indo-Pacific Energy Australia Pty Limited, Odyssey International Pty Limited,
        Indo- Pacific Energy (PNG) Limited, Source Rock Holdings Limited, Austral
        Pacific Energy (NZ) Limited (formerly Indo-Pacific Energy (NZ) Limited),
        Ngatoro Energy Limited, Rata Energy Limited (formerly PEP 38716 Limited),
        Millennium Oil & Gas Limited, Totara Energy Limited (formerly Bligh
        Oil & Minerals (NZ) Limited), Trans-Orient Petroleum (Aust) Pty Limited,
        ZOCA 96-16 Pty Limited and Trans-Orient Petroleum (PNG) Limited. The financial
        statements of subsidiaries are included in the consolidated financial
        statements using the purchase method. All significant inter-company balances
        and transactions have been eliminated upon consolidation.
|  
|c) | Joint Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   | The Company's exploration and development activities
        are conducted through its wholly-owned subsidiaries, jointly with other
        companies, and accordingly these financial statements reflect only the
        Company's proportionate interest in these activities, and refer to the
        Company as owning such interests. Substantially all the activities of
        the Company are carried out through joint ventures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|d) | Translation of Foreign Currencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | The parent company's and the consolidated entity's
        functional currency is the United States dollar.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   | The Company's foreign operations through its subsidiaries
        are of an integrated nature and accordingly, the temporal method of foreign
        currency translation is used for conversion into United States dollars.
        Monetary assets and liabilities are translated into United States dollars
        at the rates prevailing on the balance sheet date. Other assets and liabilities
        are translated into United States dollars at the rates prevailing on the
        transaction dates. Revenues and expenses arising from foreign currency
        transactions are translated into United States dollars at the average
        rate for the year. Exchange gains and losses are recorded as income or
        expense in the year in which they occur.                                                                                                                                                                                      
|  
|e) | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   | Cash and cash equivalents, accounts receivable,
        due from related parties, accounts payable and accrued liabilities are
        carried at cost which approximates fair value due to the short-term maturity
        of these instruments. Unless otherwise noted, it is management's opinion
        that the Company is not exposed to significant interest, currency or credit
        risks arising from these financial instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|f) | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | Cash and cash equivalents include government treasury
        bills and bankers' acceptances with original maturities of three months
        or less, together with accrued interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|g) | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | Property and equipment consist of furniture and
        office equipment, which are recorded at cost and amortized over their
        estimated useful lives on a declining-balance basis at annual rates of
        10% to 33 1/3%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|h) | Oil and Gas Properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | The Company follows the full cost method of accounting for oil and
          gas operations whereby all costs associated with the acquisition, exploration
          and development of oil and gas reserves are capitalized in cost centers
          on a country-by-country basis. Such costs include property acquisition
          costs, geological and geophysical studies, carrying charges on non-producing
          properties, costs of drilling both productive and non-productive wells,
          and overhead expenses directly related to these activities.
        Depletion is calculated for producing properties by using the unit-of-production
          method based on proved reserves, before royalties, as determined by
          management of the Company or independent consultants.                                                                                                                                                        

66

---

| | Sales or dispositions of oil and gas properties are
        credited to the respective cost centers and a gain or loss is recognized
        when all properties in a cost center have been disposed of, unless such
        sale or disposition significantly alters the relationship between capitalized
        costs and proved reserves of oil and gas attributable to the cost center.
        Costs of abandoned oil and gas properties are accounted for as adjustments
        of capitalized costs and written off to expense.
      A ceiling test is applied to each cost center by comparing
        the net capitalized costs to the present value of the estimated future
        net revenues from production of proved reserves, net of the effects of
        future costs to develop and produce the proved reserves, plus the costs
        of unproved properties net of impairment. Any excess capitalized costs
        are written off to expense. The calculation of future net revenues is
        based upon prices, costs and regulations in effect at balance date.
      The Company has included the asset retirement obligations
        in the capitalized cost of the full cost pool and included the related
        liability as a reduction of the carrying amount of the capitalized costs.
        The Company has also included in the calculation of the full-cost ceiling
        limitation the cash outflows that are needed to settle the recorded asset
        retirement obligations.
      Unproved properties are assessed for impairment on an
        annual basis by applying factors that rely on historical experience. In
        general, the Company may write-off an unproved property under one or more
        of the following conditions:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (i)   | there are no firm plans for further drilling on the unproved property;                                           
| | ----- | -----------------------------------------------------------------------------------------------------------------
| | (ii)  | negative results were obtained from studies of the unproved property;                                            
| | (iii) | negative results were obtained from studies conducted in the vicinity
      of the unproved property; or         
| | (iv)  | the remaining term of the unproved property does not allow sufficient
      time for further studies or drilling.

|i) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The Company accounts for income taxes under the
        liability method. This requires the recognition of future tax assets and
        liabilities for the expected future tax consequences of events that have
        been recognized in the Company's financial statements or tax returns using
        enacted tax rates in effect in the years in which the differences are
        expected to reverse.                                                                                 
|  
|j) | Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | Inventories of crude oil are valued at the lower
        of cost and net realizable value.                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|k) | Oil and Gas Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   | Sales of oil and gas are recognized in the period
        in which the product is delivered to the customer. Proceeds received under
        the gas prepayment agreement (Note 12) are recorded as a liability until
        the period in which gas is sold and delivered to NGC New Zealand Limited
        (NGC).                                                                                                                                                                           
|  
|l) | Net Loss per Common Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | Loss per share is calculated based on the weighted
        average number of common shares issued and outstanding during the year.
        The effect of potential issuances of 1,345,000 (December 31, 2002: 1,805,000)
        shares under options and 2,086,845 (December 31, 2002: 2,286,845) common
        share warrants would be antidilutive and therefore basic and diluted income
        (losses) per share are the same.                                                          
|  
|m) | Stock Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   | The Company has recognized stock based compensation
        expense based on the following:                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   | All stock option based awards granted on or after
        January 1, 2002 are measured and recognized in these consolidated financial
        statements using a fair value based method. Fair value is based using
        the Black- Scholes option-pricing model and the compensation cost is amortized
        over the vesting period. Compensation associated with unvested options
        is remeasured on each balance sheet date using the Black Scholes option
        pricing model.

67

---

|   | The Company measures compensation expense for the options
        where there has been a substantive change or modification to such options
        on each balance sheet date.
      For further details refer to Note 8.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|1- | Comparative Figures
      Certain comparative figures have been reclassified to
        conform to the current year's presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2- | Changes in Accounting Policy
      During 2003, the Company early adopted on a retroactive
        basis the Canadian Institiute of Chartered Accountant Handbook Section
        3110, Asset Retirement Obligations ("Section 3110"). Section 3110 requires
        the recognition of a liability for an asset retirement obligation in the
        period in which it is incurred and/or when a reasonable estimate of fair
        value can be made. The adoption of Section 3110 resulted in $155,927 in
        asset retirement obligations being accrued in 2003 and had no impact on
        the comparative figures.
      There have been no other changes in accounting policies
        applied during the year ended December 31, 2003.

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment are comprised as follows:

|                               | 2003     |   | 2002     |  
|------------------------------ | -------- | - | -------- | -
|                               | $        |   | $        |  
|                               |          |   |          |  
|Furniture and office equipment | 349,314  |   | 329,286  |  
|                               |          |   |          |  
|Accumulated amortization       | (318,991 | ) | (300,831 | )
|                               |          |   |          |  
|                               | 30,323   |   | 28,455   |  

68

---

NOTE 4 - OIL AND GAS PROPERTIES 
  Oil and gas properties are comprised as follows:

|                                      | Percentage   |  | Net Book     |  | Additions    |   | Depletion/  |   | Net Book    
|------------------------------------- | ------------ |  | ------------ |  | ------------ | - | ----------- | - | ------------
|                                      | Interest     |  | Value at     |  | (Recoveries) |   | Write Downs |   | Value at    
|                                      | December 31, |  | December 31, |  | During the   |   | During the  |   | December 31,
|                                      | 2003         |  | 2002         |  | Year         |   | Year        |   | 2003        
|Proved:                               |              |  |              |  |              |   |             |   |             
|New Zealand                           |              |  |              |  |              |   |             |   |             
|PMP 38148  Ngatoro Oil Field
      5 | 0.00%        |  | 299,609      |  | (273,679     | ) | (25,930     | ) | -           
|PMP 38148  Goldie Oil Field
      5  | 0.00%        |  | 502,561      |  | (502,561     | ) | -           |   | -           
|PEP 38736  Kahili Gas Field
      2  | 45.00%       |  | -            |  | 2,721,572    |   | -           |   | 2,721,572   
|                                      |              |  |              |  |              |   |             |   |             
|Total Proved                          |              |  | 802,170      |  | 1,945,332    |   | (25,930     | ) | 2,721,572   
|Unproved:                             |              |  |              |  |              |   |             |   |             
|New Zealand                           |              |  |              |  |              |   |             |   |             
|PEP 38256  Exploration               | 30.00%       |  | 113,894      |  | 32,198       |   | -           |   | 146,092     
|PEP 38258  Exploration               | 75.00%       |  | -            |  | 25,668       |   | -           |   | 25,668      
|PEP 38330  Exploration               | 34.28%       |  | 178,797      |  | 16,508       |   | -           |   | 195,305     
|PEP 38335  Exploration 1             | 0.00%        |  | -            |  | 1,380        |   | (1,380      | ) | -           
|PEP 38716  Exploration               | 42.40%       |  | 83,038       |  | 247,518      |   | -           |   | 330,556     
|PEP 38718  Exploration               | 10.00%       |  | -            |  | 618,123      |   | (472,980    | ) | 145,143     
|PEP 38723  Exploration 1             | 0.00%        |  | -            |  | 14,151       |   | (14,151     | ) | -           
|PEP 38736  Exploration 2             | 45.00%       |  | 2,399,695    |  | (2,399,695   | ) | -           |   | -           
|PEP 38738  Exploration               | 33.50%       |  | 601          |  | 433,078      |   | -           |   | 433,679     
|PEP 38480  Exploration               | 75.00%       |  | -            |  | 87,388       |   | -           |   | 87,388      
|PEP 38741  Exploration               | 30.00%       |  | 930,343      |  | (10,474      | ) | -           |   | 919,869     
|PEP 38746  Exploration               | 25.00%       |  | -            |  | 226,772      |   | (201,246    | ) | 25,526      
|PEP 38748  Exploration               | 25.00%       |  | -            |  | 105,499      |   | -           |   | 105,499     
|PEP 38753  Exploration               | 30.00%       |  | -            |  | 246,771      |   | (218,676    | ) | 28,095      
|PPP 38761  Exploration               | 27.50%       |  | -            |  | 31,219       |   | -           |   | 31,219      
|                                      |              |  |              |  |              |   |             |   |             
|New licences/ventures                 |              |  | 56,286       |  | (51,991      | ) | -           |   | 4,295       
|Australia                             |              |  |              |  |              |   |             |   |             
|AC/P 19  Exploration6                | 100.00%      |  | 703,347      |  | 42,325       |   | -           |   | 745,672     
|AC/P 31  Exploration6                | 100.00%      |  | 22,865       |  | 7,308        |   | -           |   | 30,173      
|AC/P 26  Exploration                 | 50.00%       |  | 196,523      |  | 5,645        |   | -           |   | 202,168     
|Papua New Guinea                      |              |  |              |  |              |   |             |   |             
|                                      |              |  |              |  |              |   |             |   |             
|PPL 192  Exploration 3               | 0.00%        |  | 884,042      |  | (884,042     | ) | -           |   | -           
|PPL 215  Exploration 3               | 0.00%        |  | 420,408      |  | (420,408     | ) | -           |   | -           
|PPL 235  Exploration 3               | 100.00%      |  | -            |  | 1,379,192    |   | -           |   | 1,379,192   
|PPL 228  Exploration 4               | 10.00%       |  | -            |  | 7,018        |   | -           |   | 7,018       
|PRL 4  Stanley Retention             | 7.50%        |  | 77,973       |  | 5,665        |   | -           |   | 83,638      
|PRL 5  Elevala Retention             | 7.50%        |  | 653,186      |  | 5,495        |   | -           |   | 658,681     
|                                      |              |  |              |  |              |   |             |   |             
|Total Unproved                        |              |  | 6,720,998    |  | (227,689     | ) | (908,433    | ) | 5,584,876   
|                                      |              |  |              |  |              |   |             |   |             
|Total Proved & Unproved               |              |  | 7,523,168    |  | 1,717,643    |   | (934,363    | ) | 8,306,448   

|1. | PEP 38335 and PEP 38723 were relinquished in 2003.                                                                                                                                                                  
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | PEP 38736 was transferred to proven gas properties
        in 2003 following proven reserves on discovery of the Kahili gas-condensate
        field. This property is considered to be in the pre-production stage.

69

---

|3. | PPL 235 was awarded in August 2003, which replaces
        PPL 192 and PPL 215 (relinquished in August 2003). Expenditure for PPL
        192 and 215 has been allocated to PPL 235 as this permit replaces the
        area within the relinquished permits.   
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4. | PPL 228 will be surrendered upon acceptance of a
        top file application for a further permit over a similar area.                                                                                                                                         
|5. | On September 26, 2003 the Company sold its interest
        and entitlement to petroleum in PMP 38148 and recognized a gain on licence
        sales of $3,896,306 on the Consolidated Accounts. Effective date of this
        sale was July 1, 2003.          
|6. | The Company has applied for extension on AC/P 19
        and AC/P 31 work programme that were due to be completed by December 29,
        2003. Should an extension not be granted, these permits will be surrendered
        and the related costs written off.

NEW ZEALAND

Unless otherwise indicated, petroleum exploration permits
  granted in New Zealand provide for the exclusive right to explore for petroleum
  for an initial term of five years, renewable for a further five years over one-half
  of the original area. Permit holders can apply for extensions or reductions
  of the committed work programs for the permits under certain circumstances.
  Any production permits granted will be for a term of up to 40 years from the
  date of issue. The New Zealand government has reserved a royalty of the greater
  of 5% of net sales revenue or 20% of accounting profits from the sale of petroleum
  products.

AUSTRALIA


Unless otherwise indicated, exploration permits for Petroleum
  (offshore Australia) granted in Australia provide for the exclusive right to
  explore for petroleum for an initial term of six years, renewable for an unlimited
  number of five-year terms over one-half of the remaining area at each renewal.
  Permit holders can apply for extensions or reductions of the committed work
  programs for the permits under certain circumstances. Any production permits
  granted will be for a term of 21 years from the date of issue, renewable for
  a further 21 years. In addition to general Australian taxation provisions, most
  offshore permits, including all of the Company's Australian permits, are subject
  to Petroleum Resource Rent Taxation at the rate of 40% on a project's net income
  after deduction of allowable project and exploration expenditures, with project
  expenditures compounded forward at the Long-Term Bond Rate ("LTBR") plus 1.05%
  .

PAPUA NEW GUINEA


Petroleum prospecting licences granted in Papua New Guinea
  provide for the exclusive right to explore for petroleum for an initial term
  of six years, renewable for a further five years over one-half of the original
  area, and the right to enter into a Petroleum Development Agreement upon a discovery.
  The Petroleum Development Agreement provides the right to produce any oil and
  gas discovered for a period of up to 25 years and may be extended for a further
  period of up to 20 years from discovery, subject to a maximum 22.5% participating
  interest that can be acquired by the Government of Papua New Guinea which includes
  a 2% participating interest that can be acquired by project landowners and affected
  local level government. The participants can apply for extensions or reductions
  of the committed work programs for the licences under certain circumstances
  (by way of an Application for Variation of the Work Program).

NOTE 5  ACCOUNTS RECEIVABLE

|                          | 2003    |  | 2002   
|------------------------- | ------- |  | -------
|                          | $       |  | $      
|Trade receivables         | 101,007 |  | 28,222 
|Joint venture receivables | 771,525 |  | 681,673
|                          | 872,532 |  | 709,895

70

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NOTE 6 - RELATED PARTY TRANSACTIONS

|a) | Due from Related Parties                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | At December 31, 2003, the Company is owed $Nil (December
        31, 2002: $52,065) by certain public companies with directors, officers
        and/or principal shareholders in common with the Company. This amount
        was unsecured, non-interest bearing and had no fixed terms of repayment.                                                                                                                               
|  
|b) | Oil and Gas Properties                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   | A participant in certain oil and gas properties,
        has directors, officers and/or principal shareholders in common with the
        Company.                                                                                                                                                                                                                                                                                    
|  
|c) | Other                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   | During 2003, the Company incurred $197,165 (2002:
        $152,177; 2001: $111,942) in remuneration to the President of the Company
        and $32,741 (2002: $24,245; 2001: $21,581) in rent to a trust in which
        the President of the Company is a trustee. Also during 2003, $111,634
        (2002: $104,179; 2001: $60,835) was paid to the President of the Company's
        spouse, in her role as Commercial Manager.
|  
|   | All other directors received a total remuneration
        of $20,986 during 2003. (2002: $12,001; 2001: $Nil)                                                                                                                                                                                                                                                                                                                         
|  
|   | During 2003 the Company paid a law firm in which
        a Director is a partner, $95,980 (2002: $16,490; 2001: $13,890) for legal
        services.                                                                                                                                                                                                                                                                                  
|  
|   | The Company also paid a company that employs a Director,
        $9,454 (2002: $Nil; 2001: $Nil) for financial services.                                                                                                                                                                                                                                                                                                              
|  
|   | The above-noted transactions were in the normal
        course of operations and were measured at the exchange amount, which is
        the consideration established and agreed to by the related parties.                                                                                                                                                                                                                           

NOTE 7 - COMMITMENTS AND CONTINGENCIES

|a) | Work Commitments
      The Company participates in oil and gas exploration
        and development operations jointly with independent third and related
        parties and is contractually committed under agreements to complete certain
        exploration programs. The Company's management estimates that the total
        commitments under various agreements for the 2004 fiscal year is approximately
        $7,518,900. The Company is seeking to significantly reduce this commitment
        by farm out and extension of AC/P19 commitment of $5,996,000. Should the
        company be unsuccessful in achieving a satisfactory farm out arrangement
        or extension, the permit then will be relinquished.
      The Company's commitments under licence obligations
        are summarized as follows:
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Period:Period:                                                                                                                                                                                                                                                                                                                                                                                 | Commitment  | 
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | 
| | Within 1 year                                                                                                                                                                                                                                                                                                                                                                                  | 7,518,900   | 
| | More than 1 year and within 2 years                                                                                                                                                                                                                                                                                                                                                            | 10,034,617  | 
| | More than 2 years and within 3 years                                                                                                                                                                                                                                                                                                                                                           | -           | 
| | More than 3 years and within 4 years                                                                                                                                                                                                                                                                                                                                                           | -           | 
| | More than 4 years                                                                                                                                                                                                                                                                                                                                                                              | -           | 
| |                                                                                                                                                                                                                                                                                                                                                                                                |             | 
| |                                                                                                                                                                                                                                                                                                                                                                                                | $17,553,517 | 
| |                                                                                                                                                                                                                                                                                                                                                                                               
| | Subsequent to balance sheet
        date, the Company has been awarded a participating interest in three new
        petroleum exploration permits in the onshore Taranaki area. Work commitment
        obligations for these new permits have been included in the above amounts.
      This is the Company's share of commitments as recorded
        on various licence documents, but the

71

---

|                      | Company intends to "Farm-Out"
        major expenditures and will either Farm-out interests in those licences,
        renegotiate terms of the licence or relinquish its interest, so that its
        share of expenditures required to be funded will not necessarily be the
        full amount of the commitment listed above. Alternatively, the Company
        may seek further investor funds to meet the commitments listed.         
|--------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|b)                    | Political Risks                                                                                                                                                                                                                                                                                                                                                                                                                                
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                      | Papua New Guinea is subject
        to political uncertainty and instability and the Company faces a number
        of risks and uncertainties, which may adversely impact on its ability
        to pursue its exploration and development activities in this area.                                                                                                                                                                           
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|c)                    | Environmental Laws and
        Regulations                                                                                                                                                                                                                                                                                                                                                                                                     
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                      | The Company is not aware
        of any events of noncompliance in its operations with any environmental
        laws or regulations or of any potentially material contingencies related
        to environmental issues. However, the Company cannot predict whether any
        new or amended environmental laws or regulations introduced in the future
        will have a material adverse effect on the future business of the Company.
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|d)                    | Legal Settlement                                                                                                                                                                                                                                                                                                                                                                                                                               
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                      | On October 3, 2003 the Company
        paid Greymouth Petroleum Holdings Limited $2 million which released both
        parties from any claims and liabilities against each other.                                                                                                                                                                                                                                                            
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|NOTE 8 - COMMON STOCK
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|a)                    | Authorized and Issued
        Share Capital                                                                                                                                                                                                                                                                                                                                                                                                    
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                      | The authorized share capital
        of the Company is an unlimited number of shares of common stock without
        par value.                                                                                                                                                                                                                                                                                                                

| | Issued and fully paid:                | Number    |  | Amount    
| | ------------------------------------- | --------- |  | ----------
| |                                       | Of Shares |  | $         
| | Balance at December 31, 2000 and 2001 | 6,489,324 |  | 19,478,365
| |                                       |           |  |           
| | Issued during 2002                    | 1,250,000 |  | 1,000,000 
| |                                       |           |  |           
| | Balance at December 31, 2002 and 2003 | 7,739,324 |  | 20,478,365

|   | On September 12, 2002, 1,250,000 units at $0.80 per
        unit were issued for total proceeds of $1 million, under a private financing
        arrangement with a group of investors led by a shareholder of the Company
        and the controlling shareholder of Trans-Orient Petroleum Ltd. Each unit
        was comprised of a common share and a two-year share purchase warrant
        exercisable at $0.90 in the first year and $1.15 in the second year. Each
        warrant entitles the holder to purchase one common share of the Company.
        The securities had a one-year hold period and there were no brokerage
        fees payable in connection with the financing.                                                                                                                 
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|b) | Incentive Stock Options
      The Company may grant incentive stock options to its
        officers, directors, employees and consultants, for the purchase of shares
        in the Company. Stock options are in consideration for services and are
        non-transferable. The Board of Directors of the Company determines the
        exercise price. Options have a maximum term of five years and terminate
        45 days after the termination of employment or other contracting arrangement
        of the option holder. Vesting of options may be made at the time of granting
        of the options or over a period of up to 18 months as set out in each
        option agreement. Once approved and vested, options are exercisable at
        any time until expiry or termination as above.

72

---

| | The following stock options were outstanding at December 31, 2003:
| | ------------------------------------------------------------------

| | Number    |  | Type of Option |  | Date Fully       |  | Number Vested |  | Exercise  |  | Expiry          
| | --------- |  | -------------- |  | ---------------- |  | ------------- |  | --------- |  | ----------------
| | of Shares |  |                |  | Vested           |  | December 31,  |  | Price per |  | Date            
| |           |  |                |  |                  |  | 2003          |  | Share     |  |                 
| |           |  |                |  |                  |  |               |  |           |  |                 
| | 300,000   |  | Performance    |  | -                |  | -             |  | $1.00     |  | October 15, 2007
| |           |  | shares         |  |                  |  |               |  |           |  |                 
| | 150,000   |  | Vesting        |  | April 15, 2004   |  | 112,500       |  | $1.00     |  | July 6, 2005    
| | 200,000   |  | Non Vesting    |  | -                |  | 200,000       |  | $1.00     |  | July 6, 2005    
| | 400,000   |  | Vesting        |  | April 15, 2004   |  | 387,500       |  | $1.00     |  | July 6, 2005    
| | 60,000    |  | Vesting        |  | April 15, 2004   |  | 50,300        |  | $1.25     |  | July 6, 2005    
| | 50,000    |  | Vesting        |  | October 15, 2003 |  | 50,000        |  | $1.25     |  | July 6, 2005    
| | 40,000    |  | Vesting        |  | April 15, 2004   |  | 30,000        |  | $1.25     |  | October 15, 2007
| | 95,000    |  | Vesting        |  | April 15, 2004   |  | 83,000        |  | $1.25     |  | March 26, 2006  
| | 50,000    |  | Vesting        |  | April 15, 2005   |  | 12,500        |  | $1.25     |  | October 15, 2008
| | 1,345,000 |  |                |  |                  |  | 925,800       |  |           |  |                 

| | The weighted average exercise price for options outstanding
        at December 31, 2003 is $1.05 (December 31, 2002: $1.08) . No options
        were exercised during 2003, 2002 or 2001.
      The weighted average exercise price for options fully
        vested at December 31, 2003 is $1.06 (December 31, 2002: $1.09) .
      A summary of stock option activities for the years presented
        is as follows:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Description                            | Number    |   | Exercise Price | 
| | -------------------------------------- | --------- | - | -------------- | 
| | Of Activity                            | Of Shares |   | per Share      | 
| |                                        |           |   |                | 
| | Outstanding at January 1, 2000         | 1,133,600 |   | $2.50 - 3.00*  | 
| | Granted in 2001: vesting               | 71,200    |   | $2.50*         | 
| | Cancelled in 2001: vesting             | (36,800   | ) | $2.50*         | 
| | Outstanding at December 31, 2001       | 1,168,000 |   | $1.25*         | 
| |                                        |           |   |                | 
| | Granted in 2002: vesting               | 100,000   |   | $0.90          | 
| | Granted in 2002: vesting               | 526,000   |   | $1.00          | 
| | Granted in 2002: vesting               | 267,000   |   | $1.25          | 
| | Cancelled in 2002: non-vesting         | (200,000  | ) | $1.25          | 
| | Cancelled in 2002: vesting (forfeited) | (56,000   | ) | $1.25          | 
| | Outstanding at December 31, 2002       | 1,805,000 |   | $0.90 - 1.25   | 
| |                                        |           |   |                | 
| | Cancelled in 2003: vesting (forfeited) | (410,000  | ) | $1.25          | 
| | Cancelled in 2003: vesting (forfeited) | (100,000  | ) | $0.90          | 
| | Granted in 2003: vesting               | 50,000    |   | $1.25          | 
| | Outstanding at December 31, 2003       | 1,345,000 |   | $1.00  1.25   | 

73

---

| | * On November 29, 2001, the Company amended previously
        granted stock options to purchase 40,000 shares exercisable at a price
        of $2.50 per share, from vesting to non-vesting options exercisable immediately
        and amended all stock options to have an exercise price of $1.25 per share.
      The stock option compensation cost recognized as an
        expense for 2003 was $143,312 (2002: $274,080 and 2001: Nil). This cost
        is based on the estimated fair value of all options that were issued during
        2003 and 2002, using the Black-Scholes option-pricing model, amortized
        over the vesting period using the following weighted-average assumptions:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                           | 2003    |  | 2002           | 
| | ------------------------- | ------- |  | -------------- | 
| | Expected dividend yield   | 0.00%   |  | 0.00%          | 
| | Expected price volatility | 55.76%  |  | 96.00%         | 
| | Risk-free interest rate   | 3.20%   |  | 3.55%          | 
| | Expected life of option   | 2 Years |  | 1.8 to 2 years | 

|   | The weighted average fair value of the options granted
        in 2003 and 2002 are $0.31 and $0.34.                                               
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                    
|c) | Share Purchase Warrants
      The following share purchase warrants to purchase shares
        of the Company are outstanding at December 31, 2003:

|Number            |  | Price     |  | Expiry         
|----------------- |  | --------- |  | ---------------
|Of Shares         |  | per Share |  | Date           
|Warrants:         |  |           |  |                
|1,250,000         |  | $1.15     |  | Sept 12, 2004  
|Series A Warrants |  |           |  |                
|836,845           |  | $1.50     |  | January 5, 2005
|                  |  |           |  |                
|2,086,845         |  |           |  |                

| | A summary of share purchase warrant activities for the years presented
      is as follows:
| | -------------------------------------------------------------------------------------------

| |  | Description                               |  | Number    |   | Exercise Price  | 
| |  | ----------------------------------------- |  | --------- | - | --------------- | 
| |  | Of Activity                               |  | of Shares |   | per Share       | 
| |  |                                           |  |           |   |                 | 
| |  | Outstanding at December 31, 2000 and 2001 |  | 1,226,845 |   | $2.00  3.75    | 
| |  | Granted in 2002                           |  | 1,250,000 |   | $0.90(1)        | 
| |  | Cancelled in 2002                         |  | (190,000  | ) | $2.00           | 
| |  |                                           |  |           |   |                 | 
| |  | Outstanding at December 31, 2002          |  | 2,286,845 |   | $0.90 - 2.00    | 
| |  | Cancelled in 2003                         |  | (200,000  | ) | $2.00           | 
| |  |                                           |  |           |   |                 | 
| |  | Outstanding at December 31, 2003(1)       |  | 2,086,845 |   | $1.15  1.50(2) | 

|(1) | In accordance with the original term, the exercise
        price per share of the Warrants issued on Sept 12, 2002 increased from
        $0.90 to $1.15 for the year from September 13, 2003 to September 12, 2004.                                                                                                                                                                                                       
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | In January 2002 and then in December 2003, the terms
        of the series "A" were amended to extend the expiry date to January 5,
        2005 and to increase the exercise price per warrant to $1.50. Also, the
        Series "A" warrant holder's right to receive one Series "B" warrants for
        each Series A warrant exercised in the event of a commercial discovery
        was cancelled in December 2003.

74

---

NOTE 9  EARNINGS (LOSS) PER SHARE

The following is a reconciliation of the numerators and denominators
  of the basic and diluted earnings (loss) per share calculations for the period
  ending:

|                                            | For the years ended December 31 | 
|------------------------------------------- | ------------------------------- | 
|                                            | 2003                            | 
|                                            |                                 | 
|Numerator, net income (loss) for the year   | $  47,616                       | 
|                                            |                                 | 
|Denominator:                                |                                 | 
|Weighted-average number of shares  basic   | 7,739,324                       | 
|                                            |                                 | 
|Basic earnings (loss) per share             | $  0.01                         | 
|                                            |                                 | 
|Denominator:                                |                                 | 
|Weighted-average number of shares  diluted | 7,739,324                       | 
|                                            |                                 | 
|Diluted earnings (loss) per share           | $  0.01                         | 

Due to net losses incurred during 2002 and the average stock
  price for 2003 being below the strike price, stock options and share purchase
  warrants outstanding were not included in the computation of diluted loss per
  share as the inclusion of such securities would be antidilutive in those years.

NOTE 10  ISSUE OF SPECIAL CLASS SHARES OF SUBSIDIARY

On June 18, 2003, a private placement in one of the Company's
  New Zealand subsidiaries, Austral Pacific Energy (NZ) Limited ("APENZ"), was
  made to certain private investors for the issue of 1,500,000 Special Class shares
  in that company, for a total of NZ$1,500,000 (approx. $943,525). Such shares
  confer no voting rights, but do confer the right to convert such shares to common
  shares units of APENZ in the event of a listing of and issue of other common
  shares in APENZ on the New Zealand Stock Exchange. Each unit consists of one
  common share and one half warrant with the same terms as the warrants included
  in the public offering. Subsequently, the company decided not to proceed with
  the listing of APENZ. In the event that the listing did not proceed, the subscription
  agreement requires the Company to offer to exchange such Special Class shares
  for common shares in the Company at the higher of 80% of prevailing market and
  $0.75 per common share of the Company. If the Special Class shareholders reject
  the Company's share exchange offer, they are entitled to receive redemption
  dividends calculated based on and paid out of 20% of APENZ's production income.

On November 12, 2003, each Special Class shareholder signed
  a conditional share exchange agreement which agreed to transfer to the Company
  all of the Special Class shares in exchange for the issuance of common shares
  by the Company. These Special Class shares where exchanged for common shares
  on January 5, 2004, upon the listing of the Company on the TSX Venture Exchange
  (TSX-V, part of the Toronto-based TSX Group) and the New Zealand Stock Exchange
  (NZSX), at one common share for every 1.35 Special Class share resulting in
  the issuing of 1,111,123 common shares. Also, 555,569 warrants were attached
  to these shares exercisable at a price of NZ$1.85 any time before January 5,
  2005 (See Note 13).

The Special Class shares have been classified as a liability
  rather than equity on the basis that they confer no voting rights and are repayable
  via the various options noted above.

As at December 31, 2003 the carrying cost and estimated fair
  value of the Special Class shares were the same.

75

---

NOTE 11 - INCOME TAXES

No income taxes are currently payable by the Company in any
  of the jurisdictions in which it operates. A reconciliation between the tax
  cost, using the Canadian statutory income tax rate of 37.12% (39.12% for the
  fiscal 2002 year and 44.12% for the fiscal 2001 year), and the provision for
  income taxes is as follows:

|For the year ended,                                | 2003      |   | 2002       |   | 2001      |  
|-------------------------------------------------- | --------- | - | ---------- | - | --------- | -
|                                                   |           |   |            |   |           |  
|Net income(loss) for the year before tax           | 47,616    |   | (2,826,770 | ) | 1,108,799 |  
|                                                   |           |   |            |   |           |  
|Provision for (benefit of) tax at Canadian         |           |   |            |   |           |  
|Statutory rate (37.12%)                            | 17,675    |   | (1,105,832 | ) | 489,202   |  
|Effect of varying tax rates in other jurisdictions | (22,955   | ) | 118,638    |   | (97,059   | )
|Permanent differences                              | 1,065,598 |   | 152,940    |   | 40,904    |  
|Benefit of prior year losses realized              | (322,940  | ) | -          |   | (573,971  | )
|Increase (decrease) in valuation allowance         | (737,378  | ) | 834,254    |   | 140,924   |  
|                                                   |           |   |            |   |           |  
|Income Tax Provision                               | -         |   | -          |   | -         |  

In Canada the Company has non-capital losses of approximately
  Cdn$2.07 million (December 31, 2002 -Cdn$2.02 million and December 31, 2001
  - Cdn$1.87 million) available for future deduction from taxable income derived
  in Canada, which expire as follows:

| |      | Canadian $ | 
| | ---- | ---------- | 
| | 2004 | -          | 
| | 2005 | 153,875    | 
| | 2006 | 131,714    | 
| | 2007 | 286,535    | 
| | 2008 | 382,213    | 
| | 2009 | 405,459    | 
| | 2010 | 709,198    | 
| |      |            | 
| |      | 2,068,994  | 

In addition, in Canada, at December 31, 2003, the Company has
  approximately Cdn$1.63 million (December 31, 2002 - Cdn$1.63 million and December
  31, 2001  Cdn$1.63 million) of resource and other unused tax pools to
  offset future taxable income derived in Canada. The Company also has losses
  and deductions of approximately NZ$14.87 million (December 31, 2002: NZ$17.45
  million and December 31, 2001: NZ$18.22 million) available to offset future
  taxable income derived in New Zealand, Australia and Papua New Guinea. Tax losses
  reported at December 31, 2002 of NZ$25.94m have been revised down to NZ$17.45m.
  The below valuation allowance has also been amended to reflect this revision.

Significant components of the Company's future income tax
  assets are comprised of the following at December 31, 2003 calculated at 37.12%
  (December 31, 2002 39.12% and December 31, 2001 44.12%):

|                                    | 2003       |   | 2002       |   | 2001       |  
|----------------------------------- | ---------- | - | ---------- | - | ---------- | -
|                                    |            |   |            |   |            |  
|Resource and other unused tax pools | 467,369    |   | 404,372    |   | 456,056    |  
|Net operating loss carry-forwards   | 3,807,938  |   | 3,525,683  |   | 4,745,112  |  
|                                    | 4,275,307  |   | 3,930,055  |   | 5,201,168  |  
|Valuation allowance                 | (4,275,307 | ) | (3,930,055 | ) | (5,201,168 | )
|                                    | -          |   | -          |   | -          |  

76

---

A valuation allowance has been established, and accordingly,
  no benefit has been recognized for the Company's net operating losses and deferred
  tax assets. The Company believes that, based on a number of factors, the available
  objective evidence creates sufficient uncertainty regarding the realizability
  of the future tax assets such that a full valuation allowance has been recorded.
  These factors include the Company's recent history of net losses and the expected
  near-term future losses. The Company will continue to assess the realizability
  of the future tax assets based on actual and forecasted operating results.

The increase in the 2003 valuation allowance of $345,252 is
  attributed to the following:

|- current year provision        |  | (737,378  | ) | 
|------------------------------- |  | --------- | - | 
|- timing differences not booked |  | 1,621,613 |   | 
|- change in tax rate            |  | (27,196   | ) | 
|- tax losses forfeited          |  | (511,787  | ) | 
|                                |  | 345,252   |   | 

NOTE 12  PREPAID GAS AGREEMENT


On April 2, 2003, the Company entered into a gas prepayment
  agreement with a New Zealand company, NGC New Zealand Limited (NGC), whereby
  NGC provided approximately $1,258,033 to be drawn down towards the Company's
  ongoing exploration programs. This money was received on April 3, 2003 and will
  be applied against the first approximately $1,258,033 of gas supplied by the
  Company to NGC, under contracts to be negotiated at then prevailing market rates,
  including under the contract subsequently agreed upon in January, 2004 (Note
  13(c)). The Company will negotiate in the first instance with NGC, and if no
  contract is entered into within a certain time period after notification, the
  Company is free to seek other markets for the gas. If the amount is not discharged
  through gas sales to NGC over a ten year period, it must either be repaid by
  the Company or may be converted into share equity in one of the Company's New
  Zealand subsidiaries, Austral Pacific Energy (NZ) Limited. The prepayment is
  secured under a registered charge over Millennium Oil and Gas Ltd's (a wholly-owned
  subsidiary of the Company) 25% interest in the Kahili joint venture PEP 38736.

As at December 31, 2003, the Company had sold no gas to NGC.
  As at December 31, 2003, the carrying cost and estimated fair value of the prepaid
  gas was the same.

NOTE 13 - SUBSEQUENT EVENTS

|a) | Issue of Securities and Listing on TSX-V and
        NZSX                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | On January 2, 2004 the Company successfully listed
        on the TSX-V.                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | In conjunction with the TSX-V listing, the Company
        listed on the NZSX, raising approximately $5.2 million on January 5, 2004
        through the issuance of 4 million common shares. For every two shares
        issued, one warrant was issued and is exercisable at any time before January
        5, 2005, at a price of approximately $1.37 (NZ$2.10).                                                                                                                                 
|  
|   | The proforma basic and diluted income per share
        for the year ended December 31 2003, assuming these shares were issued
        on January 5, 2004 would be $0.01. Share issue costs in relation to the
        NZSX fundraising incurred prior to December 31, 2003 have been treated
        as deferred offering costs. Such costs will be presented as a reduction
        of equity in the period proceeds are received and the shares are issued.                                        
|  
|b) | Convertible Loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   | On January 5, 2004, the Company issued two Convertible
        Promissory Notes for $250,000 each. Each note is convertible, at the option
        of the holder, into common shares in the Company at conversion rate of
        $1.10 per share within 12 months of issue. Each share on conversion will
        also comprise one warrant permitting the holder to purchase an additional
        common share at a price of $1.15 per share, for a 12 month period from
        the issuance date.
|  
|   | Interest is payable at a rate of 8% per annum from
        issue date to the earlier of conversion date or repayment date.                                                                                                                                                                                                                                                                                                                                                                            

77

---

|   | Both of the Convertible Promissory Notes are unsecured.                                                                                                                                                                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                        
|c) | Material Contract
      In Janaury 2004, the Company and its joint venture participants
        in PEP 38736 agreed on the sale of gas from the Kahili gas-condensate
        field to NGC New Zealand Limited. The Company's proceeds from the gas
        sale will initially be offset against the pre-paid gas contract with NGC
        (Note 12).

