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Philippines - NorAsian Energy Ltd

Background

NorAsian Energy Limited (“NAEL”) is a Private Company, incorporated in the Isle of Man, offshore the United Kingdom.

NAEL was formed specifically for exploration and production in the NorAsian region with its main focus being the Philippines.

 

Board of Directors

Mr. Rufino Bomasang is the Executive Chairman, of NAEL and a well known and well respected Energy Specialist, both in the Philippines and internationally.

Mr Bomasang has some 40 years experience in the minerals and energy sectors in the Philippines. He was the longest serving senior energy official through five changes of Government during which he served amongst others as Executive Director of the Office of Energy Affairs (forerunner of the current Department of Energy), the first Undersecretary of Energy, and a former President of the oil and gas subsidiary of the Philippine National Oil Company (PNOC). He played a key role in the establishment and implementation of the US $4.5 billion Shell operated Malampaya gas to power project, the largest single project undertaken in the Philippines.

Mr. Bomasang had continuously served since August 1976 as a senior official in the Philippine public energy sector. His last position was President/CEO of PNOC Exploration Corporation (PNOC-EC), the upstream oil and gas subsidiary of the state-owned Philippine National Oil Company (PNOC), which he had expanded into a total energy exploration and production company involved in petroleum, coal, and renewable energy, from June 1996 to September 2004.

Mr. Ken Fellowes is Chief Executive Officer of NAEL and Chairman of MEPS.

Mr Fellowes has over 35 years experience in all aspects of the oil and gas business. Mr. Fellowes is a leading petroleum geologist and reservoir engineer with over 35 years of international oil and gas experience including a considerable period in the Philippines. Mr Fellowes is the principal of Middle East Petroleum Services Limited, an experienced international oil and gas technical advisory group that has been operating worldwide for the past 25 years.

Mr. Ruben Gan, is the Chief Operating Officer of NAEL. His career spans 30 years in the energy sector including head of the World Bank (Visayan Sea Basin) Petroleum promotion Project.

Mr. Gan’s career started as a Petroleum Geologist with the Petroleum Board under the office of the President. Mr. Gan graduated from The University of the Philippines in 1976. RGA Resources Inc. is an oil and gas consulting and operational company based in the Philippines.

The company is headed by Mr. Ruben Gan, a petroleum geologist with 30 years of industry experience. He is a former Senior Geologist with both the Philippines Department of Energy Affairs and PNOC. He was also the Team Leader for the World Bank's oil and gas Review of the Philippines.

Mr. Peter Jermyn, is Chief Financial Officer of NAEL. His career spans over 35 years in the energy and mining sectors. His expertise lies in all aspects of project evaluation, financing and listing entities on Stock Exchanges in Australia, Canada and London.

The Board of Directors, collectively has over 140 years of experience in the resource sector with a particular focus on oil and gas.

SC 50 - THE CALAUIT OIL FIELD PROJECT

Service Contract (“SC”) 50 is located offshore in N.W. Palawan. The 5000sq km SC hosts the North and South Calauit oil discoveries, which lie in shallow water (80m). SC 50 was signed on 11th March 2005 by (then) Secretary of Energy Mr Vincent Perez on behalf of the President of the Republic of the Philippines.

The Calauit Fields contain existing proven oil reserves and lies on the trend regarded as the most oil and gas prospective in the Philippines. That trend contains several oil and gas fields to the south, including Malampaya. Malampaya, the largest producer to date in the Philippines, discovered by Shell, contains some 200 million barrels of recoverable oil and 3.5 trillion cubic feet of gas.

In 1997, the previous operator SOCDET announced that the Calauit oil fields contain a “contingent resource of 28 million barrels of oil in place (“mmboip”) in Calauit 1B and a further 22 mmboip in Calauit 1A”. AAEL considers that even 1.5 million barrels at current high oil prices is extremely profitable.

The Calauit Fields were first placed on production in 1997. A 155 day Extended Production Test on that well demonstrated that water-free production was achieved at 6,500 barrels of oil per day (bopd) from two fracture zones.

