TOP Sproule Report 2008-5-31

TECHNICAL ASSESSMENT OF THE UNDISCOVERED
HYDROCARBON RESOURCE POTENTIAL OF PEP 38348
AND 38349, ONSHORE EAST COAST BASIN, NEW ZEALAND
(As of May 31, 2008)

Copies: Trans-Orient (6 copies)
Sproule International Limited (1 copy)
Electronic (1)
Project No.: 3738.70483
Prepared For: Trans-Orient Petroleum Ltd.
Authors: Douglas J. Carsted, P.Geol., Project Leader

Barrie F. Jose, P.Geoph.
Suryanarayana Karri, M.Sc.
Exclusivity: This report has been prepared for the exclusive use of Trans-Orient, and shall
not be reproduced, distributed, or made available to any other company or
person, regulatory body, or organization without the knowledge and written
consent of Sproule International Limited, and without the complete contents of
the report being made available to that party.
Table of Contents — Page 1
Table of Contents
Introduction
Disclaimer
Assessment Procedures
Exclusivity
Certification
Summary
Table S-1 Summary of the Unproved Properties

Table S-2a Summary of the Gross Undiscovered In-Place Oil Resources
Table S-2b Summary of the Net Undiscovered In-Place Oil Resources
Discussion
General Overview
Geological Review
Conclusions
Tables
Within the text
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J:\Transorient _NZ_70483\Report Update\Final\Summary.doc
Table of Contents — Page 2
Figures
Figure 1 Map of New Zealand Highlighting Major Onshore and Offshore

Basins
Figure 2 Map of East Coast Basin New Zealand Highlighting PEP Blocks
38348 and 38349
Figure 3 Map of East Coast Basin Highlighting PEP 38348 and 38349
Figure 4 North Island, East Coast Basin, Well Location Map
Figure 5 Generalized Stratigraphy of East Coast Basin New Zealand
Figure 6 Generalized Stratigraphy of East Coast Basin New Zealand with
potential reservoirs, source rocks and seals
Figure 7 Summary of Petroleum systems of the East Coast of New Zealand
Figure 8 PEP 38348 - Leads with 2D Seismic Control and location of oil and
gas seeps
Figure 9 Summary of Petroleum systems of the East Coast of New Zealand
Figure 10 Leads and Prospects identified on previous permit PEP38330
Figure 11 PEP 38349 - Leads with 2D Seismic Control and location of oil and
gas seeps
Figure 12 Porosity Permeability cross plot for some select outcrop samples
from the PEP Block 38348.
Figure 13 Richness and Maturity of Waipawa and Whangai Source Rocks
Figure 14 Comparison of Waipawa and Whanghai to North American
Analogues
Appendices
Appendix A Definitions
Appendix B Abbreviations
Appendix C Unproved Properties
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Introduction — Page 1
Introduction
This report was originally prepared during September 2007 and updated in May 2008, by
qualified evaluators and auditors of Sproule International Limited (“Sproule”) at the request of
Dr. David Bennett, Executive Chairman of Trans-Orient Petroleum Ltd. Trans-Orient Petroleum
Ltd. is hereinafter referred to as “the Company”. The effective date of this report is May 31,
2008.
The report consists of a technical assessment of the undiscovered in-place hydrocarbon

resources associated with the two onshore Petroleum Exploration Permit blocks (PEP 38348
and 38349) held 100 percent by the Company and situated in the East Coast Basin, New
Zealand (Figure 1). Figure 2 shows the outline of the two PEP blocks. The assessment was
conducted using data provided by the Company, data available in the public domain and from
the non-confidential files of Sproule.
The resource estimates for the two PEP Blocks are based on a probabilistic model of the
expected reservoir parameters of undiscovered prospective reservoirs and traps that may be
encountered within the blocks. The reservoir parameters of porosity, water saturation, pay
thickness, area and formation volume factors were selected based on the available data and are
considered to represent the range of possible values that may be encountered by future
exploration wells.
As no commercial discoveries have been made on either of the PEP blocks as of the effective
date of this report, no proved, probable or possible reserves have been assigned to the blocks
at this time and the lands have been assessed as unproved properties.
As of the effective date of this report, the Company owns a 100 percent working interest in the
blocks addressed in this report. The undiscovered resources referred to in this report are
reported herein as the total 100 percent in-place volumes and as to the Company’s 100 percent
working interest.
This single volume report contains an Introduction, Summary and Discussion accompanied by
pertinent Tables, Figures, and Appendices. The Introduction includes disclaimers and pertinent
author certificates, the Summary presents a high-level summary of the review, and the
Discussion includes our commentary pertaining to the assessment of the two PEP blocks.
The definitions used in this report are in accordance with those presented in the Canadian Oil
and Gas Evaluators Handbook (COGEH).
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Disclaimer
This report has been prepared by qualified evaluators and auditors of Sproule International
Limited using current geological and engineering knowledge and techniques. It has been
prepared within the Code of Ethics of the Association of Professional Engineers, Geologists and
Geophysicists of Alberta. Nevertheless, the assessment presented in this report could be
affected by the data received, and the procedures used by Sproule International Limited, as
qualified below.
1. Property descriptions, details of interests held, and well data, as obtained from the
Company, or public sources, were accepted as represented. No further investigation was
made into either the legal titles held or any operating agreements in place relating to the
subject properties.
2. In the preparation of this review, a field inspection of the holdings was not undertaken.
Certain relevant geological data were made available by the Company, or were obtained
from public sources or from the non-confidential files of Sproule.
The certificates of those evaluators involved in the preparation of this report have been
included.
Assessment Procedures
In the technical review of the unproved properties, all known pertinent factors including geologic
structures, prospective producing zones, terrain and accessibility, access to markets, risk and
the economics of exploration, development and production have been considered. No estimate
of fair market value for these lands has been included, but estimates of undiscovered resource
potential have been made.
Exclusivity
This report has been prepared for the exclusive use of Trans-Orient Petroleum Ltd. It may not
be reproduced, distributed, or made available to any other company or person, regulatory body,
or organization without the knowledge and written consent of Sproule International Limited, and
without the complete contents of the report being made available to that party.
3738.70483.DJC.db
Certification
Report Preparation
The report entitled “Technical Assessment of the Undiscovered Hydrocarbon Resource

Potential of PEP 38348 and 38349, Onshore East Coast Basin, New Zealand, As of May 31,
2008,” was prepared by the following Sproule personnel:
Original signed by D. J. Carsted

________________________________________
Douglas J. Carsted, P.Geol.
Project Leader;
Vice-President, Geoscience
17 / 06 /2008 dd/mm/yr
Original signed by B. F.Jose

________________________________________
Barrie F. Jose, M.Sc., P.Geoph.
Chief Geophysicist
Manager, Geoscience
17 / 06 /2008 dd/mm/yr
Original signed by S. Karri

________________________________________
Suryanarayana Karri, M.Sc.,
Senior Petrophysical Specialist
17 / 06 /2008 dd/mm/yr
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Sproule Executive Endorsement
This report has been reviewed and endorsed by the following Executive of Sproule:
Original signed by J. L. Chipperfield

________________________________________
John L. Chipperfield, P.Geol.
Senior Vice-President
17 / 06 /2008 dd/mm/yr
Permit to Practice
Sproule International Limited is a member of the Association of Professional Engineers,

Geologists and Geophysicists of Alberta and our permit number is P6151.
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Certificate
Douglas J. Carsted, B.Sc., P.Geol.
I, Douglas J. Carsted, Vice-President, Geoscience, and Director at Sproule International

Limited, 900, 140 Fourth Ave SW, Calgary, Alberta, declare the following:
1. I hold the following degrees:

a. B.Sc. (Honours) Geology (1982) University of Manitoba, Winnipeg MB, Canada
b. B.Sc. Chemistry (1979) University of Winnipeg, Winnipeg MB, Canada
2. I am a registered professional:
a. Professional Geologist (P.Geol.) Province of Alberta, Canada
3. I am a member of the following professional organizations:

a. Association of Professional Engineers, Geologists and Geophysicists of Alberta (APEGGA)
b. Canadian Society of Petroleum Geologists (CSPG)
c. American Association of Petroleum Geologists (AAPG)
d. Petroleum Society of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM)
e. Canadian Well Logging Society (CWLS)
f. Indonesian Petroleum Association, Professional Division (IPA)
4. I am a qualified evaluator and auditor as defined in National Instrument 51-101.
5. My contribution to the report entitled “Technical Assessment of the Undiscovered

Hydrocarbon Resource Potential of PEP 38348 and 38349, Onshore East Coast Basin, New
Zealand (As of May 31, 2008),” is based on my geological knowledge and the data provided
to me by the Company, from public sources, and from the non-confidential files of Sproule
International Limited. I did not undertake a field inspection of the properties.
6. I have no interest, direct or indirect, nor do I expect to receive any interest, direct or indirect,
in the properties described in the above-named report or in the securities of Trans-Orient
Petroleum Ltd.
Original signed by D. J. Carsted
Douglas J. Carsted, P.Geol.
3738.70483.DJC.db
Certificate
Barrie F. Jose, M.Sc., P.Geoph.
I, Barrie F. Jose, Manager, Geoscience, and Associate at Sproule International Limited, 900,
140 Fourth Ave SW, Calgary, Alberta, declare the following:

a. M.Sc. Geophysics (1979) University of British Columbia, Vancouver BC, Canada
b. B.Sc. (Honours) Geological Science with Physics (1977) Queens University, Kingston ON,
Canada
a. Professional Geophysicist (P.Geoph.) Province of Alberta, Canada

a. Association of Professional Engineers, Geologists and Geophysicists of Alberta (APEGGA )
b. Canadian Society of Exploration Geophysicists (CSEG)
c. Society of Exploration Geophysicists (SEG)
d. Canadian Society of Petroleum Geologists (CSPG)
e. American Association of Petroleum Geologists (AAPG)
f. Petroleum Exploration Society of Great Britain (PESGB)
g. European Association of Geoscientists and Engineers (EAGE)
4. I am a qualified reserves evaluator and reserves auditor as defined in National Instrument

51-101.

Zealand (As of May 31, 2008),” is based on my geophysical knowledge and the data
provided to me by the Company, from public sources, and from the non-confidential files of
Sproule International Limited. I did not undertake a field inspection of the properties.
Petroleum Ltd.
Original signed by B. F. Jose
Barrie F. Jose, P.Geoph.
3738.70483.DJC.db
Certificate
I, Suryanarayana Karri, Senior Petrophysicist, at Sproule International Limited, 900, 140 Fourth
Ave SW, Calgary, Alberta, declare the following:

a. M.Sc. Engineering Physics and Instrumentation (1983), Osmania University, Hyderabad, India

a. Society of Petroleum Engineers (SPE)
b. The Society of Petrophysicists and Well Log Analysts (SPWLA)
c. Canadian Society of Petroleum Geologists (CSPG)

Zealand (As of May 31, 2008),” is based on my engineering knowledge and the data
provided to me by the Company, from public sources, and from the non-confidential files of
Sproule International Limited. I did not undertake a field inspection of the properties.
Petroleum Ltd.
Original signed by S. Karri
3738.70483.DJC.db
Certificate
John L. Chipperfield, B.Sc., P.Geol.
I, John L. Chipperfield, Senior Vice-President (Geoscience) and Director of Sproule Associates

Limited, 900, 140 Fourth Ave SW, Calgary, Alberta, declare the following:
1. I hold the following degree:

a. B.Sc. (Honours) Geology (1972) University of Alberta, Edmonton AB, Canada
a. Professional Geologist (P.Geol.) Province of Alberta, Canada

a. Association of Professional Engineers, Geologists and Geophysicists of Alberta (APEGGA)
b. Canadian Society of Petroleum Geologists (CSPG)
c. American Association of Petroleum Geologists (AAPG)
d. Petroleum Society of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM)
e. Canadian Well Logging Society (CWLS)
f. Ontario Petroleum Institute (OPI)
4. I am a qualified evaluator and auditor as defined in National Instrument 51-101.