NOTE 14: SEGMENTED INFORMATION

The Company operates in the one industry: petroleum exploration
  and production. It operates in several geographical regions, therefore information
  on country segments is provided as follows.

|2003                     |          |   |             |   |           |   |           |   |               |  
|------------------------ | -------- | - | ----------- | - | --------- | - | --------- | - | ------------- | -
|                         |          |   |             |   |           |   |           |   |               |  
|                         | Canada   |   | New Zealand |   | Australia |   | PNG       |   | Total Company |  
|Production Income:       |          |   |             |   |           |   |           |   |               |  
|Revenue                  | -        |   | 172,715     |   | -         |   | -         |   | 172,715       |  
|Production expenses      | -        |   | (120,605    | ) | -         |   | -         |   | (120,605      | )
|Net Production Income    | -        |   | 52,110      |   | -         |   | -         |   | 52,110        |  
|Interest income          | 2,188    |   | 55,436      |   | -         |   | -         |   | 57,624        |  
|Gain on Licence Sale     | -        |   | 3,896,306   |   | -         |   | -         |   | 3,896,306     |  
|Administrative expenses  | (171,650 | ) | (459,192    | ) | (3,716    | ) | (21,658   | ) | (656,216      | )
|Litigation Costs and     | -        |   | (2,250,463  | ) | -         |   | -         |   | (2,250,463    | )
|Settlement               |          |   |             |   |           |   |           |   |               |  
|Stock compensation       | (143,312 | ) | -           |   | -         |   | -         |   | (143,312      | )
|expense                  |          |   |             |   |           |   |           |   |               |  
|Write-off of oil and gas | -        |   | (908,433    | ) | -         |   | -         |   | (908,433      | )
|properties               |          |   |             |   |           |   |           |   |               |  
|                         |          |   |             |   |           |   |           |   |               |  
|Net income(loss)         | (312,774 | ) | 385,764     |   | (3,716    | ) | (21,658   | ) | 47,616        |  
|                         |          |   |             |   |           |   |           |   |               |  
|Oil and Gas properties   | -        |   | 5,199,904   |   | 978,015   |   | 2,128,529 |   | 8,306,448     |  
|Property and Equipment   | -        |   | 30,323      |   | -         |   | -         |   | 30,323        |  
|Non-current Assets       | 408,083  |   | -           |   | -         |   | -         |   | 408,083       |  
|Current Assets           | 234,083  |   | 3,092,359   |   | 9,605     |   | 44,766    |   | 3,380,813     |  
|Total Assets             | 642,166  |   | 8,322,586   |   | 987,620   |   | 2,173,295 |   | 12,125,667    |  
|Specific Items:          |          |   |             |   |           |   |           |   |               |  
|Amortization expense     | -        |   | (18,160     | ) | -         |   | -         |   | (18,160       | )
|Purchase of property and | -        |   | 20,028      |   | -         |   | -         |   | 20,028        |  
|equipment                |          |   |             |   |           |   |           |   |               |  
|                         |          |   |             |   |           |   |           |   |               |  
|2002                     |          |   |             |   |           |   |           |   |               |  
|                         |          |   |             |   |           |   |           |   |               |  
|                         | Canada   |   | New Zealand |   | Australia |   | PNG       |   | Total Company |  
|Production Income:       |          |   |             |   |           |   |           |   |               |  
|Revenue                  | -        |   | 1,845,925   |   | -         |   | -         |   | 1,845,925     |  
|Production expenses      | -        |   | (1,063,503  | ) | -         |   | -         |   | (1,063,503    | )
|Net Production Income    | -        |   | 782,422     |   | -         |   | -         |   | 782,422       |  

78

---

|Interest income          | 8,301    |   | 21,217      |   | -         |   | -         |   | 29,518        |  
|------------------------ | -------- | - | ----------- | - | --------- | - | --------- | - | ------------- | -
|Gain on Licence Sale     | -        |   | 53,457      |   | -         |   | -         |   | 53,457        |  
|Administrative expenses  | (300,082 | ) | (304,166    | ) | (11,973   | ) | (18,132   | ) | (634,353      | )
|Stock compensation       |          |   |             |   |           |   |           |   |               |  
|expense                  | (274,080 | ) | -           |   | -         |   | -         |   | (274,080      | )
|Write-off of oil and gas |          |   |             |   |           |   |           |   |               |  
|properties               | -        |   | (2,532,027  | ) | (230,778  | ) | (20,929   | ) | (2,783,734    | )
|                         |          |   |             |   |           |   |           |   |               |  
|Net income(loss)         | (565,861 | ) | (1,979,097  | ) | (242,751  | ) | (39,061   | ) | (2,826,770    | )
|Oil and Gas properties   | -        |   | 4,508,660   |   | 966,635   |   | 2,047,873 |   | 7,523,168     |  
|Property and Equipment   | -        |   | 28,455      |   | -         |   | -         |   | 28,455        |  
|Due from Related Parties | -        |   | 55,410      |   | 24,474    |   | (27,819   | ) | 52,065        |  
|Other Non-current Assets | -        |   | -           |   | -         |   | -         |   | -             |  
|Current Assets           | 516,174  |   | 1,625,263   |   | 10,013    |   | 6,807     |   | 2,158,257     |  
|Total Assets             | 516,174  |   | 6,217,788   |   | 1,001,122 |   | 2,026,861 |   | 9,761,945     |  
|Specific Items:          |          |   |             |   |           |   |           |   |               |  
|Amortization expense     | 25,974   |   | 27,033      |   | -         |   | -         |   | 53,007        |  
|Purchase of property and |          |   |             |   |           |   |           |   |               |  
|equipment                | -        |   | (11,259     | ) | -         |   | -         |   | (11,259       | )
|                         |          |   |             |   |           |   |           |   |               |  
|2001                     |          |   |             |   |           |   |           |   |               |  
|                         |          |   |             |   |           |   |           |   |               |  
|                         | Canada   |   | New Zealand |   | Australia |   | PNG       |   | Total Company |  
|Production Income:       |          |   |             |   |           |   |           |   |               |  
|Revenue                  | -        |   | 3,744,036   |   | -         |   | -         |   | 3,744,036     |  
|Production expenses      | -        |   | (1,288,105  | ) | -         |   | -         |   | (1,288,105    | )
|Net Production Income    | -        |   | 2,455,931   |   | -         |   | -         |   | 2,455,931     |  
|Interest income          | 25,788   |   | 69,166      |   | -         |   | -         |   | 94,954        |  
|Administrative expenses  | (261,747 | ) | (451,736    | ) | (7,020    | ) | (15,121   | ) | (735,624      | )
|Write-off of oil and gas |          |   |             |   |           |   |           |   |               |  
|properties               | -        |   | (678,352    | ) | (20,299   | ) | (7,811    | ) | (706,462      | )
|                         |          |   |             |   |           |   |           |   |               |  
|Net income(loss)         | (235,959 | ) | 1,395,009   |   | (27,319   | ) | (22,932   | ) | 1,108,799     |  
|Specific Items:          |          |   |             |   |           |   |           |   |               |  
|Amortization expense     | 27,808   |   | 39,534      |   | -         |   | -         |   | 67,342        |  
|Purchase of property and |          |   |             |   |           |   |           |   |               |  
|equipment                | -        |   | (12,710     | ) | -         |   | -         |   | (12,710       | )

NOTE 15  SALES TO SIGNIFICANT CUSTOMERS


The Company made oil sales of $148,991 (2002: $1,817,257;
  2001: $3,733,697) to the following significant customer, Shell (Petroleum Mining)
  Company Ltd.

NOTE 16 - DIFFERENCES BETWEEN NEW ZEALAND AND CANADIAN
  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

These financial statements have been prepared in accordance
  with Canadian generally accepted accounting principles (Canadian GAAP) which
  conform in all material respects with New Zealand generally accepted accounting
  principles (NZ GAAP) except for the following differences:

79

---

|a) | Stockholders' Equity
|-- | --------------------
|  
|   | i)                  
|  
|   |                     
|  
|   |                     
|  
|   |                     
|  
|   |                     
|  
|   |                     
|  
|   | ii)                 
|  
|   |                     

| | December 31                             | 2003        |   | 2002        |  
| | --------------------------------------- | ----------- | - | ----------- | -
| |                                         |             |   |             |  
| | Accumulated deficit under Canadian GAAP | (11,326,461 | ) | (11,374,077 | )
| |                                         |             |   |             |  
| | Stock option compensation               | 417,392     |   | 274,080     |  
| |                                         |             |   |             |  
| | Accumulated deficit, NZ GAAP            | (10,909,069 | ) | (11,099,997 | )
| |                                         |             |   |             |  
| | Contributed surplus, Canadian GAAP      | 417,392     |   | 274,080     |  
| |                                         |             |   |             |  
| | Stock option compensation               | (417,392    | ) | (274,080    | )
| |                                         |             |   |             |  
| | Contributed surplus, NZ GAAP            | -           |   | -           |  

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

|b) | Net Income (Loss) for the Year                                                                  
|-- | ------------------------------------------------------------------------------------------------
|   | The following are the effects of Note 16 (a) on Net Income
      (Loss) for 2003, 2002 and 2001:

| | For the years ended December 31                     | 2003    |  | 2002       |   | 2001     
| | --------------------------------------------------- | ------- |  | ---------- | - | ---------
| |                                                     |         |  |            |   |          
| | Net income (loss) for the year, Canadian
      GAAP | 47,616  |  | (2,826,770 | ) | 1,108,799
| |                                                     |         |  |            |   |          
| | Stock option compensation                           | 143,312 |  | 274,080    |   | -        
| |                                                     |         |  |            |   |          
| | Net income (loss) for the year, NZ GAAP             | 190,928 |  | (2,552,690 | ) | 1,108,799

CONSOLIDATED STATEMENT OF CASH FLOWS

|c) | Cash Flows from operating activities.
|-- | -------------------------------------

80

---

| | The Statement of Cash Flows is presented in Canadian
        GAAP using the indirect method. NZ GAAP under FRS 10 requires the direct
        method to be used. Cash Flows for operating activities under the direct
        method are as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | For the years ended December 31                      | 2003       |   | 2002       |   | 2001       |  
| | ---------------------------------------------------- | ---------- | - | ---------- | - | ---------- | -
| | Operating Activities                                 |            |   |            |   |            |  
| |                                                      |            |   |            |   |            |  
| | Cash inflows                                         |            |   |            |   |            |  
| | Oil and gas proceeds                                 | 1,430,748  |   | 2,047,059  |   | 3,542,880  |  
| | Interest received                                    | 57,624     |   | 29,518     |   | 94,954     |  
| |                                                      |            |   |            |   |            |  
| | Cash outflows                                        |            |   |            |   |            |  
| | Payments to suppliers and employees                  | (3,893,319 | ) | (2,902,979 | ) | (1,403,636 | )
| | Net GST payments                                     | (73,646    | ) | (12,703    | ) | 48,504     |  
| |                                                      |            |   |            |   |            |  
| | Net cash inflows (outflows) for operating activities | (2,478,593 | ) | (839,105   | ) | 2,282,702  |  

NOTE 17 - DIFFERENCES BETWEEN UNITED STATES AND CANADIAN
  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

These financial statements have been prepared in accordance
  with Canadian GAAP which conform in all material respects with United States
  generally accepted accounting principles (U.S. GAAP) except for the following
  differences:

|a) | Liabilities
|-- | -----------
|  
|   | i)         
|  
|   |            
|  
|   | ii)        
|  
|   |            
|  
|   |            

81

---

| |  | convertible instrument allocated to the common stock
        portion of the conversion option and the fair value at the commitment
        date of the common stock to be received by the holder upon conversion.
        Upon conversion of the underlying convertible instrument into common stock,
        the unamortized discount is recorded as interest expense.
      For the convertible special class shares of the subsidiary
        issued during 2003, no beneficial conversion feature is recorded as the
        fair value of the common stock on the commitment date is less than the
        portion of proceeds of the convertible instrument allocated to the common
        stock of the conversion option.
      Furthermore, under US GAAP, the carrying value of special
        class shares with a mandatory redemption feature of the subsidiary should
        reflect the redemption value of the shares at the end of the period. Consequently,
        the carrying value of the special class shares for US GAAP purposes should
        be increased by $5,732 with the same amount being charged as interest
        expense.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The effects of the above notes on liabilities are as follows: |           |   |        
| |  | ------------------------------------------------------------- | --------- | - | -------
| |  | December 31,                                                  | 2003      |   | 2002   
| |  |                                                               |           |   |        
| |  | Liabilities under Canadian GAAP                               | 2,556,371 |   | 383,577
| |  |                                                               |           |   |        
| |  | Less unamortized portion of the debt discount
      of the    |           |   |        
| |  | prepaid gas
      revenue                                     | (641,316  | ) | -      
| |  | Accretion of the redemption value of special
      class      |           |   |        
| |  | shares                                                        | 5,732     |   | -      
| |  |                                                               |           |   |        
| |  | Liabilities under US GAAP                                     | 1,920,787 |   | 383,577

|b) | Stockholders' Equity
|-- | --------------------
|  
|   | ii)                 
|  
|   |                     
|  
|   |                     
|  
|   |                     

82

---

| | December 31,                              | 2003      |   | 2002      |   | 2001     
| | ----------------------------------------- | --------- | - | --------- | - | ---------
| |                                           |           |   |           |   |          
| | Contributed surplus under Canadian GAAP   | 417,392   |   | 274,080   |   | -        
| |                                           |           |   |           |   |          
| | Less compensation stock (Canadian GAAP)   | (417,392  | ) | (274,080  | ) | -        
| |                                           |           |   |           |   |          
| | Stock option compensation cost (recovery) |           |   |           |   |          
| | Employees                                 | 174,316   |   | 35,524    |   | 584,036  
| | Non-employees                             | 21,681    |   | (69,921   | ) | 320,489  
| | Common stock and warrant issuance expense | -         |   | 778,750   |   | -        
| | Cumulative historical adjustments         | 2,823,492 |   | 2,079,139 |   | 1,174,614
| | Debt discount on prepaid gas revenue      | 688,282   |   |           |   |          
| | Compensation expense of new Series A      |           |   |           |   |          
| | warrants                                  | 260,303   |   | -         |   | -        
| |                                           |           |   |           |   |          
| | Additional paid-in capital under US GAAP  | 3,968,074 |   | 2,823,492 |   | 2,079,139

| |  | The Common Stock and Warrant issuance expense comprises
        a discount on shares issued to insiders on September 12, 2002 and the
        fair value of warrants issued on the same date. The discount on the 1,250,000
        common shares was calculated as the difference between the market value
        at the date of issue ($1.10) and the discounted share price ($0.80) and
        applied to the total number of shares issued. The fair value of each warrant
        is estimated using the Black-Scholes pricing model with the following
        assumptions:
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Expected dividend yield   | 0.00%      | 
| | ------------------------- | ---------- | 
| | Expected price volatility | 55.76%     | 
| | Risk-free interest rate   | 2.96%      | 
| | Expected life of option   | 0.67 years | 

| |  | Under US GAAP, the amendment to the terms of Series
        A warrants is considered a grant of new warrants. Consequently, $260,303
        compensation expenses is recorded for this amendment. The compensation
        expenses were calculated using the Black Scholes pricing model with the
        following assumptions:
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Expected dividend yield   | 0.00%      | 
| | ------------------------- | ---------- | 
| | Expected price volatility | 55.76%     | 
| | Risk-free interest rate   | 1.28%      | 
| | Expected life of option   | 1.04 years | 

| | ii) | Accumulated DeficitThe effects of Notes 17 (a) and (b)(i)
        on accumulated deficit are as follows:
| | --- | --------------------------------------------------------------------------------------------------------

83

---

| | December 31,                                      | 2003        |   | 2002           |  
| | ------------------------------------------------- | ----------- | - | -------------- | -
| |                                                   |             |   |                |  
| | Accumulated deficit under Canadian GAAP           | (11,326,461 | ) | (11,374,077    | )
| |                                                   |             |   |                |  
| | Add back compensation stock (Canadian GAAP)       | 417,392     |   | 274,080        |  
| |                                                   |             |   |                |  
| | Stock option compensation cost (US GAAP)          |             |   |                |  
| | Employees                                         | (174,316    | ) | (35,524        | )
| | Non-employees                                     | (21,681     | ) | 69,921         |  
| | Common stock and warrant placement expense        | -           |   | (778,750       | )
| | Accretion of debt discount                        | (46,966     | ) | -              |  
| | Compensation expense of new Series A warrants     | (260,303    | ) | -              |  
| | Interest expense on the redemption value
      of |             |   |                |  
| | special class shares                              | (5,732      | ) |                |  
| |                                                   | (11,418,067 | ) | (11,844,350    | )
| | Cumulative historical adjustments                 |             |   |                |  
| | required under
      US GAAP                      | (2,823,492  | ) | (2,079,139     | )
| |                                                   |             |   |                |  
| | Accumulated deficit under U.S. GAAP               | (14,241,559 | ) | ($  13,923,489 | )

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

|c) | Net Profit (Loss) for the Year                                                                                             
|-- | ---------------------------------------------------------------------------------------------------------------------------
|   | The following are the effects of Notes 17 (a) and (b) on Net
      Income (Loss) for the 2003, 2002, and 2001 fiscal years:

| | December 31,                                      | 2003     |   | 2002       |   | 2001      |  
| | ------------------------------------------------- | -------- | - | ---------- | - | --------- | -
| |                                                   |          |   |            |   |           |  
| | Net profit (loss) for the year under              |          |   |            |   |           |  
| | Canadian GAAP                                     | 47,616   |   | (2,826,770 | ) | 1,108,799 |  
| | Add back Canadian GAAP compensation cost          | 143,312  |   | 274,080    |   | -         |  
| | Stock Option compensation cost                    |          |   |            |   |           |  
| | Employees                                         | (174,316 | ) | (35,524    | ) | (584,036  | )
| | Non-employees                                     | (21,681  | ) | 69,921     |   | (320,489  | )
| | Common stock and warrant issuance expense         | -        |   | (778,750   | ) | -         |  
| | Accretion of debt discount                        | (46,966  | ) | -          |   | -         |  
| | Compensation expense of new Series A              |          |   |            |   |           |  
| | warrants                                          | (260,303 | ) | -          |   | -         |  
| | Interest expense on the redemption value
      of |          |   |            |   |           |  
| | special class shares                              | (5,732   | ) | -          |   | -         |  
| |                                                   |          |   |            |   |           |  
| | Net profit (loss) for the year U.S. GAAP          | (318,070 | ) | (3,297,043 | ) | 204,274   |  

|d) | Statements of Cash Flows                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Under US GAAP, the Prepaid Gas Revenue is considered
        a loan and thus should be reflected as a financing activity in the Statement
        of Cash Flows. As a result, the cash used in operating activities for
        the year ended December 31, 2003 should be increased by $1,258,033 to
        ($3,736,626) under US GAAP and the cash provided from financing activities
        should be increased by the same amount to $1,793,475 under US GAAP.

84

---

|e) | Earnings (Loss) per Share
      The following is a reconciliation of the numerators
        and denominators of the basic and diluted earnings/(loss) per share calculations
        for the 2003, 2002, and 2001 fiscal years:
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | December 31,                                           | 2003      |   | 2002        |   | 2001     
| | ------------------------------------------------------ | --------- | - | ----------- | - | ---------
| |                                                        |           |   |             |   |          
| | Numerator, net profit(loss) for the year               |           |   |             |   |          
| | under US GAAP                                          | ($318,070 | ) | ($3,297,043 | ) | $204,274 
| |                                                        |           |   |             |   |          
| | Denominator: - Basic                                   |           |   |             |   |          
| | Weighted average
      number of shares                |           |   |             |   |          
| | under
      Canadian GAAP                              | 7,739,324 |   | 6,869,461   |   | 6,489,324
| | Adjustment required
      under US GAAP                | -         |   | -           |   | -        
| |                                                        |           |   |             |   |          
| | Weighted average number of shares                      |           |   |             |   |          
| | under US GAAP                                          | 7,739,324 |   | 6,869,461   |   | 6,489,324
| |                                                        |           |   |             |   |          
| | Basic earnings(loss) per share under U.S. GAAP         | ($0.04    | ) | ($0.48      | ) | $0.03    
| |                                                        |           |   |             |   |          
| | Denominator: - Diluted                                 |           |   |             |   |          
| | Weighted average
      number of shares                |           |   |             |   |          
| | under
      Canadian GAAP                              | 7,739,324 |   | 6,869,461   |   | 6,680,384
| | Adjustment required
      under US GAAP                | -         |   | -           |   | -        
| | Weighted average number of shares                      |           |   |             |   |          
| | under US GAAP                                          | 7,739,324 |   | 6,869,461   |   | 6,680,384
| |                                                        |           |   |             |   |          
| | Diluted earnings(loss) per share under U.S.
      GAAP | ($0.04    | ) | ($0.48      | ) | $0.03    

|   | Due to net losses incurred in 2003 and 2002, stock
        options and share purchase warrants outstanding were not included in the
        computation of diluted loss per share as the inclusion of such securities
        would be antidilutive in those years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|f) | New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | In January 2003, the FASB issued FIN No. 46, "Consolidation
        of Variable Interest Entities, an Interpretation of ARB 51." The primary
        objectives of FIN No. 46 are to provide guidance on the identification
        of entities for which control is achieved through means other than voting
        rights (variable interest entities or "VIEs") and how to determine when
        and which business enterprise should consolidate the VIE. This new model
        for consolidation applies to an entity for which either: (1) the equity
        investors do not have a controlling financial interest; or (2) the equity
        investment at risk is insufficient to finance that entity's activities
        without receiving additional subordinated financial support from other
        parties. In addition, FIN No. 46 requires that both the primary beneficiary
        and all other enterprises with a significant variable interest in a VIE
        make additional disclosures. As amended in December 2003, the effective
        dates of FIN No. 46 for all non small business issuers are as follows:
        (a) For interests in special-purpose entities: periods ended after December
        15, 2003; and (b) For all VIEs created before January 31, 2003: periods
        ending after December 15, 2004 (c) For all VIEs created after January
        31, 2003, FIN No.46 is applicable immediately. The December 2003 amendment
        of FIN No. 46 also includes transition provisions that govern how an SBI
        which previously adopted the pronouncement (as it was originally issued)
        must account for consolidated VIEs.
|  
|   | The implementation of this new standard is not expected
        to have a material effect on the Company's financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

85

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Index to Exhibits

|Exhibit Reference | Exhibit Description                                                                                                              | Page Number
|----------------- | -------------------------------------------------------------------------------------------------------------------------------- | -----------
|1.1               | Articles of Continuance of the Registrant
      [1]                                                                              | N/A        
|1.2               | Certificate of Amendment of the Registrant
      [2]                                                                             | N/A        
|1.3               | 2003 Bylaws of the Registrant                                                                                                    | 87         
|2.1.1             | TSX-V listing application [3]                                                                                                    | N/A        
|2.1.2             | NZSX Prospectus and Investment Statement
      [4]                                                                               | N/A        
|4.1.1             | Asset Purchase Agreement between the
      Registrant and Trans-Orient Petroleum Ltd. [5]                                        | N/A        
|4.1.2             | Variation to Asset Purchase Agreement
      between the Registrant and Trans-Orient Petroleum Ltd. [6]                           | 104        
|4.1.3             | Warrant Amendment Agreement                                                                                                      | N/A        
|4.2               | Form of Stock Option Agreement for all
      vesting options granted to named directors and officers [7]                         | N/A        
|4.3               | Stock Option Agreement with David Bennett
      for performance vesting options [7]                                              | N/A        
|4.4               | Farm-out Agreement between the Registrant
      and Krystal Corporation Pte Ltd [7]                                              | N/A        
|4.5.1             | Form of Subscription Agreement between
      the Registrant, Indo-Pacific Energy (NZ) Limited and subscribers to
      IPENZ [7] | N/A        
|4.5.2             | Form of Share Exchange Agreement between the
      Registrant, Indo-Pacific Energy (NZ) Limited and subscribers to IPENZ         | 112        
|4.6               | Gas Pre-purchase and Option Agreement
      between the Registrant and NGC New Zealand Limited [7]                               | N/A        
|4.7.1             | Form of Asset Purchase Agreement 
      for each of PEP 38716, PEP 38728 and PEP 38716 [7]                                      | N/A        
|4.7.2             | Agreement for Sale & Purchase of
      Data and Shares in Bligh Oil & Minerals NZ Limited [7]                                    | N/A        
|4.8               | 2004 Share Option Plan                                                                                                           | 127        
|4.9.1             | Settlement agreement  GPAC                                                                                                      | 139        
|4.9.2             | Sale of PML 38148  GPAC                                                                                                         | 154        
|4.10              | Report of Reserves Form 51-101F1 [8]                                                                                             | N/A        
|4.11              | Form of Convertible note issued by the Registrant
      January 2004                                                             | 176        
|8                 | List of Subsidiaries of the Registrant                                                                                           | 200        
|11                | Code of Ethics [9]                                                                                                               | N/A        
|14.1              | Auditor's report for the fiscal years 2001
      and 2002 [7]                                                                    | N/A        
|14.2.1            | Change of auditor papers January 2004 [10]                                                                                       | N/A        
|14.2.2            | Change of auditor papers April 2004 [11]                                                                                         | N/A        
|31.1              | Section 302(a) Certification of CEO                                                                                              | 201        
|31.2              | Section 302(a) Certification of CFO                                                                                              | 202        
|32                | Section 906 Certifications                                                                                                       | 203        

86

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|[1]  | Incorporated by reference as previously included
        in Form 10-12G filed April 8, 1998.                         
|---- | ---------------------------------------------------------------------------------------------------------------------
|[2]  | Incorporated by reference as previously included
        in a Form 6-K filed December 31, 2003.                      
|[3]  | Incorporated by reference as previously included
        in a Form 6-K filed January 6, 2004.                        
|[4]  | Incorporated by reference as previously included
        in a Form 6-K filed November 28, 2003.                      
|[5]  | Incorporated by reference as previously included
        in our Form 8-K filed on April 13, 2000.                    
|[6]  | Incorporated by reference as previously included
        in our Form 20-F filed for the year ended December 31, 2001.
|[7]  | Incorporated by reference as previously included
        in our Form 20-F filed for the year ended December 31, 2002.
|[8]  | Incorporated by reference as previously included
        in a Form 6-K filed April 23, 2004.                         
|[9]  | Available on the Registrant's website at www.austral-pacific.com                                                     
|[10] | Incorporated by reference as previously included
        in a Form 6-K filed January 22, 2004.                       
|[11] | Incorporated by reference as previously included
        in a Form 6-K filed May 27, 2004.                           

87

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EXHIBIT 1.32003 BYLAWS OF THE REGISTRANT

2003 BY-LAWSTHE RESTATED BY-LAW RELATING GENERALLY TO THE TRANSACTION OF THE BUSINESS
  AND AFFAIRS OF AUSTRAL -PACIFIC ENERGY LTD. (FORMERLY INDO-PACIFIC ENERGY LTD.AND HEREIN THE "CORPORATION")

|CONTENTS | PAGE                                              
|-------- | --------------------------------------------------
|         |                                                   
|1)       | Interpretation                                    
|2)       | Business of the Corporation                       
|3)       | Borrowing and Securities                          
|4)       | Directors                                         
|5)       | Committees                                        
|6)       | Officers                                          
|7)       | Protection of Directors, Officers
      and Others
|8)       | Shares                                            
|9)       | Dividends and Rights                              
|10)      | Meetings of Shareholders                          
|11)      | Divisions and Departments                         
|12)      | Notices                                           

BE IT ENACTED as a By-Law of the Corporation as follows:

88

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Section One

INTERPRETATION

1.01 Definitions - in the By-Laws of the Corporation, unless the context
  otherwise requires:

"Act" means the Business Corporations Act (Yukon) and
  any statute that may be substituted therefore, as from time to time amended;
  marginal references to sections of the Act are not made for the purpose of modifying
  or affecting the meaning of any provision of this By-Law in any way but are
  inserted only for the purpose of directing attention to provisions of the Act
  which may be regarded as relevant;

"appoint" includes "elect" and vice versa;

"Articles" means the Articles attached to the Certificate
  of Continuance dated September 25, 1996 of the Corporation as from time to time
  amended or restated;

"Board" means the board of directors of the Corporation;

"By-Laws" means this By-Law and all other By-Laws of the Corporation
  from time to time in force and effect relating to transaction of business and
  affairs of the Corporation in addition hereto, or in amendment hereof or in
  substitution for all or any part of this By-Law;

"Corporation" means the Corporation incorporated by Certificate
  of Continuance under the Act and named Indo-Pacific Energy Ltd. to be renamed
  on December 31st, 2003, Austral Pacific Energy Ltd.;

"Meeting of Shareholders" includes an annual meeting of shareholders
  and a Special Meeting of Shareholders;

"non-business day" means Saturday, Sunday and any other day
  that is a holiday as defined in the Interpretation Act (Canada); or the
  Interpretation Act (Yukon);

"Prohibited Corporate Shareholder" means a corporation prohibited
  from holding shares in itself or its holding body corporate or a subsidiary
  corporation prohibited from holding shares in its parent corporation pursuant
  to the Act and not exempted from such prohibited shareholdings by virtue of
  the Act;

"recorded address" means in the case of a shareholder his
  address as recorded in the securities register; and in the case of joint shareholders
  the address appearing in the securities register in respect of such joint holdings
  determined under Section 8.10; and in the case of a director, officer, auditor
  or member of a committee of directors, his latest address as recorded in the
  records of the Corporation;

"Special Meeting of Shareholders" includes both a meeting
  of any class or classes acting separately from any other class or classes and
  also a meeting, other than an annual meeting, of all shareholders entitled to
  vote at any annual meeting of shareholders;

Words and expressions defined in the Act have the same meaning
  when used herein; and words importing the singular number include the plural
  and vice versa; words importing gender include the masculine, feminine and neuter
  genders; and words importing persons include individuals, bodies corporate,
  partnerships, trusts and unincorporated organizations.

Section Two

BUSINESS OF THE CORPORATION

2.01 Registered Office - Until changed in accordance
  with the Act, the registered office of the Corporation will be at the City of
  Whitehorse, in the Yukon Territory, and at such location therein as the Board
  may from time to time determine.

2.02 Corporate Seal - Until changed by the Board, the
  corporate seal of the Corporation and any facsimiles thereof adopted by the
  Board for use in jurisdictions outside the Yukon Territory will be in the form
  approved by the directors.

89

---

2.03 Financial Year - The financial year of the Corporation
  will end on the day in each year that is established by the Board.

2.04 Execution of Instruments - Deeds, transfers. assignments,
  contracts. obligations, certificates and other instruments required by law or
  otherwise by these By-Laws or any resolution of the Board or shareholders of
  the Corporation to be executed under corporate seal may be signed on behalf
  of the Corporation by anyone or two or more persons each of which is either
  a director of the Corporation or a person who holds the office of chief executive
  officer, chairman of the board, president, managing director, vice-president,
  secretary, treasurer, assistant secretary, assistant treasurer or any other
  office created by bylaw or by resolution of the Board. However. the Board may
  from time to time direct the manner in which and the person or persons by whom
  any particular instrument or class of instruments mayor will be signed or sealed.
  Any signing officer may affix the corporate seal to any instrument requiring
  the same.

2.05 Banking Arrangements - The banking business of
  the Corporation including the borrowing of money and the giving of security
  therefore, will be transacted with such banks, trust companies or other bodies
  corporate or organizations as may from time to time be designated by or under
  the authority of the Board. Such banking business or any part thereof will be
  transacted under such agreements, instructions and delegations of powers as
  the Board may from time to time by resolution prescribe or authorize.

2.06 Voting Rights in Other Bodies Corporate - The
  signing officers of the Corporation may execute and deliver proxies and arrange
  for the issuance of voting certificates or other evidence of the right to exercise
  the voting rights attaching to any securities held by the Corporation. Such
  instruments, certificates or other evidence will be in favour of such person
  or persons as may be determined by the officers executing such proxies or arranging
  for the issuance of voting certificates or such other evidence of the right
  to exercise such voting rights. In addition the Board may from time to time
  direct the manner in which and the person or persons by whom any particular
  voting rights or class of voting rights mayor will be exercised.

2.07 Withholding Information from Shareholders - Subject
  to the provisions of the Act, no shareholder will be entitled to discovery of
  any information respecting any details or conduct of the Corporation's business
  which, in the opinion of the Board, it would be inexpedient in the interests
  of the shareholders or the Corporation to communicate to the public. The Board
  may from time to time determine whether and to what extent and at what time
  and place and under what conditions or regulations the accounts, records and
  documents of the Corporation or any of them will be open to the inspection of
  shareholders and no shareholder will have any right of inspecting any account,
  record or document of the Corporation except as conferred by the Act or authorized
  by the Board or by resolution passed at a general meeting of shareholders.

Section Three

BORROWING AND SECURITIES

3.01 Borrowing Power - Without limiting the borrowing
  powers of the Corporation as set forth in the Act, the Board is authorized from
  time to time:

(b) to issue, re-issue, sell or pledge bonds, debentures,
    notes or other evidence of indebtedness or guarantees of the Corporation,
    whether secured or unsecured for such sums and at such prices as may be deemed
    expedient; (c) subject to the Act, to issue guarantees on behalf of
    the Corporation to secure the performance of the obligations of any person;
    and (d) to charge, mortgage, hypothecate, pledge or otherwise
    create a security interest in all or any currently owned or subsequently acquired
    real or personal, movable or immovable, property and undertaking of the Corporation,
    including book debts, rights, powers and franchises for the purpose of securing
    any such bonds, debentures, notes or other evidences of indebtedness or guarantee
    or any other present or future indebtedness or liability of the Corporation.


Nothing in this section limits or restricts the borrowing
  of money by the Corporation on bills of exchange or promissory notes made, drawn,
  accepted or endorsed by or on behalf of the Corporation.

90

---

3.02 Delegation of Borrowing Power - The Board may
  from time to time delegate to such one or more of the directors and officers
  of the Corporation as may be designated by the Board all or any of the powers
  conferred on the Board by section 3.01 to such extent and in such manner as
  the Board will determine at the time of each such delegation.

Section Four   DIRECTORS


4.01 Number of Directors and Quorum - Until changed
  in accordance with the Act, the Board will consist of not fewer than three and
  not more than eleven directors. Subject to section 4.07, the Articles and the
  Act the quorum for the transaction of business at any meeting of the Board will
  consist of a majority of the directors or such lesser number of directors as
  the Board may from time to time determine.

4.02 Qualification - No person will be qualified for
  election as a director if he is less than 19 years of age; if he is of unsound
  mind and has been so found by a court in Canada or elsewhere; if he is not an
  individual; or if he has the status of a bankrupt. A director need not be a
  shareholder.

4.03 Election and Term - Each director named in the
  notice of directors filed at the time of continuance will hold office from the
  date of the Certificate of Continuance until the first meeting of shareholders
  thereafter. An election of directors will take place at such first meeting of
  shareholders and at each annual meeting of shareholders thereafter and all the
  directors then in office will retire but, if qualified, will be eligible for
  reelection. A director will retain office only until the election of his successor.
  The number of directors to be elected at any such meeting will be the number
  of directors then in office unless the directors or the shareholders otherwise
  determine. The election will be by ordinary resolution of the shareholders.
  If an election of directors is not held at the proper time, the incumbent directors
  will continue in office until their successors are elected.

4.04 Removal of Directors - Subject to the provisions
  of the Act, the shareholders may by ordinary resolution passed at a special
  meeting remove any director from office and the vacancy created by such removal
  may be filled at the same meeting failing which it may be filled by the directors.

4.05 Vacation of Office - A director ceases to hold
  office when: he dies; he is removed from office by the shareholders; he ceases
  to be qualified for election as a director; or his written resignation is sent
  or delivered to the Corporation, or if a time is specified in such resignation,
  at the time so specified, whichever is later.

4.06 Vacancies - Subject to the Act and the Articles,
  a quorum of the Board may fill a vacancy in the Board, except a vacancy resulting
  from an increase in the minimum number of directors or from a failure of the
  shareholders to elect the minimum number of directors and if the Articles so
  provide, may also add to their numbers and appoint additional director(s) in
  accordance with the Act, but so that the total number of directors will not
  exceed the maximum number fixed by section 4.01. In the absence of a quorum
  of the Board, or if the vacancy has arisen from a failure of the shareholders
  to elect the minimum number of directors the Board will forthwith call a special
  meeting of the shareholders to fill the vacancy. If the Board fails to call
  such meeting or if there are no such directors then in office. any shareholder
  may call the meeting.

4.07 Action by the Board - The Board will manage the
  business and affairs of the Corporation. The powers of the Board may be exercised
  by resolution passed at a meeting at which a quorum is present or by resolution
  in writing, whether by document, telegram, telecopy or any method of transmitting
  legibly recorded messages or other means, signed by all the directors entitled
  to vote on that resolution at a meeting of the Board and any resolution in writing
  so signed will be as valid as if it had been passed at a meeting of directors
  or a committee of directors and will be held to relate to any date therein stated
  to be the effective date thereof, and a copy of every such resolution in writing
  will be kept with the minutes of the proceedings of directors or committee of
  directors. Where there is a vacancy in the Board, the remaining directors may
  exercise all the powers of the Board so long as a quorum remains in office.
  Where the Corporation has only one director, that director may constitute a
  meeting. An act of a director is valid notwithstanding any irregularity in his
  election or appointment or a defect in his qualifications.

4.08 Meetings by Telephone - A director may participate
  in a meeting of the Board or of a committee of directors by means of such telephone
  or other communications facilities as permit all persons participating in the
  meeting to hear each other, and a director participating in such a meeting by
  such means is deemed to be present at the meeting. Any such consent will be
  effective whether given before or after the meeting to which it

91

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relates and may be given with respect to all meetings of the
  Board and of committees of directors held while a director holds office.

4.09 Place of Meeting- Meetings of the Board may be
  held at any place in or outside Canada.

4.10 Calling of Meetings- Meetings of the Board
  will be held from time to time and at such place as the Board may determine.
  In addition, each of the chairman of the board, the managing directors, the
  president or any two directors may convene or direct the convening of a meeting
  of the Board.

4.11 Notice of Meeting - Except as otherwise provided
  in section 4.12, notice of the time and place of each meeting of the Board will
  be given in the manner provided in section 12.01 to each director not less than
  48 hours before the time when the meeting is to be held. A notice of a meeting
  of directors need not specify the purpose of or the business to be transacted
  at the meeting except where section 115(3) of the Act requires such purpose
  or business to be specified, including any proposal to:

| | (a) | submit to the shareholders any question or matter requiring approval
      of the shareholders;
| | --- | -----------------------------------------------------------------------------------------------
|
| | (b) | fill a vacancy among the directors or in the office of auditor;                                
|
| | (c) | issue securities;                                                                              
|
| | (d) | declare dividends;                                                                             
|
| | (e) | purchase, redeem, or otherwise acquire shares of the Corporation;                              
|
| | (f) | pay a commission for the sale of shares;                                                       
|
| | (g) | approve a management proxy circular;                                                           
|
| | (h) | approve any annual financial statements; or                                                    
|
| | (i) | adopt, amend or repeal By-Laws.                                                                

A director may in any manner waive notice of or otherwise
  consent to a meeting of the Board either before or after the convening of the
  meeting.

4.12 Regular Meetings - The Board may by resolution
  appoint a day or days in any month or months for regular meetings of the Board
  at a place and hour to be named in the resolution. No notice will be required
  for any such regular meeting.

4.13 First Meeting of New Board - Provided a quorum
  of directors is present, each newly elected Board may without notice hold its
  first meeting immediately following the meeting of shareholders at which such
  Board or portion thereof is elected.

4.14 Adjourned Meeting- Notice of an adjourned meeting
  of the Board is not required if the time and place of the adjourned meeting
  is announced at the original meeting.

4.15 Chairman- The chairman of any meeting of the
  Board will be the first mentioned of such of the following officers as have
  been appointed and who is a director and is present at the meeting: chairman
  of the board, managing director, president, or a vice-president who is a director.
  If no such officer is present, the directors present will choose one of their
  number to be chairman.

