hartleys update, page-18

US Upside – Project Margarita has one well planned for April 2008

Project Margarita, Gulf Coast Texas (SUR 20-37.5%)
Project Margarita is a JV with prospect generator,
Wandoo Energy LLC (“Wandoo”). Wandoo has
exclusive access to a 530km2 3D seismic database
in a South Texas County. There are several plays at
shallow and deeper levels, with the deeper levels
largely unexplored.
A shallow wells project was carried out from
December 06 to July 07, with a 100% technical and
50% commercial success rate from 6 wells. Two gas
fields (Agavero and Dona Carlota) and an oil field
(Milagro) were discovered and tied in to sales in
September 07. Production is forecast to stabilise at
around 1.7mmcf/d and 45bopd. A further 1-2 shallow
wells are planned in 2008, targeting ~2.5bcfe per
well, with the first to spud around April.
There are seven deeper prospects providing
significant upside potential of 200bcfe mean. These
are planned for farm-out in Q2 2008, with a deep
well targeted for Q1 2009.