Zealand (As of May 31, 2008),” is based on my geological knowledge and the data provided
to me by the Company, from public sources, and from the non-confidential files of Sproule
Associates Limited. I did not undertake a field inspection of the properties.
Petroleum Ltd.
Original signed by J. L. Chipperfield
John L. Chipperfield, P.Geol.
3738.70483.DJC.db
Summary — Page 1
Summary
This assessment is based on interpreted technical data including seismic structure maps, well
logs, seismic cross-sections, and other information supplied by the Company, published
information and our personal knowledge of the geology and economics of oil and gas
exploration, development and production in these areas of New Zealand.
The Company has been granted two five-year exclusive petroleum exploration permits by the
Government of New Zealand, covering PEP blocks 38348 and 38349, effective November 8,
2006 and expiring November 7, 2011. Both permits are located in the East Coast Basin on the
North Island. The terms of both agreements are identical and are discussed later in this report.
A summary of the lands held by the Company as PEP 38348 and PEP 38349 blocks, as of May
31, 2008, is presented in Table S-1.
Table S-1
Summary of Unproved Properties
PEP Blocks 38348 and 38349, New Zealand
Working
Area Gross Acres Net Acres
Interest
PEP Block 38348 100 % 530,535 530,535
PEP Block 38349 100 % 1,633,366 1,633,366
Total Unproved Properties 2,163,901 2,163,901
No proved, probable or possible reserves have been assigned to these holdings at this time and
they have been assessed as unproved properties. Based on our assessment, it is our opinion
that these permits contain Undiscovered Resources, as defined in the Canadian Oil and Gas
Evaluation (COGE) Handbook:
"Undiscovered Resources are those quantities of oil and gas resources estimated on a
given date to be contained in accumulations yet to be discovered.”
3738.70483.DJC.db
Summary — Page 2
Under National Instrument (NI) 51-101, companies are permitted to disclose such resources, in
addition to reserves, based on the classification criteria defined in the Canadian Oil and Gas
Evaluation Handbook (COGEH). Additional guidance concerning disclosure of resources is
provided in the Canadian Securities Administrators (CSA) Staff Notice 51-321, issued in
November 2006; in particular, this notice provides guidance concerning disclosure of
undiscovered resources and permits the disclosure of such resources as in-place volumes,
rather than recoverable volumes.
The COGEH definitions permit the subdivision of undiscovered resources into recoverable and
unrecoverable categories. The recoverable category consists of prospective resources, (which
are technically recoverable and economic) and unrecoverable resources (which are neither
technically recoverable nor economic), neither of which is applicable to the undiscovered
resources estimated to exist on these land holdings at this time.
After reviewing the geological information related to these two permits, it is our opinion that
there is an equal chance of discovering either gas or oil within the identified prospects and
leads. To simplify the modeling and analysis, the structures were deemed to be oil-bearing, with
the volumes reported as barrels of oil equivalent (BOE). Thus, the undiscovered hydrocarbon
resources estimated to exist on the two PEP Blocks are reported as BOE in-place volumes.
A summary of the gross undiscovered in-place hydrocarbon resources estimated to exist within
the PEP 38348 and 38349 blocks, as of May 31, 2008, is presented in Table S-2a, as follows:
Table S-2a
Summary of the Gross Undiscovered In-Place Hydrocarbon Resources
PEP Block 38348 and Block 38349, New Zealand
BOE1-in-Place (MMbbls)2
Area Low Estimate Best Estimate High Estimate
PEP 38348 615 1002 1773
PEP 38349 601 710 866
Total 3 1316 1736 2513

1
Barrels of oil equivalent
2
Unrisked
3
The total reported is the sum of all probabilistic cases and will not equal the arithmetic sum of the individual zone or play type
due to the effects of statistical aggregation.
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Summary — Page 3
Table S-2b
1
Summary of the Net Undiscovered In-Place Hydrocarbon Resources
PEP Block 38348 and Block 38349, New Zealand
BOE2-in-Place (MMbbls)3
Area Low Estimate Best Estimate High Estimate
PEP 38348 615 1002 1773
PEP 38349 601 710 866
Total 4 1316 1736 2513

1
Net Interest 100%
2
3
Unrisked
4
There is no certainty that any portion of the undiscovered resources will be discovered
and that, if discovered, it may not be economically viable or technically feasible to
produce.
In reviewing the lands, we have taken into account all known available pertinent factors, such as
lands having similar geological prospects, geological structures, prospective producing zones,
level of exploration and development activity, terrain, accessibility, access to markets, operating
status of the lands, and acquisition costs.
No fair market value has been assigned to these lands at this time.
Out of the Company’s inventory of prospects and leads they have identified three non-
contingent drilling locations which they plan to drill in 2009. The Company is currently
negotiating a drilling contract with NRG Services to drill the initial two wells with an option to drill
one additional well per permit. A total drilling budget of USD 3.3 million has been established
and will be funded out of the Company’s current working capital.
The drilling program will satisfy the work commitment requirements for each of the permits
which require one well to be drilled on each permit prior to November 2009 to maintain the
permits in good standing.
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Summary — Page 4
In Sproule’s opinion the estimated drill and complete cost of USD 1.1 million per well is
reasonable given the estimated target depths. The company is continuing to evaluate new
seismic data and plans to acquire additional seismic data over several of the target locations.
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Discussion — Page 1
Discussion
General Overview
Hydrocarbons are found in most New Zealand sedimentary basins (Figure 1). To date, all of
New Zealand’s production has been from the Taranaki Basin, located in the southwest of the
North Island. It is believed that the rest of the under-explored basins have potential for
commercial hydrocarbon discoveries.
Petroleum Exploration Permit (PEP) blocks 38348 and 38349 are situated in the East Coast
Basin, on the North Island, as shown in Figure 2. The Government of New Zealand granted
these exclusive permits on November 8, 2006. PEP 38348 covers a part of the basin north of
Gisborne and PEP 38349 covers part of the Hawke Bay area and south to Cape Turnagain. The
terms of both permits are identical with regard to the work program which must be carried out,
as detailed later.
The two blocks cover a large portion of the basin, with PEP 38348 extending over 530,524
acres and PEP 38349 extending over 1,633,331 acres. Figure 3 shows the location of the two
blocks relative to other exploration permits and seismic data. Of the approximately 40 wells
drilled in the basin (Figure 4), approximately 20 have been drilled in these two blocks.
Although numerous gas and oil seeps have been documented, the East Coast Basin remains
one of the least explored areas in New Zealand. Petroleum exploration in the basin started in
the mid-1800’s, however, none of the wells drilled to date have encountered commercial
petroleum accumulations.
In general terms, the permit holder must, within 12 months of the commencement date of the
permit, review the available seismic, reprocess and interpret as necessary, conduct
geochemical studies, examine structures in prospective areas and carry out petrographic tests
on reservoir and source formations. The permit holder must then make a commitment to
complete the next phase of the exploration program, which requires, within 24 months of the
commencement date of the permit, the acquisition, processing and interpretation of a minimum
of 20 kilometers of 2D seismic data, additional geological, geochemical and geophysical studies
and commitment to complete the third work program. The third phase requires the permit holder
to drill one exploration well to an agreed objective or depth within 36 months of the
commencement date of the permit. At the end of this period, the permit holder must surrender
25 percent of the permit area or surrender the entire permit. If a portion of the permit is retained,
the permit holder must submit a work program proposal for the remainder of the permit term.
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With the Company’s current drilling program of three prospects, outlined in the table below, the
Company will have fulfilled its work commitment for the first 36 months of the permits.
Drilling Prospects 2009

Prospect PEP Target Lithology Estimated
Depth
Boar Hill 38349 Miocene turbidite 1200 metres
Fractured Waipawa shale
Kowhai 38348 Upper-Mid Miocene Sandstone 1200 metres
Waitangi 28248 Paleocene-Cretaceous Sandstone 750 metres
The East Coast Basin has been identified as having reservoir, source rock and trap potential.
From the mid-1800’s, several petroleum exploration companies conducted exploration in the
region. During this exploration phase, several companies, starting with BP, Shell and Todd in
1960’s, conducted seismic profiling of this vast basin. In addition, a number of oil and gas
seeps, the majority being gas seeps, were identified by surface geological mapping all over the
basin. The most significant of the oil seeps occur at Rotokautuku (north of PEP 38348), Totangi
and Waitaning (within PEP 38348). Several exploratory wells drilled on the identified structures
and encountered numerous minor oil and gas shows, however, the wells drilled in these two
blocks did not yield commercial hydrocarbons. The lack of success has been attributed to the
lack of an adequate understanding of the structural geology of the basin.
Geological Review
The East Coast Basin of New Zealand covers an area of approximately 75,000 sq. km or
18,532,500 acres, extending from East Cape, in the northeast, to Kaikoura, in the southwest.
The region straddles the plate boundary where the Pacific Plate, to the east, is being subducted
beneath the Australian Plate to the west. The basin is a complex structural province, bounded
by the axial ranges in the west and the Hikurangi Trough in the east. From north to south, the
region is sub-divided into three main geographic areas, the Raukumara Peninsula, Hawke’s Bay
and Wairarapa. These areas are large and geologically complex.
The basin fill is extremely thick, with more than 10,000 feet of sediments in some areas, and the
stratigraphy is complex. A generalized stratigraphic column is shown in Figures 5 and 6. Figure
7 summarizes the petroleum systems of the East Coast Basin. It is suggested that some Late
Cretaceous units, such as the Koranga, Te wara, Waimana, Wairata etc., are promising
prospective reservoirs. Several Late Cretaceous to Paleogene units, such as the Tahora,
Wanstead, Weber and Whangai formations, are also thought to have good reservoir potential.
3738.70483.DJC.db
Finally, the Neogene Whangara, Wescott, Takirtini, Waipitaki, and Ngatapa formations, also
have reservoir potential.
In this analysis, 56 identified leads or prospects within the two blocks were considered; with the
main target reservoir being Miocene sandstone and Pliocene limestone formations. Cretaceous
formations were also considered as secondary targets, where appropriate.
Prior to the issuance of the current permits, PEP 38348 was partially covered by PEP 38330,
operated by Indo Pacific Energy Ltd. The previously identified leads and prospects on this block
are shown in Figure 8. Figure 9 presents a map showing the leads and prospects identified
within PEP 38348, the location of the 2D seismic control (blue), and the locations of the
recorded oil (green) and gas seeps (red).
Similarly, PEP 38349 was previously partially covered by PEP 38328 and PEP 38332, both
operated by Indo Pacific Energy Ltd. The previously identified leads and prospects on those
permits are shown in Figure 10. Figure 11 presents a map showing the leads and prospects
identified within PEP 38349, the location of the 2D seismic control (blue), and the locations of
the recorded oil (green) and gas seeps (red).
Digital well log data for three exploration wells (Hukarere-1, Kereru-1 and Whakatu-1) was
obtained from the New Zealand Ministry of Economic Development Crown Minerals website.
These wells did not encounter any hydrocarbon-bearing formations when drilled. The well log
data was primarily used to estimate the range of expected porosity values that would be used in
the probabilistic model. This information was supplemented by porosity and permeability data
measured on samples collected from outcrops within the permit area (Figure12).
The assessment of the porosity ranges, listed in the table below, was also based on reports
available on the New Zealand Ministry of Economic Development Crown Minerals website.
Because the existing exploration wells within the two blocks did not encounter hydrocarbons,
the range of water saturation values used in the model were based on water saturations found
in other known hydrocarbon pools with similar porosity values. The range of prospective areas
for the various leads was estimated from maps supplied by the Company or available from the
New Zealand Ministry of Economic Development Crown Minerals website. The net reservoir
thickness values used in the models was based on the target reservoir and ranged from 5 to 50
feet for sandstone reservoirs and 10 to 100 feet for several of the large carbonate reservoirs.
The range of values used for the formation volume factor is considered reasonable to represent
crude oils with a range of solution gas ratios.
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The following table lists the ranges of the various reservoir parameters used in the probabilistic
analysis.
PEP Block 38348 and 38349

Range of Reservoir Parameters
Zone Pliocene Miocene Cretaceous
Reservoir
Limestone Sandstone /Carbonate Sandstone
Type
Hydrocarbon
Oil/ Gas Oil/ Gas Oil/ Gas
Type
Range Minimum Maximum Minimum Maximum Minimum Maximum
Porosity (%) 8 13 10 16 10 16
Water
37 62 37 62 37 62
Saturation (%)
Net Reservoir
Varied by prospect/lead
Thickness (ft)
Area (acres) A lognormal distribution based on the most-likely area defined by structural closure for each
prospect/lead was considered.
1/Bo (stb/rbbl) 0.8 0.9 0.8 0.9 0.8 0.9
These ranges are considered to be geologically reasonable.
Source Rock Potential
Mixed-marine late Paleocene and latest Cretaceous sediments are believed to be the main
source rocks in the basin, as indicated by the chemistry of the oil and gas seeps. In the central
part of the basin, the seeps and shows are dominated by gas with isotope ratios suggesting a
mixed biogenic and thermogenic origin. The latter are thought to have originated from the
deeply buried Cretaceous source rocks. In the Wairarapa area, the oil seeps have stable
isotope signatures consistent with terrestrial source rocks but are, as yet, unmatched to any
outcropping rock sequences; however, some Cretaceous marine units contain significant
volumes of terrestrial organic material. From the available data, the Paleocene Waipawa
Formation has good oil source rock potential, with some Cretaceous rocks exhibiting moderate
potential. As mentioned previously, there is a chance that either oil or gas might be found in any
given structure and, for the purposes of this report, oil has been assumed as the hydrocarbon
fill.
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Reservoir Potential
The following table summarizes the potential reservoir units in the East Coast Basin:
Potential Reservoir Units of the East Coast Basin, New Zealand.