4.16 Votes to Govern- At all meetings of the Board
  every question will be decided by a majority of the votes cast on the question.
  In cases of an equality of votes the chairman of the meeting will not be entitled
  to a second or casting vote.

4.17 Conflict of Interest- A director or officer who
  is a party to, or who is a director or officer of or has a material interest
  in any person who is a party to, a material contract or proposed material contract
  with the Corporation will disclose the nature and extent of his interest at
  the time and in the manner provided by the Act. Any such contract or proposed
  contract will be referred to the Board or shareholders for approval even if
  such contract is one that in the ordinary course of the Corporation's business
  would not require approval by the Board or shareholders, and a director interested
  in a contract so referred to the Board will not vote on any resolution to approve
  the same except as provided by the Act.

92

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4.18 Remuneration and Expenses- The directors will
  be paid such remuneration for their services as the Board may from time to time
  determine. The directors will also be entitled to be reimbursed for travelling
  and other expenses properly incurred by them in attending meetings of the Board
  or any committee thereof. Nothing herein contained will preclude any director
  from serving the Corporation in any other capacity and receiving remuneration
  therefore.

4.19 Alternate Director (a) Any director (the "Appointor")
  may from time to time by written notice to the Corporation appoint any person
  (the "Appointee") to be his alternate director provided that the directors approve
  of such appointment by resolution. Such approval will not be required if a director
  is appointed alternate director for another director. A person, including a
  director, may be appointed as an alternate director by more than one director.

|(b) | The Appointee while
        he holds office as an alternate director will be entitled and authorized:
|--- | -----------------------------------------------------------------------------------------------------
|   
|    | (i)                                                                                                  
|   

| | (ii)  | to attend and vote as a director at meetings of
        the directors in the absence of the Appointor;                       
| | ----- | -----------------------------------------------------------------------------------------------------------------------------
|
| | (iii) | to attend and vote at meetings of all committees
        of which the Appointor is a member, in the absence of the Appointor;
|

|    | (v)                                                                                                                                                                                                                                                                                                                                                                                                                                            | if expressly so authorized by the Appointor in the
        instrument appointing the Appointee, to execute all documents, instruments
        and writings under the seal of the Corporation or otherwise which the
        Appointor is authorized to execute on behalf of the Corporation, in substitution
        for the Appointor,
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | and for the purposes thereof the Appointee will
      be deemed to be a director. He will not be deemed to be the agent of the
      Appointor.                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(c) | The Appointee will have
        a separate vote on behalf of each director for whom he is an alternate
        director. If the Appointee is also a director, the Appointee will be counted
        separately in determining the quorum of a meeting and will have a separate
        vote on behalf of each director for whom he is an alternate director in
        addition to being so counted and voting in his own right as a director.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                        
|(d) | The Appointee will not be entitled to be remunerated
      as an alternate director otherwise than out of the remuneration of the Appointor.                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                        
|(e) | No person will act as an alternate director unless
      he qualifies under the Act to act as a director of the Corporation and has
      consented in writing to his appointment.                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                        

|(f) | An Appointee's appointment as an alternate director will terminate
      if:
|--- | ----------------------------------------------------------------------------
|   
|    | (i)                                                                         
|   
|    | (ii)                                                                        
|   
|    | (iii)                                                                       
|   
|    | (iv)                                                                        
|   
|    | (v)                                                                         
|   
|(g) |                                                                             
|   

Section Five COMMITTEES 
  5.01 Committee of Directors

93

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(a) The Board may appoint one or more committees of directors,
  however designated, and delegate to such committee any of the powers of the
  Board except those which, under the Act, a committee of directors has no authority
  to exercise.

(b) The directors may by resolution appoint an executive committee
  to consist of such member or members of their body as they think fit, which
  committee will have, and may exercise during the intervals between the meetings
  of the Board, all the powers vested in the Board except the power to fill vacancies
  in the Board, the power to change the membership of, or fill vacancies in, such
  committee or any other committee of the Board and such other powers, if any,
  as may be specified in the resolution. The committee will keep regular minutes
  of its transactions and will cause them to be recorded in books kept for that
  purpose, and will report the same to the Board at such times as the Board may
  from time to time require. The Board will have the power at any time to revoke
  or override the authority given. to or acts done by the executive committee
  except as to acts done before such revocation or overriding and to terminate
  the appointment or change the membership of such committee and to fill vacancies
  in it. The executive committee may make rules for the conduct of its business
  and may appoint such assistants as it may deem necessary. A majority of the
  members of a committee will constitute a quorum thereof.

(c) The directors may from time to time by resolution constitute,
  dissolve or reconstitute standing committees and other committees consisting
  of such persons as the Board may determine. Every committee constituted by the
  Board will have the powers, authorities and discretions delegated to it by the
  Board (which will not include the power to fill vacancies in the Board and the
  power to change the membership of or fill vacancies in any committee constituted
  by the Board or the power to appoint or remove officers appointed by the Board)
  and will conform to the regulations which may from time to time be imposed upon
  it by the Board.

(d) The executive committee and any other committee may meet
  and adjourn as it thinks proper. Questions arising at any meeting will be determined
  by a majority of votes of the members of the committee present, and in case
  of an equality of votes the chairman will not have a second or casting vote.
  A resolution approved in writing by all the members of the executive committee
  or any other committee will be as valid and effective as if it had been passed
  at a meeting of such committee duly called and constituted. Such resolution
  may be in two or more counterparts which together will be deemed to constitute
  one resolution in writing. Such resolution will be filed with the minutes of
  the proceedings of the committee and will be effective on the date stated thereon
  or on the latest date stated in any counterpart.

5.02 Transaction of Business - Subject to the provisions
  of section 4.07, the powers of a committee of directors may be exercised by
  a meeting at which a quorum is present or by resolution in writing signed by
  all the members of such committee who would have been entitled to vote on that
  resolution at a meeting of the committee. Meetings of such committee may be
  held at any place in or outside Canada.

5.03 Audit Committee - When required by the Act, the
  Board will, and at any other time the Board may, elect annually from among its
  number an audit committee to be composed of not fewer than three directors of
  whom a majority will not be officers or employees of the Corporation or its
  affiliates. The audit committee will have the powers and duties provided in
  the Act.

5.04 Procedure - Unless otherwise determined by the
  Board, each committee of directors will have the power to fix its quorum at
  not less than a majority of its members, to elect its chairman and to regulate
  its procedure.

Section SixOFFICERS 6.01 Appointment - The Board may from time to time appoint a president,
    chief executive officer, one or more vice-presidents (to which title may be
    added words indicating seniority or function), a secretary, a treasurer and
    such other officers as the Board may determine, including one or more assistants
    to any of the officers so appointed. The Board may specify the duties of and,
    in accordance with this By-Law and subject to the provisions of the Act, delegate
    to such officers powers to manage the business and affairs of the Corporation.
    Subject to sections 6.02 and 6.03, an officer may but need not be a director
    and one person may hold more than one office. 94


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6.02 Chairman of the Board - The Board may from time
  to time also appoint a chairman of the board who will be a director. The chairman
  of the board will, when present, preside at all meetings of the Board, committees
  of directors and at all meetings of shareholders. In addition, the Board may
  assign to him any of the powers and duties that may by the provisions of this
  by-law be assigned to the managing director or to the president; and he will
  have such other powers and duties as the Board may specify.

6.03 Managing Director or Chief Executive Officer -
  The Board may from time to time appoint a managing director who will be a director,
  or a chief executive officer who need not be a director. Subject to the authority
  of the Board, he will have general supervision of the business and affairs of
  the Corporation; and he will, subject to the provisions of the Act, have such
  other powers and duties as the Board may specify. During the absence or disability
  of the president, or if no president has been appointed, the managing director
  or chief executive officer will also have the powers and duties of the president's
  office.

6.04 President - The Board, from time to time, may
  appoint a president. The president, in the absence or non-appointment of the
  chairman of the board, will preside at meetings of the Board and at all meetings
  of the shareholders. He will have general and active management of the business
  and affairs of the Corporation, and without limitation to the foregoing:

| | (a) | he will have general supervision and direction of all the other officers
      of the Corporation;                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) | he will submit the annual report of the Board, if
        any, and the annual balance sheets and financial statements of the business
        and affairs and reports on the financial position of the Corporation as
        required by the statutes to the annual general meeting and from time to
        time will report to the Board on all matters within his knowledge which
        the interest of the Corporation requires to be brought to their attention;
        and
|
| | (c) | he will be ex-officio a member of all standing committees.                                                                                                                                                                                                                                                                                                                                                                                                                          

6.05 Vice-President- A vice-president will have
  such powers and duties as the Board may specify.

6.06 Secretary- The secretary will attend and be the
  secretary of all meetings of the Board, shareholders and committees of the Board
  and will enter or cause to be entered in records kept for that purpose minutes
  of all proceedings thereatand will give or cause to be given, as and when instructed,
  all notices to shareholders, directors, officers, the auditor and members of
  the committees of directors. The Secretary will be the custodian of the stamp
  or mechanical device generally used for affixing the corporate seal of the Corporation
  and of all books, papers, records, documents and instruments belonging to the
  Corporation, except when some other officer or agent has been appointed for
  that purpose, will have such other powers and duties as the Board may specify.

6.07 Treasurer - The treasurer will keep proper accounting
  records in compliance with the Act and will be responsible for the deposit of
  money, the safekeeping of securities and the disbursement of the funds of the
  Corporation; he will render to the Board whenever required an account of all
  his transactions as treasurer and of the financial position of the Corporation;
  and he will have such other powers and duties as the Board may specify.

6.08 Powers and Duties of Other Officers - The powers
  and duties of all other officers will be such as the terms of their engagement
  call for or as the Board or the chief executive officer may specify. Any of
  the powers and duties of an officer to whom an assistant has been appointed
  may be exercised and performed by such assistant, unless the Board otherwise
  directs.

6.09 Variation of Powers and Duties - The Board may
  from time to time and subject to the provisions of the Act, vary, add to or
  limit the powers and duties of any officer.

6.10 Term of Office - The Board, in its discretion,
  may remove any officer of the Corporation, without prejudice to such officer's
  rights under any employment contract, otherwise each officer appointed by the
  Board will hold office until the earlier of the date his resignation becomes
  effective, the date his successor is appointed or he ceases to be qualified
  for that office.

6.11 Terms of Employment and Remuneration - The terms
  of employment and the remuneration of officers appointed by the Board will be
  settled by it from time to time.

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6.12 Conflict of Interest - An officer will disclose
  his interest in any material contract or proposed material contract with the
  Corporation in accordance with section 4.17.

6.13 Agents and Attorneys - The Board will have power
  from time to time to appoint agents or attorneys for the Corporation in or outside
  of Canada with such powers of management or otherwise, including the power to
  sub-delegate, as may be thought fit.

6.14 Fidelity Bonds - The Board may require such officers,
  employees and agents of the Corporation as the Board deems advisable to furnish
  bonds for the faithful discharge of their powers and duties, in such form and
  with such surety as the Board may from time to time determine.

Section Seven


PROTECTION OF DIRECTORS. OFFICERS AND OTHERS

7.01 Limitation of Liability - No director will be
  liable for the acts, receipts, neglects or defaults of any other director or
  officer or employee, or for joining in any receipt or other act for conformity,
  or for any loss, damage or expense happening to the Corporation through the
  insufficiency or deficiency of title to any property acquired for or on behalf
  of the Corporation, or for the insufficiency or deficiency of any security in
  or upon which any of the moneys of the Corporation will be invested, or for
  any loss or damage arising from the bankruptcy, insolvency or tortious acts
  of any person with whom any of the moneys, securities or effects of the Corporation
  will be deposited, or for any loss occasioned by any error of judgment or oversight
  on his part, or for any other loss, damage or misfortune whatever which will
  happen in the execution of the duties of his office or in relation thereto,
  unless the same are occasioned by his own wilful neglect or default; provided
  that nothing herein will relieve any director or officer from the duty to act
  in accordance with the Act and the regulations thereunder or from liability
  for any breach thereof.

7.02 Indemnity - Subject to the limitations contained
  in the Act, and to the extent he is otherwise fairly and reasonably entitled
  thereto, the Corporation will indemnify a director or officer, a former director
  or officer, or a person who acts or acted at the Corporation's request as a
  director or officer of a body corporate of which the Corporation is or was a
  shareholder or creditor (or a person who undertakes or has undertaken any liability
  on behalf of the Corporation or any such body corporate) and his heirs and legal
  representatives, against all costs, charges and expenses, including an amount
  paid to settle an action or satisfy a judgment, reasonably incurred by him in
  respect of any civil, criminal or administrative action or proceeding to which
  he is made a party by reason of being or having been a director or officer of
  the Corporation or such body corporate, if:

| | (a) | he acted honestly and in good faith with a view
        to the best interests of the Corporation; and                                                                                        
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) | in the case of a criminal or administrative action
        or proceeding that is enforced by a monetary penalty, he had reasonable
        grounds for believing that his conduct was lawful.
|

7.03 Insurance - Subject to the limitations contained
  in the Act, the Corporation may purchase and maintain such insurance for the
  benefit of its directors and officers as such, as the Board may from time to
  time determine.

Section Eight   SHARES


8.01 Allotment and Issue - The Board may from time
  to time allot, or grant options to purchase the whole or any part of the authorized
  and unissued shares of the Corporation at such times and to such persons and
  for such consideration as the Board will determine, provided that no share will
  be issued until it is fully paid as prescribed by the Act. Subject to the Articles,
  no holder of any class of share of the capital of the Corporation will be entitled
  as of right to subscribe for, purchase or receive any part of any new or additional
  issue of shares of any class, or any bonds, debentures or other securities convertible
  into shares of any class.

8.02 Commissions - The Board may from time to time
  authorize the Corporation to pay a reasonable commission to any person in consideration
  of his purchasing or agreeing to purchase shares of the Corporation, whether
  from the Corporation or from any other person, or procuring or agreeing to procure
  purchasers for any such shares.

8.03 Registration of Transfer

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(a) Subject to the provisions of the Act, no transfer of shares
  will be registered in a securities register except upon presentation of the
  certificate representing such shares with a transfer endorsed thereon or delivered
  therewith duly executed by the registered holder or by his attorney or successor
  duly appointed, together with such reasonable assurance or evidence of signature,
  identification and authority to transfer as the Board may from time to time
  prescribe, upon payment of all applicable taxes and any fees prescribed by the
  Board, upon compliance with such restrictions on transfer, if any, as are authorized
  by the Articles, and upon satisfaction of any lien referred to in section 8.05.

(b) The signature of the registered owner of any shares, or
  of his duly authorized attorney, upon an authorized instrument of transfer will
  constitute a complete and sufficient authority to the Corporation, its directors,
  officers and agents to register, in the name of the transferee as named in the
  instrument of transfer, the number of shares specified therein or, if no number
  is specified, all the shares of the registered owner represented by share certificates
  deposited with the instrument of transfer. If no transferee is named in the
  instrument of transfer, the instrument of transfer will constitute a complete
  and sufficient authority to the corporation, its directors, officers and agents
  to register, in the name of the person in whose behalf any certificate for the
  shares to be transferred is deposited with the Corporation for the purpose of
  having the transfer registered, the number of shares specified in the instrument
  of transfer or, if no number is specified, all the shares represented by all
  share certificates deposited with the instrument of transfer.

(c) Neither the Corporation nor any director, officer or agent
  thereof will be bound to inquire into the title of the person named in the form
  of transfer as transferee, or, if no person is named therein as transferee,
  of the person on whose behalf the certificate is deposited with the Corporation
  for the purpose of having the transfer registered or be liable to any claim
  by such registered owner or by any intermediate owner or holder of the certificate
  or of any of the shares represented thereby or any interest therein for registering
  the transfer, and the transfer, when registered, will confer upon the person
  in whose name the shares have been registered a valid title to such shares.

(d) Every instrument of transfer will be executed by the transferor
  and left at the registered office of the Corporation or at the office of its
  transfer agent or branch transfer agent or registrar for registration together
  with the share certificate for the shares to be transferred and such other evidence
  if any, as the directors or the transfer agent or branch transfer agent or registrar
  or branch registrar may require to prove the title of the transferor or his
  right to transfer the shares and the right of the transferee to have the transfer
  registered. All instruments of transfer where the transfer is registered will
  be retained by the Corporation or its transfer agent or branch transfer agent
  or registrar or branch\registrar and any instrument of transfer, where the transfer
  is not registered, will be returned to the person depositing the same together
  with the share certificate which accompanied the same when tendered for registration.

(e) There will be paid to the Corporation in respect of the
  registration of any transfer such sum, if any, as the directors may from time
  to time determine.

8.04 Transfer Agents and Registrars - The Board may
  from time to time appoint a registrar to maintain the securities register and
  a transfer agent to maintain the register of transfers and may also appoint
  one or more branch registrars to maintain branch securities registers and one
  or more branch transfer agents to maintain branch registers of transfer, but
  one person may be appointed both registrar and transfer agent. The Board may
  at any time terminate any such appointment.

8.05 Lien for Indebtedness - If the Articles provide
  that the Corporation will have a lien on shares registered in the name of a
  Shareholder indebted to the Corporation, such lien may be enforced, subject
  to any other provision of the Articles, by the sale of the shares thereby affected
  or by any other action, suit, remedy or proceeding authorized or permitted by
  law or by equity and, pending such enforcement, may refuse to register a transfer
  of the whole or any part of such shares.

8.06 Non-Recognition of Trusts - Subject to the provisions
  of the Act, the Corporation will treat as absolute owner of the share the person
  in whose name the share is registered in the securities register as if that
  person had full legal capacity and authority to exercise all rights of ownership,
  regardless of any indication to the contrary through knowledge or notice or
  description in the Corporation's records or on the share certificate.

8.07 Share Certificates - Every holder of one or more
  shares of the Corporation will be entitled, at his option, to a share certificate,
  or to a non-transferable written acknowledgement of his right to obtain a share
  certificate, stating the number and list or series of shares held by him as
  shown on the securities register.

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Share certificates and acknowledgements of a Shareholder's
  right to a share certificate, respectively, will be in such form as the Board
  will from time to time approve. Any share certificate will be signed in accordance
  with section 2.04 and need not be under the corporate seal; provided that, unless
  the Board otherwise determines, certificates representing shares in respect
  of which a transfer agent or registrar has been appointed will not be valid
  unless countersigned by or on behalf of such transfer agent or registrar. The
  signature of one of the signing officers or, in the case of share certificates
  which are not valid unless countersigned by or on behalf of a transfer agent
  or registrar. the signatures of both signing officers, may be printed or mechanically
  reproduced in facsimile upon share certificates and every such facsimile signature
  will for all purposes be deemed to be the signature of the officer whose signature
  it reproduces and will be binding upon the Corporation. A share certificate
  executed as aforesaid will be valid notwithstanding that one or both of the
  officers whose facsimile signature appears thereon no longer holds office at
  the date of issue of the certificate.

8.08 Use of Electronic Shares Permitted - Any shareholder
  requesting same is entitled to receive a physical share certificate which complies
  with the requirements of the Act. Absent such specific requests however, the
  Corporation may make use of electronic forms of shares and other securities
  of the Corporation which also comply with the requirements of the relevant securities
  regulatory authorities having jurisdiction over the Corporation and providing
  that such electronic form of shares and other securities also complies with
  the requirements of the depositary, clearing, and brokerage associations insofar
  as maintaining a book based system for recording changes in the Corporation's
  share and other securities registers is concerned.

8.09 Replacement of Share Certificates - The Board
  or any officer or agent designated by the Board may in its or his discretion
  direct the issue of a new share certificate in lieu of and upon cancellation
  of a share certificate that has been mutilated or in substitution for a share
  certificate claimed to have been lost, destroyed or wrongfully taken or which
  does not comply as to form with the requirements from time to time of the Act
  in this regard, on payment of such fee as the Board may direct and on such terms
  as to indemnity, reimbursement of expenses and evidence of loss and of title
  as the Board may from time to time prescribe, whether generally or in any particular
  case.

8.10 Joint Shareholders - If two or more persons are
  registered as joint holders of any share, the Corporation will not be bound
  to issue more than one certificate in respect thereof, and delivery of such
  certificate to one of such persons will be sufficient delivery to all of them.
  Anyone of such persons may give effectual receipts for the certificate issued
  in respect thereof or for any dividend, bonus, return of capital or other money
  payable or warrant issuable in respect of such share. Joint shareholders may
  collectively designate in writing an address as their recorded address for service
  of notice and payment of dividends but in default of such designation the address
  of the first named joint shareholder will be deemed to be the recorded address
  aforesaid.

8.11 Deceased Shareholders - In the event of the death
  of a holder, or of one of the joint holders, of any share. the Corporation will
  not be required to make any entry in the securities register in respect thereof
  or to make payment of any dividends thereon except upon production of all such
  documents as may be required by law and upon compliance with the reasonable
  requirements of the Corporation and its transfer agents.

Section Nine   DIVIDENDS AND RIGHTS


9.01 Dividends - Subject to the provisions of the Act,
  the Board may from time to time declare dividends payable to the shareholders
  according to their respective rights and interest in the Corporation. Dividends
  may be paid in money or property or by issuing fully paid shares of the Corporation.

9.02 Dividend Cheques - A dividend payable in cash
  will be paid by cheque drawn on the Corporation's bankers or one of them to
  the order of each registered holder of shares of the class or series in respect
  of which it has been declared and mailed by prepaid ordinary mail to such registered
  holder at his recorded address, unless such holder otherwise directs. In the
  case of joint holders the cheque will, unless such joint holders otherwise direct,
  be made payable to the order of all of such joint holders and mailed to them
  at their recorded address. The mailing of such cheque as aforesaid, unless the
  same is not paid on due presentation, will satisfy and discharge the liability
  for the dividend to the extent of the sum represented thereby plus the amount
  of any tax which the Corporation is required to and does withhold.

9.03 Non-Receipt of Cheques - In the event of non-receipt
  of any dividend cheque by the person to whom it is sent as aforesaid, the Corporation
  will issue to such person a replacement cheque for a like amount on such

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terms as to indemnity, reimbursement of expenses and evidence
  of non-receipt and of title as the Board may from time to time prescribe, whether
  generally or in any particular case.

9.04 Record Date for Dividends and Rights - The Board
  may fix in advance a date, preceding by not more than 50 days the date for the
  payment of any dividend or the date for the issue of any warrant or other evidence
  of right to subscribe for securities of the Corporation, as a record date for
  the determination of the persons entitled to receive payment of such dividend
  or to exercise the right to subscribe for such securities, provided that, where
  the Corporation is a distributing corporation for purposes of the Act, notice
  of any such record date is given not less than seven days before such record
  date by newspaper advertisement and otherwise in the manner provided in the
  Act. Where no record date is fixed in advance as aforesaid, the record date
  for the determination of the persons entitled to receive payment of any dividend
  or to exercise the right to subscribe for securities of the Corporation will
  be at the close of business on the day on which the resolution relating to such
  dividend or right to subscribe is passed by the Board.

9.05 Unclaimed Dividends - Any dividend unclaimed after
  a period of six years from the date on which the same has been declared to be
  payable will be forfeited and will revert to the Corporation.

Section Ten

MEETINGS OF SHAREHOLDERS

10.01 Annual Meetings - The annual meeting of shareholders
  will be held at such time in each year and, subject to the Act and to section
  10.04, at such place as the Board, the chairman of the board, the managing director
  or the president may from time to time determine, for the purpose of considering
  the financial statements and reports required by the Act to be placed before
  the annual meeting, electing directors, appointing auditors and for the transaction
  of such other business as may properly be brought before the meeting.

10.02 Special Meetings - The Board, the chairman of
  the board, the managing director or the president will have power to call a
  special meeting of shareholders at any time.

10.03 Special Business - All business transacted at
  a special meeting of shareholders and all business transacted at an annual meeting
  of shareholders, except consideration of the financial statements, auditors
  reports, election of directors and reappointment of the incumbent auditors,
  is deemed to be special business.

10.04 Place of Meeting - Subject to the Articles, meetings
  of shareholders may be held at Vancouver, British Columbia or such other place
  or places as the directors in their absolute discretion may determine from time
  to time.

10.05 Notice of Meeting - Notice of the time and place
  of each meeting of shareholders will be given in the manner provided in section
  12.01 not less than twenty-one nor more than fifty days before the date of the
  meeting to each director, to the auditor and to each shareholder who at the
  close of business on the record date, if any, for notice is entered in the securities
  register as the holder of one or more shares carrying the right to vote at the
  meeting. Notice of a meeting of shareholders called for any purpose other than
  consideration of the financial statements and auditor's report, election of
  directors and re-appointment of the incumbent auditor will state the nature
  of such business in sufficient detail to permit the shareholder to form a reasoned
  judgment thereon and will state the text of any special resolution to be submitted
  to the meeting. A shareholder and any other person entitled to attend a meeting
  of shareholders may in any manner waive notice of or otherwise consent to a
  meeting of shareholders.

10.06 List of Shareholders Entitled to Notice - For
  every meeting of shareholders, at any time that the Corporation has more than
  fifteen shareholders entitled to vote at a meeting of shareholders, the Corporation
  will prepare a list of shareholders entitled to receive notice of the meeting,
  arranged in alphabetical order and showing the number of shares entitled to
  vote at the meeting held by each shareholder. If a record date for the meeting
  is fixed pursuant to section 10.07 the shareholders listed will be those registered
  or constructively registered pursuant to the Act at the close of business of
  the record date, such list to be prepared on a day not later than ten days after
  such record date. If no record date is fixed, the list of shareholders will
  be prepared no later than at the close of business on the day immediately preceding
  the day on which notice of the meeting is given, or where no such notice is
  given, the day on which the meeting is held. The list will be available for
  examination by any shareholder during usual business hours at the records office
  of the Corporation or at the place where the central securities register is
  kept and at the place where the meeting is held.

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10.07 Record Date for Notice - The Board may fix in
  advance a record date, preceding the date of any meeting of Shareholders by
  not more than fifty days and not less than twenty-one days for the determination
  of the shareholders entitled to notice of the meeting, provided that notice
  of any such record date is given, not less than seven days before such record
  date, by newspaper advertisement in the manner provided in the Act. If no record
  date is so fixed, the record date for the determination of the shareholders
  entitled to notice of the meeting will be the close of business on the day immediately
  preceding the day on which the notice is given, or if no notice is given, the
  day on which the meeting is held.

10.08 Meetings Without Notice - A meeting of shareholders
  may be held without notice at any time and place permitted by the Act:

| | (a) if all the shareholders entitled to vote thereat are present in person
      or represented by proxy or if those not present or represented by proxy
      waive notice of or otherwise consented to such meeting being held, and
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                      
| | (b) if the auditor and the directors are present or waived notice of or
      otherwise consent to such meeting being held.                                                                                                          

At such meeting any business may be transacted which the Corporation
  at a meeting of shareholders may transact. If the meeting is held at a place
  outside the Yukon Territory, shareholders not present or represented by proxy,
  but who have waived notice of or otherwise consented to such meeting, will also
  be deemed to have consented to the meeting being held at such place.

10.09 Meetings by Telephone - If a majority of the
  shareholders consent, a shareholder may participate in a meeting of shareholders
  by means of such telephone or other communications facilities as permit all
  persons participating in the meeting to hear each other, and a shareholder participating
  in such a meeting by such consent will be effective whether given before or
  after the meeting to which it relates.

10.10 Chairman, Secretary and Scrutineers - The chairman
  of any meeting of shareholders will be the first mentioned of such of the following
  officers as having been appointed and who is present at the meeting: chairman
  of the board, president, managing director, or a vice-president. If no such
  officer is present within fifteen minutes from the time fixed for holding the
  meeting, the persons present and entitled to vote will choose one of their number
  to be chairman. If the secretary of the Corporation is absent or otherwise declines
  to act, the chairman will appoint some person, who need not be a shareholder,
  to act as secretary of the meeting. If desired, one or more scrutineers, who
  need not be shareholders, may be appointed by a resolution or by the chairman
  with the consent of the meeting.

10.11 Persons Entitled to be Present - The only persons
  entitled to be present at a meeting of shareholders will be those entitled to
  vote thereat, the directors and auditor of the Corporation and others who, although
  not entitled to vote, are entitled or required under any provision of the Act
  or the Articles or By-Laws to be present at the meeting. Any other person may
  be admitted only on the invitation of the chairman of the meeting or with the
  consent of the meeting.

10.12 Quorum - Save as herein otherwise provided, a
  quorum will be two shareholders or proxyholders present representing a minimum
  of five percent of the issued voting shares in the Corporation. If there is
  only one shareholder, the quorum is one person present and being, or representing
  by proxy, such shareholder. The directors, the secretary or, in his absence,
  an assistant secretary, and the solicitor of the Corporation will be entitled
  to attend at any general meeting but no such person will be counted in the quorum
  or be entitled to vote at any general meeting unless he is a shareholder or
  proxyholder entitled to vote thereat. If a quorum is present at the opening
  of any meeting of shareholders, the shareholders present or represented by proxy
  may proceed with the business of the meeting notwithstanding that a quorum is
  not present throughout the meeting.

10.13 Right to Vote - Record Date for Voting - Subject
  to the provisions of the Act as to authorized representative of any other body
  corporate, at any meeting of shareholders in respect of which the Corporation
  has prepared the list referred to in section 10.06, every person who is named
  in such list will be entitled to vote the shares shown thereon opposite his
  name except, where the Corporation has fixed a record date in respect of such
  meeting pursuant to section 10.07, to the extent that such person has transferred
  any of his shares after such record date and the transferee, upon producing
  properly endorsed certificates evidencing such shares or otherwise establishing
  that he owns such shares, demands not later than ten days before the meeting
  that his name be included in such list, in which event the transferee alone
  will be entitled to vote the

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transferred shares at the meeting. Where no record date for
  notice has been fixed and no notice of meeting given, or in the absence of a
  list prepared as aforesaid in respect of a meeting of shareholders, every person
  will be entitled to vote at the meeting who at the time is entered in the securities
  register as the holder of one or more shares carrying the right to vote at such
  meeting.

Proxies


(a) Every shareholder entitled to vote at a meeting of shareholders,
  may appoint a proxyholder, or one or more alternate proxyholders, who need not
  be shareholders, to attend and act at the meeting in the manner and to the extent
  authorized and with the authority conferred by the proxy. A proxy will be in
  writing executed by the shareholder or his attorney and will conform with the
  requirements of the Act. An instrument of proxy will be valid only at the meeting
  in respect of which it is given or any adjournment thereof.

(b) Any corporation, other than a Prohibited Corporate Shareholder,
  which is a shareholder of the Corporation may by resolution of its directors
  or other governing body authorize such person as it thinks fit to act as its
  representative at any meeting. The person so authorized will be entitled to
  exercise in respect of and at such meeting the same powers on behalf of the
  corporation which he represents as that corporation could exercise if it were
  an individual member of the Corporation personally present, including, without
  limitation, the right, unless restricted by such resolution, to appoint a proxyholder
  to represent such corporation, and will, if present at the meeting, be counted
  for the purpose of forming a quorum and be deemed to be a member present at
  the meeting. Evidence of the appointment of any such representative may be sent
  to the Corporation by written instrument, telegram, telex, facsimile or any
  method of transmitting legibly recorded messages.

(c) When the Company has more than 10 shareholders it may
  institute procedures to permit voting on resolutions by proxy by electronic
  means in compliance with applicable securities legislation.

10.15 Time for Deposit of Proxies - The Board may specify
  in a notice calling a meeting of shareholders a time, preceding the time of
  such meeting by not more than forty-eight hours exclusive of non-business days,
  before which time proxies to be used at such meeting must be deposited. A proxy
  will be acted upon only if, prior to the time so specified, it will have been
  deposited by written instrument, telegram, telex, facsimile or any method of
  transmitting legibly recorded messages with the Corporation or an agent thereof
  specified in such notice or, if no such time is specified in such notice, unless
  it has been received by the secretary of the Corporation or by the Chairman
  of the meeting or any adjournment thereof before the time of voting.

10.16 Joint Shareholders - If two or more persons hold
  shares jointly, anyone of them present in person or represented by proxy at
  a meeting of shareholders may, in the absence of the other or others, vote the
  shares but if two or more of those persons are present in person or represented
  by proxy and vote, they will vote as one on the shares jointly held by them
  and in the absence of agreement between those so voting the person named first
  in the Register will vote the shares.

10.17 Votes to Govern - At any meeting of shareholders
  every question will, unless otherwise required by the Articles or By-Laws or
  by law, be determined by the majority of the votes cast on the question. In
  case of an equality of votes either upon a show of hands or upon a poll, the
  chairman of the meeting will be entitled to a second or casting vote.

10.18 Motion - The chairman may propose or second a
  motion.

10.19 Show of Hands - Subject to the provisions of
  the Act any question at a meeting of shareholders will bedecided by a show of
  hands unless a ballot thereon is required or demanded as hereinafter provided.
  Upon a show of hands, every person who is present and entitled to vote will
  have one vote. Whenever a vote by show of hands will have been taken upon a
  question, unless a ballot thereon is so required or demanded, a declaration
  by the chairman of the meeting that the vote upon the question has been carried
  or carried by a particular majority or not carried, an entry to that effect
  in the minutes of the meeting will be conclusive evidence of the fact without
  proof of the number or proportion of the votes recorded in favour of or against
  any resolution or other proceeding in respect of such question, and the result
  of the vote so taken will be the decision of the shareholders upon such question.

10.20 Ballots

(a) On any question proposed for consideration at a meeting
  of shareholders, and whether or not a show of hands has been taken thereof,
  any shareholder or proxyholder entitled to vote at the meeting may require or

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demand a ballot. A ballot so required or demanded will be
  taken in such manner as the chairman will direct. A requirement or demand for
  a ballot may be withdrawn at any time before the taking of the ballot. If a
  ballot is taken each person present will be entitled in respect of the shares
  which he is entitled to vote at the meeting upon the question, to that number
  of votes provided by the Act or the Articles, and the result of the ballot so
  taken will be the decision of the shareholders upon the said question.

(b) No ballot may be demanded on the election of a chairman.
  A ballot demanded on a question of adjournment will be taken forthwith. A ballot
  demanded on any other question will be taken as soon as, in the opinion of the
  chairman, is reasonably convenient, but in no event later than seven days after
  the meeting and at such time and place and in such manner as the chairman of
  the meeting directs. The result of the ballot will be deemed to be the resolution
  of and passed at the meeting at which the ballot was demanded. Any business
  other than that upon which the ballot has been demanded may be proceeded with
  pending the taking of the ballot. In any dispute as to the admission or rejection
  of a vote the decision of the chairman made in good faith will be final and
  conclusive.

10.21 Adjournment - If a meeting of shareholders is
  adjourned for less than thirty days, it will not be necessary to give notice
  of the adjourned meeting, other than by announcement at the earliest meeting
  that it is adjourned. If a meeting of Shareholders is adjourned by one or more
  adjournments for an aggregate of thirty days or more, notice of the adjourned
  meeting will be given as for an original meeting. At any such adjourned meeting
  no business will be transacted other than business left unfinished at the meeting
  from which the adjournment took place.

10.22 Resolution in Writing - A resolution in writing
  signed by all the shareholders entitled to vote on that resolution at a meeting
  of shareholders is as valid as if it had been passed at a meeting of the shareholders,
  and will be held to relate to any date therein stated to be the effective date
  thereof.

10.23 Only One Shareholder - Where the Corporation
  has only one shareholder or only one holder of any class or series of shares,
  the shareholder present in person or by proxy constitutes a meeting.

10.24 Only Two Shareholders - Where the Corporation
  has only two shareholders a quorum for transaction of business at any meeting
  of shareholders will be one person present in person, being a shareholder entitled
  to vote thereat, or a duly appointed proxy of such shareholder, holding not
  less than ten percent of the outstanding shares of the Corporation entitled
  to vote at the meeting.

Section Eleven   DIVISIONS AND DEPARTMENTS


11.01 Creation and Consolidation of Divisions - The
  Board may cause the business and operations of the Corporation or any part thereof
  to be divided or to be segregated into one or more divisions upon such basis,
  including without limitation, character or type of operation, geographical territory,
  product manufactured or service rendered, as the Board may consider appropriate
  in each case. The Board may also cause the business and operations of any such
  division to be further divided into sub-units and the business and operations
  of any such divisions or sub-units to be consolidated upon such basis as the
  Board may consider appropriate in each case.

11.02 Name of Division - Subject to the Act any division
  or its sub-units may be designated by such name as the Board may from time to
  time determine and may transact business, enter into contracts, sign cheques
  and other documents of any kind and do all acts and things under such name,
  provided that the Corporation will set out its name in legible characters in
  all contracts, invoices, negotiable instruments and orders for goods or services
  issued or made by or on behalf of the Corporation. Any such contract, cheque
  or documents will be binding upon the Corporation as if it had been entered
  into or signed in the name of the Corporation.

11.03 Officers of Division - From time to time the
  Board or if authorized by the Board, the president or chief executive officer,
  may appoint one or more officers for any division, prescribe their powers and
  duties and settle their terms of employment and remuneration. The Board or,
  if authorized by the Board, the president or chief executive officer, may remove
  at its or his pleasure any Officers so appointed, without prejudice to such
  Officers right under any employment contract. Officers of divisions or their
  sub-units will not, as such, be officers of the Corporation.

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12.01 Method of Giving Notices - Any notice (which
  term includes any communication or document) to be given (which term includes
  sent, delivered or served) pursuant to the Act, the regulations thereunder,
  the Articles, the By-Laws or otherwise to a shareholder, director, officer,
  auditor or member of a committee of directors will be sufficiently given if
  delivered personally to the person to whom it is to be given or if delivered
  to his recorded address by any means of prepaid transmitted or recorded communication.
  A notice so delivered will be deemed to have been given when it is delivered
  personally or to the recorded address as aforesaid; a notice so mailed will
  be deemed to have been received by him at the time it would be delivered in
  the ordinary course of mails; and a notice so sent by any means of transmitted
  or recorded communication will be deemed to have been given when dispatched
  or delivered to the appropriate communication corporation or agency or its representative
  for dispatch. Subject to the Act, a notice of meeting of shareholders will be
  deemed to have been sent to the Shareholder on the day on which it is deposited
  in the mail. The secretary may change or cause to be changed the recorded address
  of any shareholder. director, officer, auditor or member of a committee of directors
  in accordance with any information believed by him to be reliable.

12.02 Notice to Joint Shareholders - If two or more
  persons are registered as joint holders of any share, any notice will be addressed
  to all of such joint holders but notice given to anyone or more of such persons
  at the recorded address for such joint shareholders will be sufficient notice
  to all of them.

12.03 Computation of Time - In computing the date when
  notice must be given under any provision requiring a specified number of days
  notice of any meeting or other event, the date of giving the notice will be
  excluded and the date of the meeting or other event in respect of which the
  notice is being given will be included.

12.04 Undelivered Notices - If any notice given to
  a shareholder pursuant to section 12.01 is returned on three consecutive occasions
  because he cannot be found or served or is unknown at his recorded address,
  the Corporation will not be required to give any further notices to such shareholder
  until he informs the Corporation in writing of his new recorded address.

12.05 Proof of Service - A certificate of the secretary
  or other duly authorized officer of the Corporation in office at the time of
  the making of the certificate, or of any agent of the Corporation as to the
  facts in relation to the mailing or delivery or sending of any notice to any
  shareholder, director, the auditors, or conclusive evidence thereof and will
  be binding on every shareholder. director, the auditors or any officer of the
  Corporation as the case may be.

12.06 Omissions and Errors - The accidental omission
  to give any notice to any shareholder, director, officer, auditor or member
  of a committee of directors or the non-receipt of any notice by any such person
  or any error in any notice not affecting the substance thereof will not invalidate
  any action taken at any meeting held pursuant to such notice or otherwise founded
  thereon.

