Libya

Strategy
The strategy is to monetize of proven and probable oil reserves of some 300 MMBOE, to transfer contingent reserves to proven and probable reserves through reserve commercialization, and to increase oil reserves through exploration activities.

Background
Since obtaining the participating interest in Area 47, Libya, from 2005 until 2009 the Company, together with Verenex, drilled a total of 20 exploration wells and 6 appraisal wells, with 18 of the exploration wells showing indication of considerable oil reserves. The exploration success rate of 90% is well above the global average success rate. According to a D&M report dated 30 September 2008, gross contingent reserves in Area 47 is estimated at 352 million barrels of oil equivalent (MMBOE).

Following the acquisition of Verenex's interest in Area 47 by the Libyan Investment Authority (LIA) in 2009, the Company and LIA held equal portions of 50% participating interest in Area 47 Exploratory Block. In August 2010, the Company through its Subsidiary Entity, Medco International Ventures Limited, was entrusted to replace LIA as the operator for the Block throughout the exploration period. Since the appointment as operator, the Company has continued the drilling of three exploration wells, with all three showing indication of large oil discoveries. Internal Company analysis in 2011 indicated an increase of gross contingent reserves at Area 47 to 588 MMBOE (up by 67% from the level in 2008).

Current Developments
At year-end 2011, the Company obtained commerciality approval from NOC Libya for A, D and F structures at Area 47, enabling the Company to transfer the contingency reserves to proven and probable reserves. Following the commerciality approval, the Company and its partners (LIA and NOC Libya) have entered into final preparations for the establishment of a Joint Operating Company (JOC) to undertake the development and operation of oil fieds in A, D, and F structures. In the fourth quarter of 2012, the Company also completed the initial engineering study and design (Pre-FEED) as the first stage in the project development phase.

Future Plans
The Company plans to conlude the establishment of the JOC by the first quarter of 2013. Next, the JOC will commence the follow-up stage of the engineering study and design (FEED) for oil production facilities with a capacity of 50,000 barrels oil per day, as well as a study for engineering the development drilling. The Company and its partners expect that production facilities will be in place by 2016 and production to start in 2016/2017.

Area 47

Type of Contract : EPSA
Areas (Km2) : -
Contract Expiry : 2038
Participacing Interest (Exploration) : Medco International Ventures Limited (MIVL) - 50% (Operator)
Libyan Investment Authority - 50%
Participacing Interest (Development) Medco International Ventures Limited (MIVL) - 25%
National Oil Corporation (NOC) Libya - 50%
Libyan Investment Authority (LIA) - 25%
Status : Exploration & Development