Reservoir Thickness %Sand Porosity Permeability
Formation/ Unit Age Region
Potential (m) % mD
Limestone Plio-Pleistocene H, W Good ~100 - <11-50 0-43500
Silver Range L Miocene H, W Poor ~20 >90 8 <1
Hurupi L Miocene W Good 400+ 100 27 -
Makaretu L Miocene R, H Good 50-100 70-90 5.6-26 2-174
Tunanui M Miocene R, H Good 200+ 70-90 11963 <5-207
Ngatapa Sst M Miocene H Medium ~150 100 - 10
Takiritini M Miocene W Good 15-1000 100 8.6-26 <1-218
Greenhollows M Miocene W Good 200+ >80 - 22
Whangara M Miocene R Medium ~200 >90 19-22 <4-80
Whakataki M Miocene W Medium 1000+ >50 17 15-25
Tahora Late Cretaceous R, H Medium 0-400 100 22 112
Glenburn Cretaceous R, H, W Poor 2500+ >90 39431 <1-20
Tapuwaeroa Cretaceous R Medium ~1000 >90 22 3-128
Regions: R= Raukumara Peninsula, H=Hawkes Bay, W=Wairarapa
Outcrop studies have shown that the Miocene sandstones have generally better reservoir
quality. Figure 12 shows the porosity and permeability relationship color-coded by age for PEP
Block 38348, confirming that the upper Miocene sandstone formations have the best reservoir
quality compared to the other formations.
Seals
Widespread reservoir seals of both lateral and stratigraphic nature are observed in the basin but
their characteristics are not well documented. The smectitic Wanstead formation is considered
to have better sealing characteristics for entrapment of hydrocarbons from Cretaceous and
Paleocene sources. Similarly, mudstones act as seals to trap hydrocarbons in the Neogene
sandstone and limestone formations.
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Traps
The tectonic setting of the East Coast Basin, on both Cretaceous and Neogene plate
boundaries, has resulted in a large number of widely distributed potential structural traps and a
complex history of closure development and reactivation. While many structures are thrust-
controlled, a strike-slip component cannot be ruled out. In addition, extensional faulting and
rifting, especially during the late Cretaceous and Paleogene, have contributed to the creation of
several sub-basins and prominent structures. The formation of several stratigraphic traps is also
attributed to the interaction of tectonics and eustacy. The identified potential structural and
stratigraphic traps in the two PEP blocks are individually described in the following section.
Overview of Prospects and Leads in PEP 38348 and 38349
Methodology
All available data was loaded into Schlumberger’s Petrel 3D visualization software to facilitate
integration. This data included all 2D seismic lines, well locations, cultural features such as
shorelines and lease boundaries, satellite imagery, including Landsat and digital elevation
model (DEM) data, and an inventory of geo-rectified map images including surface geology and
local and regional time structure maps. Prospect shapes, geochemical oil and gas seeps, and
regional and local fault trends were captured from the inventory of maps as polygon elements
within the Petrel project. The prospects polygons identified by the Company had been a
combination of both seismic and surface topographic anomalies, however, the horizon
interpretation was not provided and it was beyond the scope of this review to interpret the 2D
data. The seismic was used within the visualization system for comparison against the
Companies lead polygons.
The information available for review by Sproule indicates that reservoir quality rocks are present
within the two PEP blocks. Of the twenty wells drilled in the two blocks, digital well logs were
available for only three wells (Whakatu-1, Hukarere-1, and Kereru-1).
For the PEP 38348 block, fifteen prospects and leads, each with one or two prospective zones,
were considered. Similarly, for the PEP 38349 block, forty-one prospects and leads were
considered.
3738.70483.DJC.db
The following tables list the prospects and leads considered for the PEP 38348 and 38349
blocks:
PEP 38348
Identified Prospects and Leads
Prospect/Lead Target Reservoir Lithology Hydrocarbon
Pauariki Prospect Lower Miocene Sandstone Oil/Gas
Matanui Lead Lower Miocene Sandstone Oil/Gas
Mid-Waiau Lead Mid–Lower Miocene Sandstone Oil/Gas
Mangaroa Lead Mid-Lower Miocene Sandstone Oil/Gas
Kowhai Lead Upper-Mid Miocene Sandstone Oil/Gas
Arataha Lead Upper–Mid Miocene Sandstone Oil/Gas
Wharekaka Lead Upper–Mid Miocene Sandstone Oil/Gas
Paroa Lead Upper–Mid Miocene Sandstone Oil/Gas
Tolaga Deep Lead Mid–Lower Miocene Sandstone Oil/Gas
Arakihi Anticline Lead Upper Miocene Sandstone Oil/Gas
Kanakanaia Lead Lower Miocene Sandstone Oil/Gas
Waingaromia Prospect Lower Miocene Sandstone Oil/Gas
Waitangi Hill Crest Lead Paleocene-Cretaceous Sandstone Oil/Gas
Te Hau Lead Lower Miocene Sandstone Oil/Gas
Te Karaka Lead Lower Miocene Sandstone Oil/Gas
3738.70483.DJC.db
PEP38349
Port Napier Prospect Pliocene, Miocene and/or Cretaceous Limestone/Sandstone Oil/Gas
Palomino Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Fernhill Lead Pliocene Limestone Oil/Gas
Speedy Prospect Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Boar Hill Prospect Late Cretaceous Mudstone Oil/Gas
Seafield Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Maimai Lead Miocene Sandstone Oil/Gas
Runanga Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Carrick Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Clive Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Clifton Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Brookvale Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Cessna Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Burma Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Opapa Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Tukituki Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Kahahakuri Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Tikokino east Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Salisbury Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Gala Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Okauawa Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Ongonga East Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
El Dorado Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Parson Lead Pliocene Limestone Oil/Gas
Ashcott Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Rosearl Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Hatuma Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Woburn Lead Miocene Sandstone Oil/Gas
Awanui Lead Miocene Sandstone Oil/Gas
Tourere Lead Miocene and Eocene-Paleocene Sandstone Oil/Gas
Pukerua Lead Miocene Sandstone Oil/Gas
Maunga Lead Miocene and Eocene-Paleocene Sandstone Oil/Gas
Mangatoro Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Lakeview Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
3738.70483.DJC.db
PEP38349
Oporae Lead Miocene Sandstone Oil/Gas
Waewaepa North Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Waewaepa South Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Waitahora Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Titree Lead Miocene and Oligocene Sandstone Oil/Gas
Mangaorapa Lead Miocene and Oligocene Sandstone Oil/Gas
Coonoor Lead Pliocene and/or Miocene Limestone/Sandstone Oil/Gas
Each of the anomalies is briefly described in the following discussion.
PEP 38348
Pauariki Prospect
This outcrop structure was formerly known as “Area 32” of Taranaki Oil Ltd, where the off-
structure Waiapu-2 well was drilled in late 1927. Significant gas shows were reported during
drilling of this well. The Pauariki structure consists of NNE-trending stacked hanging wall
anticlines over low-angle WNW-dipping thrusts, with an observed minor south plunge on
seismic and a north plunge from surface geology. The target reservoirs are the Lower Miocene
sandstones and the Basal Miocene Whangara Formation. Lower Miocene shales act as seals.
Possible source rock are the Paleocene–Maastrichtian marine carbonaceous shales (Waipawa
Black Shale & Whangai Formation), and Upper Cretaceous carbonaceous shale interbeds. The
deeper stacked anticlines are best imaged on 2D seismic line ip-330-97-01 and the closure
appears weak on two lines (ip-330-98-101 & ip-330-98-101). Some gas seeps have been
identified in the local area.
Matanui Lead
This an outcrop structure referred to in 1928 by Taranaki Oil Ltd as being a potentially large
feature with an axial surface mapped NNE-trending anticline. Surface exposure at crest is mid-
Miocene mudstone. Reservoir targets include lower to basal Miocene turbidite sandstones. A
single seismic line, ip3330-97-01, shows a large, but poorly imaged, shallow anticlinal high
supporting the Company’s identified lead.
3738.70483.DJC.db
Mid-Waiau Lead
One, or possibly two, anticlines were mapped by NZGS in 1991 in the middle reaches of the
Waiau River, with axes immediately northwest of, and parallel to, the Waiau Fault Zone. Surface
exposures are probably mid-Miocene. Reservoir targets are middle and lower Miocene
sandstones. A gas seep was recorded on the Waiau Fault Zone 3 kilometers to the southwest,
and the middle Miocene sandstones were reported to smell of oil. No seismic coverage was
provided over this feature.
Mangaroa Lead
This is a poorly imaged deeper structural complex that is only identified on 2D seismic line ip-
330-98-101-2.
Kowhai Lead
This lead is not discernible from surface geology but was delineated using seismic. The
structure is complicated and is terminated to the north by an east-west fault zone which has a
diapiric and/or faulted core, bringing Eocene formations (including the Wanstead Formation) to
surface adjacent to Upper or Mid-Miocene formations. Reservoir targets for this lead include
Upper and Mid-Miocene turbidite sandstones, and possible fractured limestones lower in the
Miocene. This lead is crossed by two orthogonal lines. While there may be some evidence for
closure on the east-west 2D profile ip-330-98-102, the north-south profile ip-330-00-205
suggests there is a risk of leakage updip to the north.
This structure is considered by the Company to be the second drilling candidate for 2009
following the drilling of the Boar Hill prospect of PEP 38349. The TD of the well is prognosed by
the Company to be 1200 metres. The estimated drilling costs are USD 750,000 for a dry-hole
with an additional USD 350,000 to complete the well if successful. The drilling costs for this well
are to be funded out of the Company’s current working capital.
The Company is negotiating for this well to be drilled by the NRG Services Drilling Rig #1.
Arataha Lead
3738.70483.DJC.db
This lead is a surface structure originally mapped by Taranaki Oil Ltd and subsequently listed as
a closed structure by Vacuum Oil Co. It has a surface culmination in Upper Miocene mudstone,
with a north plunge shown by surface dip on the uppermost Miocene Tokomaru Sandstone. Gas
seeps and oil smells were observed in the Parehaka High 13 kilometers to the ENE of Arataha
and in known source rocks across a major Pliocene depocentre and major fault. Although gas
seeps have been recorded south of the Arataha Lead, recent isotope analysis shows these to
be of shallow biogenic origin (swamp gas; Francis, 1998b). Reservoir targets are mainly Mid-
Miocene turbidite sandstones. Although this lead is covered by three seismic profiles, the
structure climbs steeply to the north (ip-330-98-104) and there appears to be a risk of leakage in
that direction.
Wharekaka and Paroa Leads
There are hints of gentle rollover in surface geology 6–8 kilometers NNW of Tolaga Bay, around
the northern margins of the wide Uawa River alluvial plains. These two leads are termed
Wharekaka and Paroa. The Wharekaka Lead is associated with the NE-trending Marau Beach
Fault (Strong 1927; Francis 1984). Surface exposures are of uppermost Miocene (Kapitean)
sandstones and sandy limestone. However, the base Tokomaru Sandstone is usually
unconformable on the underlying Mapiri Mudstone and surface dips are not necessarily
indicative of deeper structure.
Gas was reported in water bores in the Uawa River plains, and flammable gas was encountered
in two dynamite shot holes in the Tolaga Anticline to the south. There are numerous gas seeps
and oil indications further to the north, south and west. Upper Miocene Hikuwai Sandstone,
having good reservoir quality, is the primary reservoir target, with poorer quality, slightly older
Kaiaua sandstone and the Mid-Miocene section as secondary targets.
The Wharekaka Lead is apparently bigger and has higher relief than does the Paroa Lead,
although this comparison is based only on dip lines for Paroa. Wharekaka is more extensively
covered by four dip lines and one strike line, while Paroa is partially covered by three dip lines.
The seismic continuity is poor and the reflection energy is broken and discontinuous. Paroa may
be more synclinal, while Wharekaka may have better developed closure on its SW flank.
Tolaga Deep Lead
This is a subsidiary footwall structure discernible immediately north of the faulted axis of the
Tolaga Anticline, updip from the Kaiaua Syncline. Rollover is inferred to be in Mid-to-Lower
3738.70483.DJC.db
Miocene and the structure is strongly unconformable below the inferred top Mid-Miocene. A
small, stacked thrust in this area is supported by 2D seismic line ip-330-98-102.
Arakihi Lead
This structure is located on the eastern side of a major Pliocene depocentre (Waihora Syncline)
as a surface anticline exposing top Miocene to Lower Pliocene. Seismic or well control is not
available to delineate this structure. Reservoir targets include Upper and possibly Mid-Miocene
sandstones. Surface geological observations (Francis, 1998a) suggest the anticline to be a
hanging wall structure over a NW-dipping reverse fault. The structure is prognosed to be
favorably situated with regard to mature source with a good drainage area. No 2D seismic
coverage was available over this lead.
Kanakanala Lead
This structure is delineated from a surface anticline in the Waihora Valley, 8 kilometers
southeast of the Waitangi seeps and 4 kilometers west of the Waihora Syncline, a major
Pliocene depocentre. However, closure is uncertain, as it could not be confirmed from the
available seismic data. Accordingly, the size of the closure is unknown. Two lines cross this lead
(ip330-00-201 & -202) and, on both lines, this structure appears to be in a flank position and
less prospective than some of the other leads.
Waingaromia Prospect
The most successful well in the East Coast Basin is the Waingaromia-1, drilled between 1884
and 1890. The well was situated near the axis of the Waingaromia Syncline but encountered oil
and gas shows in several sandstone, limestone and conglomerate formations between 143 and
350 meters, and oil was apparently produced between 390 meters and the TD of 403 meters at
a rate of 20 to 50 barrels per day. Recent exploration by Indo-Pacific Energy in the area lead to
the drilling of the Waingaromia–2 well in May 2002, close to the Waingaromia–1 well and about
100 meters deeper. Although gas was present while drilling, the well was abandoned as dry.
Gas collected at 493 meters contained 44% methane, 0.25% ethane, 117-ppm propane and 18-
ppm butane. Most of the gas was believed to have come from fractures in concretions. Gas
bubbles were observed in the core from 250 meters down. A strong gas kick at 348 meters,
which was flared, came from a vuggy brecciated concretionary zone with open fractures. At 339
meters, oil was observed from an open fault dipping at 40°, which had strike-slip displacement.
3738.70483.DJC.db
In summary, the Waingaromia-2 well, drilled to test the potential hydrocarbon-bearing