12.07 Persons Entitled by Death or Operation of Law
  - Every person who by operation of law, transfer, death of a shareholder or
  any other means whatsoever, will become entitled to any share, will be bound
  by every notice in respect of such share which will have been duly given to
  the shareholder from whom he derives his title prior to such person's name and
  address being entered on the securities register (whether such notice was given
  before or after the happening of the event upon which he became so entitled)
  and before his furnishing to the Corporation the proof of authority or evidence
  of his entitlement prescribed by the Act.

12.08 Waiver of Notice - Any shareholder (or his duly
  appointed proxyholder), director, officer, auditor or member of a committee
  of directors may at any time waive the sending of any notice, or waive or abridge
  the time for any notice, required to be given to him under any provision of
  the Act, the regulations thereunder, the Articles, the By-Laws or otherwise
  and such waiver or abridgement will cure any default in the giving or the time
  of such notice, as the case may be. Any such waiver or abridgement will be in
  writing except a waiver of notice of a meeting of shareholders or of the Board
  which may be given in any manner.

ENACTED by the Board as at December 31st, 2003.
    (signed) Bernhard ZinkhoferDirector

CONFIRMED by the Shareholders in accordance with the Act on December 31st,
  2003

__________________________________________
  Chairman of the Shareholders' Meeting

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EXHIBIT 4.1.3WARRANT AMENDMENT AGREEMENT

THIS AGREEMENTmade effective the 4th day of December, 2003

BETWEEN:

| | INDO-PACIFIC ENERGY LTD. (to be renamed Austral Pacific Energy Ltd.)
      (the "Company")
| | ------------------------------------------------------------------------------------------

AND:

| | TRANS-ORIENT PETROLEUM LTD.,
      (the "Warrantholder")
| | --------------------------------------------------------

WHEREAS:

(A) By agreement dated January 30, 2000 which completed March
  28, 2000, the Warrantholder was issued 4,184,224 Class A share purchase warrants
  which were subsequently consolidated on a 5-for-1 basis (the "Old Warrants")
  and later revised downwards in exercise price;

(B) The Old Warrants were exerciseable into a common share
  of the Company plus a Series B warrant to purchase a further common share in
  certain events;

(C) In consideration of the Warrantholder agreeing to surrender
  the right to exercise into a Series B warrant in addition to a common share
  and to increase the exercise price for the common share by US$0.10, the Company
  has agreed to extend the term of Old Warrants;

NOW THEREFORE THIS AGREEMENT WITNESSES:

1. Agreement to Amend Old Warrant

Effective immediately, the certificate for the Old Warrants
  is deemed for all purposes to be amended hereby and to be re-issued in the form
  contemplated by s.2.

2. Form of Amended Warrant

To reflect the amendment of the Old Warrant, the Company agrees
  to immediately after listing of its common shares on the TSX Venture Exchange,
  execute, issue and deliver to the Warrantholder the Amended Warrants in the
  form attached hereto as Schedule "A" which amended warrants shall entitle the
  purchaser to purchase an aggregate 836,845 common shares of the Company at a
  price of US$1.50 per share until January 5, 2005. The Warrantholder shall deliver
  the original certificate representing the Old Warrants to the Company on execution
  hereof, against delivery of the Amended Warrants.

|3. | General                                                                                                                                    
|-- | -------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | (a)      This Agreement shall be deemed
      to have been made and shall be enforceable under the                                         
|  
|   | laws of the Province of British Columbia; and                                                                                              
|  
|   | (b)      Each of the parties shall execute
      such further document and assurances as may be necessary to effect the terms
      hereof.

IN WITNESS WHEREOF the parties have caused this Warrant
  Amendment Agreement to be executed as of February 23, 2004 with effect as of
  the date first above written.

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INDO-PACIFIC ENERGY LTD., (to be renamed Austral Pacific Energy Ltd.)

Per: __________________________
  Authorized Signatory

TRANS-ORIENT PETROLEUM LTD.

Per: __________________________
  Authorized Signatory

105

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SCHEDULE "A"

AMENDED SHARE PURCHASE WARRANT CERTIFICATE

VOID AFTER THE CLOSE OF BUSINESSIN VANCOUVER, BRITISH COLUMBIA ON JANUARY 5, 2005

SHARE PURCHASE WARRANT TO PURCHASE 836,845 COMMON SHARES
  OFAUSTRAL PACIFIC ENERGY LTD. 
  (FORMERLY INDO-PACIFIC ENERGY LTD.)[Incorporated (by Continuance) under the Business Corporations Act (Yukon)]

THIS IS TO CERTIFY THAT, for value received, Trans Orient
  Petroleum Ltd. (the "Holder") is entitled to purchase 836,845 fully paid and
  non-assessable common shares of AUSTRAL PACIFIC ENERGY LTD.(herein called
  the "Corporation") as such shares were constituted on December 4, 2003, at any
  time up to the close of business at the City of Vancouver, Province of British
  Columbia, on January 5, 2005 at a price of US$1.50per share upon and
  subject to the terms and conditions hereof. After the close of business on January
  5, 2005 these Share Purchase Warrants shall expire and all rights attributable
  to them will be void.

This Warrant may be exercised 1) at the offices of the Company,
  284 Karori Road, P.O. Box 17-258 Karori, Wellington, New Zealand, or 2) at the
  offices of the Company's lawyers, 1500 - 1055 West Georgia Street, Vancouver,
  British Columbia V6E 4N7, by delivery of this Warrant and applicable exercise
  proceeds.

"The securities represented by this Certificate are subject
  to a hold period and may not be traded in British Columbia until September 6,
  2003 except as permitted by the Securities Act (British Columbia) and the Regulations
  thereunder."

This Warrant is not transferable except with the consent of
  the Corporation (which may require evidence of compliance of the transferor
  and transferee with applicable securities laws) and is issued subject to the
  Terms and Conditions appended hereto.

IN WITNESS WHEREOFthe Corporation has caused this
  Warrant to be executed by a duly authorized officer.

DATED: March 4, 2004 with effect from December 4, 2003

AUSTRAL PACIFIC ENERGY LTD. Per: __________________________
    Authorized Officer


(SEE TERMS AND CONDITIONS ATTACHED HERETO)

106

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TERMS & CONDITIONS FOR AMENDED WARRANTS

Terms and Conditions attached to the Share Purchase Warrant
  (Amended) originally issued by AUSTRAL PACIFIC ENERGY LTD. on March 20,
  2002 to the Warrant Holder and which amendments are dated for reference on December
  4, 2003.

ARTICLE ONE - INTERPRETATION

Section 1.01 - Definitions: In these Terms and Conditions,
  unless there is something in the subject matter or context inconsistent therewith:

|(a) | "Corporation" means AUSTRAL PACIFIC Energy Ltd.
        until a successor corporation shall have become such in the manner prescribed
        in Article 6, and thereafter "Corporation" shall mean such successor corporation;                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | "Corporation's Auditors" means an independent firm
        of accountants duly appointed as auditors of the Corporation;                                                                                                                                                                                 
|   
|(c) | "Director" means a Director of the Corporation for
        the time being, and reference, without more, to action by the Directors
        of the Corporation as a Board, or whenever duly empowered, action by an
        executive committee of the Board;                                             
|   
|(d) | "herein", "hereby" and similar expressions refer
        to these Terms and Conditions as the same may be amended or modified from
        time to time; and the expression "Article" and "Section" followed by a
        number refer to the specified Article or Section of these Terms and Conditions;
|   
|(e) | "person" means an individual, corporation, partnership,
        trustee or any unincorporated organization and words importing persons
        have a similar meaning;                                                                                                                                   
|   
|(f) | "Shares" means the common shares in the capital
        of the Corporation as constituted at the date hereof and any shares resulting
        from any subdivision or consolidation of the Shares;                                                                                                       
|   
|(g) | "Transfer Agent" means the trust company duly appointed
        as the Registrar and Transfer Agent of the Corporation;                                                                                                                                                                                  
|   
|(h) | "Warrant" means a share purchase warrant of the
        Corporation issued and presently authorized, as set out in Section 2.01
        hereof;                                                                                                                                                          
|   
|(i) | "Warrant Certificate" means the certificate to which
        these Terms and Conditions are attached;                                                                                                                                                                                                    
|   
|(j) | "Warrant Holder" or "Holder" means the person named
        as such on the Warrant Certificate;                                                                                                                                                                                                          
|   
|(k) | Words importing the singular number include the
        plural and vice versa and words importing the masculine gender include
        the feminine and neuter genders.                                                                                                                                  

Section 1.02 - Interpretation Not Affected by Headings:
  The division of these Terms and Conditions into Articles and Sections, and the
  insertion of headings are for convenience of reference only and shall not affect
  the construction of interpretation thereof.

Section 1.03 - Applicable Law: The terms hereof and
  of the Warrant shall be construed in accordance with the laws of the Province
  of British Columbia and the laws of Canada applicable thereto.

ARTICLE TWO - ISSUE OF WARRANTS

Section 2.01 - Issue of Warrants: A Warrant as dated
  above entitling the Holder to purchase the aggregate of number of Shares referred
  to on the Warrant Certificate is hereby authorized to be issued by the Corporation.

Section 2.02 - Additional Warrants: The Corporation
  may at any time and from time to time do further equity

107

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or debt financing and may issue additional Shares, warrants
  or grant options or similar rights to purchase Shares which financings and issuances
  shall not give rise to any adjustment under this Warrant.

Section 2.03 - Issue in Substitution for Lost Warrants:

|(a) | If the Warrant Certificate becomes mutilated, lost,
        destroyed or stolen, the Corporation shall issue and deliver a new Warrant
        Certificate of like date and tenor as the one mutilated, lost, destroyed
        or stolen, in exchange for and in place of and upon cancellation of such
        mutilated, lost, destroyed or stolen Warrant Certificate.                                                                                                                                                                                                                        
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | The Holder shall bear the cost of the issue of a
        new Warrant Certificate hereunder and in the case of the loss destruction
        or theft of the Warrant Certificate, shall furnish to the Corporation
        such evidence of loss, destruction, or theft as shall be satisfactory
        to the Corporation in its discretion and the Corporation may also require
        the Holder to furnish indemnity in an amount and form satisfactory to
        the Corporation in its discretion, and shall pay the reasonable charges
        of the Corporation in connection therewith.

Section 2.04 - Warrant Holder Not a Shareholder: The
  Warrant shall not constitute the Holder a shareholder of the Corporation, nor
  entitle it to any right or interest in respect thereof except as may be expressly
  provided in the Warrant.

ARTICLE THREE - TRANSFER

Section 3.01 - Transfer of the Warrant: The Warrant
  Certificate is transferable with the consent of the Corporation which may require
  evidence of compliance by the transferor and transferee with applicable securities
  laws.

ARTICLE FOUR - EXERCISE OF THE WARRANT

Section 4.01 - Method of Exercise of The Warrant: The
  right to purchase shares conferred by the Warrant Certificate may be exercised,
  prior to its expiry time, by the Holder surrendering it, with a duly completed
  and executed subscription in the form attached thereto and cash or a certified
  cheque payable to or to the order of the Corporation, at par in Vancouver, British
  Columbia, for the purchase price applicable at the time of surrender in respect
  of the shares subscribed for in lawful money of Canada, to the offices noted
  on the face page of the Warrant.

Section 4.02 - Effect of Exercise of the Warrant:

|(a) | Upon surrender and payment as aforesaid the Shares
        so subscribed for shall be issued and the Holder shall become the holder
        of record of such Shares on the date of such surrender and payment.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | Within ten business days after surrender and payment
        as aforesaid, the Corporation shall forthwith cause to be delivered to
        the Holder a certificate for the Shares purchased as aforesaid.    

Section 4.03 - Subscription for Less than Entitlement:
  The Holder may subscribe for and purchase a number of Shares less than the number
  which it is entitled to purchase pursuant to the surrendered Warrant Certificate.
  In the event of any purchase of a number of Shares less than the number which
  can be purchased pursuant to the Warrant Certificate, the Holder shall be entitled
  to receive a new Warrant Certificate in respect of the balance of the Shares
  which it was entitled to purchase pursuant to the surrendered Warrant Certificate
  and which were not then purchased.

Section 4.04 - Expiration of the Warrant: After the
  expiration of the period within which the Warrant Certificate is exercisable,
  all rights thereunder shall wholly cease and terminate and the Warrant shall
  be void and of no effect.

Section 4.05 - Exercise Price: The price per Share
  which must be paid to exercise a Warrant is as set forth on the face of the
  Warrant Certificate.

Section 4.06 - Adjustment of Exercise Price: 108


---

The number of Shares deliverable upon the exercise of a Warrant
  shall be subject to adjustment in the events and in the manner following:

|(a) | In the event of any subdivision or subdivisions
        of the Shares as such are constituted on the date hereof at any time while
        the Warrant is outstanding into a greater number of Shares, the Corporation
        will thereafter deliver at the time of purchase of Shares under the Warrant,
        in addition to the number of Shares in respect of which the right to purchase
        is then being exercised, such additional number of Shares as result from
        said subdivision or subdivisions without the Holder making any additional
        payment or giving any other consideration therefore.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | In the event of any consolidation or consolidations
        of the Shares as such are constituted on the date hereof at any time while
        the Warrant is outstanding, into a lesser number of Shares, the Corporation
        shall thereafter deliver and the Holder shall accept, at the time of purchase
        of Shares under the Warrant, in lieu of the number of Shares in respect
        of which the right to purchase is then being exercised, the lesser number
        of Shares as result from such consolidation or consolidations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(c) | In the event of any change of the Shares as such
        are constituted on the date hereof at any time while the Warrant is outstanding,
        the Corporation shall thereafter deliver at the time of purchase of Shares
        under the Warrant the number of Shares of the appropriate class resulting
        from the said change as the Holder would have been entitled to receive
        in respect of the number of Shares so purchased had the right to purchase
        been exercised before such change.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(d) | In the event of any capital reorganization or reclassification
        of the Shares (other than a change in the par value thereof) of the Corporation
        or in the event of any merger or amalgamation of the Corporation with
        or into any other company or in the event of any sale of the assets of
        the Corporation as or substantially as an entirety, then the Holder shall
        thereafter have the right to purchase and receive, in lieu of the Shares
        immediately theretofore purchasable and receivable upon the exercise of
        the rights represented by the Warrant, the kind and amount of Shares and
        other securities and property receivable upon such capital reorganization,
        reclassification, merger, amalgamation or sale which the Holder of a number
        of Shares equal to the number of Shares purchasable and receivable upon
        the exercise of the rights represented by the Warrant would have received
        as a result of such.                                                                                                                                                                                                 
|   
|    | The subdivision or consolidation of Shares at any
        time outstanding into a greater or lesser number of Shares (whether with
        or without par value) shall not be deemed to be a capital reorganization
        or a reclassification of the capital of the Corporation for the purposes
        of this paragraph (d).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(e) | If the Corporation at any time while the Warrant
        is outstanding pays any stock dividend or makes any distribution to its
        shareholders payable in Shares, the Corporation shall thereafter deliver
        at the time of purchase of Shares under the Warrant, in addition to the
        number of Shares in respect of which the right of purchase is then being
        exercised, an additional number of Shares of the appropriate class as
        would have been payable on the Shares so purchased if they had been outstanding
        on the record date for the payment of such stock dividend.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(f) | The adjustments provided for in this Section are cumulative.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(g) | The Corporation shall not be required to issue fractional
        Shares or other securities in satisfaction of its obligations hereunder.
        If any fractional interest in a Share or other security would, except
        for the provisions of this paragraph (g), be deliverable upon the exercise
        of the Warrant, the Corporation shall, at its option, in lieu of delivering
        a fractional Share or other security therefore, satisfy the right to receive
        such fractional interest by payment to the Holder of an amount in cash
        equal (computed in the case of a fraction of a cent to the next lower
        cent) to the current market value of the right to subscribe for such fractional
        interest (computed on the basis of the last sale price of Shares of the
        Corporation on the OTC Bulletin Board or other market, exchange or quotation
        service where the Shares are quoted (and where more than one, the one
        where volume is generally greater) preceding the day on which such exercise
        takes place or, if no such price is available, at the fair market value
        thereof as determined by the Corporation's Auditors).
|   

Section 4.07 - Determination of Adjustments: If any
  questions shall at any time arise with respect to the exercise price, such question
  shall be conclusively determined by the Corporation's Auditors, or, if they
  decline to so act any other firm of Chartered Accountants, in Vancouver, that
  the Corporation may designate and who shall have access to all appropriate records
  and such determination shall be binding upon the Corporation and

109

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ARTICLE FIVE - COVENANTS BY THE CORPORATION

Section 5.01 - Reservation of Shares: The Corporation
  will reserve and there will remain unissued out of its authorized capital a
  sufficient number of Shares to satisfy the rights of purchase provided for in
  the Warrant Certificate.

ARTICLE SIX - MERGER AND SUCCESSORS

Section 6.01 - Corporation May Consolidate, etc. on Certain
  Terms: Nothing herein contained shall prevent any amalgamation or merger
  of the Corporation with or into any other corporation or corporations, or a
  conveyance or transfer of all or substantially all the properties and estates
  of the Corporation as an entirety to any corporation lawfully entitled to acquire
  and operate same; provided however that the corporation formed by such amalgamation
  or merger or which acquires by conveyance or transfer all or substantially all
  the properties and estates of the Corporation as an entirety shall be a corporation
  organized and existing under the laws of Canada or of the United States of America,
  or any Province, State, District or Territory thereof, and shall, simultaneously
  with such amalgamation, merger, conveyance or transfer, assume the due and punctual
  performance and observance of all the covenants and conditions hereof to be
  performed or observed by the Corporation.

Section 6.02 - Successor Corporation Substituted: In
  case the Corporation, pursuant to Section 6.01 shall be amalgamated or merged
  with or into any other corporation or corporations, or shall convey or transfer
  all or substantially all of its properties and estates as an entirety to any
  other corporation, the successor corporation formed by such consolidation or
  amalgamation, or into which the Corporation shall have been amalgamated or merged
  or which shall have received a conveyance or transfer as aforesaid, shall succeed
  to and be substituted for the Corporation hereunder. Such changes in phraseology
  and form (but not in substance) may be made in the Warrant Certificate and herein
  as may be appropriate in view of such amalgamation, merger or transfer.

110

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SUBSCRIPTION FORM

TO: AUSTRAL PACIFIC ENERGY LTD.

The undersigned being the bearer of the within Warrant Certificate, hereby
  subscribes for ________ of the common shares referred to in the said Warrant
  Certificate according to the conditions thereof and herewith makes payment of
  the purchase price in full for the said number of shares.

The undersigned hereby directs that the shares hereby subscribed for be issued
  and delivered as follows:

|**NAME(S) IN FULL** | **ADDRESS** | **NUMBER OF SHARES**
|------------------- | ----------- | --------------------
|                    |             |                     
|                    |             |                     
|                    |             |                     
|                    |             |                     

DATED this _________ day ________ of , 20 ______.

SIGNATURE ___________________

111

---

The undersigned being the registered holder of the within Warrant Certificate,
  hereby subscribes for _____________ of the common shares referred to in the
  said Warrant Certificate according to the conditions thereof and herewith makes
  payment of the purchase price in full for the said number of shares.

The undersigned hereby directs that the shares hereby subscribed for be issued
  and delivered as follows:

|NAME(S) IN FULL | ADDRESS | NUMBER OF SHARES
|--------------- | ------- | ----------------
|                |         |                 
|                |         |                 
|                |         |                 
|                |         |                 

DATED this          day of             20,

SIGNATURE ______________________________

|NOTE: ANY SECURITES ACQUIRED PURSUANT TO THIS WARRANT
        CERTIFICATE ON OR PRIOR TO A  DATE WHICH IS FOUR MONTHS PLUS
        ONE DAY FROM THE DATE OF ISSUANCE WILL BE SUBJECT TO  A HOLD
        PERIOD EXPIRING ON SUCH DATE.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



112

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EXHIBIT 4.5.2  FORM OF SHARE EXCHANGE AGREEMENT


SHARE EXCHANGE AGREEMENT

DATE:           12
  November 2003

PARTIES:

| | THE "SUBSCRIBER"being the person whose name
        and details are set out in the attestation section of this Agreement (and
        if more than one person then those persons jointly and severally)
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                        
| | INDO-PACIFIC ENERGY (NZ) LIMITED,a company
        incorporated under the laws of New Zealand ("the Company")                                                                                          
| |                                                                                                                                                                                                        
| | INDO-PACIFIC ENERGY LTD.,a company incorporated
        under the laws of the Yukon Territory, Canada ("the Parent")                                                                                   

BACKGROUND:

|A | On 13 June 2003 the parties entered into
      a Subscription Agreement pursuant to which the Subscriber holds the number
      of SC Shares in the Company set out in Schedule A.                                                                                                                                                                                                                                                                                            
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|B | The parties agree that
        the Subscriber will transfer these SC Shares to the Parent in exchange
        for the issue by the Parent to the Subscriber of the number of Common
        Shares in the Parent set out in Schedule A together with the issue to
        the Subscriber of the number of options to purchase additional Common
        Shares in the Parent as set out in Schedule A and otherwise on the terms
        and conditions set out in Schedule B.
| 
|C | It is intended that
        upon settlement under this Share Exchange Agreement, all the rights and
        obligations of the parties under the Subscription Agreement shall terminate.                                                                                                                                                                                                                                                                                      

|1.Interpretation
|----------------
|                
|1.1             
|                
|                
|                
|                
|                
|                
|                
|                
|                
|                
|                
|                
|                
|                
|                

112

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| |  | Wellington and in Auckland, New Zealand.
| |  | ----------------------------------------

|1.2 | In the interpretation of this Agreement:
|--- | ----------------------------------------
|   
|    | (a)                                     
|    |                                         
|    | (b)                                     
|    |                                         
|    | (c)                                     
|    |                                         
|    | (d)                                     
|    |                                         
|    | (e)                                     
|    |                                         
|    | (f)                                     
|    |                                         
|    | (g)                                     

2. Condition

113

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|2.1 | This agreement is conditional upon the
        Parent being granted a listing on the TSX Venture Exchange, and a listing
        on the New Zealand Stock Exchange as an Overseas Listed Issuer (as defined
        in the Listing Rules of the New Zealand Stock Exchange), and the Common
        Shares being accepted for quotation on the New Zealand Stock Exchange.                                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|2.2 | If the conditions set out in clause 2.1
        have not been fulfilled by 31 May 2004 then this agreement will terminate.                                                                                                                                                                                                                                                                                                  
|   
|3.  | Agreement to Exchange Shares                                                                                                                                                                                                                                                                                                                                                                                                
|   
|3.1 | The Subscriber agrees to transfer to the
        Parent all the SC Shares held by the Subscriber in exchange for the issue
        by the Parent to the Subscriber of Common Shares (in the proportion set
        out in clause 3.2) and the issue by the Parent to the Subscriber of the
        Options (in the proportion and on the terms and conditions referred to
        in clause 4).                             
|   
|3.2 | The number of Common Shares to be issued
        to the Subscriber shall be in the proportion of one Common Share for every
        1.35 SC Shares held by the Subscriber, rounded up to the next whole number
        of Common Shares in the event of fractions.                                                                                                                                                          
|   
|3.3 | The Common Shares shall, on issue, rank
        equally in all respects with the other Common Shares then on issue except
        that:                                                                                                                                                                                                                                                                                     
|   
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|    | (c)                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|4.  | Options                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|4.1 | At the time of issue of the Common Shares
        to the Subscriber pursuant to this Agreement, the Parent shall also issue
        to the Subscriber the number of Options set out in Schedule A, issued
        in the proportion of one Option for every two Common Shares issued to
        the Subscriber pursuant to this Agreement, rounded up to the next whole
        number of Options in the event of fractions.
|   

|4.2 | The Options shall be issued in the form of a Share
        Purchase Warrant containing the terms and  conditions set out in
        Schedule B.                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|4.3 | The Options and any Common Shares underlying the
        Options shall not be transferable to any other  person until four
        months after the Options are issued to the Subscriber.

|5.  | Settlement                                                                                                 
|--- | -----------------------------------------------------------------------------------------------------------
|   
|5.1 | Settlement shall take place within 7 days after
        the date that this Agreement becomes unconditional.
|   

|5.2 | On the date of settlement the Subscriber
        will hand to the Parent a duly completed transfer of the SC  Shares,
        and the Parent shall hand to the Subscriber satisfactory evidence of the
        issue to the  Subscriber of the Common Shares and Options.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5.3 | The Company undertakes to register the
        transfer of the SC Shares from the Subscriber to the Parent upon presentation
        to the Company of the duly completed security transfer form.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|5.4 | At the time of settlement all the rights
        and obligations of the parties under the Subscription Agreement shall
        terminate.                                                        
|   
|6.  | Representations and Warranties of the
        Subscriber                                                                                                                                         
|   
|6.1 | The Subscriber warrants and represents
        to the Parent as follows:                                                                                                                         
|   
|    | (a)                                                                                                                                                                                              
|   

114

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| | (b) | The Subscriber's principal business is
        the investment of money, or in the course of and for the purposes of his
        business, the Subscriber habitually invests money;                                                                                                                                                                                                                                                                                                                                                    
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (c) | The Subscriber is aware that the issue
        of the Common Shares which are the subject of this Agreement is being
        made pursuant to applicable exemptions from the prospectus or equivalent
        requirements of all legislation of any kind whatsoever (the "Securities
        Rules") of all jurisdictions applicable to the offer of securities and
        the Subscriber is knowledgeable of, or has been independently advised
        as to, the applicable Securities Rules;                                    
|
| | (d) | The Subscriber is not accepting the issue
        of the Common Shares with a view to offering them to the public anywhere
        in the world;                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (e) | The Subscriber will not resell or otherwise
        dispose of any of the Common Shares in a manner which would cause the
        Company or the Parent to be in breach of the laws, rules or regulations
        of any applicable jurisdiction;                                                                                                                                                                                                                                                                                     
|
| | (f) | The Subscriber has, in entering into this
        Agreement, relied solely on his own judgment and investigations and not
        in reliance on any representations, warranties, statements or otherwise
        made by the Company or the Parent, or any of their respective directors,
        officers, employees, professional advisers consultants and agents to the
        Subscriber or to any other person; and all such representations and warranties
        whether expressed or implied are hereby expressly excluded;
|
| | (g) | If the Subscriber is not a natural person
        entering into this Agreement on his own behalf, the Subscriber:                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |     | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (h) | The entry into, and performance by the
        Subscriber of his obligations hereunder does not require any consent,
        approval of, or filing with, any governmental or regulatory agency or
        authority in any jurisdiction;                                                                                                                                                                                                                                                                                             
|

| |     | United States Securities Laws                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (i) | The Subscriber is not a "U.S. Person" (as that term
        is defined in Regulation S under the  United States Securities Act
        of 1933, as amended). This will include (a) any natural person  resident
        in the United States; (b) any partnership or corporation organized or
        incorporated  under the laws of the United States; (c) any trust
        of which any trustee is a U.S. person; (d)  any partnership or corporation
        organized outside the United States by a U.S. person  principally
        for the purpose of investing in securities not registered under the United
        States  Securities Act of 1933, unless it is organized or incorporated,
        and owned, by accredited  investors;

| | (j)   | The Subscriber is not acquiring the Common Shares
        either directly or indirectly, for the account or benefit of a U.S. Person
        and the Subscriber has not entered into any agreement, arrangement or
        understanding (either written or oral) with any U.S. Person or a person
        in the United States respecting:
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (i)   | The transfer or assignment of any rights or interests
        in any of the Common Shares;                                                                                                                                                                                                                                                 
|
| | (ii)  | The division of profits, losses, fees, commissions,
        or any financial stake in connection with the Common Shares; and                                                                                                                                                                                                               
|
| | (iii) | The voting of the Common Shares;                                                                                                                                                                                                                                                                                                           
|

115

---

| | (k) | The Subscriber has no intention to distribute, either
        directly or indirectly, any of the Common Shares in the United States
        or to U.S. Persons;                                                                                                                             
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (l) | The current structure of this transaction and all
        transactions and activities contemplated hereunder is not, to the best
        of the knowledge and belief of the Subscriber, a scheme to avoid the registration
        requirements of the United States Securities Act of 1933;
|

| | (m) | The Subscriber acknowledges that the Subscriber
        is potentially acquiring the Common Shares in a transaction wholly outside
        of Canada but for greater certainty also acknowledges that the Subscriber
        is an "accredited investor" as defined in Multilateral Instrument 45-103
        Capital Raising Exemption 1 (the "Instrument") promulgated under the Securities
        Act(British Columbia) and the Securities Act(Alberta) (each,
        an "Act"): and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     | Natural Persons                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |     | (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |     | (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |     | (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|

____________________________
  1 The Rule defines the term (i) "financial assets" as cash or securities, (ii)
  "related liabilities" as liabilities incurred or assumed for the purpose of
  financing the acquisition or ownership of financial assets or liabilities that
  are secured by financial assets, (iii) "spouse" as, in relation to an individual,
  another individual to whom that individual is married and is not living separate
  and apart within the meaning of the Divorce Act (Canada) or is living
  and cohabiting within a marriage-like relationship, including a marriage-like
  relationship between persons of the same gender. Terms used herein which are
  defined in National Instrument 14-101 (the "National Instrument") as adopted
  by the Commissions have the meaning given to them in the National Instrument
  and terms used herein which are defined in the Acts have the meaning given to
  them in the Acts. Reference should be made to the Instrument itself for the
  complete text of the Instrument, including other definitions, and to the Companion
  Policy to the Instrument for matters of interpretation and application.

116

---

distributes its securities under a prospectus that has been
  registered in accordance with the laws of that jurisdiction.

| |  |  | British Columbia Instrument 72-503
| |  |  | ----------------------------------
| |  |  |                                   

| | (n) | The Subscriber is not resident in British
        Columbia.
| | --- | -----------------------------------------------------------
|
| | (o) | The Subscriber acknowledges that:                          
|
| |     | (i)                                                        
|
| |     | (ii)                                                       
|
| |     | (iii)                                                      
|
| |     | (iv)                                                       
|
| |     | (v)                                                        
|

|7.  | Representations and warranties of the Company and the Parent                                                                                                                                                                
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|7.1 | The Company warrants and represent to
        the Subscriber as follows:                                                                                                                                                    
|   
|    | (a)                                                                                                                                                                                                                         
|   
|    | (b)                                                                                                                                                                                                                         
|   
|    | (c)                                                                                                                                                                                                                         
|   
|7.2 | The Parent warrants and represent to the
        Subscriber as follows:                                                                                                                                                     
|   
|    | (a)                                                                                                                                                                                                                         
|   
|    | (b)                                                                                                                                                                                                                         
|   
|    | (c)                                                                                                                                                                                                                         
|   
|7.3 | Except as expressly set forth in this
        clause, any and all representations and warranties, whether expressed
        or implied, by or on behalf of the Company and the Parent are hereby expressly
        excluded.
|   
|8.  | No Waiver                                                                                                                                                                                                                   
|   

|.1 | No failure or delay on the part of
      a party in exercising any power or right under this Agreement shall operate
      as a waiver nor shall any single or partial exercise of such right or power
      preclude any other or future exercise of the same or any other right.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|  

117

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|9.   | Assignment                                                                                                                                                                                                                                                                                                                                                
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|9.1  | This Agreement and the rights and obligations
        under this Agreement are personal to the parties and such rights shall
        not be assignable except with the prior written consent of the other which
        may be withheld without giving any reason.                                                                                        
|    
|10.  | Notices                                                                                                                                                                                                                                                                                                                                                   
|    
|10.1 | All notices or other communications required
        or permitted to be given under this Agreement shall be given at the recipient's
        address set down in this Agreement, as the case may be (or such other
        address as that party may have specified in writing to the others) and
        shall be deemed to have been duly given or made:
|    
|     | (a)                                                                                                                                                                                                                                                                                                                                                       
|    
|     | (b)                                                                                                                                                                                                                                                                                                                                                       
|    
|     | (c)                                                                                                                                                                                                                                                                                                                                                       
|    
|     | (d)                                                                                                                                                                                                                                                                                                                                                       
|    
|     | PROVIDED THATif a communication
        is given by hand or by facsimile after 5pm on a Working Day or on a day
        which is not a Working Day it shall be deemed to have been received at
        9am on the next following Working Day.                                                                                                             
|    
|11.  | Amendments                                                                                                                                                                                                                                                                                                                                                
|    
|11.1 | This Agreement may not be altered except
        by written agreement of the parties.                                                                                                                                                                                                                                                                     
|    

118

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|12.  | Governing Law                                                                                        
|---- | -----------------------------------------------------------------------------------------------------
|    
|12.1 | This Agreement shall be governed by, and construed in accordance with,
      the laws of New Zealand.
|    

Executed as an agreement:

|INDO-PACIFIC ENERGY (NZ) LIMITED
      By: ___________________________
               Director                                      | Address for Communications:
      Indo-Pacific Energy (NZ) Limited  
        Indo-Pacific House  
        284 Karori Road  
        PO Box 17258  
        Wellington, New Zealand
      Attention: The Company Secretary  
        Facsimile Number: + 64 4 476-0120
|----------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|INDO-PACIFIC ENERGY LTD.
      By: ___________________________
               Director                                              | Address for Communications:
      Indo-Pacific Energy Ltd.  
        Indo-Pacific House
        284 Karori Road  
        PO Box 17258
      Wellington, New Zealand
      Attention: The Company Secretary   
        Facsimile Number: + 64 4 476-0120             
|INDIVIDUAL SUBSCRIBERS:
      _____________________________
        Signature
      _____________________________
        Signature | OTHER SUBSCRIBERS:
      _____________________________
        Print full name of Subscriber
      By: _____________________________
        Authorised Person                                                                                                       
|Address for Communications with Subscriber:                                                                                        

119

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SCHEDULE A

|Name of Subscriber:   |                      
|--------------------- | ---------------------
|No. of SC Shares:     | in words( in figures)
|No. of Common Shares: | in words( in figures)
|No. of Options:       | in words( in figures)



120

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SCHEDULE B

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER
  OF THESE SECURITIES SHALL NOT TRADE THESE WARRANTS NOR THE SECURITIES ISSUABLE
  ON EXERCISE HEREOF BEFORE[THE DATE WHICH IS FOUR MONTHS PLUS ONE
  DAY FROM THE BELOW NOTED DATEOF ISSUANCE HEREOF]

COMMON SHARE PURCHASE WARRANT CERTIFICATE

VOID AFTER THE CLOSE OF BUSINESSIN WELLINGTON, NEW
  ZEALAND ONTHE FIRST ANNIVERSARY OF THE DATE OF ISSUANCE]

SHARE PURCHASE WARRANT TO PURCHASE[NO. OF SHARES]COMMON SHARES OF INDO-PACIFIC ENERGY LTD.[Incorporated (by Continuance) under the Business Corporations Act (Yukon)]

THIS IS TO CERTIFY THAT, for value received, [Name of Subscriber](the "Holder") is entitled to purchase [No. of shares]fully paid
  and non-assessable common shares of INDO-PACIFIC ENERGY LTD (herein called
  the "Corporation") as such shares were constituted on the Date of Issuance ,
  at any time up to the close of business at the city of ,Wellington New Zealand,
  on the First Anniversary of the Date of Issuanceat a price of NZ$1.85
  per share, upon and subject to the terms and conditions hereof. After the close
  of business on the First Anniversary of the Date of Issuance, these Share Price
  Warrants, if not previously exercised, shall expire and all rights attributable
  to them will be void.

This Warrant may be exercised by delivery of this certificate
  along with certified exercise funds to the Corporation at its offices at 284
  Karori Road, Kaori, Wellington, New Zealand

In the event of a request to transfer of this Warrant, the
  Corporation may require evidence of compliance of the transferor and transferee
  with applicable securities laws prior to registering a transfer.

This Warrant is issued subject to the Terms and Conditions
  appended hereto.

IN WITNESS WHEREOFthe Corporation has caused this
  Warrant to be executed by a duly authorised officer on the Date of Issuance
  which shall remain fixed notwithstanding any transfer or reissue of this Warrant
  or part thereof..

|Date of Issuance: | 2003
|----------------- | ----

|INDO-PACIFIC ENERGY LTD.     
|-----------------------------
|                             
|                             
|Per: ________________________
|Authorised Officer           

(SEE TERMS AND CONDITIONS ATTACHED HERETO)

121

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TERMS & CONDITIONS FOR WARRANTS

Terms and Conditions attached to the Share Purchase
  Warrant issued by INDO-PACIFIC ENERGY LTD.To the Warrant Holder and
  bearing the Date of Issuance of XX]

ARTICLE ONE  INTERPRETATION

Section 1.01  Definitions: In these Terms and Conditions,
  unless there is something in the subject matter or context inconsistent therewith:

|(a) | "Corporation" means Indo-Pacific Energy Ltd until
        a successor corporation shall have become such in the manner prescribed
        in Article 6, and thereafter "Corporation" shall mean such successor corporation;                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | "Corporation's Auditors" means an independent firm
        of accountants duly appointed as auditors of the Corporation;                                                                                                                                                                                 
|   
|(c) | "Director" means a Director of the Corporation for
        the time being, and reference, without more, to action by the Directors
        of the Corporation as a Board, or whenever duly empowered, action by an
        executive committee of the Board;                                             
|   
|(d) | "herein", "hereby" and similar expressions refer
        to these Terms and Conditions as the same may be amended or modified from
        time to time; and the expression "Article" and "Section" followed by a
        number refer to the specified Article or Section of these Terms and Conditions;
|   
|(e) | "person" means an individual, corporation, partnership,
        trustee or any unincorporated organisation and words importing persons
        have a similar meaning;                                                                                                                                   
|   
|(f) | "Shares" means the common ( also referred to as
        ordinary) shares in the capital of the Corporation as constituted at the
        date hereof and includes any shares resulting from any subdivision or
        consolidation of the Shares;                                                      
|   
|(g) | "Transfer Agent" means one or more companies duly
        appointed from time to time as a Registrar and Transfer Agent(s) of the
        Corporation;                                                                                                                                                   
|   
|(h) | "Warrant" means a share purchase warrant of the
        Corporation issued and presently authorised, as set out in Section 2.01
        hereof;                                                                                                                                                          
|   
|(i) | "Warrant Certificate" means the certificate to which
        these Terms and Conditions are attached;                                                                                                                                                                                                    
|   
|(j) | "Warrant Holder" or "Holder" means the person named
        as such on the Warrant Certificate;                                                                                                                                                                                                          
|   
|(k) | Words importing the singular number include the
        plural and vice versa and words importing the masculine gender include
        the feminine and neuter genders.                                                                                                                                  
|   

Section 1.02  Interpretation Not Affected by Headings:The division of these Terms and Conditions into Articles and Sections, and
  the insertion of headings are for convenience of reference only and shall not
  affect the construction or interpretation thereof.

Section 1.03  Applicable Law:The terms hereof
  and of the Warrant shall be construed in accordance with the laws of the Yukon
  Territory and the laws of Canada applicable thereto.

ARTICLE TWO  CREATION AND ISSUE OF WARRANTS

Section 2.01  Creation and Issue of Warrants:A
  Warrant as dated above entitling the Holder to purchase the aggregate of number
  of Shares referred to on the Warrant Certificate is hereby authorised to be
  issued by the Corporation.

Section 2.02  Additional Securities Permitted :The
  Corporation may at any time and from time to time do

122

---

further equity or debt financing and may issue additional
  Shares, warrants or grant options or similar rights to purchase Shares which
  financings and issuances shall not give rise to any adjustment under this Warrant.

