for those following.

Interesting article from todays AFR 'No Liability' section...correct to the extent of NVS late announcement yesterday that the Novus' Magnet Withers prospect well drilled onshore Texas did not
encounter hydrocarbons in commercial quantities and consequently will be plugged and abandoned. NVS lost 7c on close as a result.

Middle East discovery revives Novus
Author: Bruce Hextall
Date: 18/01/2003
Publication: Australian Financial Review
Section: Investment
Page: 53

Novus Petroleum has emerged from the sin bin on the back of exploration success in the Middle East which has given its ``growth through the drill bit" strategy some market credibility. The mid-ranked, Sydney-based oil and gas group's shares sprinted up 17¢ to trade at $1.29 on Friday after reaching a low of $1 last month compared with a 12-month high of $2.42.
Last year's collapse in its share price began with the failure of the Dunn-Murdock-1 well near Padre Island off the coast of south-west Texas where Novus's main United States exploration effort is centred.

The slide continued as the market lost faith in the company's ability to make its US exploration program a success.

After last year's brutal treatment by the market, things have started to improve with this week's price recovery being sparked by Novus and its partner, Canada's Heritage Oil Corp, reporting a significant condensate and gas discovery off the coast of Oman.

Analysts suggest the Tibat-1 gas discovery, which flowed up to 11 million cubic feet of gas a day, could be worth between 9¢ and 58¢ per share to Novus depending on the size of the reservoir and the price obtained for the gas.

Heritage is certainly optimistic, stating that the hydro-carbon column was considerably larger than originally projected and the reservoir could be ``twice, possibly three times larger than originally mapped".

This would mean a reservoir of between 200 and 300 billion cubic feet. Novus has a 40 per cent interest in the discovery.

Tibat was Novus' first operated exploration well off Oman. Its success has upgraded the potential of the company's northern Arabian gas/condensate acreage, according to Merrill Lynch.

Merrill has been a long time backer of Novus but its support was tested last September when the company's managing director, Bob Williams, announced a change in strategy after reporting a $43.6 million loss for the June half.

The loss followed large write-offs on unsuccessful exploration and stranded gas assets.

Williams said at the time the company would become a self-funding exploration company, pinning its hopes for growth on aggressive yet low-risk exploration in the US and the Middle East.

This week, Williams was able to claim some success with this strategy with the Tibat-1 discovery which is expected to be readily commercialised because of strong demand for gas in Oman and the United Arab Emirates.

Williams is hoping to build on that success, arguing that the company has a very strong exploration portfolio plus solid cashflow from existing production.

Apart from the Arabian Gulf region Novus will concentrate on the US and particularly Padre Island off the coast of western Texas this year.

The company had mixed success with its Padre Island play last year. Nevertheless, Williams is hopeful better results will flow this year. The planned drilling program will concentrate on deep but larger targets.

Merrill has Novus back as a buy.

It had value on the company at $2.43 before the Tibat-1 well proved a winner and now has a price target of $2.

Deutsche Bank, which has a $1.80 price target on Novus and also a buy recommendation on the stock, says only exploration success can deliver a re-rating.