formations encountered in the Waingaromia-1 well, did not encounter any of the anticipated
Mid- and Lower Miocene sandstone formations (Waingaromia-2 Well Completion Report). The
2D seismic line ip330-00-301 shows the possibility of a fault-dependent trap against a major
fault in the vicinity of this lead.
Waitangi Hill Crest Lead
The Waitangi seep area was the target of exploration in the early 1900’s. After drilling five
shallow wells, Gisborne Oil Company drilled two deeper wells towards the centre of Waitangi hill
and about 600 meters north of the main seeps. The area was interpreted to be a fold-dominant
structure. Gas and oil shows were encountered in several horizons in the Waitangi-1 well, with
the most significant shows recorded from a greensand associated with “brown shales” at about
200 meters. The greensand could be associated with the Rakauroa Member of the Whangai
Formation or, alternatively, with Waipawa Black Shale or Wanstead Formation. Surface
exposure is very patchy but these formations are present in the Waitangi Crest area. In 1912,
the oil-bearing greensand zone at 200 meters was perforated and produced about 10 bbl/day of
oil. The casing of Waitangi-1 still bubbles gas and oil. No 2D seismic coverage was provided
over this lead but nearby line ip330-00-301 shows a major fault immediately to the south and
the structure appears to be rising towards this lead at the end of this line.
This structure is considered to be the third drilling candidate by the Company in 2009. It is
proposed to be drilled following the Boar Hill prospect (PEP 38349) and the Kowhai prospect
(PEP 38348) to a total depth (TD) of approximately 750 metres. The Company may acquire
some additional seismic following a review of the first two wells, before spudding a well into this
structure. The estimated drilling cost for this well is USD 750,000 for the dry-hole case with an
additional USD 350,000 to complete the well in the event of a success. The drilling costs for the
well, are to be funded out of the Company’s current working capital.
The Company is negotiating for this well to be drilled by the NRG Services Drilling Rig #1.
Te Hau Lead
Te Hau is a minor rollover structure situated immediately southwest of the Waitangi High and
seven kilometers from the main oil seeps. South-dipping Lower Miocene sandstone can be seen
in surface outcrops and the fault (or unconformity?) juxtaposing the complex high is only one
kilometer to the north. Lower Miocene sandstones and discontinuous limestones occur close to
3738.70483.DJC.db
this contact. The prospect is small, extending about 700 meters along the rollover, but could
represent an interesting flank prospect to the exposed oil-rich Waitangi High, if closure to both
north and south could be established. No 2D seismic coverage was provided over this lead but
nearby line ip330-00-204 shows that the structure appears to be rising towards this lead at the
end of this line.
Te Karaka Lead
This is a structural high with NW-dipping Mid- to Lower Miocene and SE-dipping Lower Pliocene
formations close to the Totangi oil seeps. One shallow well was drilled to a depth of 150 meters
by O.A. Browne Company in 1957 but no data is available on the well. Surface exposures are
concealed by extensive Upper Quaternary alluvium and Lower Quaternary lakebeds. No
seismic coverage was provided for this lead.
PEP 38349
PEP 38349 largely consists of approximately 7 to 10 kilometres of prospective Mid-Cretaceous

to Quaternary section. Black and grey shales of Upper Cretaceous–Paleocene age are the main
marine source rocks. Miocene–Quaternary reservoirs and seals are inferred to be present in the
area, with indications of late burial, hydrocarbon maturation and migration. Several oil seeps to
the south of the permit are linked to thermogenic and biogenic source rocks. The predominant
structural element is the Miocene to Late Pliocene and Quaternary basin development in a
compressive-wrench regime. The main reservoir targets are the Upper and Mid-Miocene
turbidites, shelf sandstones and fractured limestones, Pliocene coquina limestones with
possible turbidites, and possible Upper Cretaceous–Paleocene sandstones and fractured
shales.
Port Napier Prospect
This rollover and SW-plunging structure indicates a Late Pliocene high from surface geology.
The well Hukarere-1 was drilled on the structure in late 2001 and was abandoned as dry. The
well was drilled to a total depth of 10,598 feet to test the hydrocarbon potential of the Pania
Anticline. The well was drilled on reclaimed land in the Port of Napier. At 4,250 feet, the
Mangatoro Formation was encountered, resting conformably on the Haupori Sandstone. The
top of the Wanstead Formation was encountered at 6980 feet. The Whangai Formation was
encountered at 9,068 feet, with an unusual facies of intensively calcite-veined mudstone at
3738.70483.DJC.db
9,220-9,522 feet, interpreted as a fault zone. The Glenburn Formation was penetrated at 10,127
feet and encountered gas up to 23%. A perforation test of the interval between 10,431 and
10,513 feet flowed only water. A second test through perforations at 10,352-10,364 feet did not
show significant pressure buildup and 22 barrels of water were swabbed to surface.
Petrophysical analysis of the Hukurere-1 well showed that the Haupori, Waitere and Glenburn
formations have better hydrocarbon potential compared to the remainder of the logged section.
The Haupori sandstone, with a gross vertical thickness of 597 feet, did not have any gas shows
while drilling. The Waitere Formation that covers the Late Miocene succession between the
Mokonui and Waitere unconformities, comprises a fining-upward sequence that grades from
sandstone to siltstone. In the first four feet of the formation, samples exhibited a weak pale
greenish-blue crushed cut and bluish-white residual ring but without any direct fluorescence. A
few other samples showed slow blooming milky white cut without any fluorescence. Minor
background gas was observed while drilling the section. Petrophysical analysis showed the
formation to have a gross vertical thickness of 1223 feet. Several thin sections from the
Glenburn sandstone show poor porosity with high clay content. The interval 10,400-10,500 feet
MD had porosity of 15% and a calculated water saturation in the range of 75-85%. The 2D line
ip328-99-201 clearly shows a prospective anticlinal closure supporting this prospect.
Palomino Lead
This structure is situated to the east of Whakatu-1 and is seismically defined by a separate
rollover. The primary reservoir targets are Pliocene limestone and Miocene sandstone units.
Sproule’s petrophysical interpretation of the Whakatu-1 well shows that the entire logged
interval is devoid of any hydrocarbon potential, except for the Waipuna limestone section that
shows an average porosity of 8% and an average water saturation of 50%. This zone, with an
estimated 32 feet of low-porosity net pay, is the most promising section in the well. The
geological summary from the well completion report identifies the interval as calcareous
sandstone grading to sandy limestone. Gas levels were relatively low, with C1 values of 85-285
ppm; however, the C2 levels were very high, ranging up to 35 ppm. No C3 or heavier
components were present. According to the well completion report, the anticipated Pliocene and
Miocene reservoirs were absent in the vicinity of the Whakatu structure. The 2D line g328-98-
117 shows that the deeper structure rises from quite steep flanks and flattens out on the crest of
the deep structure, and may have a rollover closure component. The shallower section does not
appear to have closure.
Fernhill Lead
3738.70483.DJC.db
This structure lies inland to the west of the Hawke’s Bay area and is poorly defined on the
existing seismic lines. The Mangapanian-Nukumaruan regressive phase in this area is
dominated by carbonate lithofacies within the Te Aute sediments, which are common
throughout the Hawke’s Bay area. The prospective primary reservoir target is the Mangapanian
(Late Pliocene) limestone. Good quality seismic on lines such as 97-02 show a fault-dependent
high-side closure against a major fault at depth that develops a significant rollover in the shallow
section.
Speedy Prospect
The Speedy prospect is located in the central part of the East Coast Basin, close to known
Cretaceous-Paleocene source rocks, Mid-to Late Miocene turbidite sandstones, Early and Mid-
Pliocene coquina limestone reservoirs, and Miocene-Pliocene seals. The structure is a
northeast trending seismically defined 4-way dip closure. Hydrocarbons are inferred to have
migrated from a substantial half-graben some 5 kilometers to the northwest of this structure.
One well, Speedy-1, drilled in mid-2000 to a total depth of 876 meters, was plugged and
abandoned as dry. The well failed to reach the target horizon due to mechanical difficulties
during drilling. The stratigraphic succession encountered by the well consisted of Upper
Miocene claystone formation with minor sandstones, unconfirmably overlain by Mid-Pliocene
claystone and sandstone formations. A maximum mud gas level of 2.71% was recorded at 430
meters. The Tukituki (Mangapanian) sandstone, Te Onepu limestone formations overlie the
claystone formation. Inferred porosity and permeability in this section are good to very good.
The Te Onepu limestones are part of the Te Aute Limestone group in the Hawke’s Bay area.
Finally, the Quaternary mudstones, oyster beds and gravel beds were encountered to the
surface.
Boar Hill Prospect
This is a reasonably well-defined seismic structure confirming the surface geological mapping.
The structure is defined by two dip seismic profiles (ip332-98-207 and ip332-99-3030 and one
strike seismic profile (ip332-99-302). Although there is evidence of a great deal of faulting, all
three of these 2D seismic profiles exhibit a general antiformal shape. This structure is
considered as the first drilling candidate by the Company in the second quarter of 2009 to a TD
of approximately 1200 metres. It is inferred that stacked thrusts of Whangai Formation and
older in core of structure can be encountered. Reservoir targets prognosed by the Company
include both the Miocene-aged turbidite sands and potentially, the Waipawa and Whangai oil
3738.70483.DJC.db
shales. Three 2D seismic profiles show a major subsurface structure supporting this prospect.
A major regional fault on the north and east flanks dramatically terminates the structure.
The Company has 50 km of newly acquired 2D seismic data which was not available at the time
of the Sproule review which has increased their confidence in the closure. The Company is
negotiating for this well to be drilled by the NRG Services Drilling Rig #1. The drilling costs for
the well are to be funded out of current working capita.
The estimated drilling cost for a dry-hole are USD 750,000 in the case of a dry-hole with an
additional USD 350,000 to complete the well.
Seafield Lead
The Seafield lead is a rollover structure situated northwest of Napier. A 3-way closure is defined
by seismic interpretation of Indo Pacific 1998 lines, with no closure definition to the northwest.
Late Miocene to Pliocene formations are the prospective reservoirs.
Maimai Lead
This is a poorly defined sub-unconformity rollover structure flanking the Port Napier prospect,
with Miocene formations as probable reservoir targets. The rollover feature shows an attractive
amplitude anomaly at the crest of the closure on 2D seismic profile ip328-99-202, supporting
this lead.
Runanga Lead
A small rollover is seen on dip line 89C-01 but is not adequately defined to the north or south
due to a lack of strike line control. Similar to the Fernhill lead, the primary reservoir target is
considered to be the Mangapanian (Late Pliocene) limestone.
3738.70483.DJC.db
Carrick Lead
This structure was identified on several seismic lines. Gas bubbles were reported from a
shallow water well drilled near the structure. Similar to the Fernhill lead, the primary prospective
reservoir target is expected to be the Mangapanian (Late Pliocene) limestone. Carrick appears
to be a more subtle closure, as shown on offsetting line 97-04.
Clive Lead
Seismic lines 98-114-97-01 and g328-98-105 show this feature to be a high-side, likely fault-
dependent closure against a major down-to-basement fault. Similar to the Carrick structure, gas
was reported from a water well drilled on the northwestern flank of the structure. The primary
reservoir targets are Pliocene limestone and Miocene sandstone units.
Clifton Lead
Situated at the northern end of the extensive Elsthorpe Anticline on the coast, this structure is
identified on seismic lines 98-114-97-01 and just off g328-98-105; however, definition of the
northern and southern closures is not clear. Possible reservoir targets are the Pliocene
limestone, with secondary objectives in the Miocene sandstone units. There appears to be high-
side hanging wall rollover closure (particularly at shallower depths) against a major down-to-
basin fault.
Brookvale Lead
A minor rollover is seen on seismic line L98-115 at the end of the line. It is also seen as a high
on the southern end of lines 99-205 and 301, with possible definition on line L204. This structure
is located to the north of Havelock North town. Reservoir targets could be the Pliocene
limestones, with secondary targets in the Miocene sandstones. While 2D seismic line ip328-99-
301 rises towards this anomaly, the structure lacks direct seismic control.
Cessna Lead
This structure is characterized by a distinct surface topography feature defined by mid-Pliocene