Section 2.03  Issue in Substitution for Lost Warrants:

|(a) | If the Warrant Certificate becomes mutilated, lost,
        destroyed or stolen, the Corporation shall issue and deliver a new Warrant
        Certificate of like date and tenor as the one mutilated, lost, destroyed
        or stolen, in exchange for and in place of and upon cancellation of such
        mutilated, lost, destroyed or stolen Warrant Certificate.                                                                                                                                                                                                                        
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | The Holder shall bear the cost of the issue of a
        new Warrant Certificate hereunder and in the case of the loss destruction
        or theft of the Warrant Certificate, shall furnish to the Corporation
        such evidence of loss, destruction, or theft as shall be satisfactory
        to the Corporation in its discretion and the Corporation may also require
        the Holder to furnish indemnity in an amount and form satisfactory to
        the Corporation in its discretion, and shall pay the reasonable charges
        of the Corporation in connection therewith.
|   

Section 2.04  Warrant Holder Not a Shareholder:The
  Warrant shall not constitute the Holder a shareholder of the Corporation, nor
  entitle it to any right or interest in respect thereof except as may be expressly
  provided in the Warrant.

ARTICLE THREE  EXERCISE OF THE WARRANT

Section 3.01  Method of Exercise of The Warrant:The right to purchase shares conferred by the Warrant Certificate may be
  exercised, prior to its expiry time, by the Holder surrendering it, with a duly
  completed and executed subscription in the form attached hereto and cash or
  a certified cheque payable to or to the order of the Corporation, for the purchase
  price applicable at the time of surrender in respect of the shares subscribed
  for in lawful money of New Zealand to the Corporation at its principal office
  noted on the warrant certificate.

|(a) | Upon surrender and payment as aforesaid the Shares
        so subscribed for shall be issued and the Holder shall become the holder
        of record of such Shares on the date of such surrender and payment.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | Within ten business days after surrender and payment
        as aforesaid, the Corporation shall forthwith cause to be delivered to
        the Holder a certificate for the Shares purchased as aforesaid.    
|   

Section 3.03  Subscription for Less than Entitlement:The Holder may subscribe for and purchase a number of Shares less than the
  number which it is entitled to purchase pursuant to the surrendered Warrant
  Certificate. In the event of any purchase of a number of Shares less than the
  number which can be purchased pursuant to the Warrant Certificate, the Holder
  shall be entitled to receive a new Warrant Certificate in respect of the balance
  of the Shares which it was entitled to purchase pursuant to the surrendered
  Warrant Certificate and which were not then purchased.

Section 3.04  Expiration of the Warrant:After
  the expiration of the period within which the Warrant Certificate is exercisable,
  all rights thereunder shall wholly cease and terminate and the Warrant shall
  be void and of no effect.

Section 3.05  Exercise Price:The price per Share
  which must be paid to exercise a Warrant is as set forth on the face of the
  Warrant Certificate.

Adjustment of Exercise Price:


The number of Shares deliverable upon the exercise of a Warrant
  shall be subject to adjustment in the events and in the manner following:

|(a) | In the event of any subdivision or subdivisions of the Shares as such
      are constituted on the date
|--- | -------------------------------------------------------------------------------------------------------

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|    | hereof at any time while the Warrant is outstanding
        into a greater number of Shares, the Corporation will thereafter deliver
        at the time of purchase of Shares under the Warrant, in addition to the
        number of Shares in respect of which the right to purchase is then being
        exercised, such additional number of Shares as result from said subdivision
        or subdivisions without the Holder making any additional payment or giving
        any other consideration therefore.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | In the event of any consolidation or consolidations
        of the Shares as such are constituted on the date hereof at any time while
        the Warrant is outstanding, into a lesser number of Shares, the Corporation
        shall thereafter deliver and the Holder shall accept, at the time of purchase
        of Shares under the Warrant, in lieu of the number of Shares in respect
        of which the right to purchase is then being exercised, the lesser number
        of Shares as result from such consolidation or consolidations without
        making any reduction or demanding any other consideration therefore..                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(c) | In the event of any other change nature or rights
        and privileges of the Shares as such are constituted on the date hereof
        at any time while the Warrant is outstanding, the Corporation shall thereafter
        deliver at the time of purchase of Shares under the Warrant the number
        of Shares of the appropriate class resulting from the said change as the
        Holder would have been entitled to receive in respect of the number of
        Shares so purchased had the right to purchase been exercised before such
        change.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(d) | In the event of any capital reorganisation or reclassification
        of the Shares (other than a change in the par value thereof) of the Corporation
        or in the event of any merger or amalgamation of the Corporation with
        or into any other company or in the event of any sale of the assets of
        the Corporation as or substantially as an entirety, then the Holder shall
        thereafter have the right to purchase and receive, in lieu of the Shares
        immediately theretofore purchasable and receivable upon the exercise of
        the rights represented by the Warrant, the kind and amount of Shares and
        other securities and property receivable upon such capital reorganisation,
        reclassification, merger, amalgamation or sale which the Holder of a number
        of Shares equal to the number of Shares purchasable and receivable upon
        the exercise of the rights represented by the Warrant would have received
        as a result of such.                                                                                                                                                                                                        
|   
|    | The subdivision or consolidation of Shares at any
        time outstanding into a greater or lesser number of Shares (whether with
        or without par value) shall not be deemed to be a capital reorganisation
        or a reclassification of the capital of the Corporation for the purposes
        of this paragraph (d).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(e) | If the Corporation at any time while the Warrant
        is outstanding pays any stock dividend or makes any distribution to its
        shareholders payable in Shares, the Corporation shall thereafter deliver
        at the time of purchase of Shares under the Warrant, in addition to the
        number of Shares in respect of which the right of purchase is then being
        exercised, an additional number of Shares of the appropriate class as
        would have been payable on the Shares so purchased if they had been outstanding
        on the record date for the payment of such stock dividend.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(f) | The adjustments provided for in this Section are
        cumulative.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(g) | The Corporation shall not be required to issue fractional
        Shares or other securities in satisfaction of its obligations hereunder.
        If any fractional interest in a Share or other security would, except
        for the provisions of this paragraph (g), be deliverable upon the exercise
        of the Warrant, the Corporation shall, at its option, in lieu of delivering
        a fractional Share or other security therefore, satisfy the right to receive
        such fractional interest by payment to the Holder of an amount in cash
        equal (computed in the case of a fraction of a cent to the next lower
        cent) to the current market value of the right to subscribe for such fractional
        interest (computed on the basis of the last sale price of Shares of the
        Corporation on the New Zealand Stock Exchange or other market, exchange
        or quotation service where the Shares are quoted (and where more than
        one, the one where volume is generally greater) preceding the day on which
        such exercise takes place or, if no such price is available at the fair
        market value thereof as determined by the Corporation's Auditors).

Section 3.07  Determination of Adjustments:If
  any questions shall at any time arise with respect to the exercise price, such
  question shall be conclusively determined by the Corporation's Auditors, or,
  if they decline to so act any other firm of Chartered Accountants, in New Zealand
  , that the Corporation may designate and who shall have access to all appropriate
  records and such determination shall be binding upon the Corporation and the
  Holders.

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ARTICLE FOUR  COVENANTS BY THE CORPORATION

Section 4.01 - Reservation of Shares:The Corporation
  will reserve and there will remain unissued out of its authorised capital a
  sufficient number of Shares to satisfy the rights of purchase provided for in
  the Warrant Certificate.

ARTICLE FIVE  MERGER AND SUCCESSORS

Section 5.01  Corporation May Consolidate, etc. on
  Certain Terms:Nothing herein contained shall prevent any amalgamation or
  merger of the Corporation with or into any other corporation or corporations,
  or a conveyance or transfer of all or substantially all the properties and estates
  of the Corporation as an entirety to any corporation lawfully entitled to acquire
  and operate same; provided however that the corporation formed by such amalgamation
  or merger or which acquires by conveyance or transfer all or substantially all
  the properties and estates of the Corporation as an entirety shall be a corporation
  organised and existing under the laws of Canada, New Zealand, Australia or of
  the United States of America,and assumes the due and punctual performance and
  observance of all the convents and conditions hereof to be performed or observed
  by the Corporation.

Section 5.02  Successor Corporation Substituted: In case the Corporation, pursuant to Section 5.01 shall be amalgamated
  or merged with or into any other corporation or corporations, or shall convey
  or transfer all or substantially all of its properties and estates as an entirety
  to any other corporation, the successor corporation formed by such consolidation
  or amalgamation, or into which the Corporation shall have been amalgamated or
  merged or which shall have received a conveyance or transfer as aforesaid, shall
  succeed to and be substituted for the Corporation hereunder. Such changes in
  phraseology and form (but not in substance) may be made in the Warrant Certificate
  and herein as may be appropriate in view of such amalgamation, merger or transfer.

Section 5.03 - Transfers:The Corporation reserves
  the right to permit transfers of the Warrants in its sole discretion. Applications
  for transfer should be made in writing and signed by the registered owner of
  the warrant (with signature guaranteed by a bank or brokerage) to the Corporation
  at its principal office noted on the Warrant Certificate. The application must
  provide the name and address of the proposed transferee along with the original
  Warrant Certificate for cancellation and reissue. The Corporation may require
  as a condition for the transfer, that the Corporation be provided with an opinion
  of legal counsel in the jurisdiction of residence of the transferee to the effect
  that the transfer complies with applicable law.

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SUBSCRIPTION FORM

The undersigned being the registered holder of the within
  Warrant Certificate, hereby subscribes for _____________ of the common shares
  referred to in the said Warrant Certificate according to the conditions thereof
  and herewith makes payment of the purchase price in full for the said number
  of shares.

The undersigned hereby directs that the shares hereby subscribed
  for be issued and delivered as follows:

|NAME(S) IN FULL | ADDRESS | NUMBER OF SHARES
|--------------- | ------- | ----------------
|                |         |                 
|                |         |                 
|                |         |                 
|                |         |                 

DATED this          day of          20

SIGNATURE ___________________________

|NOTE: ANY SECURITES ACQUIRED PURSUANT TO THIS
      WARRANT CERTIFICATE ON OR PRIOR TO A  DATE WHICH IS FOUR MONTHS
      PLUS ONE DAY FROM THE DATE OF ISSUANCE WILL BE SUBJECT TO  A
      HOLD PERIOD EXPIRING ON SUCH DATE.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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EXHIBIT 4.8
  2004 SHARE OPTION PLAN

2004 SHARE OPTION PLAN

Dated for Reference 23 April, 2004



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ARTICLE 1PURPOSE AND INTERPRETATION

Purpose

The purpose of this Plan will be to
  advance the interests of Austral Pacific Energy Ltd. ("the Company") by encouraging
  equity participation in the Company through the acquisition of Common Shares
  of the Company. It is the intention of the Company that this Plan will at all
  times be in compliance with the rules and policies of the TSX Venture Exchange
  (or "TSX Venture") (the "TSX Venture Policies") and any inconsistencies between
  this Plan and the TSX Venture Policies whether due to inadvertence or changes
  in TSX Venture Policies will be resolved in favour of the latter.

Definitions


In this Plan

Affiliate means a company that
  is a parent or subsidiary of the Company, or that is controlled by the same
  entity as the Company;

Associate has the meaning assigned
  by the Securities Act;

Board means the board of directors
  of the Company or any committee thereof duly empowered or authorized to grant
  options under this Plan;

Change of Control includes situations
  where after giving effect to the contemplated transaction and as a result of
  such transaction:

(i) any one Person holds a sufficient
  number of voting shares of the Company or resulting company to affect materially
  the control of the Company or resulting company, or,

(ii) any combination of Persons, acting
  in concert by virtue of an agreement, arrangement, commitment or understanding,
  hold in total a sufficient number of voting shares of the Company or its successor
  to affect materially the control of the Company or its successor,

where such Person or combination of
  Persons did not previously hold a sufficient number of voting shares to affect
  materially control of the Company or its successor. In the absence of evidence
  to the contrary, any Person or combination of Persons acting in concert by virtue
  of an agreement, arrangement, commitment or understanding, holding more than
  20% of the voting shares of the Company or its successor is deemed to materially
  affect the control of the Company or its successor;

Common Shares means common shares
  without par value in the capital of the Company providing such class is listed
  on the TSX Venture;

Company means the Corporation
  named at the top hereof and includes, unless the context otherwise requires,
  all of its subsidiaries or affiliates and successors according to law;

Consultant means a Person or
  Consultant Company, other than an Employee, Officer or Director that:

(i) provides on an ongoing bona fide
  basis, consulting, technical, managerial or like services to the Company or
  an Affiliate of the Company, other than services provided in relation to a Distribution;

(ii) provides the services under a
  written contract between the Company or an Affiliate and the Person or the Consultant
  Company;

(iii) in the reasonable opinion of
  the Company, spends or will spend a significant amount of time and attention
  on the business and affairs of the Company or an Affiliate of the Company; and



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(iv) has a relationship with the Company
  or an Affiliate that enables the Person or Consultant Company to be knowledgeable
  about the business and affairs of the Company;

Consultant Company means for
  a Person consultant, a company or partnership of which the Person is an employee,
  shareholder or partner;

Directors means the directors
  of the Company as may be elected from time to time;

Discounted Market Pricehas the
  meaning assigned by Policy 1.1 of the TSX Venture Policies;

Disinterested Shareholder Approval
  means approval by a majority of the votes cast by all the Company's shareholders
  at a duly constituted shareholders' meeting, excluding votes attached to shares
  beneficially owned by Service Providers or their Associates;

Distribution has the meaning
  assigned by the Securities Act, and generally refers to a distribution of securities
  by the Company from treasury;

Effective Date for an Option
  means the date of grant thereof by the Board;

Employee means:

(a) a Person who is considered an employee
  under the Income Tax Act (i.e. for whom income tax, employment insurance and
  CPP deductions must be made at source);

(b) a Person who works full-time for
  the Company or its subsidiary providing services normally provided by an employee
  and who is subject to the same control and direction by the Company over the
  details and methods of work as an employee of the Company, but for whom income
  tax deductions are not made at source; or

(c) a Person who works for the Company
  or its subsidiary on a continuing and regular basis for a minimum amount of
  time per week providing services normally provided by an employee and who is
  subject to the same control and direction by the Company over the details and
  methods of work as an employee of the Company, but for whom income tax deductions
  need not be made at source;

Exercise Price means the amount
  payable per Common Share on the exercise of an Option, as determined in accordance
  with the terms hereof;

Expiry Date means the day on
  which an Option lapses as specified in the Option Commitment therefor or in
  accordance with the terms of this Plan;

Insider means

| | (i)  | an insider as defined in the TSX Venture Policies or as defined
      in securities legislation applicable to the Company;
| | ---- | --------------------------------------------------------------------------------------------------------------------------
|
| | (ii) | an Associate of any person who is an Insider by virtue of
      §(i) above;                                               

Investor Relations Activities
  has the meaning assigned by Policy 1.1 of the TSX Venture Policies, and means
  generally any activities or communications that can reasonably be seen to be
  intended to or be primarily intended to promote the merits or awareness of or
  the purchase or sale of securities of the Company;

Listed Shares means the number
  of issued and outstanding shares of the Company that have been accepted for
  listing on the TSX Venture, but excluding dilutive securities not yet converted
  into Listed Shares;

Management Company Employee means
  a Person employed by another Person or a corporation providing management services
  to the Company which are required for the ongoing successful operation of the
  business enterprise of the Company, but excluding a corporation or Person engaged
  primarily in Investor Relations Activities;

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NEX means a separate board of TSX Venture for companies
    previously listed on TSX Venture or the Toronto Stock Exchange which have
    failed to maintain compliance with the ongoing financial listing standards
    of those markets; Officer means a duly appointed senior officer of
    the Company; Option means the right to purchase Common Shares
    granted hereunder to a Service Provider; Option Commitment means the notice of grant of an
    Option delivered by the Company hereunder to a Service Provider and substantially
    in the form of Schedule A hereto; Optioned Shares means Common Shares that may be issued
    in the future to a Service Provider upon the exercise of an Option; Optionee means the recipient of an Option hereunder; Outstanding Shares means at the relevant time, the
    number of outstanding Common Shares of the Company from time to time; Participant means a Service Provider that becomes
    an Optionee; Person
 Plan means this Share Option Plan, the terms of which
    are set out herein or as may be amended; Plan Shares means the total number of Common Shares
    which may be reserved for issuance as Optioned Shares under the Plan as provided
    in §2.2; Regulatory Approval means the approval of the TSX
    Venture and any other securities regulatory authority that may have lawful
    jurisdiction over the Plan and any Options issued hereunder; Securities Act means the Securities Act, R.S.B.C.
    1996, c. 418, as amended from time to time; Service Provider means a Person who is a bona fide
    Director, Officer, Employee, Management Company Employee or Consultant, and
    also includes a company, of which 100% of the share capital is beneficially
    owned by one or more Person Service Providers; Share Compensation Arrangement means any Option under
    this Plan but also includes any other stock option, stock option plan, employee
    stock purchase plan or any other compensation or incentive mechanism involving
    the issuance or potential issuance of Common Shares to a Service Provider; Shareholders Approval means approval by a majority
    of the votes cast by eligible shareholders at a duly constituted shareholders'
    meeting; TSX Venture means the TSX Venture Exchange and any
    successor thereto; and TSX Venture Policies means the rules and policies
    of the TSX Venture as amended from time to time.


Other Words and Phrases


Words and Phrases used in this Plan but which are not defined
  in the Plan, but are defined in the TSX Venture Policies, will have the meaning
  assigned to them in the TSX Venture Policies.

|Gender |                                                                                                         
|------ | --------------------------------------------------------------------------------------------------------
|       |                                                                                                         
|1.4    | Words importing the masculine gender include the
      feminine or neuter, words in the singular include

130

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the plural, words importing a corporate entity include individuals, and vice
  versa.

ARTICLE 2SHARE OPTION PLAN

There is hereby established a Share Option Plan to recognize
  contributions made by Service Providers and to create an incentive for their
  continuing assistance to the Company and its Affiliates.

Maximum Plan Shares


The maximum aggregate number of Plan Shares that may be reserved
  for issuance under the Plan is 1,920,000Common Shares, unless this Plan
  is amended pursuant to the requirements of the TSX Venture Policies. This maximum
  number is inclusive of the current number of Shares reserved for Options being
  1,355,000 (leaving 565,000 available for further grants of Options).

Eligibility


Options to purchase Common Shares may be granted hereunder
  to Service Providers from time to time by the Board. Service Providers that
  are corporate entities will be required to undertake in writing not to effect
  or permit any transfer of ownership or option of any of its shares, nor issue
  more of its shares (so as to indirectly transfer the benefits of an Option),
  as long as such Option remains outstanding, unless the written permission of
  the TSX Venture and the Company is obtained.

Options Granted Under the Plan

All Options granted under the Plan will be evidenced by an
  Option Commitment in the form attached as Schedule A, showing the number of
  Optioned Shares, the term of the Option, a reference to vesting terms, if any,
  and the Exercise Price.

Subject to specific variations approved by the Board, all
  terms and conditions set out herein will be deemed to be incorporated into and
  form part of an Option Commitment made hereunder.

Limitations on Issue

Subject to §2.9, the following restrictions on issuances
  of Options are applicable under the Plan:

b) no Options can be granted under the Plan if the Company
    is designated "Inactive" (as defined in TSX Venture Policies) by the TSX Venture; c) the aggregate number of Options granted to Service Providers
    conducting Investor Relations Activities in any 12-month period must not exceed
    2% of the Listed Shares, calculated at the time of grant, without the prior
    consent of TSX Venture; and d) the aggregate number of options granted to any one Consultant
    in any 12-month period must not exceed 2% of the Listed Shares, calculated
    at the time of grant, without the prior consent of TSX Venture.


Options Not Exercised

In the event an Option granted under the Plan expires unexercised
  or is terminated by reason of dismissal of the Optionee for cause or is otherwise
  lawfully cancelled prior to exercise of the Option, the Optioned Shares that
  were issuable thereunder will be returned to the Plan and will be eligible for
  re-issue.

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Powers of the Board

The Board will be responsible for the general administration
  of the Plan and the proper execution of its provisions, the interpretation of
  the Plan and the determination of all questions arising hereunder. Without limiting
  the generality of the foregoing, the Board has the power to

allot Common Shares for issuance in connection with the exercise
    of Options; grant Options hereunder; subject to Regulatory Approval, amend, suspend, terminate
    or discontinue the Plan, or revoke or alter any action taken in connection
    therewith, except that no general amendment or suspension of the Plan will,
    without the written consent of all Optionees, alter or impair any Option previously
    granted under the Plan unless as a result of a change in TSX Venture Policies
    or the Company's tier classification thereunder; delegate all or such portion of its powers hereunder as
    it may determine to one or more committees of the Board, either indefinitely
    or for such period of time as it may specify, and thereafter each such committee
    may exercise the powers and discharge the duties of the Board in respect of
    the Plan so delegated to the same extent as the Board is hereby authorized
    so to do; and may in its sole discretion amend this Plan (except for previously
    granted and outstanding Options) to reduce the benefits that may be granted
    to Service Providers (before a particular Option is granted) subject to the
    other terms hereof.


Terms or Amendments Requiring Disinterested Shareholder
  Approval The Company will be required to obtain Disinterested Shareholder
    Approval prior to any of the following actions becoming effective: the Plan, together with all of the Company's previously established and
      outstanding stock option plans or grants, could result at any time in: (i) the aggregate number of shares reserved for issuance under stock
        options granted to Insiders exceeding 10% of the Listed Shares; (ii) the number of Optioned Shares issued to Insiders within a one-year
        period exceeding 10% of the Listed Shares; or, (iii) in the case of a Tier l Company only, the issuance
        to any one Optionee, within a 12-month period, of a number of shares exceeding
        5% of Listed Shares; or
 b) any reduction in the Exercise Price of an Option previously
      granted if the Optionee is an Insider at the time of the proposed amendment.
 ARTICLE 3TERMS AND CONDITIONS OF OPTIONS Exercise Price 3.1 The Exercise Price of an Option will be set by the Board
  at the time such Option is allocated under the Plan, and cannot be less than
  the Discounted Market Price. Term of Option 3.2 An Option can be exercisable for a maximum of 10 years
  from the Effective Date for a Tier 1 Company, or five years from the Effective
  Date for a Tier 2 or NEX Company. 132    Option Amendment 3.3 Subject to §2.9(b), the Exercise Price of an Option may be amended
    (other than an increase as allowed by TSX Venture Policies) only if at least
    six (6) months have elapsed since the later of the date of commencement of
    the term of the Option, the date the Company's shares commenced trading on
    the TSX Venture, or the date of the last amendment of the Exercise Price. 3.4 An Option must be outstanding for at least one year before the Company
  may extend its term, subject to the limits contained in §3.2. 3.5 Any proposed amendment to the terms of an Option must be approved by the
  TSX Venture prior to the exercise of such Option, in accordance with TSX Venture
  Policies. Vesting of Options 3.6 Subject to §13.7, vesting of Options is otherwise at the discretion
  of the Board, and will generally be subject to: a)
      the Service Provider remaining employed by or
          continuing to provide services to the Company or any of its subsidiaries
          and Affiliates as well as, at the discretion of the Board, achieving
          certain milestones which may be defined by the Board from time to time
          or receiving a satisfactory performance review by the Company or its
          subsidiary or affiliate during the vesting period; orb)
      remaining as a Director of the Company or any
          of its subsidiaries or Affiliates during the vesting period. 3.7 If the Company is a Tier 2 Company and the Plan Shares exceed 10% of the
  Listed Shares, any Options granted under the Plan will vest in accordance with
  the vesting schedule attached as Schedule B and may be exercised only after
  vesting. Vesting of Options Granted for Investor Relations Activities a)
      Options granted to Consultants conducting Investor
          Relations Activities will vest in accordance with Schedule B. Variation of Vesting Periods 3.8 At the time an Option is granted which carries vesting provisions, the
  Board may vary such vesting provisions provided in §3.7 and §a), subject
  to Regulatory Approval. Optionee Ceasing to be Director, Employee or Service Provider 3.9 No Option may be exercised after the Service Provider has left the employ/office
    or has been advised his services are no longer required or his service contract
    has expired, except as follows: b) in the case of a Tier 1 Company, Options granted to any Service Provider
      must expire within 90 days after the date the Optionee ceases to be employed
      with or provide services to the Company, but only to the extent that such
      Optionee was vested in the Option at the date the Optionee ceased to be
      so employed or to provide services to the Company; c) in the case of a Tier 2 or NEX Company, Options granted to a Service
      Provider conducting Investor Relations Activities must expire within 30
      days of the date the Optionee ceases to conduct such activities, but only
      to the extent that such Optionee was vested in the Option at the date the
      Optionee ceased to conduct such activities,
 133   d) in the case of a Tier 2 or NEX Company, Options granted to an Optionee
      other than one conducting Investor Relations Activities must expire within
      90 days after the Optionee ceases to be employed with or provide services
      to the Company, but only to the extent that such Optionee was vested in
      the Option at the date the Optionee ceased to be so employed or to provide
      services to the Company; and e) in the case of an Optionee being dismissed from employment or service
      for cause, such Optionee's Options, whether or not vested at the date of
      dismissal will immediately terminate without right to exercise same.
 Non Assignable 3.10 Subject to §3.10(a), all Options will be exercisable only by the
  Optionee to whom they are granted and will not be assignable or transferable. Adjustment of the Number of Optioned Shares  3.11 The number of Common Shares subject to an Option will be subject to adjustment
    in the events and in the manner following: b) in the event of a consolidation of the Common Shares as constituted
      on the date hereof, at any time while an Option is in effect, into a lesser
      number of Common Shares, the Company will thereafter deliver and an Optionee
      will accept, at the time of purchase of Optioned Shares hereunder, in lieu
      of the number of Optioned Shares in respect of which the right to purchase
      is then being exercised, the lesser number of Common Shares as result from
      the consolidation; c) in the event of any change of the Common Shares as constituted on the
      date hereof, at any time while an Option is in effect, the Company will
      thereafter deliver at the time of purchase of Optioned Shares hereunder
      the number of shares of the appropriate class resulting from the said change
      as an Optionee would have been entitled to receive in respect of the number
      of Common Shares so purchased had the right to purchase been exercised before
      such change; d) in the event of a capital reorganization, reclassification or change
      of outstanding equity shares (other than a change in the par value thereof)
      of the Company, a consolidation, merger or amalgamation of the Company with
      or into any other company or a sale of the property of the Company as or
      substantially as an entirety at any time while an Option is in effect, an
      Optionee will thereafter have the right to purchase and receive, in lieu
      of the Optioned Shares immediately theretofore purchasable and receivable
      upon the exercise of the Option, the kind and amount of shares and other
      securities and property receivable upon such capital reorganization, reclassification,
      change, consolidation, merger, amalgamation or sale which the holder of
      a number of Common Shares equal to the number of Optioned Shares immediately
      theretofore purchasable and receivable upon the exercise of the Option would
      have received as a result thereof. The subdivision or consolidation of Common
      Shares at any time outstanding (whether with or without par value) will
      not be deemed to be a capital reorganization or a reclassification of the
      capital of the Company for the purposes of this §3.12(d); e) an adjustment will take effect at the time of the event giving rise
      to the adjustment, and the adjustments provided for in this Section are
      cumulative; f) the Company will not be required to issue fractional shares in satisfaction
      of its obligations hereunder. Any fractional interest in a Common Share
      that would, except for the provisions of this §3.12(f), be deliverable
      upon the exercise of an Option will be cancelled and not be deliverable
      by the Company; and
 134   g) if any questions arise at any time with respect to the Exercise Price
      or number of Optioned Shares deliverable upon exercise of an Option in any
      of the events set out in this §3.12, such questions will be conclusively
      determined by the Company's auditors, or, if they decline to so act, any
      other firm of Chartered Accountants, in Vancouver, British Columbia (or
      in the city of the Company's principal executive office) that the Company
      may designate and who will have access to all appropriate records and such
      determination will be binding upon the Company and all Optionees.
 ARTICLE 4COMMITMENT AND EXERCISE PROCEDURES Option Commitment 4.1 Upon grant of an Option hereunder, an authorized officer of the Company
  will deliver to the Optionee an Option Commitment detailing the terms of such
  Options and upon such delivery the Optionee will be subject to the Plan and
  have the right to purchase the Optioned Shares at the Exercise Price set out
  therein subject to the terms and conditions hereof. Manner of Exercise 4.2 An Optionee who wishes to exercise
        his Option may do so by deliveringa)
      a written notice to the Company specifying the number of Optioned Shares
        being acquired pursuant to the Option; andb)
      cash or a certified cheque payable to the Company for the aggregate
        Exercise Price for the Optioned Shares being acquired. Delivery of Certificate and Hold Periods 4.3 As soon as practicable after receipt of the notice of exercise described
  in §4.2 and payment in full for the Optioned Shares being acquired, the
  Company will direct its transfer agent to issue a certificate to the Optionee
  for the appropriate number of Optioned Shares. Such certificate issued will
  bear a legend stipulating any resale restrictions required under applicable
  securities laws. Further, if the Company is a Tier 2 or NEX Company, or the
  Exercise Price is based on the Discounted Market Price, the certificate will
  also bear a legend stipulating that the Optioned Shares are subject to a four-month
  TSX Venture hold period commencing the date of the Option Commitment. Employment and Services  ARTICLE 5GENERAL 5.1 Nothing contained in the Plan will confer upon or imply in favour of any
  Optionee any right with respect to office, employment or provision of services
  with the Company, or interfere in any way with the right of the Company to lawfully
  terminate the Optionee's office, employment or service at any time pursuant
  to the arrangements pertaining to same. Participation in the Plan by an Optionee
  will be voluntary. No Representation or Warranty 5.2 The Company makes no representation or warranty as to the future market
  value of Common Shares issued in accordance with the provisions of the Plan
  or to the effect of the Income Tax Act (Canada) or any other taxing statute
  governing the Options or the Common shares issuable thereunder or the tax consequences
  to a Service Provider. Compliance with applicable securities laws as to the
  disclosure and resale obligations of each Participant is the responsibility
  of such Participant and not the Company. Interpretation 5.3 The Plan will be governed and construed in accordance with the laws of
  the Province of British Columbia. 135   Amendment of the Plan 5.4 The Board reserves the right, in its absolute discretion, to at any time
  amend, modify or terminate the Plan with respect to all Common Shares in respect
  of Options which have not yet been granted hereunder. Any amendment to any provision
  of the Plan will be subject to any necessary Regulatory Approvals unless the
  effect of such amendment is intended to reduce (but not to increase) the benefits
  of this Plan to Service Providers. 136   SCHEDULE ASHARE OPTION PLANOPTION COMMITMENT Notice is hereby given that, effective this ________ day of ________________
    , __________ (the "Effective Date") ♦ (the "Company") has granted to
    ___________________________________________ (the "Service Provider"), an Option
    to acquire ______________ Common Shares ("Optioned Shares") up to 5:00 p.m.
    Vancouver Time on the __________ day of ____________________ , __________
    (the "Expiry Date") at a Exercise Price of Cdn$ ____________ per share. At the date of grant of the Option, the Company is classified as a Tier ____
    company under TSX Venture Policies. Optioned Shares will vest and may be exercised as follows: ____________ In accordance with the vesting provisions set out in
    Schedule B of the Plan or ____________ As follows: The grant of the Option evidenced hereby is made subject to the terms and
    conditions of the Company's Share Option Plan, the terms and conditions of
    which are hereby incorporated herein. To exercise your Option, deliver a written notice specifying the number
    of Optioned Shares you wish to acquire, together with cash or a certified
    cheque payable to the Company for the aggregate Exercise Price, to the Company.
    A certificate for the Optioned Shares so acquired will be issued by the transfer
    agent as soon as practicable thereafter and will bear a minimum four month
    non-transferability legend from the date of this Option Commitment. [A Tier
    1 Company may grant stock options without a hold period, provided the exercise
    price of the options is set at or above the market price of the Company's
    shares rather than below.] The Company and the Service Provider represent that the Service Provider
    under the terms and conditions of the Plan is a bona fide [EMPLOYEE/ CONSULTANT/MANAGEMENT
    COMPANY EMPLOYEE] __________________________________ of the Company, entitled
    to receive Options under TSX Venture Exchange Policies. ♦ ____________________________
    Authorized Signatory 137   SCHEDULE B
    SHARE OPTION PLAN 
    VESTING SCHEDULE Options granted pursuant to the Plan to all Service Providers employed or
  retained by the Company will vest as follows: (a) 1/3 of the total number of Options granted
        will vest one year after the date of grant;(b) a further 1/3 of the total number of Options
        granted will vest two years after the date of grant; and(c) the remaining 1/3 of the total number of
        Options granted will vest three years after the date of grant.


138

---

EXHIBIT 4.9.1

PETROLEUM PRODUCTS SALE & PURCHASE AGREEMENT

**Petroleum Products Sale & Purchase
  Agreement**

Greymouth Petroleum Acquisition Company Limited
  Ngatoro Energy Limited



|         
|---------
|29.6.2004

---

|Petroleum Products Sale & Purchase Agreement
|--------------------------------------------
|                                            

|Table of Contents |                                     
|----------------- | ------------------------------------
|                  |                                     
|1.                | Definitions
      and Interpretation
|                  | 1.1                                 
|                  | 1.2                                 
|                  | 1.3                                 
|                  | 1.4                                 
|2.                | Nature of Agreement                 
|                  | 2.1                                 
|                  | 2.2                                 
|3.                | Condition                           
|                  | 3.1                                 
|                  | 3.2                                 
|                  | 3.3                                 
|                  | 3.4                                 
|                  | 3.5                                 
|4.                | Sale
      and Purchase             
|                  | 4.1                                 
|                  | 4.2                                 
|                  | 4.3                                 
|                  | 4.4                                 
|                  | 4.5                                 
|                  | 4.6                                 
|                  | 4.7                                 
|                  | 4.8                                 
|                  | 4.9                                 
|                  | 4.10                                
|                  | 4.11                                
|5.                | NEL's Obligations                   
|                  | 5.1                                 
|                  | 5.2                                 
|6.                | Mutual Warranties                   
|7.                | Completion
      Obligations        
|8.                | Indemnities                         
|                  | 8.1                                 
|                  | 8.2                                 
|9.                | Notices                             
|10.               | No Disclosure                       
|                  | 10.1                                

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|Petroleum Products Sale & Purchase Agreement
|--------------------------------------------
|                                            

|   | 10.2 Exceptions                            | 151
|-- | ------------------------------------------ | ---
|   | 10.3 Public Announcements                  | 152
|11 | Further Assurances                         | 152
|12 | Entire Agreement                           | 152
|13 | Amendment                                  | 152
|14 | Assignment                                 | 152
|15 | No Waiver                                  | 153
|16 | No Merger                                  | 153
|17 | Stamp Duty and Costs                       | 153
|18 | Governing Law                              | 153
|19 | Counterparts                               | 153
|20 | GST                                        | 153
|   | 20.1 Definitions                           | 153
|   | 20.2 All consideration GST
      exclusive | 153

|         
|---------
|29.6.2004

---

|Petroleum Products Sale & Purchase Agreement
|--------------------------------------------
|                                            

|Date    | 2003
|------- | ----
|        |     
|Parties |     
|        |     

| | 1. | Greymouth Petroleum Acquisition Company Limitedof Level 28, 151
      Queen Street, Auckland, New Zealand (GPAC)
| | -- | ----------------------------------------------------------------------------------------------------------------
|
| | 2. | Ngatoro Energy Limitedof 284 Karori Road, Karori, Wellington,
      New Zealand ( NEL)                          
|

|Recitals |   |                                                                                                                                                                                                                                                                                                              
|-------- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        
|         | A | NEL is the legal and beneficial owner of a 5% Percentage Interest
      in PMP 38148.                                                                                                                                                                                                                        
|        
|         | B | NEL desires to sell to GPAC, which desires to purchase from
      NEL, all Petroleum to which  NEL becomes entitled by reason of it being
      the holder of the 5% Percentage Interest in PMP  38148, for the consideration,
      upon the terms and subject to the conditions set out in this  Agreement.

