Farmout Negotiations

Fusion Oil & Gas PLC
04 September 2002

                              Fusion Oil & Gas plc

                          ('Fusion' or 'the Company')

              Completion of Farmout Negotiations with Amerada Hess


Following the Company's announcement of 23 May 2002 that it had signed a letter
of intent with Amerada Hess, Fusion announces that its subsidiary, Fusion Oil &
Gas NL, has signed agreements with various subsidiaries of Amerada Hess
Corporation ('Amerada Hess') whereby, subject to the normal approval of the
respective Government Ministries, Amerada Hess will acquire an interest in
Fusion's Gambia PPL, AGC (Senegal/Guinea-Bissau) Croix du Sud and Cameroon Ntem
deepwater exploration licences. The three licences involved in this agreement
cover a combined area of approximately 11,100 square kilometres of the highly
prospective deepwater West African Atlantic Margin.

The main elements of the agreement are as follows:

  • Amerada Hess will be appointed as Operator of each licence.

  • Amerada Hess will acquire 80% of the Gambia PPL licence, 68% of the Croix
    du Sud licence and 80% of the Ntem licence.

  • Amerada Hess will fund all costs related to the acquisition and processing
    of an aggregate 4,250 square kilometres of 3D seismic data across the three
    exploration licenses, in addition to certain costs that relate to 2D seismic
    surveys previously acquired in the licences by Fusion.  3D seismic tender
    documents have been issued with a view to commencing acquisition at the
    earliest possible opportunity.

  • Amerada Hess may elect to fund all costs associated with the drilling of
    up to six deepwater exploration wells (up to two wells on each of the three
    licences).

  • Expenditure on this anticipated exploration programme is estimated to be
    worth in the region of US $22 -US $33 million net to Fusion's remaining 20%
    interest in the three licences.


Fusion will retain a 20% participating interest in each licence and has the
right to re-acquire a further 5% working interest in each licence prior to
drilling the first exploration well through payment of pro-rata back costs.

After evaluation of the 3D seismic data Amerada Hess will have the option to
fund the first exploration well on each license or to withdraw from the
respective license. On completion of the first exploration well on any license
Amerada Hess will have the option to fund a second exploration well or to
withdraw from the licence.

Once Amerada Hess have drilled a second exploration well on any license, it's
farming obligations regarding that license will have been fulfilled. Should
Amerada Hess withdraw from any license before that stage, Fusion would return to
its pre-farmout equity position.

The extent of the Fusion 20% carry through the drilling operations will be
capped at net US $4.5 million for each of the wells in The Gambia and AGC and
net US $3 million in Cameroon.  Amerada Hess will fund all operating and permit
costs in each licence until it either completes the second well or elects to
withdraw from the relevant licence.

Alan Stein, Managing Director of Fusion, commented:

'We are delighted to announce the completion of this major farmout transaction
with Amerada Hess, one of the most successful exploration companies in West
Africa in recent years.  The fast-track approach to 3D seismic acquisition is
testament to the development of an excellent working relationship between
Fusion, Amerada Hess and our Government partners and a shared desire to
accelerate exploration of these highly prospective licences.

This agreement with Amerada Hess is in clear accordance with the Fusion business
model, which envisages the identification and acquisition of potentially
prospective acreage in under-explored areas, the application of state-of-the-art
geoscience techniques to illuminate prospectivity and ultimately partnership
with companies that have the relevant experience and capital resources to drill
frontier high potential exploration wells.

We have already achieved success with our drilling programme offshore Mauritania
with oil discoveries at Chinguetti 1 last year and more recently at Chinguetti
4-2 earlier this month.  With the prospect of an extensive exploration campaign
and a larger equity stake in each project we are confident that these other
regions in West Africa offer even greater potential for Fusion and our
shareholders.'

4 September 2002


For further details please refer to the company's web page www.fusionoil.com.au
or contact:

Fusion Oil & Gas plc
Alan Stein, Managing Director              Tel:   [phone]
Australia                                  Fax:   [phone]
                                           e-mail:  [e-mail]


College Hill Associates
Peter Rigby                                Tel:   [phone]
James Henderson                            Fax:   [phone]
                                           e-mail:  [e-mail]


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