limestone. The structure is seen as an asymmetric hanging wall rollover on a NW-dipping
3738.70483.DJC.db
reverse fault on the available seismic lines. Shallow lower Pliocene limestones and deeper
Upper to Mid-Miocene turbidites are the main reservoir targets. No 2D seismic was available
over this lead.
Burma Lead
This structure is identified from surface geology as a 3-way rollover expressed in mid-Pliocene
limestones. The Pliocene limestones and Late Miocene sandstones are the possible reservoir
targets. No 2D seismic was available over this lead.
Opapa Lead
Surface geology indicates a 4-way closure in mid-Pliocene limestones with targets from shallow
Lower Pliocene limestones and, possibly, Upper and Mid-Miocene turbidites and Paleocene
sandstones. No 2D seismic was available over this lead.
Tukituki Lead
This is a surface structure to the west of the Patangata Syncline, with gentle dips in Pliocene
limestones that define rollover and a northerly plunge. No 2D seismic was available over this
lead.
Kahahakuri Lead
This is likely a steeply dipping fault-dependent closure as best illustrated on 2D line “th”. The
steepness hinders the liklelihood of trapping large volumes.
Tikokino East Lead
This is a steeply dipping deep fault-bounded trap discernible on line g328-98-109. It is not clear
if there is roll-over on this deep structure as the seismic character appears to be strongly
influenced by diffractions extending off the crest of the structure.
3738.70483.DJC.db
Salisbury Lead
This is a small rollover on seismic line C91-04, mainly below the unconformity. It increases in
size, and closes higher to the south, on line C91-05. The structure may be en-echelon to the
Kereru structure, which is a 4-way dip closure. The area of closure at the mid-Mangapanian
level is approximately 8 square kilometers. Kereru-1 was drilled almost on the crest of the upper
gently folded sequence, and about 900 meters west of the crest of the unconformity. There were
no visual hydrocarbon shows in either cuttings or sidewall cores. Several recorded gas shows
were mostly background and predominantly methane. The highest gas values were recorded in
the Tirowhenua mudstone at 3,785 feet and between 4,000 and 4,100 feet. This well was
plugged and abandoned as dry.
In the Ohara mudstone interval, porosity values of 16% and water saturation values up to 40%
were computed in several zones; however, the results are suspect due to poor hole conditions.
In the zone of highest total gas readings within the Tirowhenua mudstone, log analysis does not
indicate any hydrocarbon saturations.
In Salisbury, the reservoir targets are the Pliocene limestones and Miocene sandstones, as in
the Kereru structure. No 2D seismic was available over this lead.
Gala Lead
This is a broad, shallow rollover trending NNE–SSW on seismic data. It is interpreted that this
lead could be contiguous with the Okauawa lead. It is inferred that Upper Miocene sandstones
are present below the Pliocene. This is an attractive feature with good areal extent that appears
to have some associated amplitude anomaly, for example, on 2D line ‘tb”.
Okauawa Lead
This structural high is seen at the east end of seismic line C91-05, with a slight rise on line 89C-
02, and evidence of structure on surface geology. Reservoir targets are the formations above
and below the mid-Pliocene unconformity. The 2D seismic (eg. line “tc”) is extremely poor over
this lead and does not compare favourably against other opportunities.
Ongonga East Lead
The Ongonga East structure lies south-east of the high drilled by the Ongonga-1 well. According
to the well completion report, Ongonaga-1 was drilled on a closed subsurface seismic high to
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test the hydrocarbon potential of the Pliocene carbonate that exhibits good porosity and
permeability in outcrop. The well was drilled to a total depth of 5,162 feet, with no significant
hydrocarbon indications. The Ongonga East structure is a separate down-dip fault block, having
the same objective of Pliocene limestone targets. This fault block may exhibit some fault-
independent rollover closure but additional seismic is required for validation.
El Dorado Lead
The structure is characterized by a gentle rollover at the intersection of two seismic lines
passing through the crest. Closure to the south is not well defined. The primary reservoir target
is the Mid-Pliocene coquina limestone, with a possible Pliocene and/or Miocene sandstone
target. The 2D seismic profile “tp” illustrates and supports this anticlinal carbonate build-up with
relatively clean seismic continuity.
Parson Lead
This lead is an unusual mound interpreted on seismic line 97-11, inferred by the Company to be
a Pliocene coquina limestone body. However, it may just be a steeply dipping fault-dependent
lead. Closure is not confirmed due to a lack of adequate strike lines. The structure may possibly
be connected to the Speedy lead to the south and a poorly imaged mound to the north. The
reservoir target is shallow and assumed to be close to outcrop.
Ashcott Lead
Ashcott is delineated as a rollover near the north end of seismic line 97-05 (near-strike), with a
suggestion of dip rollover at the extreme eastern end of the line. Surface geology indicates that
the Pliocene limestone flattens out, suggesting that the rollover is in the Miocene section.
Rosearl Lead
This structure is identified on a single dip line as a rollover and a strike line is required to confirm
closure. Mid-Pliocene coquina limestone is the primary reservoir target, with a possible
secondary objective in the deeper Miocene sandstones. A rollover feature seen on line 97-05,
which could be a possible carbonate buildup, provides some support for this interpretation.
3738.70483.DJC.db
Hatuma Lead
This is a moderately large rollover seen on seismic line 97-05 (near-strike) below the
unconformity. The seismic quality is very good on this line and the structure appears to have
substantial relief. Western regional dip is evident from other seismic lines. More seismic lines
through the crest would better define closure to the east. The primary reservoir targets would
most probably be the Mid-Pliocene coquina limestone and, possibly, deeper Miocene
sandstones.
Woburn Lead
This is a structural high between the Hatuma and Awanui leads. It is well defined on two
reprocessed seismic lines, 97-05 and 98-204. It is a robust Miocene structure underlying a
Pliocene syncline. The top of the Miocene section was eroded during the early Pliocene.
Awanui Lead
This is a double rollover structure near the western end of lines 97-05, 332-98-204 (dip) and
332-98-205 (strike). The structure is situated close to the Waewaepa–Oruawharo fault. It is
inferred that the closure is probably of Miocene age.
Tourere Lead
This is a surface anticline with visible Upper Miocene outcrop exposure. The structure is
parallel to the Pukerua lead and is located 2.5 kilometers east of it. The reservoir targets are
Lower Miocene and possible Eocene-Paleocene formations. No 2D seismic was available over
this lead.
Pukerua Lead
Pukerua is delineated as a small surface anticline in the Pliocene, located 500 meters east of
the Oruawharo fault. The east side syncline appears to show favorable plunge reversal. The
primary reservoir targets are the Upper and Lower Miocene sandstones. No 2D seismic was
available over this lead.
3738.70483.DJC.db
Maunga Lead
This is a surface anticline, faulted against the Pliocene section to the east, and located near the
Oruawharo fault. Oil indications were reported in surface exposure of sandstones at the crest.
Reservoir targets include Lower Miocene and, possibly, Eocene-Paleocene formations. No 2D
seismic was available over this lead.
Mangatoro Lead
This structure is an inferred high, immediately east of the Waewaepa fault, comparable to the
Waewaepa leads. One seismic line was shot (98-206) but the data is very poor. Possible targets
include lower Pliocene limestone and Upper and Lower Miocene sandstones. This lead is
crossed by one 2D profile, 98-206, and appears to be in a flank position and less attractive than
many other leads.
Lakeview Lead
This structure is barely discernable as a hanging wall rollover on reprocessed seismic line 332-
98-206, toward the southeast end, and situated 4 kilometers SE of the Waewaepa–Oruawharo
fault. It is considered to be a relatively shallow prospect, with probable Miocene formations
under the base-Pliocene unconformity. This lead is crossed by one 2D profile, 98-206, and
appears to be an attractive high-side fault-dependent closure that may have a rollover
component.
Oporae Lead
This is a surface 4-way closure defined on the west by the mid-Pliocene limestone and, on the
east, by dip on the Upper Miocene. High local topographic relief is reported on the structure.
Possible reservoir target formations are the Upper Miocene sandstones at or near the
unconformity, with a secondary objective in Lower Miocene sandstones preserved between the
Paleocene and Upper Miocene. No 2D seismic was available over this lead.
3738.70483.DJC.db
Waewaepa North and South Leads
Waewaepa-North is a 4-way surface closure defined in mid-Pliocene (Mangapanian) limestone.

Possible targets include lower Pliocene limestones, and Upper and, possibly, Lower Miocene
sandstones. It is characterized by a long northerly plunge, separated by a gentle saddle from
the Waewaepa South lead. Subsurface closure is not confirmed due to lack of adequate seismic
definition. The Waewaepa and Coonoor leads are to the east of Waewaepa fault. Oil and gas
seeps are observed in breached anticlines to the east of these leads. The Waewaepa South
lead has a long southerly plunge. No 2D seismic was available over these leads.
Waitahora Lead
This lead is situated along the same trend as, and to the north of, the Waewaepa leads but has
a poorer surface signature. The potential reservoir targets are Lower Pliocene limestones,
Upper and, possibly, Lower Miocene sandstones. No 2D seismic was available over this lead.
Titree Lead
This is a surface anticline with mid-Miocene outcrop exposures. Reservoir targets are possibly
Lower Miocene turbidites and top Oligocene sandstones. The Wescott oil seeps lie to the west
of this lead. No 2D seismic was available over this lead.
Mangaorapa Lead
The Mangaorapa Anticline lies across the Akitio Syncline axis from Boar Hill. Reservoir targets
are similar to the Titree North lead. No 2D seismic was available over this lead.
Coonoor Lead
This is an outcrop high to the SSW of the Waewaepa South lead. Reservoir targets are similar
to the Waewaepa leads. No 2D seismic was available over this lead.
3738.70483.DJC.db
Summary of the Resource Assessment of the identified Prospects and Leads
Based on our review of the information made available to us, it is apparent that:
• reservoir quality rocks are present within the two PEP blocks,
• source rocks have generated hydrocarbons in the basin and there has been migration
through the system, and
• prospective structures are present on the blocks.
However, it is also apparent that:

• most of the identified structures are poorly defined at this time and additional data may
invalidate them,
• there is insufficient stratigraphic data to provide confident identification of prospective
reservoirs within the identified structures,
• there is insufficient data to determine whether trap formation pre-dates hydrocarbon
migration,
• original charged traps may not have been preserved in this active basin,
• the basin is both oil- and gas-prone but small gas pools would not be economic to
produce and it would have to be determined if even large volumes of gas, if discovered,
would be economic.
Based on this review, it is our opinion that the current risks and uncertainties applicable to these
blocks are numerous and suggest that the geological risks are high. Also, at this immature stage
of basin development, we have treated the prospects as if they were independent, however, this
is not so. As additional seismic is shot and wells are drilled, the probabilities associated with the
remaining undrilled prospects will change in accordance with the accumulated well results. In
our assessment, we have acknowledge geological risk and inter-dependence of the prospects
by incorporating a P99 net pay value of zero for each prospect or lead in our analysis.
It is our opinion that the basin is too immature to justify estimation of recoverable hydrocarbons,
thus we have limited our assessment to the estimation of undiscovered in-place resources.
In assessing the undiscovered resources for these PEP blocks, ranges of reservoir parameter
values for porosity, water saturation, area, net pay and shrinkage factors were estimated for
each prospect or lead, and incorporated into a probabilistic software model, using either
triangular or lognormal distributions. The lognormal distributions were modeled using assumed
P10 and P90 end points. The model was run for 10,000 iterations, from which a distribution of
all possible outcomes was created. The totals for each prospect or lead were summed
statistically in order to estimate an aggregated expected outcome. Note that the arithmetic sum
3738.70483.DJC.db
of individual volumes for each prospect or lead will not equal the statistical sum due to
aggregation effects.
Based on the probabilistic model built for PEP Blocks 38348 and 38349, low, best and high
estimates for the undiscovered in-place oil resources were selected, using the P90, P50 and
P10 values from the output distribution. These results are presented in Table 1a for the gross
volumes and Table 1b for the net volumes. These volumes are reported as unrisked volumes;
specifically, Sproule has not applied any geological risk factors or economic criteria to these
estimates.
Note that there is no certainty that any portion of the undiscovered resources will be
discovered and that, if discovered, it may not be economically viable or technically
feasible to produce.
Table 1a
PEP Blocks 38348 and 38349, East Coast, New Zealand
Probabilistic Estimate of Gross Undiscovered In-Place Hydrocarbon Resources
Low Estimate Best Estimate High Estimate
Area Gross BOE1-in-Place (MMbbls)2
PEP Block 38348 615 1002 1773
PEP Block 38349

601 710 866
Total 3 1316 1736 2513

1
2
Unrisked
3
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Table 1b
PEP Blocks 38348 and 38349, East Coast, New Zealand
Probabilistic Estimate of Net1 Undiscovered In-Place Oil Resources2
Low Estimate Best Estimate High Estimate

3
Area Gross BOE -in-Place (MMbbls)
PEP Block 38348 615 1002 1773
PEP Block 38349

601 710 866
Total 4 1316 1736 2513

1
Company Net WI 100 percent
2.
Unrisked
3.
4.
Shale Gas Potential
In addition to conventional opportunities, the Company is also pursuing an unconventional

fractured shale gas play in the Waipawa-Whangai formations, which also serve as a source rock
within the area. Based on this, an application has been filed for an additional license
immediately south of PEP 38349 (Figure2).
A study of the shale gas potential of the Waipawa and Whangai formations by GNS Science of
New Zealand indicated that the Whangai can be quite thick, with low to moderate richness and
maturity, while the Waipawa appears richer but of more modest thickness (Figures 13 and 14).
Subsurface data for this play is sparse but the Company plans to collect additional outcrop data.
These rocks vary in burial depth from surface to in excess of 10,000 feet. If sufficiently fractured,
these source rocks could also have reservoir potential.
GNS Science also compared the thickness, richness, and maturity characteristics of the
Waipawa and Whangai fractured shale source to analogue formations in North America such as
the Bakken play in Montana and Barnett shales in East Texas.
While Sproule recognizes that potential may exist in this unconventional play, no data is
available to permit an assessment of its resources to be made at this time. Minimum information
required in order to confirm this potential includes such data as gas analyses, desorption
isotherm tests, gas recovery from preserved cores and drilling mud gas shows. Ultimately, well
3738.70483.DJC.db
test and/or production data and economic analysis will be required in order to identify and
estimate reserves for the play.
Minimum Work Obligations
The PEPs granted to the Company by Crown Minerals, New Zealand, stipulate the length of
time for the Exploration Period, which, for these permits, is 60 months.
As the terms for both permits are essentially the same, the information set out below applies to
both PEP 38348 and 38349 blocks, except where noted.
The work program for both the permits is

a) Within the first 12 months:
i. Review available seismic data and reprocess and interpret as necessary;
ii. Conduct geochemical surveys over identified prospects/leads. Review the results
of this work and prioritize prospective areas and prospects/leads;
iii. Examine structural and stratigraphic relationships of prospective areas and carry
out petrographic analysis including porosity and permeability tests of reservoir
and source formations.
And make a firm commitment to complete the following:
b) Within 24 months of the commencement date of the permit:
i. Acquire, process and interpret a minimum of 20 km of 2D seismic data on PEP
38348 and 30 km of 2D seismic data on PEP 38349;
ii. Undertake additional geological and geochemical studies and appropriate
geophysical studies, including detailed interpretation of existing and the
reprocessed and newly acquired seismic data described above.;
And make a firm commitment to complete the following:
c) Within 36 months of the commencement date of the permit:
Drill one exploration well to an agreed objective and/ or depth unless geological
or engineering constraints encountered whilst drilling make this unreasonable;
And submit by notice in writing a work program for the remainder of the permit term and
surrender 25% of the permit area or surrender the permit.
The royalty rate for the produced crude oil is set as a sliding scale with reasonable rates. There
is no minimum expenditure on either PEP.
The work obligation set out in both agreements is considered to be reasonable and achievable
by the Company, given the 5-year exploration period.
3738.70483.DJC.db
Work Plans and Budget
The Company is negotiating for their first wells to be drilled by the NRG Services Drilling Rig #1
commencing the second quarter of 2009. The first three wells currently planned will target the
Boar Hill prospect of PEP 38349 and the non-contingent Kowhai and Waitangi prospects of PEP
38348. Costs for these wells, to be funded out of current working capital, are estimated at USD
750,000 each for a dryhole case and USD 350,000 additional to complete each well in the
success case for a total budget of USD 3.3 million.
In Sproule’s opinion the work program being followed by the Company is following the work
commitment requirements listed as part of the terms and conditions of the PEP Permits. Each of
the drilling targets are stand alone prospects.
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Appendix A — Page 1
Appendix A — Definitions
The following definitions form the basis of our classification of reserves and values presented in
this report. They have been prepared by the Standing Committee on Reserves Definitions of the
Petroleum Society of the CIM (“CIM”), incorporated in the Society of Petroleum Evaluation
Engineers (“SPEE”) Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”) and
specified by National Instrument 51-101 (“NI 51-101”).
Reserves are estimated remaining quantities of oil and natural gas and related substances
anticipated to be recoverable from known accumulations, from a given date forward, based on:
• analysis of drilling, geological, geophysical and engineering data;

• the use of established technology;
• specified economic conditions, which are generally accepted as being reasonable, and
shall be disclosed; and
• a remaining reserve life of 50 years.
Reserves are classified according to the degree of certainty associated with the estimates.
1. Proved Reserves
Proved reserves are those reserves that can be estimated with a high degree of certainty to
be recoverable. It is likely that the actual remaining quantities recovered will exceed the
estimated proved reserves.
2. Probable Reserves
Probable reserves are those additional reserves that are less certain to be recovered than
proved reserves. It is equally likely that the actual remaining quantities recovered will be
greater or less than the sum of the estimated proved plus probable reserves.
3. Possible Reserves
Possible reserves are those additional reserves that are less certain to be recovered than
probable reserves. It is unlikely that the actual remaining quantities recovered will exceed
the sum of the estimated proved plus probable plus possible reserves. Possible reserves
have not been considered in this report.
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Other criteria that must also be met for the categorization of reserves are provided in Section
5.5 of the COGE Handbook.
Each of the reserves categories (proved, probable, and possible) may be divided into developed
or undeveloped categories.
4. Developed Reserves
Developed reserves are those reserves that are expected to be recovered from existing
wells and installed facilities or, if facilities have not been installed, that would involve a low
expenditure (e.g., when compared to the cost of drilling a well) to put the reserves on
production. The developed category may be subdivided into producing and non-producing.
5. Developed Producing Reserves
Developed producing reserves are those reserves that are expected to be recovered from
completion intervals open at the time of the estimate. These reserves may be currently
producing or, if shut in, they must have previously been on production, and the date of
resumption of production must be known with reasonable certainty.
6. Developed Non-Producing Reserves
Developed non-producing reserves are those reserves that either have not been on
production, or have previously been on production, but are shut in, and the date of
resumption of production is unknown.
7. Undeveloped Reserves
Undeveloped reserves are those reserves expected to be recovered from known

accumulations where a significant expenditure (e.g., when compared to the cost of drilling a
well) is required to render them capable of production. They must fully meet the
requirements of the reserves classification (proved, probable, possible) to which they are
assigned.
In multi-well pools, it may be appropriate to allocate total pool reserves between the
developed and undeveloped categories or to subdivide the developed reserves for the pool
between developed producing and developed non-producing. This allocation should be
based on the estimator’s assessment as to the reserves that will be recovered from specific
wells, facilities, and completion intervals in the pool and their respective development and
production status.
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8. Levels of Certainty for Reported Reserves
The qualitative certainty levels contained in the definitions in Sections 1, 2 and 3 are
applicable to individual reserves entities, which refers to the lowest level at which reserves
estimates are made, and to reported reserves, which refers to the highest level sum of
individual entity estimates for which reserve estimates are made.
Reported total reserves estimated by deterministic or probabilistic methods, whether

comprised of a single reserves entity or an aggregate estimate for multiple entities, should
target the following levels of certainty under a specific set of economic conditions:
a. There is a 90% probability that at least the estimated proved reserves will be
recovered.
b. There is a 50% probability that at least the sum of the estimated proved reserves plus
probable reserves will be recovered.
c. There is a 10% probability that at least the sum of the estimated proved reserves plus
probable reserves plus possible reserves will be recovered.
A quantitative measure of the probability associated with a reserves estimate is generated

only when a probabilistic estimate is conducted. The majority of reserves estimates will be
performed using deterministic methods that do not provide a quantitative measure of
probability. In principle, there should be no difference between estimates prepared using
probabilistic or deterministic methods.
Additional clarification of certainty levels associated with reserves estimates and the effect
of aggregation is provided in Section 5.5.3 of the COGE Handbook. Whether deterministic
or probabilistic methods are used, evaluators are expressing their professional judgment as
to what are reasonable estimates.
9. Pipeline Gas Reserves are gas reserves remaining after deducting surface losses due to
process shrinkage and raw gas used as lease fuel.
10. Remaining Recoverable Reserves are the total remaining recoverable reserves
associated with the acreage in which the Company has an interest.
11. Company Gross Reserves are the Company’s working interest share of the remaining
reserves, before deduction of any royalties.
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12. Company Net Reserves are the gross remaining reserves of the properties in which the
Company has an interest, less all Crown, freehold, and overriding royalties and interests
owned by others.
13. Net Production Revenue is income derived from the sale of net reserves of oil, pipeline
gas, and gas by-products, less all capital and operating costs.
14. Fair Market Value is defined as the price at which a purchaser seeking an economic and
commercial return on investment would be willing to buy, and a vendor would be willing to
sell, where neither is under compulsion to buy or sell and both are competent and have
reasonable knowledge of the facts.
15. Barrels of Oil Equivalent (BOE) Reserves – BOE is the sum of the oil reserves, plus the
gas reserves divided by a factor of 6, plus the natural gas liquid reserves, all expressed in
barrels or thousands of barrels. Equivalent reserves can also be expressed in thousands of
cubic feet of gas equivalent (McfGE) using a conversion ratio of 1 bbl:6 Mcf.
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Appendix B — Page 1
Appendix B — Abbreviations
This appendix contains a list of abbreviations that may be found in Sproule reports, as well as a
table comparing Imperial and Metric units. Two conversion tables, used to prepare this report,
are also provided.
AOF absolute open flow