It is agreed as follows.

|1.  | Definitions and Interpretation                                                                                                                                                                                                                                                                           
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|1.1 | JVOA Definitions                                                                                                                                                                                                                                                                                         
|   
|    | Unless the context otherwise requires, terms defined
        in the JVOA have the same meanings respectively when used in this Agreement.                                                                                                                                                                
|   
|1.2 | Definitions                                                                                                                                                                                                                                                                                              
|   
|    | In this Agreement:                                                                                                                                                                                                                                                                                       
|   
|    | "Act"means the Goods and Services
        Tax Act, 1985 of New Zealand.                                                                                                                                                                                                                                  
|   
|    | "Claim"means any claim, demand, action,
        proceeding, judgment, liability, loss, damage, cost or expense (including
        legal costs on a full indemnity basis, whether or not the subject of a
        court order, and disbursements) whatever and in any way arising.                        
|   
|    | "Completion Date"means the later
        of (a) the day 5 Business Days after the Minister's consent has been obtained
        in accordance with Clause 3 and in accordance with Clause 2 of the Sale
        Deed and (b) the first Business Day after the date of execution of this
        Agreement.
|   
|    | "Disposal Point"means the exit flange
        on the Parties' production or storage facilities at which possession of
        Petroleum passes from the Parties to the lifting Party and at which the
        Petroleum ceases to be subject to the JVOA.                                                
|   

|         
|---------
|29.6.2004

---

|Petroleum Products Sale & Purchase Agreement
|--------------------------------------------
|                                            

| | "Effective Date" means 1 July 2003.
      "Encumbrance" means any mortgage, charge, pledge, lien,
        assignment, security interest, royalty, overriding royalty, net profits
        interest, trust, contractual right of set-off or other security arrangement
        in favour of any person.
      "GST"means goods and services tax chargeable in accordance
        with the Act.
      "JVOA" means the Joint Venture Operating Agreement dated
        2 September 1993 between Petroleum Resources Limited, Australia and New
        Zealand Petroleum Limited, ARCO Petroleum New Zealand Inc., Minora Energy
        (New Zealand) Limited, Cairn Energy PLC, NZOG Services Limited and the
        Minister of Energy for New Zealand acting on behalf of Her Majesty the
        Queen in right of New Zealand and now between Petroleum Resources Limited,
        Australia and New Zealand Petroleum Limited, NEL, GPAC, Greymouth Petroleum
        Limited, Southern Petroleum (Ohanga) Limited and NZOG Services Limited.
      "NEL Sole Risk Operation" means the drilling of the GO
        880 Well by NEL as a Sole Risk Operation under the JVOA.
      "NEL's Petroleum Entitlements" has the meaning given in
        Clause 4.1.
      "Public Authority" includes:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | any government in any jurisdiction, whether national, regional or local;                                                                                                                 
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) | any minister, department, office, commission, delegate, instrumentality,
      agency, board, authority or organisation of any government or in which any
      government is interested;
|
| | (c) | any non-government regulatory authority; and                                                                                                                                             
|
| | (d) | any provider of public utility services, whether or not government owned
      or controlled.                                                                                            
|

| | "Purchase Price" means $US4,750,000.00 plus GST, subject
        to adjustment in accordance with clause 4.2.
      "Representative" in relation to a party means:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e) | each of the party's Affiliates; and  
| | --- | -------------------------------------
|
| | (f) | the party's or any of its Affiliates'
|
| |     | (i)                                  
|
| |     | (ii)                                 
|

| | "Sale Deed" means the Deed between Southern and NEL attached
        to this Agreement which, subject to compliance with the procedures set
        out in section 11.02(b) of the JVOA, is intended to be executed by Southern
        and NEL.
      "Southern" means Southern Petroleum (Ohanga) Limited of
        Level 28, 151 Queen Street, Auckland, New Zealand.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|         
|---------
|29.6.2004

---

|Petroleum Products Sale & Purchase Agreement
|--------------------------------------------
|                                            

|1.3 | PMP 38148
      Petroleum Mining Permit No.38148 is a Mining Permit which was granted
        in respect of some 38.212 square kilometres of the Licence Area for a
        term of 14 years commencing 23 December 1996, and which is held by the
        Parties according to their respective Percentage Interests as follows:
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|GPAC                                      | - | 51.5693% 
|----------------------------------------- | - | ---------
|Southern                                  | - | 4%       
|Greymouth Petroleum Limited               | - | 4%       
|Petroleum Resources Limited               | - | 20.43070%
|Australia & New Zealand Petroleum Limited | - | 15%      
|NEL                                       | - | 5%       

|1.4 | Interpretation                                                                                                                                      
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | Headings are for convenience only and
        do not affect interpretation. The following rules apply unless the context
        otherwise requires.
|   
|    | (a)                                                                                                                                                 
|   
|    | (b)                                                                                                                                                 
|   
|    | (c)                                                                                                                                                 
|   
|    | (d)                                                                                                                                                 
|   
|    | (e)                                                                                                                                                 
|   
|    | (f)                                                                                                                                                 
|   
|    | (g)                                                                                                                                                 
|   
|    | (h)                                                                                                                                                 
|   
|    | (i)                                                                                                                                                 
|   
|2.  | Nature of Agreement                                                                                                                                 
|   
|2.1 | Contractual not Proprietary                                                                                                                         
|   
|    | GPAC and NEL acknowledge and agree that
        the rights acquired by GPAC under this Agreement:                                                   
|   
|    | (a)                                                                                                                                                 
|   

|         
|---------
|29.6.2004

---

|Petroleum Products Sale & Purchase Agreement
|--------------------------------------------
|                                            

| | (b) | do not create or vest any interest in land;                                 
| | --- | ----------------------------------------------------------------------------
|
| | (c) | do not confer any entitlement to exclusive possession of any land; and      
|
| | (d) | are defined by, and limited to, the contractual covenants in this Agreement.
|

|2.2 | No Leasehold etc.                                                                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | For the avoidance of doubt, no leasehold interest, rent charge
      or profit à prendre is created, granted or assigned by this Agreement.                                                                                                                                                                                                                                              
|   
|3.  | Condition                                                                                                                                                                                                                                                                                                                                                                                
|   
|3.1 | Minister's Consent                                                                                                                                                                                                                                                                                                                                                                       
|   
|    | Insofar as this Agreement imposes any
        obligation on NEL which relates to or affects the production of Petroleum
        from the Licence Area, or the proceeds of sale of such production, it
        is entered into subject to the consent of the Minister as required by
        Section 41(2)(d) of the Crown Minerals Act.                                                  
|   
|3.2 | Application for Consent                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | As soon as practicable after the execution
        of this Agreement, GPAC and NEL shall jointly make application for the
        Minister's consent to this Agreement and shall produce such information
        relating to the Agreement as the Minister considers necessary or desirable
        and may require under Section 41(3) of the Crown Minerals Act.                      
|   
|3.3 | Satisfaction of Condition                                                                                                                                                                                                                                                                                                                                                                
|   
|    | Each of the parties shall use all reasonable
        endeavours to procure that the Minister's consent is obtained as soon
        as practicable. Each shall keep the other informed on a timely basis of
        its progress with regard to obtaining the Minister's consent.                                                                                                         
|   
|3.4 | Failure to Obtain Consent                                                                                                                                                                                                                                                                                                                                                                
|   
|    | If the Minister's Consent has not been
        obtained by 5pm on 30 September, 2003, either GPAC or NEL may terminate
        this Agreement immediately by giving written notice to the other. If Southern
        or NEL gives notice of termination under Clause 2.4 of the Sale Deed,
        this Agreement, ipso facto, shall terminate at the same time as the Sale
        Deed.
|   
|3.5 | Effect of Termination                                                                                                                                                                                                                                                                                                                                                                    
|   
|    | Termination of this Agreement in accordance
        with Clause 3.4 shall not affect:                                                                                                                                                                                                                                                                                                    
|   
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    | (c)                                                                                                                                                                                                                                                                                                                                                                                      
|   

|         
|---------
|29.6.2004

---

|Petroleum Products Sale & Purchase Agreement
|--------------------------------------------
|                                            

|4.  | Sale and Purchase                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|4.1 | Sale on Completion Date                                                                                                                                                                                                                                                                                                              
|   
|    | Subject to Clauses 3.1 and 7 and against
        receipt from GPAC of the payments due pursuant to Clause 4.2, with effect
        from the Effective Date NEL agrees to sell and assign absolutely to GPAC,
        which agrees to purchase and accept the assignment of, all of NEL's right,
        title and interest in and to:
|   
|    | (a)                                                                                                                                                                                                                                                                                                                                  
|   
|    | (b)                                                                                                                                                                                                                                                                                                                                  
|   
|    | (c)                                                                                                                                                                                                                                                                                                                                  
|   
|    | (d)                                                                                                                                                                                                                                                                                                                                  
|   
|    | (e)                                                                                                                                                                                                                                                                                                                                  
|   
|    | (f)                                                                                                                                                                                                                                                                                                                                  
|   
|    | (g)                                                                                                                                                                                                                                                                                                                                  
|   
|    | (h)                                                                                                                                                                                                                                                                                                                                  
|   
|    | (collectively "NEL's Petroleum Entitlements")
        free from all Encumbrances (other than NEL's obligation to pay royalty,
        as referred to in Clause 4.2(e)).                                                                                                                                                              
|   
|4.2 | Sale Consideration                                                                                                                                                                                                                                                                                                                   
|   
|    | As consideration for the agreement to
        sell and assign NEL's Petroleum Entitlements, GPAC shall (but subject
        to Clause 4.10):                                                                                                                                                                                         
|   
|    | (a)                                                                                                                                                                                                                                                                                                                                  
|   
|    | (b)                                                                                                                                                                                                                                                                                                                                  
|   

|         
|---------
|29.6.2004

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|Petroleum Products Sale & Purchase Agreement
|--------------------------------------------
|                                            

| | (c) | direct the escrow agent to pay to NEL on the Completion Date the sum
      of $500,000;                                                                                                                                                                                                                     
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (d) | reimburse to NEL on the Completion Date the amounts
        of all Cash Calls received on or after the Effective Date which NEL has
        paid.;                                                                                                                                                          
|
| | (e) | assume on the Completion Date NEL's obligation to
        pay royalty under the Crown Minerals Actin respect of NEL's Petroleum
        Entitlements to Petroleum produced and saved on and after the Effective
        Date, and indemnify and hold NEL harmless in respect of that obligation;
        and
|
| | (f) | with effect from the Completion Date, pay to the Operator all Cash Calls
      made after that date for which NEL would otherwise be responsible in respect
      of its 5% Percentage Interest under the JVOA.                                                                                             
|

|4.3 | Method of Payment                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | GPAC shall pay amounts due under Clause
        4.2 to an account nominated by NEL prior to the payment date by direct
        electronic transfer received in that account in immediately available
        funds on the payment date.                                                    
|   
|4.4 | Refund of Deposit                                                                                                                                                                                                                                                                          
|   
|    | If the deposit becomes refundable in accordance
        with Clause 4.2(a), NEL shall direct the escrow agent to pay that amount
        to an account nominated by GPAC by direct electronic transfer received
        in that account in immediately available funds on the payment date.
|   
|4.5 | Interest                                                                                                                                                                                                                                                                                   
|   
|    | If any amount payable under this Agreement
        is not paid on the due date, it will bear interest at the Agreed Interest
        Rate computed and compounded daily for the period commencing on the due
        date for payment and expiring on the actual date of payment.          
|   
|    | The right to require payment of interest
        under this Clause is without prejudice to any other rights either party
        may have against the other at law or in equity.                                                                                                           
|   
|4.6 | Time of the Essence                                                                                                                                                                                                                                                                        
|   
|    | As regards payments due under this Agreement,
        GPAC and NEL agree that time is of the essence.                                                                                                                                                                                      
|   
|4.7 | Property and Risk                                                                                                                                                                                                                                                                          
|   
|    | With regard to NEL's Petroleum Entitlements,
        in each instance property and risk will pass to GPAC when:                                                                                                                                                                            
|   
|    | (a)                                                                                                                                                                                                                                                                                        
|   
|    | (b)                                                                                                                                                                                                                                                                                        
|   
|    | (c)                                                                                                                                                                                                                                                                                        
|   

|         
|---------
|29.6.2004

---

|Petroleum Products Sale & Purchase Agreement
|--------------------------------------------
|                                            

|4.8  | Possession                                                                                                                                                                                                                                                                                                                                        
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     | Possession of NEL's Petroleum Entitlements
        will be given to GPAC, in each instance, at the Disposal Point.                                                                                                                                                                                                                                
|    
|4.9  | Additional Documents                                                                                                                                                                                                                                                                                                                              
|    
|     | On the Completion Date and thereafter
        when so requested by GPAC, NEL shall execute and deliver to GPAC, such
        assignments and other documents as are necessary or desirable in order
        to provide GPAC with the full benefit and advantage of NEL's Petroleum
        Entitlements and all of its rights in relation thereto.
|    
|4.10 | Relief from Payment Obligations                                                                                                                                                                                                                                                                                                                   
|    
|     | If for any reason, other than any act or omission on the part
      of GPAC:                                                                                                                                                                                                                                                                      
|    
|     | (a)                                                                                                                                                                                                                                                                                                                                               
|    
|     | (b)                                                                                                                                                                                                                                                                                                                                               
|    
|     | GPAC shall, without prejudice to any other
        rights it may have at law or in equity, be relieved of its obligations
        to make further payments under Clause 4.2.                                                                                                                                                                      
|    
|4.11 | Effective Date                                                                                                                                                                                                                                                                                                                                    
|    
|     | Subject to completion on the Completion
        Date, the sale and assignment of NEL's Petroleum                                                                                                                                                                                                                                                  
|    
|     | Entitlements will take effect as on and
        from the Effective Date and the Purchase Price shall be adjusted to reflect
        any Cash Calls received by NEL on or after the Effective Date and any
        receipts by NEL from sales of Petroleum produced on or after the Effective
        Date.                                        
|    
|5.   | NEL's Obligations                                                                                                                                                                                                                                                                                                                                 
|    
|5.1  | NEL's Warranties                                                                                                                                                                                                                                                                                                                                  
|    
|     | NEL warrants to GPAC, on the date of execution of this Agreement
      and on the Completion Date, that:                                                                                                                                                                                                                                          
|    
|     | (a)                                                                                                                                                                                                                                                                                                                                               
|    
|     | (b)                                                                                                                                                                                                                                                                                                                                               
|    
|5.2  | NEL's Covenants                                                                                                                                                                                                                                                                                                                                   
|    
|     | NEL covenants with GPAC that, from and
        after completion and throughout the term of the JVOA:                                                                                                                                                                                                                                              
|    
|     | (a)                                                                                                                                                                                                                                                                                                                                               
|    

|         
|---------
|29.6.2004

---

|Petroleum Products Sale & Purchase Agreement
|--------------------------------------------
|                                            

| |     | GPAC, in a form satisfactory to GPAC, to assume
        and discharge all of NEL's obligations under this Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) | NEL shall not sell, transfer, assign or otherwise
        dispose of the whole or any part of NEL's Petroleum Entitlements, except
        to GPAC and in the manner described in this Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | (c) | NEL shall deliver to GPAC, or make available for
        delivery to GPAC, all of NEL's Petroleum Entitlements at the Delivery
        Point as soon as practicable after it becomes available to NEL;                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (d) | NEL shall not grant or create, or suffer the creation
        of, any Encumbrance over the whole or any part of either or both of NEL's
        5% Percentage Interest and NEL's Petroleum Entitlements;                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (e) | NEL shall, with effect from the execution date hereunder,
        appoint GPAC's nominee as NEL's representative on the Operating Committee,
        change the representative as and when requested by GPAC and give notice
        of each such appointment to the Parties as required by Section 4.02(a)
        of the JVOA and, until the Completion Date, GPAC shall ensure that all
        communications and information relating to the Operating Committee or
        NEL's 5% Percentage Interest will be provided to NEL immediately it comes
        into the posession of GPAC or its nominee under this clause;
|
| | (f) | subject to Clause 5.2(e) and(g), NEL shall comply
        with all of the conditions subject to which the Licence and the Mining
        Permit were granted and with the provisions of the JVOA;                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | (g) | NEL shall not agree to any amendment of, give any
        consent or approval under or waive any provision of the JVOA or make any
        decision as to any matter reserved for decision by the Parties under the
        JVOA, without in each instance having obtained the prior approval of GPAC
        or having acted as directed by GPAC; and                                                                                                                                                                                                                                                                         
|
| | (h) | NEL shall forward to GPAC as soon as practicable
        all Cash Calls, notices and other communications received by NEL from
        the Operator or any of the other Parties under the JVOA.                                                                                                                                                                                                                                                                                                                                                                                                                                
|

|6. | Mutual Warranties                              
|-- | -----------------------------------------------
|   |                                                
|   | Each of the parties warrants to the other that:

| | (a) | it is duly incorporated with limited liability and
        validly existing under the laws of its country of incorporation;                                                                                                                                                                                                              
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) | it has full corporate power and has been properly
        authorised by all necessary corporate action to execute this Agreement,
        and this Agreement (subject to the Minister's consent) constitutes a legal,
        valid and binding obligation enforceable against it in accordance with
        the terms of this Agreement;
|
| | (c) | the signing of this Agreement and the performance
        of the transactions contemplated by this Agreement will not contravene
        or constitute a material breach under the provisions of any agreement,
        instrument, law, judgment, order, licence, permit or consent by which
        it is bound;                       
|

|         
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|29.6.2004

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|Petroleum Products Sale & Purchase Agreement
|--------------------------------------------
|                                            

| | (d) | it has not incurred any obligation or liability,
        contingent or otherwise, for brokers' or finders' fees in respect of the
        transactions contemplated by this Agreement for which the other party
        will have any obligation;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (e) | no step has been taken to wind it up, appoint a
        controller or administrator, seize or take possession of any of its assets
        or make any arrangement, compromise or composition with any of its creditors;
        and             
|
| | (f) | it is able to pay its debts as and when they become
        due and payable.                                                                                                                                                                     
|

|7. | Completion Obligations                                                                                                                                                                                                                                              
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                     
|   | This Agreement and the Sale Deed are interdependent.
        Neither party is obliged to complete the sale and assignments of NEL's
        Petroleum Entitlements unless, at the same time, completion occurs in
        accordance with Clause 3 of the Sale Deed.

|8.  | Indemnities                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|8.1 | GPAC's Indemnity                                                                                                                                                                                    
|   
|    | GPAC shall indemnify NEL against any claims
        which may be made or brought against NEL or claims, costs or losses which
        NEL may sustain or incur arising from or in connection with:  
|   
|    | (a)                                                                                                                                                                                                 
|   
|    | (b)                                                                                                                                                                                                 
|   
|    | (c)                                                                                                                                                                                                 
|   
|8.2 | NEL's Indemnity                                                                                                                                                                                     
|   
|    | NEL shall indemnify GPAC against any claims
        which may be made or brought against GPAC or claims, costs or losses which
        GPAC may sustain or incur arising from or in connection with:
|   
|    | (a)                                                                                                                                                                                                 
|   
|    | (b)                                                                                                                                                                                                 
|   
|9.  | Notices                                                                                                                                                                                             
|    |                                                                                                                                                                                                     
|    | Any notice, agreement, consent, approval,
        waiver or direction given under this Agreement:                                                                                                   

|(a) | must be in writing addressed to the intended recipient
        at the address shown below or the address last notified by the intended
        recipient to the sender: GPAC
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | Greymouth Petroleum Mining Company Limited                                                                                                                                  
|   

|         
|---------
|29.6.2004

---

|Petroleum Products Sale & Purchase Agreement
|--------------------------------------------
|                                            

|    | P.O. Box 1394
        Shortland Street
        Auckland N.Z.
        Attention: Chairman 
        Fax: (649) 377 4928                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | NEL                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Ngatoro Energy Limited 
      284 Karori Road 
      Karori 
      Wellington N.Z.                                                                                                                                                                                                                                                                                                                                                     
|   
|    | Attention: Manager, Corporate Affairs 
      Fax: (644) 476 0120                                                                                                                                                                                                                                                                                                                                                                       
|   
|(b) | must be signed by a person duly authorised by the sender; and                                                                                                                                                                                                                                                                                                                                                                          
|   
|(c) | will be taken to have been given when delivered, received or left at
      the above address. If delivery or receipt occurs on a day when business
      is not generally carried on in the place to which the communication is sent
      or is later than 4 pm (local time) it will be taken to have been duly given
      at the commencement of business on the next day when business is generally
      carried on in that place.
|   

|10.  | No Disclosure                                                                                                                                                                                                                                                                       
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|10.1 | Confidentiality                                                                                                                                                                                                                                                                     
|    
|     | Subject to Clause 10.2, each of the parties shall keep confidential
      the terms of this Agreement and all documents and other information relating
      to this Agreement or the transactions contemplated by it.                                                              
|    
|10.2 | Exceptions                                                                                                                                                                                                                                                                          
|    
|     | A party may make any disclosures in relation
        to this Agreement as it thinks necessary to:                                                                                                                                                                                   
|    
|     | (a)                                                                                                                                                                                                                                                                                 
|    
|     | (b)                                                                                                                                                                                                                                                                                 
|    
|     | (c)                                                                                                                                                                                                                                                                                 
|    
|     | In the case of disclosure under paragraph
        (b), the party wishing to make the disclosure must give the other party
        prior notice of the disclosure and use reasonable endeavours to agree
        with the other party the form of, and the extent of, the disclosure.
|    

|         
|---------
|29.6.2004

---

|Petroleum Products Sale & Purchase Agreement
|--------------------------------------------
|                                            

|10.3 | Public Announcements                                                                                                                                                                                                                                                                                                                                           
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     | Except as required by applicable law or the requirements
        of any Public Authority or of any Stock Exchange on which the shares of
        a party or its holding company are quoted, all press releases and other
        public announcements relating to the transactions dealt with by this Agreement
        must be in terms agreed by the parties.
|    
|11.  | Further Assurances                                                                                                                                                                                                                                                                                                                                             
|    

|    | Each party shall take all steps, execute all documents and do everything
      reasonably required by the other party to give effect to any of the transactions
      contemplated by this Agreement.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                      
|12. | Entire Agreement                                                                                                                                                                                     

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | This Agreement (together with the Sale Deed of even
        date) embodies the entire agreement between the parties with respect to
        its subject matter and supersedes any prior negotiation, arrangement,
        understanding or agreement with respect to the subject matter or any term
        of the agreement.
      Each party releases the other from, and agrees not to
        make any claims against the other or any of its Representatives, in respect
        of or arising from any conduct in relation to any draft of this Agreement,
        or any negotiation, arrangement, understanding or agreement with respect
        to the subject matter or any term of this Agreement, whether the conduct
        occurred before or during the making of this Agreement.

|13. | Amendment                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------
|   
|    | This Agreement may be amended only by
        another agreement executed by all parties who may be affected by the amendment.
|   
|14. | Assignment                                                                                                                   
|   
|    | (a)                                                                                                                          
|   
|    | (b)                                                                                                                          
|   
|    | (c)                                                                                                                          
|   

|         
|---------
|29.6.2004

---

|Petroleum Products Sale & Purchase Agreement
|--------------------------------------------
|                                            

|15. | No Waiver                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                      
|    | No failure to exercise and no delay in exercising
        any right, power or remedy under this Agreement will operate as a waiver.
        Nor will any single or partial exercise of any right, power or remedy
        preclude any other or further exercise of that or any other right, power
        or remedy.

|16. | Merger                                                                                                             
|--- | -------------------------------------------------------------------------------------------------------------------
|   
|    | The rights and obligations of the parties will merge
        on completion of any transaction under this Agreement.
|   

|17. | Stamp Duty and Costs                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Each party shall bear its own costs arising out of
        the preparation of this Agreement but GPAC shall bear all fees payable
        under the Crown Minerals Act on this Agreement, on any instruments entered
        into under this Agreement, and in respect of each dealing or other transaction
        evidenced by this Agreement. GPAC shall indemnify NEL on demand against
        any liability for such fees (including fines and penalties).

|18. | Governing Law                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | This Agreement is governed by the laws of New Zealand.
        The parties submit to the non-exclusive jurisdiction of the courts exercising
        jurisdiction there.
|   
|19. | Counterparts                                                                                                                                                            
|   
|    | This Agreement may be executed in any number of
        counterparts. All counterparts together will be taken to constitute one
        instrument.                     
|   

|20.  | GST                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|20.1 | Definitions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    
|     | In this Clause 25, consideration, supplyand
        tax invoicehave the same meanings as in the Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    
|20.2 | All consideration GST exclusive                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    
|     | GST is chargeable in respect of any supply made
        under, pursuant to or in connection with this Agreement and, unless the
        consideration for that supply is expressly agreed to be GST inclusive,
        the recipient of that supply shall pay to the supplier an amount equal
        to the GST chargeable on that supply in addition to any other consideration
        payable for that supply. No payment shall be required under this Clause
        until the supplier provides to the recipient a tax invoice in respect
        of the supply.
|    

|         
|---------
|29.6.2004

---

|Petroleum Products Sale & Purchase Agreement
|--------------------------------------------
|                                            

EXECUTED in Wellington, New Zealand. Executed by GREYMOUTH PETROLEUMACQUISITION COMPANY LIMITED

|_____________________________
      Director Signature | _____________________________
      Director/Secretary Signature
|------------------------------------------------------ | ----------------------------------------------------------------
|                                                       |                                                                 
|_____________________________
      Print Name         | _____________________________
      Print Name                  

Executed by NGATORO ENERGY LIMITED:

|_____________________________
      Director Signature | _____________________________
      Director/Secretary Signature
|------------------------------------------------------ | ----------------------------------------------------------------
|                                                       |                                                                 
|_____________________________
      Print Name         | _____________________________
      Print Name                  

|         
|---------
|29.6.2004

---

EXHIBIT 4.9.2SALE DEED FOR PML 38148

Sale Deed

Southern Petroleum (Ohanga) Limited




Page (155)

---

Sale Deed

|Table of Contents |                                
|----------------- | -------------------------------
|1.                | Definitions and Interpretation 
|                  | 1.1 JVOA Definitions           
|                  | 1.2  Definitions               
|                  | 1.3  Interpretation            
|2.                | Condition                      
|                  | 2.1  Minister's Consent        
|                  | 2.2  Application for Consent   
|                  | 2.3  Satisfaction of Condition 
|                  | 2.4  Right to Terminate        
|                  | 2.5  Effect of Termination     
|3.                | Sale and Purchase              
|                  | 3.1  Sale on an Completion Date
|                  | 3.2  Sale Consideration        
|                  | 3.3  Method of Payment         
|                  | 3.4  Interest                  
|                  | 3.5 Time of the Essence        
|                  | 3.6 Property and Risk          
|                  | 3.7 Possession                 
|                  | 3.8 Additional Documents       

---

Sale Deed

|    | 3.9 Effective
      Date       | 166
|--- | ------------------------------ | ---
|4.  | Completion Obligations         | 166
|    | 4.1 Relief                     | 166
|    | 4.2 Interdependence            | 167
|5.  | NEL's Obligations              | 167
|    | 5.1 NEL's Warranties           | 167
|    | 5.2 NEL's Covenants            | 167
|6.  | Mutual Warranties              | 168
|7.  | Indemnities                    | 168
|    | 7.1 Southern's
      Indemnity | 168
|    | 7.2 NEL's Indemnity            | 169
|8.  | Notices                        | 169
|9.  | No Disclosure                  | 170
|    | 9.1 Confidentiality            | 170
|    | 9.2 Exceptions                 | 170
|    | 9.3 Public Announcements       | 171
|10. | Further Assurances             | 171
|11. | Entire Agreement               | 171
|12. | Amendment                      | 172

---

Sale Deed

|13. | Assignment                                 | 172
|--- | ------------------------------------------ | ---
|14. | No Waiver                                  | 172
|15. | No Merger                                  | 172
|16. | Stamp Duty and Costs                       | 172
|17. | Governing Law                              | 173
|18. | Counterparts                               | 173
|19. | GST                                        | 173
|    | 19.1 Definitions                           | 173
|    | 19.2 All consideration
      GST exclusive | 173

Page (158)

---

Sale Deed

|Date     | 2003                                                                                                                                                                                                                                                                                                                      
|-------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                                                                                                                                           
|Parties  |                                                                                                                                                                                                                                                                                                                           
|         |                                                                                                                                                                                                                                                                                                                           
|1.       | Southern Petroleum (Ohanga) Limitedof Level 28, 151 Queen Street,
      Auckland, New Zealand ( Southern)                                                                                                                                                                                                                 
|        
|2.       | Ngatoro Energy Limitedof 284 Karori Road, Karori, Wellington,
      New Zealand ( NEL)                                                                                                                                                                                                                                    
|        
|Recitals |                                                                                                                                                                                                                                                                                                                           
|        
|A        | NEL is the legal and beneficial owner of the Property.                                                                                                                                                                                                                                                                    
|        
|B        | By the Petroleum Products SPA, NEL agreed to sell
      and assign, with effect from the Effective Date, all of its rights to Petroleum
      produced from the Licence Area and once ownership thereof has passed to
      NEL under the JVOA, as well as all of NEL's rights under any contracts relating
      thereto.
|        
|C        | NEL has agreed to sell and Southern has agreed to
      purchase the Property.                                                                                                                                                                                                                                            

It is agreed as follows.

|1.  | Definitions and Interpretation                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------
|   
|1.1 | JVOA Definitions                                                                                                                    
|   
|    | Unless the context otherwise requires, terms defined
        in the JVOA have the same meanings respectively when used in this Deed.
|   
|1.2 | Definitions                                                                                                                         
|   
|    | In this Deed:                                                                                                                       

"Act" means the Goods and Services Tax Act,
  1985 of New Zealand.

Page (159)

---

Sale Deed

"Claim" means any claim, demand, action, proceeding,
  judgment, liability, loss, damage, cost or expense (including legal costs on
  a full indemnity basis, whether or not the subject of a court order, and disbursements)
  whatever and in any way arising.

"Completion Date" has the same meaning as is
  given to that term in the Petroleum Products SPA.

"Effective Date"


"Encumbrance" means any mortgage, charge, pledge,
  lien, assignment, security interest, royalty, overriding royalty, net profits
  interest, trust, contractual right of set-off or other security arrangement
  in favour of any person, but does not include the Petroleum Products SPA..

"GPAC" means Greymouth Petroleum Acquisition
  Company Limited of Level 28, 151 Queen Street, Auckland, New Zealand.

"GST" means good and services tax chargeable
  in accordance with the Act.

"Information"means all geological,
  geophysical or technical information within the custody or control of NEL being
  information that relates to the presence, absence, extent or production of hydrocarbon
  deposits in the area of PMP 38148 and its surrounds and which has been obtained
  from the exploration and prospecting for or production of Petroleum within the
  area of the Permit (and surrounding the area of the Permit to enable Buyer to
  have full data in relation to the area of the Permit) including, without limitation,
  the books, records, seismic and interpretative data, notes, drawings, maps and
  other information (in various media) related to PMP 38148 and its surrounds;

"JVOA" means the Joint Venture Operating Agreement
  dated 2 September 1993 between Petroleum Resources Limited, Australia and New
  Zealand Petroleum Limited, ARCO Petroleum New Zealand Inc., Minora Energy (New
  Zealand) Limited, Cairn Energy PLC, NZOG Services Limited and the Minister of
  Energy for New Zealand acting on behalf of Her Majesty the Queen in right of
  New Zealand.

"NEL Sole Risk Operation" means the drilling
  of the GO 880 Well by NEL as a Sole Risk Operation under the JVOA.

"Ngatoro Gas Contract"means the
  Contract for the Sale and Purchase of Ngatoro Gas dated 18 February 1998 the
  current parties to which being NEL, Southern, Petroleum Resources Limited, Australia
  and New Zealand Petroleum Limited, Greymouth Petroleum Acquisition Company Limited
  and Greymouth Petroleum Limited as "Seller" and Greymouth Petroleum Acquisition
  Company Limited as "Buyer"

Page (160)

---

Sale Deed

"Oil Inventory"means all Petroleum to
  which NEL is entitled or which has been taken by NEL in the exercise of its
  rights under the JVOA and not as of the Effective Date sold or otherwise disposed
  of by NEL.

"Petroleum Products SPA" means the Petroleum
  Products Sale and Purchase Agreement dated the same date as this Deed between
  GPAC and NEL.

"Property" means collectively:

|(a) | NEL's 5% Percentage Interest in PMP 38148;                                                                                                                                                                               
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | Information;                                                                                                                                                                                                             
|   
|(c) | Oil Inventory;                                                                                                                                                                                                           
|   
|(d) | NEL's rights and interests under the Ngatoro Gas Contract;                                                                                                                                                               
|   
|(e) | NEL's Contributing Interest share in all
        Joint Property including, in particular, NEL's interest in all funds held
        in the Joint Account; and                                                             
|   
|(f) | all of NEL's rights under the JVOA and
        any contract entered into pursuant thereto; but subject to NEL's obligations
        to deliver and GPAC's rights to take, pursuant to the Petroleum Products
        SPA:
|   
|    | (i)                                                                                                                                                                                                                      
|   
|    | (ii)                                                                                                                                                                                                                     

"Public Authority" includes:

|(a) | any government in any jurisdiction, whether national, regional or local;                                                                                                                     
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | any minister, department, office, commission, delegate,
        instrumentality, agency, board, authority or organisation of any government
        or in which any government is interested;
|   
|(c) | any non-government regulatory authority; and                                                                                                                                                 
|   
|(d) | any provider of public utility services, whether or not government owned
      or controlled.                                                                                                

"Purchase Price" means $250,000.00 plus GST.

Page (161)

---

Sale Deed

|    | "Representative"in relation to a party means:                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | (a)                                                                                                                                                 
|   
|    | (b)                                                                                                                                                 
|   
|    |                                                                                                                                                     
|   
|    |                                                                                                                                                     
|   
|1.3 | Interpretation                                                                                                                                      
|   
|    | Headings are for convenience only and
        do not affect interpretation. The following rules apply unless the context
        otherwise requires.
|   
|    | (a)                                                                                                                                                 
|   
|    | (b)                                                                                                                                                 
|   
|    | (c)                                                                                                                                                 
|   
|    | (d)                                                                                                                                                 
|   
|    | (e)                                                                                                                                                 
|   
|    | (f)                                                                                                                                                 
|   
|    | (g)                                                                                                                                                 
|   
|    | (h)                                                                                                                                                 
|   
|    | (i)                                                                                                                                                 

Page (162)

---

Sale Deed

|2.  | Condition                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|2.1 | Minister's Consent                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    | This Deed and the Petroleum Products SPA
        are entered into subject to the consent of the Minister as required by
        Section 41(2) of the Crown Minerals Act.                                                                                                                                                                                                                                 
|   
|2.2 | Application for Consent                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | As soon as practicable after the date
        of execution of this Deed, Southern and NEL shall jointly make application
        for the Minister's consent and shall produce such information relating
        to the transactions evidenced by this Deed as the Minister considers necessary
        or desirable and may require under Section 41(3) of the Crown Minerals
        Act.               
|   
|2.3 | Satisfaction of Condition                                                                                                                                                                                                                                                                                                                                                                                
|   
|    | Each of the parties shall use all reasonable
        endeavours to procure that the Minister's consent is obtained as soon
        as practicable. Each shall keep the other informed on a timely basis of
        its progress with regard to obtaining the Minister's consent.                                                                                                                         
|   
|2.4 | Right to Terminate                                                                                                                                                                                                                                                                                                                                                                                       
|   
|    | If the Minister's consent has not been
        obtained by 5pm on 30 September, 2003, either Southern or NEL may terminate
        this Deed immediately by giving written notice to the other. If GPAC or
        NEL gives notice of termination under Clause 3.4 of the Petroleum Products
        SPA, this Deed, ipso facto, shall terminate at the same time as the Petroleum
        Products SPA.
|   
|2.5 | Effect of Termination                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    | Termination in accordance with Clause
        2.4 will not affect:                                                                                                                                                                                                                                                                                                                                       
|   
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                      

Page (163)

---

Sale Deed

|3.  | Sale and Purchase                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|3.1 | Sale on Completion Date                                                                                                                                                                                                                                            
|   
|    | Subject to Clauses 2.1 and 4, on the Completion
        Date NEL sells and assigns absolutely to Southern, which purchases and
        accepts the assignment of, all of NEL's right, title and interest in and
        to the Property free from all Encumbrances.
|   
|3.2 | Completion by Southern                                                                                                                                                                                                                                             
|   
|    | As consideration for the sale and assignment
        of the Property, Southern shall on the                                                                                                                                                                        
|   
|    | Completion Date pay to NEL the Purchase
        Price, adjusted pursuant to clause 3.10, and shall deliver to NEL against
        receipt from NEL of the items listed in Clause 3.3:                                                                              
|   
|    | (a)                                                                                                                                                                                                                                                                
|   
|    | (b)                                                                                                                                                                                                                                                                
|   
|    | (c)                                                                                                                                                                                                                                                                
|   
|    | (d)                                                                                                                                                                                                                                                                
|   
|3.3 | Sale Consideration                                                                                                                                                                                                                                                 
|   
|    | As consideration for the sale and assignment
        of the Property, Southern shall on the Completion Date pay to NEL the
        amounts and deliver to NEL the items listed in Clause 3.2, against receipt
        from NEL of:                                 

Page (164)

---

Sale Deed

|    | (a)                                                                                                                                                                                                                                                                          | A proper registrable assignment of NEL's interest
        as a holder of the Mining Permit, and an assignment of its Percentage
        Interest under the JVOA, duly executed by NEL and Southern;                                                                                                                                                                                                                                                                                 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | (b)                                                                                                                                                                                                                                                                          | One counterpart of the written instrument referred
        to in Section 11.03(ii) of the JVOA and in 3.2 above;                                                                                                                                                                                                                                                                                                                                                                    
|   
|    | (c)                                                                                                                                                                                                                                                                          | a covenant in a form satisfactory to GPAC and NEL,
        duly executed by GPAC and Southern and NEL, whereby Southern shall assume
        and agree to discharge all of NEL's obligations under the Petroleum Products
        SPA and NEL shall assign absolutely to Southern, free from all Encumbrances,
        all of NEL's rights under the Petroleum Products SPA and GPAC shall release
        NEL from any further obligation to GPAC under the Petroleum Products SPA;
|   
|    | (d)                                                                                                                                                                                                                                                                          | an executed Deed of Assignment in a form satisfactory
        to Southern whereby NEL assigns to Southern all of NEL's interest in the
        Ngatoro Gas Contract;                                                                                                                                                                                                                                                                                                                
|   
|    | (e)                                                                                                                                                                                                                                                                          | such other transfers, assignments, deeds of assumption
        and other documents or instruments as are necessary or desirable effectually
        to convey or assign legal and beneficial ownership of the Property to
        Southern and to provide Southern with the full benefit and advantage thereof
        (particulars of which documents and instruments will be notified by Southern
        to NEL a reasonable time prior to the Completion Date).                 
|   
|3.4 | Method of Payment                                                                                                                                                                                                                                                           
|   
|    | Southern shall pay amounts due under Clause
        3.2 to an account nominated by NEL prior to the payment date by direct
        electronic transfer received in that account in immediately available
        funds on the Completion Date.                              
|   
|3.5 | Interest                                                                                                                                                                                                                                                                    
|   
|    | If any amount payable under this Deed
        is not paid on the due date, it will bear interest at the Agreed Interest
        Rate computed and compounded daily for the period commencing on the due
        date for payment and expiring on the actual date of payment.
|   
|    | The right to require payment of interest
        under this Clause is without prejudice to any other rights either party
        may have against the other at law or in equity.                                                                                            

Page (165)

---

Sale Deed

|3.6  | Time of the Essence                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     | As regards payments due under this Deed, the parties
        agree that time is of the essence.                                                                                                                                                                                                                                                                                                                                                                     
|    
|3.7  | Property and Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    
|     | The Property will be at the risk of NEL until the
        Completion Date, at which time it will pass to Southern.                                                                                                                                                                                                                                                                                                                                                  
|    
|3.8  | Possession                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|     | Possession of the Property will be given to Southern
        on the Completion Date.                                                                                                                                                                                                                                                                                                                                                                                
|    
|3.9  | Additional Documents                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    
|     | After the Completion Date, when so requested by
        Southern, NEL shall execute and deliver to Southern such additional assignments
        and other documents as are necessary or desirable in order to provide
        Southern with the full benefit and advantage of the Property and all of
        its rights in relation thereto.                                                                                                                       
|    
|3.10 | Effective Date                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    
|     | Subject to completion on the Completion Date, the
        sale and purchase of the Property will take effect as on and from the
        Effective Date. Upon the Completion Date the Purchase Price shall be adjusted
        to take account of any Cash Calls received by NEL between the Effective
        Date and the Completion Date and which have been paid by NEL and all amounts
        received from the Joint Account, by NEL after the Effective Date.
|    
|4.   | Completion Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    
|4.1  | Relief                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    
|     | Southern will not be obliged to complete the purchase
        of the Property if any part thereof is cancelled, forfeited, surrendered,
        lost, damaged, destroyed or otherwise materially impaired before the Completion
        Date.                                                                                                                                                                                                                       

Page (166)

---

Sale Deed

|4.2 | Interdependence                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | This Deed and the Petroleum Products SPA
        are interdependent. Completion of the sale and purchase of the Property
        under this Deed shall not be completed until such time as Completion has
        occurred in accordance with Clause 4 of the Petroleum Products SPA.
|   
|5.  | NEL's Obligations                                                                                                                                                                                                                                                                    
|   
|5.1 | NEL's Warranties                                                                                                                                                                                                                                                                     
|   
|    | NEL warrants to Southern, both on the
        date of execution of this Deed and on the Completion Date, that:                                                                                                                                                                       
|   
|    | (a)                                                                                                                                                                                                                                                                                  
|   
|    | (b)                                                                                                                                                                                                                                                                                  
|   
|5.2 | NEL's Covenants                                                                                                                                                                                                                                                                      
|   
|    | NEL covenants with Southern that until
        the Completion Date:                                                                                                                                                                                                                  
|   
|    | (a)                                                                                                                                                                                                                                                                                  
|   
|    | (b)                                                                                                                                                                                                                                                                                  
|   
|    | (c)                                                                                                                                                                                                                                                                                  
|   
|    | (d)                                                                                                                                                                                                                                                                                  

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Sale Deed

6. Mutual Warranties

Each of the parties warrants to the other that:

|(a) | it is duly incorporated with limited liability and
        validly existing under the laws of its country of incorporation;                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | it has full corporate power and has been properly
        authorised by all necessary corporate action to execute this Deed, and
        this Deed (subject to the Minister's consent) constitutes legal, valid
        and binding obligations enforceable against it in accordance with its
        terms;                                                                                 
|   
|(c) | the signing of this Deed and the performance of
        the transactions contemplated by this Deed will not contravene or constitute
        a material breach under the provisions of any agreement, instrument, law,
        judgment, order, licence, permit or consent by which it is bound (except
        that NEL gives no such warranty in respect of the JVOA or the Mining Permit);
|   
|(d) | it has not incurred any obligation or liability,
        contingent or otherwise, for brokers' or finders' fees in respect of the
        transactions contemplated by this Deed for which the other party will
        have any obligation;                                                                                                                                                 
|   
|(e) | no step has been taken to wind it up, appoint a
        controller or administrator, seize or take possession of any of its assets
        or make any arrangement, compromise or composition with any of its creditors;
        and                                                                                                                                                         
|   
|(f) | it is able to pay its debts as and when they become
        due and payable.                                                                                                                                                                                                                                                                                                                 
|   

|7.  | Indemnities                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|7.1 | Southern's Indemnity                                                                                                                                                          
|   
|    | Southern shall indemnify NEL against any
        claims which may be made or brought against NEL or which NEL may sustain
        or incur arising from or in connection with:
|   
|    | (a)                                                                                                                                                                           

Page (168)

---

Sale Deed

|(b) | any breach of, or default under, this Deed by Southern;                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(c) | any act, omission or decision of Southern in giving
        or withholding any consent or approval in the exercise or performance
        of any of the functions provided for in clause 5.2.
|   

|7.2 | NEL's Indemnity                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | NEL shall indemnify Southern against any
        claims which may be made or brought against Southern or claims, costs
        or losses which Southern may sustain or incur arising from or in connection
        with:
|   
|    | (a)                                                                                                                                                                                                                     
|   
|    | (b)                                                                                                                                                                                                                     
|   
|8.  | Notices                                                                                                                                                                                                                 
|   
|    | Any notice, agreement, consent, approval, waiver or direction
      given under this Deed:                                                                                                                              
|   

| | (a) | must be in writing addressed to the intended recipient
        at the address shown below or the address last notified by the intended
        recipient to the sender:
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     | Southern                                                                                                                                                               
|
| |     | Southern Petroleum (Ohanga) Limited                                                                                                                                    
|
| |     | P.O. Box 1394                                                                                                                                                          
|
| |     | Shortland Street                                                                                                                                                       
|
| |     | Auckland N.Z.                                                                                                                                                          
|
| |     | Attention: Chairman                                                                                                                                                    
|
| |     | Fax: (649) 377 4928                                                                                                                                                    

Page (169)

---

Sale Deed

| |     | NEL                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     | Ngatoro Energy Limited                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |     | 284 Karori Road                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |     | Karori                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |     | Wellington N.Z.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |     | Attention: Manager, Corporate Affairs                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |     | Fax: (644) 476 0120                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | (b) | must be signed by a person duly authorised by the sender; and                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (c) | will be taken to have been given when delivered,
        received or left at the above address. If delivery or receipt occurs on
        a day when business is not generally carried on in the place to which
        the communication is sent or is later than 4 pm (local time) it will be
        taken to have been duly given at the commencement of business on the next
        day when business is generally carried on in that place.
|

|9.  | No Disclosure                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|9.1 | Confidentiality                                                                                                                                                                                                        
|   
|    | Subject to Clause 9.2, each of the parties
        shall keep confidential the terms of this Deed and all documents and other
        information relating to this Deed or the transactions contemplated by
        it.
|   
|9.2 | Exceptions                                                                                                                                                                                                             
|   
|    | A party may make any disclosures in relation to this Deed as
      it thinks necessary to:                                                                                                                             
|   
|    | (a)                                                                                                                                                                                                                    

Page (170)

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Sale Deed

|(b) | comply with the JVOA or any applicable law or requirement
        of any Public Authority or of any Stock Exchange on which the shares of
        a party or its holding company are quoted; or
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(c) | any of its employees to whom it is necessary to
        disclose the information if that employee undertakes to keep the information
        confidential.                                     
|   

|    | In the case of disclosure under paragraph (b), the
        party wishing to make the disclosure must give the other party prior notice
        of the disclosure and use reasonable endeavours to agree with the other
        party the form of, and the extent of, the disclosure.                                                                      
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|9.3 | Public Announcements                                                                                                                                                                                                                                                                                                                                      
|   
|    | Except as required by applicable law or the requirements
        of any Public Authority or of any Stock Exchange on which the shares of
        a party or its holding company are quoted, all press releases and other
        public announcements relating to the transactions dealt with by this Deed
        must be in terms agreed by the parties.
|   
|10. | Further Assurances                                                                                                                                                                                                                                                                                                                                        
|   

|    | Each party shall take all steps, execute all documents
        and do everything reasonably required by the other party to give effect
        to any of the transactions contemplated by this Deed.                                                                                                                                                                                                                                           
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|11. | Entire Agreement                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    | This Agreement (together with the Petroleum Product
        SPA) embodies the entire agreement between the parties with respect to
        its subject matter and supersedes any prior negotiation, arrangement,
        understanding or agreement with respect to the subject matter or any term
        of the agreement.                                                                                                                   
|   
|    | Each party releases the other from, and agrees not
        to make any claims against the other or any of its Representatives, in
        respect of or arising from any conduct in relation to any draft of this
        Deed, or any negotiation, arrangement, understanding or agreement with
        respect to the subject matter or any term of this Deed, whether the conduct
        occurred before or during the making of this Deed.

