quarterly activities report

Fourth Quarter Activities Report
HIGHLIGHTS
�� Full year production shows substantial growth with production exceeding 650,000 barrels oil equivalent for 12 months to June 2006; - Net annual gas production up three fold to over 1 Bcf; and - Net annual oil production reaches 470,000 BO, up 66% on previous year.

�� 2005/06 drilling success rate remains high at 67% (16 out of 24 wells), despite a focus on higher risk opportunities.

�� Three wells successfully intersected hydrocarbons on the Lavaca County, Texas project during the June quarter.

�� Initial polymer treatment on six White Eagle wells in Kansas has led to a substantial production increase at reduced cost. Another 30 wells targeted over the coming 12 months.

Gross revenue derived from oil and gas sales was US$10.3 million for the June 2006 quarter compared to US$4.8 million for June 2005 quarter. A combination of higher oil and gas prices, along with a sharp jump in production all combined to assist in revenue growth. On a quarter by quarter basis, the current quarter revenue is lower than the March 2006 quarterly revenue due to reversal of accruals made previously on the White Eagle project.


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