BOE barrels of oil equivalent
bopd barrels of oil per day
bwpd barrels of water per day
DCQ daily contract quantity
DSU drilling spacing unit
GCA gas cost allowance
GOR gas-oil ratio
GORR gross overriding royalty
LPG liquid petroleum gas
McfGE thousands of cubic feet of gas equivalent
Mcfpd thousands of cubic feet per day
MPR maximum permissive rate
MRL maximum rate limitation
NCI net carried interest
NGL natural gas liquids
NORR net overriding royalty
NPI net profits interest
ORRI overriding royalty interest
P&NG petroleum and natural gas
PSA Production Sharing Agreement
PSU production spacing unit
PVT pressure-volume-temperature
WI working interest
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Imperial Units Metric Units

3 3
M (10 ) one thousand Prefixes k (10 ) one thousand
6 6
MM (10 ) million M (10 ) million
B (109) one billion G (109) one billion

12 12
T (10 ) one trillion T (10 ) one trillion
18
E (10 ) one milliard
in. inches Length cm centimetres
ft feet m metres
mi mile km kilometres
2 2
ft square feet Area m square metres
ac acres ha hectares
3 3
cf or ft cubic feet Volume m cubic metres
scf standard cubic feet
gal gallons L litres
Mcf thousand cubic feet
Mcfpd thousand cubic feet per day
MMcf million cubic feet
MMcfpd million cubic feet per day
Bcf billion cubic feet (109)
bbl barrels m3 cubic metre
Mbbl thousand barrels
stb stock tank barrel stm3 stock tank cubic metres

3
bbl/d barrels per day m /d cubic metre per day
bbl/mo barrels per month
Btu British thermal units Energy J joules

3
MJ/m megajoules per cubic metre (106)
TJ/d terajoule per day (1012)
oz ounce Mass g gram
lb pounds kg kilograms
ton ton t tonne
lt long tons
Mlt thousand long tons
psi pounds per square inch Pressure Pa pascals
kPa kilopascals (103)
psia pounds per square inch absolute
psig pounds per square inch gauge
°F degrees Fahrenheit Temperature °C degrees Celsius
°R degrees Rankine K Kelvin
M$ thousand dollars Dollars k$ thousand dollars
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Imperial Units Metric Units

sec second Time s second
min minute min minute
hr hour h hour
day day d day
wk week week
mo month month
yr year a annum
3738.70483.DJC.db
Conversion Factors — Metric to Imperial
cubic metres (m3) (@ 15°C) x 6.29010 = barrels (bbl) (@ 60°F), water
m3 (@ 15°C) x 6.3300 = bbl (@ 60°F), Ethane
m3 (@ 15°C) x 6.30001 = bbl (@ 60°F), Propane

3
m (@ 15°C) x 6.29683 = bbl (@ 60°F), Butanes
3
m (@ 15°C) x 6.29287 = bbl (@ 60°F), oil, Pentanes Plus
3
m (@ 101.325 kPaa, 15°C) x 0.0354937 = thousands of cubic feet (Mcf) (@ 14.65 psia, 60°F)
1,000 cubic metres (103m3) (@ 101.325 kPaa, 15°C) x 35.49373 = Mcf (@ 14.65 psia, 60°F)
hectares (ha) x 2.4710541 = acres

3 2
1,000 square metres (10 m ) x 0.2471054 = acres
10,000 cubic metres (ha.m) x 8.107133 = acre feet (ac-ft)

3 3 3
m /10 m (@ 101.325 kPaa, 15° C) x 0.0437809 = Mcf/Ac.ft. (@ 14.65 psia, 60°F)
joules (j) x 0.000948213 = Btu

3
megajoules per cubic metre (MJ/m ) (@ 101.325 kPaa, x 26.714952 = British thermal units per standard cubic foot (Btu/scf)
15°C) (@ 14.65 psia, 60°F)
dollars per gigajoule ($/GJ) x 1.054615 = $/Mcf (1,000 Btu gas)
metres (m) x 3.28084 = feet (ft)
kilometres (km) x 0.6213712 = miles (mi)

3 3
dollars per 1,000 cubic metres ($/10 m ) x 0.0288951 = dollars per thousand cubic feet ($/Mcf) (@ 15.025 psia) B.C.
3 3
($/10 m ) x 0.02817399 = $/Mcf (@ 14.65 psia) Alta.
dollars per cubic metre ($/m3) x 0.158910 = dollars per barrel ($/bbl)
3 3
gas/oil ratio (GOR) (m /m ) x 5.640309 = GOR (scf/bbl)
kilowatts (kW) x 1.341022 = horsepower
kilopascals (kPa) x 0.145038 = psi
tonnes (t) x 0.9842064 = long tons (LT)
kilograms (kg) x 2.204624 = pounds (lb)
litres (L) x 0.2199692 = gallons (Imperial)
litres (L) x 0.264172 = gallons (U.S.)

3 6 3
cubic metres per million cubic metres (m /10 m ) (C3) x 0.177496 = barrels per million cubic feet (bbl/MMcf) (@ 14.65 psia)
m3/106m3) (C4) x 0.1774069 = bbl/MMcf (@ 14.65 psia)
m3/106m3) (C5+) x 0.1772953 = bbl/MMcf (@ 14.65 psia)

6 3
tonnes per million cubic metres (t/10 m ) (sulphur) x 0.0277290 = LT/MMcf (@ 14.65 psia)
3
millilitres per cubic meter (mL/m ) (C5+) x 0.0061974 = gallons (Imperial) per thousand cubic feet (gal (Imp)/Mcf)
(mL/m3) (C5+) x 0.0074428 = gallons (U.S.) per thousand cubic feet (gal (U.S.)/Mcf)
Kelvin (K) x 1.8 = degrees Rankine (°R)
millipascal seconds (mPa.s) x 1.0 = centipoise
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Conversion Factors — Imperial to Metric
barrels (bbl) (@ 60°F) x 0.15898 = cubic metres (m3) (@ 15°C), water
bbl (@ 60°F) x 0.15798 = m3 (@ 15°C), Ethane
bbl (@ 60°F) x 0.15873 = m3 (@ 15°C), Propane
bbl (@ 60°F) x 0.15881 = m3 (@ 15°C), Butanes
bbl (@ 60°F) x 0.15891 = m3 (@ 15°C), oil, Pentanes Plus
thousands of cubic feet (Mcf) (@ 14.65 psia, 60°F) x 28.17399 = m3 (@ 101.325 kPaa, 15°C)
Mcf (@ 14.65 psia, 60°F) x 0.02817399 = 1,000 cubic metres (103m3) (@ 101.325 kPaa, 15°C)
acres x 0.4046856 = hectares (ha)
acres x 4.046856 = 1,000 square metres (103m2)
acre feet (ac-ft) x 0.123348 = 10,000 cubic metres (104m3) (ha.m)
Mcf/ac-ft (@ 14.65 psia, 60°F) x 22.841028 = 103m3/m3 (@ 101.325 kPaa, 15°C)
Btu x 1054.615 = joules (J)
British thermal units per standard cubic foot (Btu/Scf) (@ 14.65 psia, x 0.03743222 = megajoules per cubic metre (MJ/m3) (@ 101.325 kPaa,
60°F) 15°C)
$/Mcf (1,000 Btu gas) x 0.9482133 = dollars per gigajoule ($/GJ)
$/Mcf (@ 14.65 psia, 60°F) Alta. x 35.49373 = $/103m3 (@ 101.325 kPaa, 15°C)
$/Mcf (@ 15.025 psia, 60°F), B.C. x 34.607860 = $/103m3 (@ 101.325 kPaa, 15°C)
feet (ft) x 0.3048 = metres (m)
miles (mi) x 1.609344 = kilometres (km)
$/bbl x 6.29287 = $/m3 (average for 30°-50° API)
GOR (scf/bbl) x 0.177295 = gas/oil ratio (GOR) (m3/m3)
horsepower x 0.7456999 = kilowatts (kW)
psi x 6.894757 = kilopascals (kPa)
long tons (LT) x 1.016047 = tonnes (t)
pounds (lb) x 0.453592 = kilograms (kg)
gallons (Imperial) x 4.54609 = litres (L) (.001 m3)
gallons (U.S.) x 3.785412 = litres (L) (.001 m3)
barrels per million cubic feet (bbl/MMcf) (@ 14.65 psia) (C3) x 5.6339198 = cubic metres per million cubic metres (m3/106m3)
bbl/MMcf (C4) x 5.6367593 = (m3/106m3)
bbl/MMcf (C5+) x 5.6403087 = (m3/106m3)
LT/MMcf (sulphur) x 36.063298 = tonnes per million cubic metres (t/106m3)
gallons (Imperial) per thousand cubic feet (gal (Imp)/Mcf) (C5+) x 161.3577 = millilitres per cubic meter (mL/m3)
gallons (U.S.) per thousand cubic feet (gal (U.S.)/Mcf) (C5+) x 134.3584 = (mL/m3)
degrees Rankine (°R) x 0.555556 = Kelvin (K)
centipoises x 1.0 = millipascal seconds (mPa.s)
3738.70483.DJC.db
Appendix C — Page 1
Appendix C — Unproved Properties
Definitions
Unproved properties are defined as those holdings or zones to which proved or probable or
possible reserves have not been assigned. In holdings where proved, probable or possible
reserves values have been included for one or more zones, an additional value would be
assigned for unproved prospects in the remaining potential zones.
Assessment Procedure
Regional and local structural and stratigraphic features and trends provided the principal criteria
for the technical review of the unproved properties, but other factors were also considered,
where pertinent. A summary of the main criteria considered is given below where data was
available or deemed necessary.
1. Prices paid.
2. Local and regional geological, geochemical and geophysical features.
3. Other regional and local subsurface information from deep test holes and other subsurface
geophysical data.
4. Terrain and accessibility.
5. Proximity to main pipeline outlets.
6. Proximity to transportation.
7. Company concerned in the case of farmouts.
8. Farmout deal involved.
9. Overrides and other continent interests involved.
10. Proximity to known discoveries that are likely to affect market outlets.
11. Economics of exploration, development and production.
12. Market situation.
13. Work commitments and minimum required expenditures.
In accordance with National Instrument 51-101, a series of review procedures is to be followed

during the assessment of unproved lands. For the sake of clarity, these methods are herein
presented and form the basis for the current assessment. During the course of the review, and
in the text of this report, the points within Items 6.2 have been addressed. The fair market value
of these lands has not been presented in this report.
3738.70483.DJC.db
National Instrument 51-101 Requirements
Other Oil and Gas Information
Item 5.9 – Disclosure Concerning Prospects
If a reporting issuer discloses anticipated results from a prospect, the reporting issuer shall also
disclose in writing, in the same document or in a supporting filing, in respect of the prospect:
(a) the location and basin name;

(b) the reporting issuer’s gross and net interest in the property, expressed in units of area
(acres or hectares);
(c) in the case of undeveloped property in which the reporting issuer holds a leasehold
interest, the expiry date of that interest;
(d) the name, geologic age, and lithology of the target zone;
(e) the distance to the nearest analogous commercial production;
(f) the product types reasonably expected;
(g) the range of pool or field sizes;
(h) the depth of the target zone;
(i) the estimated cost to drill and test a well to the target depth;
(j) reasonably expected drilling commencement and completion dates;
(k) the anticipated prices to be received for each product type reasonably expected;
(l) reasonably expected marketing and transportation arrangements;
(m) the identity and relevant experience of the operator;
(n) risks and probability of success; and
(o) the application information specified in Section 5.10.
Item 5.10 – Estimates of Fair Value of an Unproved Property, Prospect or Resource
1. If a reporting issuer discloses in writing an estimate of the fair value of an unproved

property, prospect or resource, or discloses expected results from a prospect, the
disclosure shall include all positive and negative factors relevant to the estimate or
expectation.