Page (171)

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Sale Deed

|12. | Amendment                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | This Agreement may be amended only by another agreement
        executed by all parties who may be affected by the amendment.                                                                                                                                                                                                                                                                                       
|   
|13. | Assignment                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    | The rights and obligations of each party under this
        Deed are personal. They cannot be assigned, charged or otherwise dealt
        with, and no party shall attempt or purport to do so, without the prior
        consent of all the parties.                                                                                                                                                              
|   
|14. | No Waiver                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    | No failure to exercise and no delay in exercising
        any right, power or remedy under this Deed will operate as a waiver. Nor
        will any single or partial exercise of any right, power or remedy preclude
        any other or further exercise of that or any other right, power or remedy.                                                                                                            
|   
|15. | Merger                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    | The rights and obligations of the parties will merge
        on completion of any transaction under this Deed.                                                                                                                                                                                                                                                                                                      
|   
|16. | Stamp Duty and Costs                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    | Each party shall bear its own costs arising out
        of the preparation of this Deed but Southern shall bear all fees payable
        under the Crown Minerals Act on this Deed, on any instruments entered
        into under this Deed, and in respect of each dealing or other transaction
        evidenced by this Deed. Southern shall indemnify NEL on demand against
        any liability for such fees.

Page (172)

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Sale Deed

|17.  | Governing Law                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|     | This Agreement is governed by the laws of New Zealand.
        The parties submit to the non- exclusive jurisdiction of the courts exercising
        jurisdiction there.                                                                                                                                                                                                                                                                                                                                                                                                              
|    
|18.  | Counterparts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    
|     | This Agreement may be executed in any number of
        counterparts. All counterparts together will be taken to constitute one
        instrument.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|19.  | GST                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    
|19.1 | Definitions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|     | In this Clause 19, consideration, supplyand tax
      invoicehave the same meanings as in the Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    
|19.2 | All consideration GST exclusive                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    
|     | GST is chargeable in respect of any supply made
        under, pursuant to or in connection with this Deed or the Sale Agreement
        and, unless the consideration for that supply is expressly agreed to be
        GST inclusive, the recipient of that supply shall pay to the supplier
        an amount equal to the GST chargeable on that supply in addition to any
        other consideration payable for that supply. No payment shall be required
        under this Clause until the supplier provides to the recipient a tax invoice
        in respect of the supply.

EXECUTED in Wellington, New Zealand.

Executed by SOUTHERN PETROLEUM(OHANGA) LIMITED

Page (173)

---

Sale Deed

|__________________________________ | __________________________________
|---------------------------------- | ----------------------------------
|Director Signature                 | Director/Secretary Signature      
|                                   |                                   
|__________________________________ | __________________________________
|Print Name                         | Print Name                        

Page (174)

---

Sale Deed

Executed by NGATORO ENERGYLIMITED:

|__________________________________ | __________________________________
|---------------------------------- | ----------------------------------
|Director Signature                 | Director/Secretary Signature      
|                                   |                                   
|__________________________________ | __________________________________
|Print Name                         | Print Name                        

Page (175)

---

EXHIBIT 4.11FORM OF CONVERTIBLE NOTE ISSUED BY THE REGISTRANT JANUARY 2004

"The securities represented hereby have not been and will
  not be registered under the United States Securities Act of 1933, as amended
  (the "U.S. Securities Act"). The holder hereof, by purchasing such securities,
  agrees for the benefit of the Issuer that such securities may be offered, sold,
  pledged or otherwise transferred only (a) to the Issuer, (b) outside the United
  States in accordance with Rule 904 of Regulation S under the U.S. Securities
  Act if applicable, or (c) (1) pursuant to the exemption from the registration
  requirements under the U.S. Securities Act provided by Rule 144 thereunder,
  if available, and in accordance with applicable State securities laws, or (2)
  in a transaction that does not require registration under the U.S. Securities
  Act or any applicable state laws and regulations governing the offer and sale
  of securities, and the holder has prior to such sale furnished to the Issuer
  an opinion of counsel or other evidence of exemption in form and substance reasonably
  satisfactory to the Issuer. Provided that if the Issuer is a "foreign issuer"
  as that term is defined by Regulation S of the U.S. Securities Act at the time
  of sale, a new certificate bearing no restrictive legend, delivery of which
  will constitute "Good Delivery" may be obtained from the transfer agent, upon
  delivery of this certificate and a duly executed declaration, in form satisfactory
  to the Issuer and its transfer agent, to the effect that the sale of the securities
  represented hereby is being made in compliance with Rule 904 of Regulation S
  under the U.S. Securities Act."

CONVERTIBLE NOTE SUBSCRIPTION AGREEMENT

|TO:   | INDO-PACIFIC
      ENERGY LTD.                        
|----- | ------------------------------------------------------
|      | (herein generally,
      the "Issuer")                
|      | 284 Karori
      Road                                 
|      | Karori, Wellington                                    
|      | Phone: 64 44762717
      Fax: 64 44760120             
|     
|FROM: | Exploration
      Capital Partners Limited Partnership
|     
|RE:   | Purchase of
      Convertible Note of the Issuer      

REFERENCE DATE:December 9, 2003

Instructions to complete this Subscription Agreement

Confirm the subscription information regarding the Note on
  page 2 and sign on page 2. 
  Confirm Registration or Delivery Instructions (if different from information
  in Item 1).

If you are, or are purchasing the Note on behalf of, a U.S.
  Person or person in the United States, you must complete the "Certificate of
  U.S. Person" (Schedule B).

Courier or fax completed forms to Indo-Pacific Energy Ltd.,
  c/o Lang Michener, Barristers & Solicitors, Suite 1500 - 1055 West Georgia
  Street, Vancouver, BC, Canada V6E 4N7, or fax your completed Subscription Agreement
  to the attention of Bernhard Zinkhofer at fax: 604-893-2396 (tel: 604-691-7438,
  e-mail bzinkhof@lmls.com. Funds may be attached to the forms by certified cheque
  or bank draft payable to "Indo-Pacific Energy Ltd."

176

---

|Exploration Capital Partners Limited Partnership(Name of Investor  please print)
      _________________________________
        (Signature of Investor)
      _________________________________
        (Official Capacity or Title of Signatory, if Investor is not an individual
         please print)
      _________________________________
        (Please print name of individual whose signature appears above if different
        than the name of the name of the Investor printed above.)
      7770 Camino RealCarlsbad, CA USA 92009
      (Investor's Address)_________________________________
        (Investor's Telephone Number and Fax Number)
      _________________________________
        (Investor's E-Mail Address)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|REGISTER the Note as set forth below
      ____________________
      Name____________________
        Account reference, if applicable
      ____________________
        Address
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Principal of NoteUS$250,000
|---------------------------

|Aggregate Subscription Price for Note:
      US$250,000Payable to: Indo-Pacific Energy Ltd.
|-------------------------------------------------------------------------------------------

|DELIVER the Note as set forth below:
      ______________________
      Name______________________
        Account reference, if applicable
      _____________________
      Contact Name_____________________
      Address_____________________
      Telephone Number
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ACCEPTANCE:The Issuer hereby accepts the above subscription on the
  terms and conditions attached hereto.

INDO-PACIFIC ENERGY LTD.

|Per: |                                      |  |                                                    
|---- | ------------------------------------ |  | ---------------------------------------------------
|     | ____________________________________ |  | Execution Date:  __________________________________
|     | Authorized Signatory                 |  |                                                    

177

---

Definitions

(a) "Accredited Investor" means generally a high net
  worth or high income person, specifically defined as:

(ii) an Investor resident in the Province of Ontario who
    is an accredited investor as defined in Ontario Securities Commission Rule
    45-501 and set out on Form 3 (see Schedule D); or (iii) a U.S. Person who is an accredited investor as defined
    in Rule 501(a) of Regulation D (see Schedule D);


(b) "Applicable Securities Laws" means the securities
  legislation having application and the rules, policies, notices and orders issued
  by applicable securities regulatory authorities over this Offering and the Issuer
  in the Principal Canadian Jurisdictions;

(c) "Closing" means the completion of the issue and
  sale by the Issuer of the Note against payment pursuant to this Subscription
  Agreement;

(d) "Closing Date" means the second day following completion
  of the Issuer's listing on the TSX Venture Exchange providing that the NZ Offering
  has completed, both of which events are expected to occur on or about December
  31, 2003. On the Closing Date the Note will be issued and delivered to Investor
  or as it may direct;

(e) "Exemptions" means the exemptions from the registration
  and prospectus or equivalent requirements under Applicable Securities Laws;

(f) "Foreign Portfolio Manager" means a person who
  carries on business as a "portfolio manager" (within the meaning of that term
  under Applicable Securities Laws) in an International Jurisdiction and who purchases
  Units as an agent for fully managed accounts;

(g) "fully managed" in relation to an account, means
  that the Investor has the discretion as to the account as contemplated by Applicable
  Securities Law;

(h) "International Jurisdiction" means a country other
  than Canada or the United States;

(i) "Investor" means the person or persons named as
  Investor on the face page of this Subscription Agreement and if more than one
  person is so named, means all of them jointly and severally;

(j) "Issuer" means Indo-Pacific Energy Ltd.;

(k) "MI 45-102" means Multilateral Instrument 45-102
  - Resale of Securities (a copy is available from the Issuer or online at www.bcsc.bc.ca);

(l) "MI 45-103" means Multilateral Instrument 45-103
  - Capital Raising Exemptions (a copy is available from the Issuer or online
  at www.bcsc.bc.ca);;

(m) "MI 45-103 Jurisdictions" means British Columbia,
  Alberta, Manitoba, Saskatchewan, Prince Edward Island, Nova Scotia, Newfoundland
  and Labrador, the Northwest Territories and Nunavut;

(n) "material" means material in relation to the Issuer
  and any subsidiary considered on a consolidated basis;

(o) "material change" means any change in the business,
  operations, assets, liabilities, ownership or capital of the Issuer and any
  subsidiary considered on a consolidated basis that would reasonably be expected
  to have a significant effect on the market price or value of the Issuer's securities;

178

---

(p) "material fact" means any fact that significantly
  affects or would reasonably be expected to have a significant effect on the
  market price or value of the Issuer's securities;

(q) "misrepresentation" is as defined under Applicable
  Securities Laws";

(r) "Note" means the two convertible notes of $250,000
  to be issued to two Investors in the form attached as Schedule A in the principal
  amount of US$500,000;

(s) "NZ Offering" means the prospectus offering of
  4 million shares and warrants by the Issuer in New Zealand;

(t) "Offering" means the sale by the Issuer to two
  Investors of US$250,000 Notes on the terms set forth in this Agreement;

(u) "Ontario Accredited Investor Exemption" means the
  exemption from prospectus requirements found in Ontario Securities Commission
  Rule 45-501;

(v) "Portfolio Manager" means an adviser who manages
  the investment portfolio of clients through discretionary authority granted
  by one or more clients;

(w) "Public Record" means information which has been
  publicly filed under applicable securities laws by the Issuer, which can be
  reviewed at www.sedar.com;

(x) "Principal Canadian Jurisdictions" means jurisdictions
  referred to in MI 45-102;

(y) "Regulation D" means Regulation D under the U.S.
  Securities Act;

(z) "Regulation S" means Regulation S under the U.S.
  Securities Act;

(aa) "Schedules" means the schedules attached hereto
  comprising:

| | (i)   | A | Form of Note;                        
| | ----- | - | -------------------------------------
| | (ii)  | B | Certificate of U.S. Person;
      and
| | (iii) | C | Form of Warrant;                     

(bb) "Securities" means the Note, the Shares and Warrants
  of the Issuer issuable on conversion of the Note being sold hereunder, as well
  as any Warrant Shares;

(cc) "Share" means a common share without par value
  in the capital of the Issuer;

(dd) "Subscription Agreement" means this subscription
  agreement between the Investor and the Issuer, including all Schedules incorporated
  by reference as it may be amended or supplemented from time to time;

(ee) "Unit" is a reference to one Share and Warrant
  to be issued as part of a Unit for each US$1.10 of principal amount of the Note
  on conversion of the Note;

(ff) "U.S." or "United States" means the United
  States of America, its territories and possessions, any State of the United
  States, and the District of Columbia;

(gg) "U.S. Person" means a U.S. Person as defined in
  Regulation S. For further clarity in this Subscription Agreement, and without
  limiting the foregoing, a U.S. person includes (a) any natural person resident
  in the United States; (b) any partnership or corporation organized or incorporated
  under the laws of the United States; (c) any trust of which any trustee is a
  U.S. person; (d) any partnership or corporation organized outside the United
  States by a U.S. person principally for the purpose of investing in securities
  not registered under the U.S. Securities Act, unless it is organized or incorporated,
  and owned, by

179

---

accredited investors (as defined in Regulation D) who are
  not natural persons, estates or trusts; and (e) any estate of which any executor
  or administrator is a U.S. person;

(hh) "U.S. Securities Act" means the Securities
  Act of 1933, as amended, of the United States of America;

(ii) "Warrant" means one whole Share purchase warrant
  to be issued as part of a Unit on conversion of the Note, each of which is exercisable
  to acquire an additional common share of the Issuer for US$1.15 each for a 12
  month period after the Closing Date on the terms described herein;

(jj)"Warrant Certificate" means the certificate representing
  the share purchase Warrant issued to an Investor on conversion of the Note in
  the form attached as Schedule C; and

(kk) "Warrant Share" may be used to refer to the Share
  to be issued upon the exercise of a Warrant.

2. Prospectus Exempt Subscription Commitment

2.1 The undersigned (the "Investor") hereby irrevocably subscribes
  for and agrees to purchase from the Issuer, subject to the terms and conditions
  set forth herein, a Note in the principal amount as set out on the face page
  of this Subscription. Subject to the terms hereof, this Subscription will be
  deemed to have been made and be effective only upon its acceptance by the Issuer.

3. Description of Note and Underlying Securities (Share
  and Warrant)

3.1 The Note will be in the form of Schedule A and the principal
  amount of the Note will be convertible into Units of the Issuer at US$1.10 per
  Unit, each Unit comprising one Share and one Warrant.

3.2 Each Warrant will entitle the Investor to purchase one
  Warrant Share for a 12-month period after the Closing Date at a price of US$1.15.

3.3 The Warrants will be governed by the terms and conditions
  set out in the certificate representing the Warrants (the "Warrant Certificates")
  attached as Schedule C. Each Warrant Certificate will contain, among other things,
  provision for the appropriate adjustment in a class, number and price of the
  Warrant Shares upon the occurrence of certain events, including any subdivision,
  consolidation or re-classification of the common shares of the Issuer or payments
  of stock dividends or upon the merger or re-organization of the Issuer.

4. Closing


4.1 The Investor will deliver to the offices of the Issuer's
  solicitors, aggregate subscription funds and the Subscription Agreement completed
  in accordance with the instructions on the face page and arrange for concurrent
  wiring or delivery of certified funds. On request by the Issuer, the Investor
  agrees to complete and deliver any other documents, questionnaire, notices and
  undertakings as may possibly be required by regulatory authorities, stock exchanges
  and Applicable Securities Laws to complete the transactions contemplated by
  this Agreement. Delivery and payment for the Note will be completed by the Issuer
  and the Investor at the Issuer's attorney's offices noted on page 1 on the Closing
  Date

5. Four-Month Canadian Resale Restriction, U.S. Resale

5.1 The Issuer will have filed an Annual Information Form
  ("AIF") in the Principal Canadian Jurisdictions under Multilateral Instrument
  45-102, and it will be at the Closing Date, a Qualifying Issuer (as defined
  in Multilateral Instrument 45-102) in the Principal Canadian Jurisdictions for
  purposes of permitting a four (4) month restricted period (from the Closing
  Date) legend in Canada on the Shares and Warrants issued to the Investor hereunder
  if the Note is converted during that four-month period. The securities will
  have a one year U.S. hold period subject to Rule 904 and the Investor will not
  resell the securities in New Zealand within one year from the Closing Date.

6. Investor's Acknowledgements  Regarding Risk, Restrictions,
  Independent Advice

180

---

6.1 The Investor represents and warrants and acknowledges and agrees with
  (on its own behalf and, if applicable, on behalf of each beneficial purchaser
  for whom the Investor is contracting hereunder) the Issuer that

(b) no prospectus has been filed by the Issuer with any
    securities commission or similar authority in Canada or elsewhere, in connection
    with the issuance of the Securities, and the issuance and the sale of the
    Units is subject to such sale being exempt from the prospectus/registration
    requirements under Applicable Securities Laws and accordingly: (ii) the Investor may not receive information that might
      otherwise be required to be provided to it under such legislation; and (iii) the Issuer is relieved from certain obligations
      that would otherwise apply under such legislation;
 (c) the Investor (or others for whom the Investor is contracting
    hereunder) has been advised to consult its own legal advisors with respect
    to the merits and risks of an investment in the Securities and with respect
    to applicable resale restrictions and it (or others for whom it is contracting
    hereunder) is solely responsible (and the Issuer is in no way responsible)
    for compliance with applicable resale restrictions; (d) to the knowledge of the Investor, the sale of the Securities
    was not accompanied by any advertisement, and the Issuer will not pay a finder's
    fee in connection with any subscriptions by U.S. Persons unless the payment
    is to a U.S. registered broker or dealer; (e) the offer made by this Subscription is irrevocable (subject
    to the right of the Issuer to terminate this Subscription) and requires acceptance
    by the Issuer; (f) this Subscription is not enforceable by the Investor
    unless it has been accepted by the Issuer. The Investor waives any requirement
    on the Issuer's behalf to immediately communicate its acceptance for this
    Subscription to the Investor; (g) the Securities are speculative investments which involve
    a substantial degree of risk; (h) the Investor is sophisticated in financial investments,
    has had access to and has received all such information concerning the Issuer
    that the Investor has considered necessary in connection with the Investor's
    investment decision and the Investor will not receive an offering memorandum
    or similar disclosure document; (i) the subscription proceeds will be available to the Issuer
    on Closing and this subscription is not conditional on any other Note subscription
    completing; (j) no agency, governmental authority, regulatory body,
    stock exchange or other entity has made any finding or determination as to
    the merit for investment of, nor have any such agencies or governmental authorities
    made any recommendation or endorsement with respect to, the Securities; and (k) the Issuer will rely on the representations and warranties
    made herein or otherwise provided by the Investor to the Issuer in completing
    the sale and issue of the Units to the Investor.


181



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7. Investor's Exemption Status and Other Representation

7.1 Each Investor, by its execution of this Subscription Agreement,
  hereby further represents, warrants to, and covenants with the Issuer that:

(b) the Investor has no knowledge of a "material fact" or
    "material change", as those terms are defined in Applicable Securities Laws,
    in respect of the affairs of the Issuer that has not been generally disclosed
    to the public; (c) the Investor (and, if applicable, any beneficial purchaser
    for whom it is acting) is resident in the jurisdiction set out as the "Investor's
    Address" on the second page of this Subscription Agreement; (d) the Investor has the legal capacity and competence to
    enter into and execute this Subscription Agreement and to take all actions
    required pursuant hereto and, if the Investor is a corporation, it is duly
    incorporated and validly subsisting under the laws of its jurisdiction of
    incorporation and all necessary approvals by its directors, shareholders and
    others have been obtained to authorize execution of this Subscription Agreement
    on behalf of the Investor; (e) the entering into of this Subscription Agreement and
    the transactions contemplated hereby do not result in the violation of any
    of the terms and provisions of any law applicable to, or the constating documents
    of, the Investor or of any agreement, written or oral, to which the Investor
    may be a party or by which the Investor is or may be bound; (f) the Investor has duly and validly authorized, executed
    and delivered this Subscription Agreement and understands it is intended to
    constitute a valid and binding agreement of the Investor enforceable against
    the Investor; (g) in connection with the Investor's investment in the
    Units, the Investor has not relied upon the Issuer for investment, legal or
    tax advice, and has, in all cases sought the advice of the Investor's own
    personal investment advisor, legal counsel and tax advisers or has waived
    its rights to and the Investor is either experienced in or knowledgeable with
    regard to the affairs of the Issuer, or either alone or with its professional
    advisors is capable, by reason of knowledge and experience in financial and
    business matters in general, and investments in particular, of evaluating
    the merits and risks of an investment in the Units and is able to bear the
    economic risk of the investment and it can otherwise be reasonably assumed
    to have the capacity to protect its own interest in connection with the investment
    in the Units; (h) no person has made to the Investor any written or oral
    representations: (i) that any person will resell or repurchase the Units; (ii) that any person will refund the purchase price for
      the Units; or (iii) as to the future price or value of the Units;
 (i) UNLESS the Investor has completed the certificate of
    U.S. Person included herein as Schedule B (in which case the representations,
    warranties and covenants of the Investor made therein are incorporated herein
    by reference), Investor represents and warrants that: (i) it did not receive the offer to purchase the Securities
    in the United States, it was outside the United States when it (or its authorized
    signatory, if it is not an individual) executed and delivered this Subscription
    Agreement, the Securities are not being acquired, directly or indirectly,
    for the account or benefit of a U.S. Person or a person in the United States
    and the Investor does not have any


182

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agreement or understanding (either written or oral) with
    any U.S. Person or a person in the United States respecting: (B) the division of profits, losses, fees, commissions,
      or any financial stake in connection with this Subscription Agreement; or (C) the voting of the Securities; and
 (ii) the Investor has no intention to distribute either directly
    or indirectly any of the Securities in the United States or to U.S. Persons;
    and (iii) the current structure of this transaction and all
    transactions and activities contemplated hereunder is not a scheme to avoid
    the registration requirements of the U.S. Securities Act; (j) the Investor acknowledges that the Securities have not
    been registered under the U.S. Securities Act or the securities law of any
    state in the United States, and may not be offered or sold in the United States
    or to a U.S. Person unless an exemption from such registration requirements
    is available. The Subscriber understands that the Issuer has no obligation
    or present intention of filing a registration statement under the U.S. Securities
    Act or any state securities laws in respect of the Securities or the Warrant
    Shares; (k) the Investor acknowledges that the Warrants may not
    be exercised by or on behalf of a U.S. Person or a person in the United States
    unless exemptions from registration under the U.S. Securities Act and any
    applicable state securities laws are available and the holder has provided
    the Issuer with an opinion of counsel reasonably satisfactory to the Issuer
    to such effect; provided, however, that an original Investor that purchased
    its Units pursuant to a completed certificate of U.S. Person as set forth
    in Schedule D to this Subscription Agreement will not be required to deliver
    an opinion of counsel in connection with its exercise of the Warrants so purchased
    at a time when the Investor's representations and warrants set forth in such
    certificate remain true and correct; and (l) the Investor acknowledges and agrees that all costs
    and expenses incurred by the Investor (including any fees and disbursements
    of any special counsel or other advisors retained by the Investor) relating
    to the purchase of the Units shall be borne by the Investor;


7.2 The representations, warranties and covenants set forth
  in this §0 are made by the Investor as of the date of this Subscription
  Agreement and as of the Closing Date. The Investor agrees to inform the Issuer
  immediately of any change in such representations, warranties and covenants
  which occurs prior to the Closing Date.

8. Representations of the Issuer

8.1 The Issuer represents and warrants to the Investor that,
  as of the date of this Subscription and at Closing hereunder:

(a) the Issuer and its subsidiaries are valid and subsisting
    corporations duly incorporated and in good standing under the laws of the
    jurisdictions in which they are incorporated, continued or amalgamated; (b) the Issuer has complied, or will comply, with all applicable
    corporate and securities laws and regulations in connection with the offer,
    sale and issuance of the Securities, and in connection therewith has not engaged
    in any "direct selling efforts," as such term is defined in Regulation S,
    with respect to the Securities offered outside the United States pursuant
    to Regulation S, or any "general solicitation or general advertising," as
    described in Regulation D, in the United States; (c) the Issuer and its subsidiaries are the beneficial owners
    of the business and assets or the interests in the business or assets referred
    to in its Public Record and except as disclosed therein, all agreements by
    which the Issuer or its subsidiaries holds an interest in a property, business
    or asset are


183

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in good standing according to their terms, and the properties
    are in good standing under the applicable laws of the jurisdictions in which
    they are situated; (d) no offering memorandum has been or will be provided
    to the Investor; (e) the financial statements comprised in the Public Record
    accurately reflect the financial position of the Issuer as at the date thereof,
    and no adverse material changes in the financial position of the Issuer have
    taken place since the date of the Issuer's last financial statements except
    as filed in the Public Record; (f) the creation, issuance and sale of the Securities by
    the Issuer does not and will not conflict with and does not and will not result
    in a breach of any of the terms, conditions or provisions of its constating
    documents or any agreement or instrument to which the Issuer is a party; (g) the Securities will, at the time of issue, be duly allotted,
    validly issued, fully paid and non-assessable and will be free of all liens,
    charges and encumbrances and the Issuer will reserve sufficient shares in
    its treasury to enable it to issue the Shares and Warrant Shares; (h) this Subscription when accepted has been duly authorized
    by all necessary corporate action on the part of the Issuer and, subject to
    acceptance by the Issuer, constitutes a valid obligation of the Issuer legally
    binding upon it and enforceable in accordance with its terms; (i) neither the Issuer nor any of its subsidiaries is a
    party to any actions, suits or proceedings which could materially affect its
    business or financial condition, and to the best of the Issuer' knowledge
    no such actions, suits or proceedings have been threatened as at the date
    hereof, except as disclosed in the Public Record; (j) no order ceasing or suspending trading in the securities
    of the Issuer nor prohibiting sale of such securities has been issued to the
    Issuer or its directors, officers or promoters and to the best of the Issuer'
    knowledge no investigations or proceedings for such purposes are pending or
    threatened; and (k) except as set out in the Public Record or herein, no
    person has any right, agreement or option, present or future, contingent or
    absolute, or any right capable of becoming a right, agreement or option for
    the issue or allotment of any unissued common shares of the Issuer or any
    other security convertible or exchangeable for any such shares or to require
    the Issuer to purchase, redeem or otherwise acquire any of the issued or outstanding
    shares of the Issuer.


9. Covenants of the Issuer

|9.1                                                       | The Issuer covenants with each Investor that the Issuer will:
|--------------------------------------------------------- | -------------------------------------------------------------
|                                                         
|                                                          | (a)                                                          
|                                                         
|                                                          | (b)                                                          
|                                                         
|                                                          | (c)                                                          
|                                                         
|10. Resale Restrictions and
      Legending of Securities

10.1 The Investor acknowledges that any resale of the Securities
  will be subject to resale restrictions contained in the Applicable Securities
  Laws applicable to the Issuer, the Investor will receive a certificate bearing
  the following legend imprinted thereof:

184

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> "Unless permitted under securities legislation, the holder
>     of the securities shall not trade the securities before •. [that date
>     which is four months and a day from the Closing Date will be inserted]
>   Without prior written approval of the Exchange and compliance
>     with all applicable securities legislation, the securities represented by
>     this certificate may not be sold, transferred, hypothecated or otherwise traded
>     on or through the facilities of the TSX Venture Exchange or otherwise in Canada
>     or to or for the benefit of a Canadian resident until • [that date which
>     is four months and a day from the Closing Date will be inserted]"

10.2 The certificates representing any Securities issued to
  Investors who complete the Certificate of U.S. Person will bear the following
  legend imprinted thereon:

> "The securities represented hereby have not been and will
>     not be registered under the United States Securities Act of 1933, as amended
>     (the "U.S. Securities Act"). The holder hereof, by purchasing such securities,
>     agrees for the benefit of the Issuer that such securities may be offered,
>     sold, pledged or otherwise transferred only (a) to the Issuer, (b) outside
>     the United States in accordance with Rule 904 of Regulation S under the U.S.
>     Securities Act if applicable, or (c) (1) pursuant to the exemption from the
>     registration requirements under the U.S. Securities Act provided by Rule 144
>     thereunder, if available, and in accordance with applicable State securities
>     laws, or (2) in a transaction that does not require registration under the
>     U.S. Securities Act or any applicable state laws and regulations governing
>     the offer and sale of securities, and the holder has prior to such sale furnished
>     to the Issuer an opinion of counsel or other evidence of exemption in form
>     and substance reasonably satisfactory to the Issuer. Provided that if the
>     Issuer is a "foreign issuer" as that term is defined by Regulation S of the
>     U.S. Securities Act at the time of sale, a new certificate bearing no restrictive
>     legend, delivery of which will constitute "Good Delivery" may be obtained
>     from the transfer agent, upon delivery of this certificate and a duly executed
>     declaration, in form satisfactory to the Issuer and its transfer agent, to
>     the effect that the sale of the securities represented hereby is being made
>     in compliance with Rule 904 of Regulation S under the U.S. Securities Act."
>   and that any certificate representing any Securities issued
>     in exchange therefor or in substitution thereof will bear the same legend,
>     provided, however, that if the Issuer is a "foreign issuer" as that
>     term is defined by Regulation S under the U.S. Securities Act at the time
>     of sale of any Shares or any Warrant Shares, a new certificate bearing no
>     legend may be obtained from transfer agent upon delivery of the certificate
>     evidencing such securities and a duly executed declaration, in a form satisfactory
>     to the Company and transfer agent to the effect that the sale of the securities
>     is being made in compliance with Rule 904 of Regulation S under the U.S. Securities
>     Act.

10.3 The Warrants are non-transferable without the consent
  of the Issuer. The Issuer will normally consent to a transfer where it is supplied
  with a legal opinion that the intended transfer is in compliance with applicable
  securities laws.

10.4 The certificates representing the Warrants will bear
  a legend to the following effect:

> "THIS WARRANT AND THE SECURITIES DELIVERABLE UPON EXERCISE
>     THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
>     1933, AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
>     STATE OF THE UNITED STATES. THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED
>     STATES OR BY OR ON BEHALF OF A PERSON IN THE UNITED STATES OR A U.S. PERSON
>     UNLESS THE WARRANT AND THE UNDERLYING SHARES HAVE BEEN REGISTERED UNDER THE
>     SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE
>     OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. "UNITED
>     STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES
>     ACT."

185

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11. Consent to the Disclosure of Information

11.1 The Investor acknowledges and consents to the release by the Issuer of
  certain information regarding the Investor's subscription, including the Investor's
  name, address, telephone number, email address and the number of Units purchased,
  in compliance with securities regulatory policies to regulatory authorities
  in the Principal Canadian Jurisdictions.

12. General

12.1 Time is of the essence hereof.

12.2 Neither this Subscription Agreement nor any provision hereof shall be
  modified, changed, discharged or terminated except by an instrument in writing
  signed by the party against whom any waiver, change, discharge or termination
  is sought.

12.3 The parties hereto shall execute and deliver all such further documents
  and instruments and do all such acts and things as may either before or after
  the execution of this Subscription Agreement be reasonably required to carry
  out the terms of this Subscription Agreement.

12.4 This Subscription Agreement shall be subject to, governed by and construed
  in accordance with the laws of British Columbia and the laws of Canada as applicable
  therein and the Investor hereby irrevocably attorns to the jurisdiction of the
  Courts situate therein.

12.5 This Subscription Agreement may not be assigned by any party hereto.

12.6 The Issuer shall be entitled to rely on delivery of a facsimile copy
  of this Subscription Agreement, and acceptance by the Issuer of a facsimile
  copy of this Subscription Agreement shall create a legal, valid and binding
  agreement between the Investor and the Issuer in accordance with its terms.

12.7 This Subscription Agreement may be signed by the parties in as many counterparts
  as may be deemed necessary, each of which so signed shall be deemed to be an
  original, and all such counterparts together shall constitute one and the same
  instrument.

12.8 Without limitation, this Subscription Agreement is deemed to be entered
  into on the reference date set out on the face page, notwithstanding its actual
  date of execution by the Investor, and the transactions contemplated hereby
  are conditional upon and subject to the Issuer achieving a listing on the TSX
  Venture Exchange. If such listing is not obtained and the Shares listed, posted
  and called for trading on the Exchange by January 15, 2003 the Investor, at
  its option, may terminate this agreement upon notice to the Issuer whereupon
  the Issuer will refund the amount advanced by the Investor for the Note, together
  with interest at the rate of 8% per annum.

12.9 This Subscription, including, without limitation, the representations,
  warranties, acknowledgements and covenants contained herein, shall survive and
  continue in full force and effect and be binding upon the parties notwithstanding
  the completion of the purchase of the Note by the Investor pursuant hereto,
  the completion of the issue of the Note of the Issuer and any subsequent disposition
  by the Investor of the Shares or Warrants.

12.10 The invalidity or unenforceability of any particular provision of this
  Subscription shall not affect or limit the validity or enforceability of the
  remaining provisions of this Subscription.

12.11 Except as expressly provided in this Subscription and in the agreements,
  instruments and other documents contemplated or provided for herein, this Subscription
  contains the entire agreement between the parties with respect to the sale of
  the Securities and there are no other terms, conditions, representations or
  warranties, whether expressed, implied, oral or written, by statute, by common
  law, by the Issuer, by the Investor, or by anyone else.

186

---

> "The securities represented hereby have not been and will
>       not be registered under the United States Securities Act of 1933, as amended
>       (the "U.S. Securities Act"). The holder hereof, by purchasing such securities,
>       agrees for the benefit of the Issuer that such securities may be offered,
>       sold, pledged or otherwise transferred only (a) to the Issuer, (b) outside
>       the United States in accordance with Rule 904 of Regulation S under the
>       U.S. Securities Act if applicable, or (c) (1) pursuant to the exemption
>       from the registration requirements under the U.S. Securities Act provided
>       by Rule 144 thereunder, if available, and in accordance with applicable
>       State securities laws, or (2) in a transaction that does not require registration
>       under the U.S. Securities Act or any applicable state laws and regulations
>       governing the offer and sale of securities, and the holder has prior to
>       such sale furnished to the Issuer an opinion of counsel or other evidence
>       of exemption in form and substance reasonably satisfactory to the Issuer.
>       Provided that if the Issuer is a "foreign issuer" as that term is defined
>       by Regulation S of the U.S. Securities Act at the time of sale, a new certificate
>       bearing no restrictive legend, delivery of which will constitute "Good Delivery"
>       may be obtained from the transfer agent, upon delivery of this certificate
>       and a duly executed declaration, in form satisfactory to the Issuer and
>       its transfer agent, to the effect that the sale of the securities represented
>       hereby is being made in compliance with Rule 904 of Regulation S under the
>       U.S. Securities Act."

SCHEDULE A

CONVERTIBLE PROMISSORY NOTE

|Principal Amount: US$250,000 | Issue Date: December 31, 2003
|---------------------------- | -----------------------------

|Payee          |  | The following person is the
        registered holder and the payee of this Note (the "Noteholder"):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|               |  | _______________________________________________________________________                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|               |  | _______________________________________________________________________                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|               |  | _______________________________________________________________________                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|              
|Borrower       |  | This Convertible Note is made
        and issued by Indo-Pacific Energy Ltd. (the “Issuer”) pursuant
        to a Convertible Note Subscription Agreement dated December 9, 2003 (the
        “Subscription”) entered into between the Noteholder and the
        Issuer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Convertibility |  | The Principal Amount, upon the
        election of the holder and notice to the Issuer, is convertible into One
        Unit of the Issuer per US$1.10 of Principal Amount, such right of conversion
        to commence on the Issue Date and expire one year after the Issue Date.
        Each Unit will comprise one Share and one Warrant permitting the holder
        to purchase an additional Share at price of US$1.15 per Share, for a one
        year period from the Issue Date hereof. To effect conversion, this Note
        should be delivered to the Issuer with the attached note conversion form
        completed. Interest hereon is not convertible into Units.
      If the authorized and issued capital of the Issuer as
        presently constituted is consolidated into a lesser number of the Issuer’s
        Shares or subdivided into a greater number of the Issuer’s Shares,
        the number of the Issuer’s Shares and Warrants to be issued to the
        holder on conversion of the Note shall be decreased or increased proportionately,
        as the case may be. If Indo-Pacific should determine to amalgamate or
        merge with any other company or companies (and the right to do so is hereby
        expressly reserved), whether by way of statutory amalgamation, sale of
        its assets and undertaking or otherwise howsoever, then and in each such
        event, the number of shares and share purchase warrants in the corporation
        resulting from such amalgamation or merger in respect of which this Note
        is outstanding is applicable, but not converted, shall be such number
        of shares and share purchase warrant in that corporation as would have
        been acquired by the Noteholder pursuant to the amalgamation or merger
        if this Note had been converted immediately prior to the effective date
        of such amalgamation or merger.