Unfortunately by endeavouring to increase the production rates significantly, water coning through the fractures occurred in the vertical well bore.

A review by Dr. Andrew Wadsley an independent reservoir engineer indicates that water-free production rates of up to 15,000 bopd could potentially be achieved by drilling a horizontal well in the top section of the reservoir.

Economics indicate that even at half the expected 15,000 bopd production rate, the potential for a commercially robust project with an extremely short payback period.

EAST VISAYAS BASIN

An Application is currently being processed by the Philippine Department of Energy covering a large offshore area west of Cebu Island in the Visayas. Signing is expected by the end of June 2005.

AAEL and Ottoman will each acquire a 40% participating interest in the Licence, consisting of two separate blocks, totalling about 4,455 square km.

The Consortium plans to initially acquire 250 km of seismic over the southern (Cebu Straits) block and carry out an engineering study of the Villaba -1/1 St wet gas discovery in the northern (Leyte) block.

The southern block lies immediately offshore and east of Cebu Island. Cebu Island has several oil and gas discoveries and oil seeps. Seismic carried on the un-drilled offshore block demonstrates a number of well-defined and large structures, some with amplitude anomalies (indirect hydrocarbon indicators) indicating significant hydrocarbon potential.

The northern block located part onshore and part offshore Leyte Island, contains the Villaba -1 /1 ST gas discovery, which encountered a 19 metre wet gas column at the crest of a 490 m thick Pliocene carbonate build-up. The well was not tested in the mid 90’s due to lack of a nearby energy market. The Villaba structure is one of several reefs straddling a basement high.

Drilling is planned for late 2006 after the Discoverer-1 is released from the Calauit Field.

ULTRA DEEP WATER – OFFSHORE SW PALAWAN BASIN

An Application is currently being processed by the Philippine Department of Energy covering a large offshore area west of Cebu Island in the Visayas.

The Application area covers two deep-water blocks of 9,150 square km combined. Regional seismic carried out by TransAsia and previous operators, has identified a number of significant prospects.

One such prospect, the Marantao carbonate build up (reef), is at least 5 times larger in size than Malampaya, which is of similar age and setting and which lies on trend to the NNE. Malampaya, significantly the largest producer of oil and gas to date in the Philippines, contains some 200 million barrels of recoverable oil and 3.5 million cubic feet of recoverable gas. If the Marantao reef contains hydrocarbons, it could be Philippines largest field.

The “Marantao” licence application is also on-trend with the recent oil discoveries by US independent Murphy Oil. Murphy’s discoveries, immediately to the SSW in offshore Sarawak, are reported to be in the “giant category” range of 300-700 million barrels of oil, also in deep water.

The Marantao reef prospect lies in 1,800 to 1,950 meters of water, is about 150 square km in size at closure level and has about 500 meters vertical relief. The depth to the target Nido Limestone is around 2,500 metres b.s.l.

Drilling is planned for 2008. An Ultra Deep Water Unit will be required (see below).

As discussed, MEPS and HFE are cooperating on the financing and building of the HFE D80 design. It is anticipated that construction of the first D80 unit will commence in the Daewoo Shipyard in Korea in late 2005 and would then be available to drill this enormous prospect in 2008.

The HFE designed D80 unit (above) is a 5th Generation “Dual Ram Rig, capable of drilling in up to 10,000 feet of water. Frigstad and MEPS are currently negotiating with a major Asian builder to commence construction of the first Unit in late 2005.

The Unit is ideally suited to drill NAEL’s Marantao Prospect in 2008. The Marantao Prospect has a recoverable reserve potential of over 1.0 Billion barrels and lies in 7,000 feet of water.

The total cost of the Unit is in the order of US$400 million (significantly less costly than recent similar New Builds). Frigstad and MEPS have arranged approximately 50% of such costs in Norwegian Government guaranteed debt. Equity will be sought once final terms have been agreed with the shipyard.