property, prospect or resource:
(a) in the case of an estimate of the fair value of an unproved property, except as
provided in paragraph (b), the estimate shall be based on the first applicable item
3738.70483.DJC.db
listed below, and that item shall be described as the basis of the estimate in the
document containing the disclosure or in a supporting filing;
i. the acquisition cost to the reporting issuer, provided that there have been no
material changes in the unproved property, the surrounding properties, or the
general oil and gas economic climate since acquisition;
ii. recent sales by others of interest in the same unproved property;
iii. terms and conditions, expressed in monetary terms, of recent farmin agreements
related to the unproved property;
iv. terms and conditions, expressed in monetary terms, of recent work commitments
v. recent sales of similar properties in the same general area;
(b) in the case of an estimate of fair market value to which none of the items listed in
paragraph (a) applies:
i. the estimate shall be prepared or accepted by a professional valuator (who is not

a “related party” of the reporting issuer within the meaning of the term as used in
the CICA Handbook) applying valuation standards established by the
professional body of which the valuator is a member and from which the valuator
derives professional standing;
ii. the estimate shall consist of at least three values that reflect a range of
reasonable likelihoods (the low value being conservative, the middle value being
the median, and the high value being optimistic) reflecting courses of action
expected to be followed by the reporting issuer;
iii. the estimate, and the identities of the professional valuator and of the
professional body referred to in subparagraph (i) shall be set out in the document
containing the disclosure or in a supporting filing; and
iv. the reporting issuer shall obtain from the professional valuator referred to in
subparagraph (i):
(A) a report of the estimate that does not contain
(i) a disclaimer that materially detracts from the usefulness of the estimate;
or
(ii) a statement that the report may not be relied on; and
(B) the professional valuator’s written consent to the disclosure of the report by
the reporting issuer to the public.
3738.70483.DJC.db
Item 6.2 – Properties With No Attributed Reserves
1. For unproved properties, disclosure:
(a) the gross area (acres or hectares) in which the reporting issuer has an interest;
(b) the interest of the reporting issuer therein expressed in terms of net area (acres or
hectares);
(c) the location, by country; and
(d) the existence, nature (including any bonding requirements), timing and cost
(specified or estimated) of any work commitments.
2. Disclose, by country, the net area (acres or hectares) of unproved property for which the
reporting issuer expects its rights to explore, develop and exploit to expire within
one year.
References
1. Crown Minerals web site information
2. Dave Francis, Dave Bennett, Steven Courteney, ”Advances in understanding of onshore
east coast basin structure, stratigraphic thickness and hydrocarbon generation”, 2004
New Zealand Petroleum conference proceedings.
3. Ozolins, V., and Dave Francis, “Whakatu-1 well completion report”, Petroleum Report
Series PR 2476, Crown Minerals Website.
4. Westech Energy New Zealand Ltd., “Hukarere-1 well completion report”, Petroleum
Report Series PR 2656, Crown Minerals Website.
5. Johnston, J.G., and D. A. Francis., “Kereru-1 well completion report”, Petroleum Report
6. Field, B.D., Uruski, C.I., et al.: “Cretaceous-Cenozoic geology and petroleum systems of
the East Coast region, New Zealand”, Geological monograph 19, Institute of Geological
and Nuclear Sciences Ltd., New Zealand.
7. Indo-Pacific Energy (NZ) Ltd., “Waingaromia-2 well completion report”, 2002, Petroleum
8. Indo-Pacific Energy (NZ) Ltd., “Speedy1/1A well completion report”, 2000, Petroleum
9. Beaver Exploration (NZ) Ltd., “Ongonga-1 well completion report”, 1971, Petroleum
3738.70483.DJC.db
National Instrument 51-101 Requirements
Other Oil and Gas Information
Item 5.9 – Disclosure Concerning Prospects
If a reporting issuer discloses anticipated results from a prospect, the reporting issuer shall also
disclose in writing, in the same document or in a supporting filing, in respect of the prospect:
(a) the location and basin name;

(b) the reporting issuer’s gross and net interest in the property, expressed in units of area
(acres or hectares);
(c) in the case of undeveloped property in which the reporting issuer holds a leasehold
interest, the expiry date of that interest;
(d) the name, geologic age, and lithology of the target zone;
(e) the distance to the nearest analogous commercial production;
(f) the product types reasonably expected;
(g) the range of pool or field sizes;
(h) the depth of the target zone;
(i) the estimated cost to drill and test a well to the target depth;
(j) reasonably expected drilling commencement and completion dates;
(k) the anticipated prices to be received for each product type reasonably expected;
(l) reasonably expected marketing and transportation arrangements;
(m) the identity and relevant experience of the operator;
(n) risks and probability of success; and
(o) the application information specified in Section 5.10.
Item 5.10 – Estimates of Fair Value of an Unproved Property, Prospect or Resource

property, prospect or resource, or discloses expected results from a prospect, the
disclosure shall include all positive and negative factors relevant to the estimate or
expectation.

property, prospect or resource:
(a) in the case of an estimate of the fair value of an unproved property, except as
provided in paragraph (b), the estimate shall be based on the first applicable item
3738.70483.DJC.db
listed below, and that item shall be described as the basis of the estimate in the
document containing the disclosure or in a supporting filing;
i. the acquisition cost to the reporting issuer, provided that there have been no
material changes in the unproved property, the surrounding properties, or the
general oil and gas economic climate since acquisition;
ii. recent sales by others of interest in the same unproved property;
iii. terms and conditions, expressed in monetary terms, of recent farmin agreements
iv. terms and conditions, expressed in monetary terms, of recent work commitments
v. recent sales of similar properties in the same general area;
(b) in the case of an estimate of fair market value to which none of the items listed in
paragraph (a) applies:
i. the estimate shall be prepared or accepted by a professional valuator (who is not

a “related party” of the reporting issuer within the meaning of the term as used in
the CICA Handbook) applying valuation standards established by the
professional body of which the valuator is a member and from which the valuator
derives professional standing;
ii. the estimate shall consist of at least three values that reflect a range of
reasonable likelihoods (the low value being conservative, the middle value being
the median, and the high value being optimistic) reflecting courses of action
expected to be followed by the reporting issuer;
iii. the estimate, and the identities of the professional valuator and of the
professional body referred to in subparagraph (i) shall be set out in the document
containing the disclosure or in a supporting filing; and
iv. the reporting issuer shall obtain from the professional valuator referred to in
subparagraph (i):
(A) a report of the estimate that does not contain
(i) a disclaimer that materially detracts from the usefulness of the estimate;
or
(ii) a statement that the report may not be relied on; and
(B) the professional valuator’s written consent to the disclosure of the report by
the reporting issuer to the public.
3738.70483.DJC.db
Item 6.2 – Properties With No Attributed Reserves
1. For unproved properties, disclosure:
(a) the gross area (acres or hectares) in which the reporting issuer has an interest;
(b) the interest of the reporting issuer therein expressed in terms of net area (acres or
hectares);
(c) the location, by country; and
(d) the existence, nature (including any bonding requirements), timing and cost
(specified or estimated) of any work commitments.
2. Disclose, by country, the net area (acres or hectares) of unproved property for which the
reporting issuer expects its rights to explore, develop and exploit to expire within
one year.
References
1. Crown Minerals web site information
2. Dave Francis, Dave Bennett, Steven Courteney, ”Advances in understanding of onshore
east coast basin structure, stratigraphic thickness and hydrocarbon generation”, 2004
New Zealand Petroleum conference proceedings.
3. Ozolins, V., and Dave Francis, “Whakatu-1 well completion report”, Petroleum Report
4. Westech Energy New Zealand Ltd., “Hukarere-1 well completion report”, Petroleum
5. Johnston, J.G., and D. A. Francis., “Kereru-1 well completion report”, Petroleum Report
6. Field, B.D., Uruski, C.I., et al.: “Cretaceous-Cenozoic geology and petroleum systems of
the East Coast region, New Zealand”, Geological monograph 19, Institute of Geological
and Nuclear Sciences Ltd., New Zealand.
7. Indo-Pacific Energy (NZ) Ltd., “Waingaromia-2 well completion report”, 2002, Petroleum
8. Indo-Pacific Energy (NZ) Ltd., “Speedy1/1A well completion report”, 2000, Petroleum
9. Beaver Exploration (NZ) Ltd., “Ongonga-1 well completion report”, 1971, Petroleum
3738.70483.DJC.db
Figure 1
East Coast Basin
Taranaki Basin
Source: New Zealand Ministry of Economic Development Crown Minerals
Map of New Zealand

Highlighting Major Onshore and Offshore Basins
with 2D, 3D seismic and wells.
70483
Figure 2
East Coast Basin
Map of East Coast Basin New Zealand

Highlighting PEP 38348 and PEP 38349
70483
Figure 3
Source: New Zealand Ministry of Economic Development Crown Minerals
Map of East Coast Basin

Highlighting PEP 38348 and 38349.
70483
Figure 4
Source:GeoSphere
North Island, East Coast Basin

Well Location Map
70483
Figure 5
Generalized Stratigraphy of the East Coast Basin New Zealand
70483
Figure 6
Generalized Stratigraphy of the East Coast of New Zealand

(After Dave Francis et. Al.,)
70483
Figure 7
Summary of Petroleum systems of the East Coast of New Zealand

(After Dave Francis et. Al.,)
70483
Figure 8
0 4 8
km
Leads and Prospects identified on previous permit PEP38330
70483
Figure 9
Oil Seep
Gas Seep
0 4 8
km
PEP 38348 - Leads with 2D Seismic Control and location of oil and gas seeps
70483
Figure 10
0 5 10
km
Leads and Prospects identified on previous permit PEP38330

70483
Figure 11
Oil Seep
Gas Seep
0 5 10
km
PEP 38349 - Leads with 2D Seismic Control and location of oil and gas seeps
70483
Figure 12
1000
100
10
Permeability (mD)
0.1
0.01
0 10 20 30 40
Porosity (%)
Upper Miocene Middle Miocene Lower Miocene Basal Miocene
Upper Cretaceous + Mid-Cretaceous Top Cretaceous
Porosity Permeability cross plot for some select outcrop samples

from the PEP Block 38348. (Adapted from Ref.2 Dave Francis et. al)
70483
70483
Source: GNS Science
Richness and Maturity of Waipawa and Whangai Source Rocks

Figure 13
70483
Source: GNS Science
Comparison of Waipawa and Whanghai to North American Analogues

Figure 14

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TECHNICAL ASSESSMENT OF THE UNDISCOVERED

HYDROCARBON RESOURCE POTENTIAL OF PEP 38348

AND 38349, ONSHORE EAST COAST BASIN, NEW ZEALAND

(As of May 31, 2008)

Project No.: 3738.70483

Prepared For: Trans-Orient Petroleum Ltd.

Authors: Douglas J. Carsted, P.Geol., Project Leader

Table S-1 Summary of the Unproved Properties

Within the text

Figure 1 Map of New Zealand Highlighting Major Onshore and Offshore

The report consists of a technical assessment of the undiscovered in-place hydrocarbon

The report entitled “Technical Assessment of the Undiscovered Hydrocarbon Resource

Original signed by D. J. Carsted

Original signed by B. F.Jose

Original signed by S. Karri

Sproule Executive Endorsement

Original signed by J. L. Chipperfield

Sproule International Limited is a member of the Association of Professional Engineers,

Douglas J. Carsted, B.Sc., P.Geol.

I, Douglas J. Carsted, Vice-President, Geoscience, and Director at Sproule International

1. I hold the following degrees:

3. I am a member of the following professional organizations:

4. I am a qualified evaluator and auditor as defined in National Instrument 51-101.

5. My contribution to the report entitled “Technical Assessment of the Undiscovered

Original signed by D. J. Carsted

Douglas J. Carsted, P.Geol.

Barrie F. Jose, M.Sc., P.Geoph.

1. I hold the following degrees:

3. I am a member of the following professional organizations:

4. I am a qualified reserves evaluator and reserves auditor as defined in National Instrument

5. My contribution to the report entitled “Technical Assessment of the Undiscovered

Original signed by B. F. Jose

Barrie F. Jose, P.Geoph.

Suryanarayana Karri, M.Sc.

1. I hold the following degrees:

2. I am a member of the following professional organizations:

3. My contribution to the report entitled “Technical Assessment of the Undiscovered

Original signed by S. Karri

Suryanarayana Karri, M.Sc.

John L. Chipperfield, B.Sc., P.Geol.

I, John L. Chipperfield, Senior Vice-President (Geoscience) and Director of Sproule Associates

1. I hold the following degree:

3. I am a member of the following professional organizations:

4. I am a qualified evaluator and auditor as defined in National Instrument 51-101.

5. My contribution to the report entitled “Technical Assessment of the Undiscovered

Original signed by J. L. Chipperfield

John L. Chipperfield, P.Geol.

PEP Block 38348 100 % 530,535 530,535

PEP Block 38349 100 % 1,633,366 1,633,366

Total Unproved Properties 2,163,901 2,163,901

Area Low Estimate Best Estimate High Estimate

PEP 38348 615 1002 1773

PEP 38349 601 710 866

Total 3 1316 1736 2513

Area Low Estimate Best Estimate High Estimate

PEP 38348 615 1002 1773

PEP 38349 601 710 866

Total 4 1316 1736 2513

Drilling Prospects 2009

PEP Block 38348 and 38349

These ranges are considered to be geologically reasonable.

Source Rock Potential

Potential Reservoir Units of the East Coast Basin, New Zealand.