187

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|Interest                                                        |  | Interest shall accrue on the Principal Amount of
        this Note from the date hereof until the date of repayment or conversion
        of the Principal Amount at a rate of 8% per annum, after as well as before
        maturity, default and judgement. Interest will not become due and owing
        until the earlier of the first anniversary of the Issue Date or the date
        of conversion of this Note.                                                                                                                                                 
|--------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Due Date                                                        |  | This Note is due on demand any time after the first
        anniversary of the Issue Date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Security for the Repayment of the Principal
      Sum hereunder |  | This Note is backed by the full faith and credit
        of the Issuer but is not secured by any charges on the Issuer or its assets.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Prepayment                                                      |  | This Note may be prepaid by the Issuer without penalty
        at any time before its Due Date on 20 days’ written notice by the
        Issuer to the Noteholder. The conversion privilege shall remain in effect
        during such 20 day period.                                                                                                                                                                                                                                                                                                                     
|                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Resale Restrictions                                             |  | This Note and any Securities issued on conversion
        hereof are subject to resale restrictions in British Columbia and Alberta
        for a 4 month period from the Issue Date subject to the limited exemptions
        permitting transferability pursuant to securities legislation. These securities
        are also subject to resale restrictions in the United States.                                                                                                                                                                                      
|                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Other Terms                                                     |  | This Convertible Note is issued pursuant to the
        Note Subscription Agreement between the Noteholder and Indo-Pacific.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Notices                                                         |  | Any demand notice or other communication required or permitted to be
          given hereunder shall be validly given if delivered by either of the
          Subscriber or Indo-Pacific at the address as follows: if to Noteholder:
        See page 1
        and if to Indo-Pacific:
        284 Karori Road
          Karori, Wellington
          Facsimile: 64 44760120
        with a copy to B. Zinkhofer, director and counsel
        1500 - 1055 West Georgia Street
          Vancouver, British Columbia
          V6E 4N7
          Facsimile: 604-893-2395
|                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Governing Law                                                   |  | This Convertible Note shall be governed by and construed
        in accordance with the laws of the Province of British Columbia, Canada,
        and shall be enforceable in the courts of said Province.                                                                                                                                                                                                                                                                                                                                                                
|                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Waiver of Presentment                                           |  | Indo-Pacific hereby waives requirement for presentment
        for payment, demand, protest and notice of protest and non-payment of
        this Note. Indo- Pacific agrees to pay all expenses incurred by the holder
        in connection with any collection or enforcement proceedings respecting
        this Note. The failure or delay by the holder of this Note in exercising
        any of its rights in any instance shall not constitute a waiver thereof.                                                                                                 

IN WITNESS WHEREOF this Note has been issued as of the date first above
  written by Indo-Pacific Energy Ltd.

INDO-PACIFIC ENERGY LTD.

Per: __________________
  Authorized Signatory

188

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note conversion FORM

|TO: | INDO-PACIFIC
      ENERGY LTD. (also the "Issuer")
|--- | --------------------------------------------------
|    | 284 Karori
      Road                             
|    | Karori, Wellington                                
|    | Phone: 64 44762717
      Fax: 64 44760120         

|1. | The undersigned Noteholder hereby subscribes for ___________ Units ("Units")
      of INDO-PACIFIC ENERGY LTD. at the price of US$1.10 per Unit determined
      under, and on the terms specified in, the Note and by conversion of the
      Principal Amount of the Note.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|   |                                                                                         
|-- | ----------------------------------------------------------------------------------------
|2. | The undersigned Noteholder represents and warrants to the Issuer
      that (check one):
|  
| ̈  | (a)                                                                                     
|  
| ̈  | (b)                                                                                     
|  
| ̈  | (c)                                                                                     

The terms "U.S. Person" and "United States" are as defined in Regulation S
  under the 1933 Act.

|3. | The undersigned is aware that the Shares comprised
      in the Units and any shares acquired  by exercise of the Warrant will
      bear the following legends:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | “Unless permitted under securities legislation,
          the holder of the securities shall not trade the securities before April
          30, 2004.
        Without the prior written approval of the Exchange
          and compliance with all applicable securities legislation, the securities
          represented by this certificate may not be sold, transferred, hypothecated
          or otherwise traded on or through the facilities of the TSX Venture
          Exchange or otherwise in Canada or to or for the benefit of a Canadian
          resident until April 30, 2004.”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4. | If the undersigned is a U.S. person, he is
      aware that the Share certificate issuable hereunder will bear the following
      legend:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | "The securities represented hereby have not been and
          will not be registered under the United States Securities Act of 1933,
          as amended (the "U.S. Securities Act"). The holder hereof, by purchasing
          such securities, agrees for the benefit of the Issuer that such securities
          may be offered, sold, pledged or otherwise transferred only (a) to the
          Issuer, (b) outside the United States in accordance with Rule 904 of
          Regulation S under the U.S. Securities Act if applicable, (c) inside
          the United Sates (1) pursuant to the exemption from the registration
          requirements under the U.S. Securities Act provided by Rule 144 thereunder,
          if available, and in accordance with applicable State securities laws,
          or (2) in a transaction that does not require registration under the
          U.S. Securities Act or any applicable State laws and regulations governing
          the offer and sale of securities, and the holder has prior to such sale
          furnished to the

189

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|   | Issuer an opinion of counsel or other evidence of exemption
          in form and substance reasonably satisfactory to the Corporation. Provided
          that if the Corporation is a "foreign issuer" as that term is defined
          by Regulation S of the U.S. Securities Act at the time of sale, a new
          certificate bearing no restrictive legend, delivery of which will constitute
          "Good Delivery" may be obtained form the transfer agent, upon delivery
          of this certificate and a duly executed declaration, in form satisfactory
          to the Corporation and its transfer agent, to the effect that the sale
          of the securities represented hereby is being made in compliance with
          Rule 904 of Regulation S under the U.S. Securities Act."
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|5. | The undersigned hereby irrevocably directs that the said Common Shares
      and Warrants be issued and delivered as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|                 |  |                                   |  | Number(s) of 
|---------------- |  | --------------------------------- |  | -------------
|Names(s) in Full |  | Address(es) (Include Postal Code) |  | Common Shares
|                 |  |                                   |  |              
|                 |  |                                   |  |              
|                 |  |                                   |  |              

(Please print full name in which share certificates are to
  be issued. If any shares are to be issued to a person or persons other than
  the Warrantholder, the Warrantholder must pay to the Trustee all exigible transfer
  taxes or other government charges.)

DATED this _____ day of ____________________ , _____ .

(If Common Shares are being registered to other than the registered
  Notetholder a signature guarantee is required.)

|                         |  |                                             
|------------------------ |  | --------------------------------------------
|Signature Guaranteed By: |  | Signature of Noteholder*                    
|                         |  |                                             
|                         |  |                                             
|                         |  | Name of Noteholder                          
|                         |  |                                             
|                         |  |                                             
|                         |  | Address of Noteholder (Include Postal  Code)

* This signature must correspond exactly with the name appearing on the first
  page of the Note.

|Please check box if the share certificates are
      to be delivered (at subscriber's expense) failing which the certificates
      will be mailed. |  ̈
|--------------------------------------------------------------------------------------------------------------------------------------------------- | -

190



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SCHEDULE BCERTIFICATE OF U.S. PERSON

Capitalized terms defined in the subscription agreement to which this
  Schedule D is attached and not defined in this Schedule D have the meanings
  set forth therein.

The Investor covenants, represents and warrants to Indo-Pacific Energy
  Ltd.(the "Issuer") that:

(a)      it
  understands that the Note, the Units, the Shares, the Warrants and the Warrant
  Shares (collectively, the "Securities") have not been and will not be registered
  under the U.S. Securities Act and that the sale contemplated hereby is being
  made in reliance on the exemption from such registration requirement provided
  by Rule 506 of Regulation D;
  (b)      it acknowledges that it has not purchased
  the Securities as a result of any form of general solicitation or general advertising,
  including advertisements, articles, notices or other communications published
  in any newspaper, magazine or similar media or broadcast over radio, or television,
  or any seminar or meeting whose attendees have been invited by general solicitation
  or general advertising; 
  (c)      it understands and agrees that there may be
  material tax consequences to the Investor of an acquisition, disposition or
  exercise of any of the Securities. The Issuer gives no opinion and makes no
  representation with respect to the tax consequences to the Investor under United
  States federal, state or, local tax law or foreign tax law of the undersigned's
  acquisition or disposition of such securities. In particular, no determination
  has been made whether the Issuer has been or will be a "passive foreign investment
  company" ("PFIC") within the meaning of Section 1291 of the United States
  Internal Revenue Code; 
  (d)      it understands and agrees that the financial
  statements of the Issuer have been prepared in accordance with Canadian generally
  accepted accounting principles, which differ in some respects from United States
  generally accepted accounting principles, and thus may not be comparable to
  financial statements of United States companies; 
  (e)      it understands and acknowledges that upon
  the issuance thereof, and until such time as the same is no longer required
  under the applicable requirements of the U.S. Securities Act or applicable state
  securities laws and regulations, the certificates representing the Securities
  will bear a legend in substantially the following form:

"The securities represented hereby
  have not been and will not be registered under the United States Securities
  Act of 1933, as amended (the "U.S. Securities Act"). The holder hereof, by purchasing
  such securities, agrees for the benefit of the Issuer that such securities may
  be offered, sold, pledged or otherwise transferred only (a) to the Issuer, (b)
  outside the United States in accordance with Rule 904 of Regulation S under
  the U.S. Securities Act, if applicable, or (c) (1) pursuant to the exemption
  from the registration requirements under the U.S. Securities Act provided by
  Rule 144 thereunder, if available, and in accordance with applicable State securities
  laws, or (2) in a transaction that does not require registration under the U.S.
  Securities Act or any applicable state laws and regulations governing the offer
  and sale of securities, and the holder has prior to such sale furnished to the
  Issuer an opinion of counsel or other evidence of exemption in form and substance
  reasonably satisfactory to the Corporation. Provided that if the Corporation
  is a "foreign issuer" as that term is defined by Regulation S of the U.S. Securities
  Act at the time of sale, a new certificate bearing no restrictive legend, delivery
  of which will constitute "Good Delivery" may be obtained from the transfer agent,
  upon delivery of this certificate and a duly executed declaration, in form satisfactory
  to the Corporation and its transfer agent, to the effect that the sale of the
  securities represented hereby is being made in compliance with Rule 904 of Regulation
  S under the U.S. Securities Act.";

191

---

provided, that if the Issuer is a
  "foreign issuer" within the meaning of Regulation S under the U.S. Securities
  Act at the time of sale of any Shares or Warrant Shares, a new certificate,
  which will constitute "good delivery", will be made available to the Investor
  upon provision by the Investor to the Issuer and its transfer agent of a declaration
  (in the form attached as Appendix "A", or as the Issuer may adopt from time
  to time) that the sale of the securities represented thereby is being made in
  compliance with Rule 904 of Regulation S under the U.S. Securities Act.

(f)      it
  consents to the Issuer making a notation on its records or giving instruction
  to the registrar and transfer agent of the Issuer in order to implement the
  restrictions on transfer set forth and described herein; 
  (g)      if an individual, it is a resident of the
  state or other jurisdiction listed as the "Investor's Address" on the second
  page of the Subscription Agreement, or if the Investor is not an individual,
  the office of the Investor at which the Investor received and accepted the offer
  to purchase the Issuer's Units is the address listed as the "Investor's Address"
  on the second page of the Subscription Agreement. 
  (h)      it has such knowledge and experience in financial
  and business matters as to be capable of evaluating the merits and risks of
  an investment in the Securities and it is able to bear the economic risk of
  loss of its entire investment; 
  (i)      the Issuer has provided to it the opportunity
  to ask questions and receive answers concerning the terms and conditions of
  the offering and it has had access to such information concerning the Issuer
  as it has considered necessary or appropriate in connection with its investment
  decision to acquire the Securities; 
  (j)      it is acquiring the Securities for its own
  account, for investment purposes only and not with a view to any resale, distribution
  or other disposition of the Securities in violation of the United States securities
  laws; 
  (k)      if it decides to offer, sell or otherwise
  transfer any of the Securities, it will not offer, sell or otherwise transfer
  any of such Securities directly or indirectly, unless

| |  | (i)   | the sale is to the Issuer;                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | (ii)  | the sale is made outside the United States in a
        transaction meeting the requirements of Rule 904 of Regulation S under
        the U.S. Securities Act and in compliance with applicable local laws and
        regulations;                                                                                                                                                                                                                               
|
| |  | (iii) | the sale is made pursuant to the exemption from the
        registration requirements under the U.S. Securities Act provided by Rule
        144 thereunder and in accordance with any applicable state securities
        or "Blue Sky" laws; or                                                                                                                                                                                                                  
| |  |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | (iv)  | the Securities are sold in a transaction that does
        not require registration under the U.S. Securities Act or any applicable
        state laws and regulations governing the offer and sale of securities,
        and, in the case of clauses (ii) through (iv) above, it has prior to such
        sale furnished to the Issuer an opinion of counsel or other evidence of
        exemption in form and substance reasonably satisfactory to the Issuer;

(l)      it
  is an "accredited investor" as defined in Regulation D by virtue of satisfying
  one or more of the categories indicated below (please place your initials on
  the appropriate line(s)):

|_________ | Category 1. | A bank, as defined in Section 3(a)(2) of the U.S.
      Securities Act, whether acting in its individual or fiduciary capacity;
      or                                               
|--------- | ----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          |             |                                                                                                                                                                                        
|_________ | Category 2. | A savings and loan association or other institution
      as defined in Section 3(a)(5)(A) of the U.S. Securities Act, whether acting
      in its individual or fiduciary capacity; or
|          |             |                                                                                                                                                                                        
|_________ | Category 3. | A broker or dealer registered pursuant to Section
      15 of the Securities Exchange Act of 1934; or                                                                                  
|          |             |                                                                                                                                                                                        
|_________ | Category 4. | An insurance company as defined in Section 2(13)
      of the U.S. Securities Act; or                                                                                                  
|          |             |                                                                                                                                                                                        

192

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|_________ | Category 5. | An investment company
        registered under the Investment Company Act of 1940; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--------- | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|_________ | Category 6. | A business development
        company as defined in Section 2(a)(48) of the Investment Company Act
        of 1940; or                                                                                                                                                                                                                                                                                                                                                                                                                                             
|          |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|_________ | Category 7. | A small business investment
        company licensed by the U.S. Small Business Administration under Section
        301(c) or (d) of the Small Business Investment Act of 1958; or                                                                                                                                                                                                                                                                                                                                                                                 
|          |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|_________ | Category 8. | A plan established and
        maintained by a state, its political subdivision or any agency or instrumentality
        of a state or its political subdivisions, for the benefit of its employees,
        with assets in excess of US$5,000,000; or                                                                                                                                                                                                                                                                                                              
|          |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|_________ | Category 9. | An employee benefit plan
        within the meaning of the Employee Retirement Income Security
        Act of 1974in which the investment decision is made by a plan fiduciary,
        as defined in Section 3(21) of such Act, which is either a bank, savings
        and loan association, insurance company or registered investment advisor,
        or an employee benefit plan with total assets in excess of US$5,000,000
        or, if a self-directed plan, the investment decisions are made solely
        by persons who are accredited investors; or
|          |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|_________ | Category 10 | A private business development
        company as defined in Section 202(a)(22) of the Investment Advisors
        Act of 1940; or                                                                                                                                                                                                                                                                                                                                                                                                                                  
|          |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|_________ | Category 11 | An organization described
        in Section 501(c)(3) of the Internal Revenue Code, a corporation,
        a Massachusetts or similar business trust, or a partnership, not formed
        for the specific purpose of acquiring the Units, with total assets in
        excess of US$5,000,000; or                                                                                                                                                                                                                                                                
|          |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|_________ | Category 12 | A director, executive
        officer or general partner of the Issuer; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|          |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|_________ | Category 13 | A natural person whose
        individual net worth, or joint net worth with that person's spouse, at
        the time of this purchase exceeds US$1,000,000; or                                                                                                                                                                                                                                                                                                                                                                                                    
|          |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|_________ | Category 14 | A natural person who
        had an individual income in excess of US$200,000 in each year of the two
        most recent years or joint income with that person's spouse in excess
        of US$300,000 in each of those years and has a reasonable expectation
        of reaching the same income level in the current year; or                                                                                                                                                                                                                                 
|          |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|_________ | Category 15 | A trust, with total assets
        in excess of US$5,000,000, not formed for the specific purpose of acquiring
        the securities offered, whose purchase is directed by a sophisticated
        person as described in SEC Rule 506(b)(2)(ii); or                                                                                                                                                                                                                                                                                                              
|          |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|_________ | Category 16 | An entity in which each
        of the equity owners meets the requirements of one of the above categories.                                                                                                                                                                                                                                                                                                                                                                                                                                                         

ONLY UNITED STATES INVESTORS NEED TO COMPLETE AND SIGN

_______________________________
  Date

_______________________________
  Duly authorized signatory for Investor

_______________________________
  (Print name of Investor)

193

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Appendix "A" to 
  CERTIFICATE OF U.S. PERSONForm of Declaration for Removal of Legend

TO: Indo-Pacific Energy Ltd. (the "Corporation'); and to Registrar and transfer
  agent for the shares of the Corporation.

The undersigned (A) acknowledges that the sale of the securities
  of the Corporationto which this declaration relates is being made in
  reliance on Rule 904 of Regulation S under the United States Securities Act
  of 1933, as amended (the "U.S. Securities Act"), and (B) certifies that (1)
  the undersigned is not an "affiliate" of the Corporation (as that term is defined
  in Rule 405 under the U.S. Securities Act); (2) the offer of such securities
  was not made to a person in the United States and either (a) at the time the
  buy order was originated, the buyer was outside the United States, or the seller
  and any person acting on its behalf reasonably believed that the buyer was outside
  the United States, or (b) the transaction was executed on or through the facilities
  of the Toronto Stock Exchange and neither the seller nor any person acting on
  its behalf knows that the transaction has been prearranged with a buyer in the
  United States; (3) neither the seller nor any affiliate of the seller nor any
  person acting on their behalf has engaged or will engage in any directed selling
  efforts in the United States in connection with the offer and sale of such securities;
  (4) the sale is bona fide and not for the purpose of "washing off" the resale
  restrictions imposed because the securities are "restricted securities" (as
  that term is defined in Rule 144(a)(3) under the U. S. Securities Act); (5)
  the seller does not intend to replace such securities with fungible unrestricted
  securities; and (6) the contemplated sale is not a transaction, or part of a
  series of transactions, which, although in technical compliance with Regulation
  S, is part of a plan or scheme to evade the registration provisions of the U.
  S. Securities Act. Terms used herein have the meanings given to them by Regulation
  S under the U.S. Securities Act.

|Dated  __________________ 2003 |                                                               
|------------------------------ | --------------------------------------------------------------
|                               | X  ______________________________                             
|                               | Signature of individual (if Purchaser isan individual)        
|                               | X  ______________________________                             
|                               | Authorized signatory (if Purchaser is notan
      individual) 
|                               | ______________________________                                
|                               | Name of Purchaser (please print)                              
|                               | ______________________________                                
|                               | Name of authorized signatory ( please print)                  
|                               | ______________________________                                
|                               | Official capacity of authorized signatory (please
      print)

194

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SCHEDULE C

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER
  OF THE SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE APRIL 30, 2004.

WITHOUT THE PRIOR WRITTEN APPROVAL OF THE EXCHANGE AND COMPLIANCE
  WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS
  CERTIFICATE AND ANY SECURITIES ISSUED ON THE EXERCISE THEREOF MAY NOT BE SOLD,
  TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF
  THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF
  A CANADIAN RESIDENT UNTIL APRIL 30, 2004.

THIS WARRANT AND THE SECURITIES DELIVERABLE UPON EXERCISE
  THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
  AS AMENDED (THE "U.S. SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE
  OF THE UNITED STATES. THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES
  OR BY OR ON BEHALF OF A PERSON IN THE UNITED STATES OR A U.S. PERSON UNLESS
  THE WARRANT AND THE UNDERLYING SHARES HAVE BEEN REGISTERED UNDER THE SECURITIES
  ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION
  FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. "UNITED STATES" AND "U.S.
  PERSON" ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.

Expiry Date: December 31, 2004

COMMON SHARE PURCHASE WARRANT
  to acquire Common Shares of INDO-PACIFIC ENERGY LTD.(continued under the laws of the Yukon) 
  ♦
  Telephone 64 44762717 Fax: 64 44760120

THE RIGHT TO PURCHASE COMMON SHARES UNDER THIS WARRANT EXPIRES
  AT 5:00 P.M. (VANCOUVER TIME) ON DECEMBER 31, 2004 (THE "EXPIRY DATE").

ANY SHARES ACQUIRED BY EXERCISE PRIOR TO APRIL 30, 2004 WILL
  BE SUBJECT TO RESALE RESTRICTIONS IN CANADA UNTIL THAT DATE AND WILL BEAR A
  LEGEND TO THIS EFFECT.

|Warrant Certificate | CERTIFICATE FOR ♦
      Warrants, each Warrant entitling    
|------------------- | ------------------------------------------------------------
|No. ♦               | the holder thereof to acquire
      one Common Share of INDO
|                    | PACIFIC ENERGY LTD.                                         

THIS IS TO CERTIFY THAT,

♦

(the "Holder") is the registered holder of the number of common
  share purchase warrants (the "Warrants") of INDO-PACIFIC ENERGY LTD. (the "Company")
  set forth above, and is entitled, on exercise of these Warrants upon and subject
  to the terms and conditions set forth herein, to purchase at any time prior
  to 5:00 p.m. (Vancouver time) on the Expiry Date at a price of US$1.15
  upon the terms and conditions hereinafter set forth, the number of Common Shares
  set forth above.

The rights represented by this Warrant may be exercised by
  the Holder hereof, in whole or in part and from time to time (but not for any
  fractional Common Share) by surrendering this Warrant and the attached Warrant
  Exercise Form, duly completed and executed, to the offices of Indo-Pacific Energy
  Ltd., , together with cash or a bank draft, certified cheque or money order
  payable to "INDO-PACIFIC ENERGY LTD."

195

---

Notwithstanding the foregoing, the Warrants may not be exercised
  or transferred into or within the United States or to or for the account or
  benefit of any person within the United States or to any "U.S. Person" within
  the meaning of Regulation S under the U.S. Securities Act without evidence satisfactory
  to the Company of compliance with U.S. securities laws.

The Company covenants and agrees that all Common Shares which
  may be issued upon the exercise of the rights represented by this Warrant will,
  upon issuance, be fully paid and non-assessable and free of all liens, charges
  and encumbrances. The Company further covenants and agrees that during the period
  within which the rights represented by this Warrant may be exercised, the Company
  will at all times have authorized and reserved, a sufficient number of Common
  Shares to provide for the exercise of the rights represented by this Warrant.

THE FOLLOWING ARE THE TERMS AND CONDITIONS REFERRED TO
  IN THIS WARRANT:

1. As used herein, the term "Common Shares" shall mean and
  include the Company's presently authorized common shares and shall also include
  any capital stock of any class of the Company hereafter authorized which shall
  not be limited to a fixed sum or percentage in respect of the rights of the
  Holders thereof to participate in dividends and in the distribution of assets
  upon the voluntary or involuntary liquidation, dissolution or winding-up of
  the Company.

2. In case the Company shall at any time subdivide its outstanding
  Common Shares into a greater number of shares, the Warrant exercise price shall
  be proportionately decreased and the number of subdivided Common Shares entitled
  to be purchased proportionately increased, and conversely, in case the outstanding
  Common Shares of the Company shall be consolidated into a smaller number of
  shares, the Warrant purchase price shall be proportionately increased and the
  number of combined Common Shares entitled to be purchased hereunder shall be
  adjusted accordingly.

3. If any capital reorganization, reclassification or consolidation
  of the capital stock of the

Company, or the merger or amalgamation of the Company with
  another corporation shall be effected, then as a condition of such reorganization,
  reclassification, consolidation, merger or amalgamation, adequate provision
  shall be made whereby the Holder hereof shall have the right to purchase and
  receive upon the basis and upon the terms and conditions specified in this Warrant
  and in lieu of the Common Shares immediately theretofore purchasable and receivable
  upon the exercise of the rights represented hereby, such shares of stock, or
  other securities as may be issued with respect to or in exchange for such number
  of outstanding Common Shares equal to the number of Common Shares purchasable
  and receivable upon the exercise of this Warrant had such reorganization, reclassification,
  consolidation, merger or amalgamation taken place immediately after such exercise.
  The Company shall not effect any merger or amalgamation unless prior to or simultaneously
  with the consummation thereof the successor corporation (if other than the Company)
  resulting from such merger or amalgamation shall assume by written instrument
  executed and mailed or delivered to the Holder of this Warrant the obligation
  to deliver to such Holder such Common Shares of stock or securities in accordance
  with the foregoing provisions.

4. In case at any time:

(b) the Company shall offer for subscription pro rata to
    the Holders of its Common Shares any additional shares of stock of any class
    or other rights; (c) there shall be any capital reorganization, or reclassification
    of the capital stock of the Company, or consolidation or merger or amalgamation
    of the Company with, or sale of all or substantially all of its assets to,
    another corporation; or


196

---



then, and in any one or more of such cases, the Company shall
  give to the Holder of this Warrant, at least twenty days' prior written notice
  of the date on which the books of the Company shall close or a record shall
  be taken for such dividend, distribution or subscription rights, or for determining
  rights to vote with respect to such reorganization, reclassification, consolidation,
  merger or amalgamation, dissolution, liquidation or winding-up and in the case
  of any such reorganization, reclassification, consolidation, merger or amalgamation,
  dissolution, liquidation or winding-up, at least twenty days' prior written
  notice of the date when the same shall take place. Such notice in accordance
  with the foregoing clause, shall also specify, in the case of any such dividend,
  distribution or subscription rights, the date on which the Holders of Common
  Shares shall be entitled thereto, and such notice in accordance with the foregoing
  shall also specify the date on which the Holders of Common Shares shall be entitled
  thereto, and such notice in accordance with the foregoing shall also specify
  the date on which the Holders of Common Shares shall be entitled to exchange
  their Common Shares for securities or other property deliverable upon such reorganization,
  reclassification, consolidation, merger or amalgamation, dissolution, liquidation
  or winding-up as the case may be. Each such written notice shall be given by
  first class mail, registered postage prepaid, addressed to the Holder of this
  Warrant at the address of such Holder, as shown on the books of the Company.

5. This Warrant shall not entitle the Holder hereof to any
  rights as a shareholder of the Company, including without limitation, voting
  rights.

6. This Warrant and all rights hereunder are not transferable
  except with consent of the Company which may require as a condition to any transfer
  that the transferee provide a legal opinion as to the compliance with applicable
  laws of any purported transfer of rights under this Warrant.

7. This Warrant is exchangeable, upon the surrender hereof
  by the Holder hereof at the offices of the Company, for new Warrants of like
  tenor representing in aggregate the right to subscribe for and purchase the
  number of Common Shares which may be subscribed for and purchased hereunder,
  each of such new Warrants to represent the right to subscribe for and purchase
  such number of Common Shares as shall be designated by such Holder hereof at
  the time of such surrender.

Certificates for the Common Shares subscribed for will be
  mailed to the persons specified in the exercise form at their respective addresses
  specified therein or, if so specified in the exercise form, delivered to such
  persons at the office where this Warrant Certificate is surrendered. If fewer
  Common Shares are purchased than the number that can be purchased pursuant to
  this Warrant Certificate, the Holder hereof will be entitled to receive without
  charge a new Warrant Certificate in respect of the balance of the Common Shares
  not so purchased.

IN WITNESS WHEREOF INDO-PACIFIC ENERGY LTD. has caused this
  Warrant Certificate to be duly signed and it shall bear a reference date of
  December ♦, 2003, notwithstanding its later date of actual issue or
  reissue of a certificate for a lesser number of Warrants.

INDO-PACIFIC ENERGY LTD.

By: ____________________
         Authorized Signatory

197

---

WARRANT EXERCISE FORM

To: INDO-PACIFIC ENERGY LTD. (also the "Issuer") 
  ♦
  Telephone (604) ♦ Fax: (604) ♦

|1.                                                                                                   | The undersigned Holder of the within Warrant
        Certificate hereby subscribes for ___________ common shares ("Common Shares")
        of INDO-PACIFIC ENERGY LTD. (or such number of Common Shares or other
        securities or property to which such subscription entitles him in lieu
        thereof or in addition thereto under the provisions of the Warrant Certificate)
        at the price determined under, and on the terms specified in, the Warrant
        Certificate and encloses herewith cash or a bank draft, certified cheque
        or money order payable at par to or to the order of INDO-PACIFIC ENERGY
        LTD. in payment therefor.                                                 
|---------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|2.                                                                                                   | The undersigned represents and warrants
        to the Issuer that (check one):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                    
|                                                                                                     | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                    
|                                                                                                     | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                    
|                                                                                                     | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                    
|The terms "U.S. Person" and "United States" are as defined
      in Regulation S under the 1933 Act.
|                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3.                                                                                                   | The undersigned is aware that any shares acquired by exercise
        of the Warrant will bear the following legends:
      "Unless permitted under securities legislation, the
          holder of the securities shall not trade the securities before April
          ♦, 2004.
        Without the prior written approval of the Exchange
          and compliance with all applicable securities legislation, the securities
          represented by this certificate may not be sold, transferred, hypothecated
          or otherwise traded on or through the facilities of the TSX Venture
          Exchange or otherwise in Canada or to or for the benefit of a Canadian
          resident until April ♦, 2004."
|                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|4.                                                                                                   | If the undersigned is a U.S. person, he is aware that the
        certificate issuable hereunder will bear the following legend:
      "The securities represented hereby have not been and
          will not be registered under the United States Securities Act of 1933,
          as amended (the "U.S. Securities Act"). The holder hereof, by purchasing
          such securities, agrees for the benefit of the Issuer that such securities
          may be offered, sold, pledged or otherwise transferred only (a) to the
          Issuer, (b) outside the United States in accordance with Rule 904 of
          Regulation S                                                                                  

198



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|   | under the U.S. Securities Act if applicable, (c)
          inside the United Sates (1) pursuant to the exemption from the registration
          requirements under the U.S. Securities Act provided by Rule 144 thereunder,
          if available, and in accordance with applicable State securities laws,
          or (2) in a transaction that does not require registration under the
          U.S. Securities Act or any applicable State laws and regulations governing
          the offer and sale of securities, and the holder has prior to such sale
          furnished to the Issuer an opinion of counsel or other evidence of exemption
          in form and substance reasonably satisfactory to the Corporation. Provided
          that if the Corporation is a "foreign issuer" as that term is defined
          by Regulation S of the U.S. Securities Act at the time of sale, a new
          certificate bearing no restrictive legend, delivery of which will constitute
          "Good Delivery" may be obtained form the transfer agent, upon delivery
          of this certificate and a duly executed declaration, in form satisfactory
          to the Corporation and its transfer agent, to the effect that the sale
          of the securities represented hereby is being made in compliance with
          Rule 904 of Regulation S under the U.S. Securities Act."
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|5. | The undersigned hereby irrevocably directs that the said Common Shares
      be issued and delivered as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



|                 |  |                                   |  | Number(s) of 
|---------------- |  | --------------------------------- |  | -------------
|Names(s) in Full |  | Address(es) (Include Postal Code) |  | Common Shares
|                 |  |                                   |  |              
|                 |  |                                   |  |              
|                 |  |                                   |  |              

(Please print full name in which share certificates are to be issued. If any
  shares are to be issued to a person or persons other than the Warrantholder,
  the Warrantholder must pay to the Trustee all exigible transfer taxes or other
  government charges.)

DATED this _____ day of ____________________ , _____ .

(If Common Shares are being registered to other than the registered warrantholder
  a signature guarantee is required.)

|                         |  |                                            
|------------------------ |  | -------------------------------------------
|Signature Guaranteed By: |  | Signature of Subscriber*                   
|                         |  |                                            
|                         |  | Name of Subscriber                         
|                         |  |                                            
|                         |  |                                            
|                         |  | Address of Subscriber (Include Postal Code)

* This signature must correspond exactly with the name appearing on the first
  page.

|Please check box if the share certificates are to be delivered
      (at subscriber's expense) failing which the certificates will be mailed. |  ̈
|--------------------------------------------------------------------------------------------------------------------------------------------- | -

THE RIGHT TO PURCHASE SHARES UNDER THIS WARRANT EXPIRES AT 5:00 P.M. (VANCOUVER
  TIME) ON DECEMBER ♦, 2004 (THE "EXPIRY DATE").

199

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EXHIBIT 8LIST OF SUBSIDIARIES

|Name                                            | Jurisdiction     | Business                                      | % of     
|----------------------------------------------- | ---------------- | --------------------------------------------- | ---------
|                                                |                  |                                               | Ownership
|Source Rock Holdings Limited                    | New Zealand      | Holding company                               | 100%     
|Austral Pacific Energy (NZ)
      Limited [1]   | New Zealand      | Oil and gas exploration
      and development | 100%     
|Millennium Oil & Gas
      Limited              | New Zealand      | Oil and gas exploration
      and development | 100%     
|Rata Energy Limited                             | New Zealand      | Oil and gas exploration
      and development | 100%     
|Ngatoro Energy Limited                          | New Zealand      | Shell Company                                 | 100%     
|Totara Energy Limited [2]                       | New Zealand      | Shell Company                                 | 100%     
|Odyssey International Pty
      Limited         | Australia        | Oil and gas exploration
      and development | 100%     
|Indo-Pacific Energy Australia
      Pty Limited | Australia        | Oil and gas exploration
      and development | 100%     
|Trans-Orient Petroleum (Aust)
      Pty Limited | Australia        | Oil and gas exploration
      and development | 100%     
|ZOCA 96-16 Pty Limited                          | Australia        | Shell Company                                 | 100%     
|Trans-Orient Petroleum (PNG)
      Limited      | Papua New Guinea | Oil and gas exploration
      and development | 100%     
|Indo-Pacific Energy (PNG)
      Limited         | Papua New Guinea | Shell Company                                 | 100%     

|[1] | Name changed after end of reporting period, from Indo-Pacific Energy
      (NZ) Limited.                                   
|--- | ---------------------------------------------------------------------------------------------------------------------------
|   
|[2] | Subsidiary acquired with effect from 1 July 2003; name subsequently changed
      from Bligh Oil & Minerals (N.Z.) Limited.
|   

200

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EXHIBIT 31.1

CERTIFICATION UNDER SECTION 302 OF SARBANES-OXLEY

I, David John Bennett, certify that:

|1. | I have reviewed this annual report on
        Form 20-F of Austral Pacific Energy Ltd.;                                                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. | Based on my knowledge, this report does
        not contain any untrue statement of a material fact or omit to state a
        material fact necessary to make the statements made, in light of the circumstances
        under which such statements were made, not misleading with respect to
        the period covered by this report;
|  
|3. | Based on my knowledge, the financial statements,
        and other financial information included in this report, fairly present
        in all material respects the financial condition, results of operations
        and cash flows of the issuer as of, and for, the periods presented in
        this report;                       
|  
|4. | The issuer's other certifying officer(s)
        and I are responsible for establishing and maintaining disclosure controls
        and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
        for the issuer and have:                                                                                            
|  
|   | a)                                                                                                                                                                                                                                                                                                                                        
|  
|   | b)                                                                                                                                                                                                                                                                                                                                        
|  
|   | c)                                                                                                                                                                                                                                                                                                                                        
|  
|5. | The issuer's other certifying officer(s)
        and I have disclosed, based on our most recent evaluation of internal
        control over financial reporting, to the issuer's auditors and the audit
        committee of the issuer's board of directors (or persons performing the
        equivalent functions):                    
|  
|   | a)                                                                                                                                                                                                                                                                                                                                        
|  
|   | b)                                                                                                                                                                                                                                                                                                                                        

Date: June 29, 2004

"David Bennett" 
    __________________________
    David John Bennett 
    Chief Executive Officer


201

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EXHIBIT 31.2

CERTIFICATION UNDER SECTION 302 OF SARBANES-OXLEY

I, Nigel Robinson, certify that:

|1. | I have reviewed this annual report on
        Form 20-F of Austral Pacific Energy Ltd.;                                                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. | Based on my knowledge, this report does
        not contain any untrue statement of a material fact or omit to state a
        material fact necessary to make the statements made, in light of the circumstances
        under which such statements were made, not misleading with respect to
        the period covered by this report;
|  
|3. | Based on my knowledge, the financial statements,
        and other financial information included in this report, fairly present
        in all material respects the financial condition, results of operations
        and cash flows of the issuer as of, and for, the periods presented in
        this report;                       
|  
|4. | The issuer's other certifying officer(s)
        and I are responsible for establishing and maintaining disclosure controls
        and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
        for the issuer and have:                                                                                            
|  
|   | a)                                                                                                                                                                                                                                                                                                                                        
|  
|   | b)                                                                                                                                                                                                                                                                                                                                        
|  
|   | c)                                                                                                                                                                                                                                                                                                                                        
|  
|5. | The issuer's other certifying officer(s)
        and I have disclosed, based on our most recent evaluation of internal
        control over financial reporting, to the issuer's auditors and the audit
        committee of the issuer's board of directors (or persons performing the
        equivalent functions):                    
|  
|   | a)                                                                                                                                                                                                                                                                                                                                        
|  
|   | b)                                                                                                                                                                                                                                                                                                                                        

Date: June 29, 2004

"Nigel Robinson"
    __________________________
    Nigel Robinson 
    Chief Financial Officer


202

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EXHIBIT 32.1

CERTIFICATIONS UNDER SECTION 906 OF SARBANES-OXLEY

In connection with the annual report of Austral Pacific Energy
  Ltd. (the "Company") on Form 20-F for the fiscal year ending December 31, 2003
  as filed with the Securities and Exchange Commission on the date hereof (the
  "Report"), I, David John Bennett, Chief Executive Officer of the Company, certify,
  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002, that:

|1. | The Report fully complies with the requirements
        of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. | The information contained in the Report fairly presents,
        in all material respects, the financial condition and results of operations
        of the Company.

"David Bennett" 
  ____________________________
  Name: David John Bennett 
  Title: Chief Executive Officer
  June 29, 2004

CERTIFICATIONS UNDER SECTION 906 OF SARBANES-OXLEY

In connection with the annual report of Austral Pacific Energy
  Ltd. (the "Company") on Form 20-F for the fiscal year ending December 31, 2003
  as filed with the Securities and Exchange Commission on the date hereof (the
  "Report"), I, Nigel Robinson, Chief Financial Officer of the Company, certify,
  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002, that:

|1. | The Report fully complies with the requirements
        of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. | The information contained in the Report fairly presents,
        in all material respects, the financial condition and results of operations
        of the Company.

"Nigel Robinson" 
  ____________________________
  Name: Nigel Robinson 
  Title: Chief Financial Officer 
  June 29, 2004

203

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