Arawak’s assets are held in three countries of the Former Soviet Union, Kazakhstan, Russia and Azerbaijan, three countries which represent over 7% of the world’s proved crude oil reserves and 29% of the world’s natural gas reserves, according to the Energy Information Administration (“EIA”) a branch of the US Department of Energy.

We expect these countries to be the main players in increased non-OPEC oil and gas supplies in the early part of this century.

Our focus on Kazakhstan, Russia and Azerbaijan also offers Arawak a cohesive operating niche. A shared Soviet legacy can also have positive implications in for example, transferable skills and knowledge.

Kazakhstan

At 30 million barrels of proved reserves, according to the EIA, Kazakhstan has the largest recoverable crude oil reserves in the Caspian Sea region. Arawak’s three producing fields and two exploration blocks in Kazakhstan are located in the Pre-Caspian Basin in the west of the country and are held through the Company’s wholly owned subsidiary Altius Energy Corporation (“Altius”).

The Pre-Caspian Basin is characterised by two principal play types, the subsalt and the suprasalt, separated by a thick salt layer of Permian Kungurian age. Hydrocarbon exploration has been active in the suprasalt since the 1900s while subsalt exploration began in the 1970s.

The subsalt play here has been recognised, in light of reserves data at Kashagan, Tengiz and Karachaganak, as one of the richest oil and gas basins in the world and is the target of the major oil companies due to the potentially large reserve size and the high capital expenditure required.

Arawak’s contracts are largely for the suprasalt. The play is characterised by shallow Cretaceous, Jurassic, Triassic and Upper Permian clastic reservoirs. The oil is trapped in vertically stacked reservoirs on the crest or flanks of salt domes at depths of 200-2,500 metres.

Arawak’s business in Kazakhstan is to capitalise on development and exploration projects in the undeveloped prospective sedimentary basins. The Company focuses on the numerous suprasalt oil discoveries of shallow to moderate depth in the region, the acquisition and development of which and the exploration for analogous reserves.

Russia

In 2004, Russia was the world’s biggest natural gas producer, the second biggest oil exporter and the third largest energy consumer, according to the EIA.

At 1,680 trillion cubic feet, Russia has the world’s largest natural gas reserves, while it holds the world’s eighth biggest oil reserves at 60 billion barrels proven and 67 million barrels of probable, according to the EIA.

Arawak’s producing asset’s in Russia are held through the Company’s 50% interest in RF Energy Investments Limited (“RFE”) and located in the Timan-Pechora Basin in the Komi Republic. The Company’s interest in the newly acquired exploration block, Kymbozhyuskaya, is 100%

In 2004, the US Geological Survey had estimated ultimate recoverable reserves from the Timan-Pechora Basin at 20 billion boe, of which 66% were oil. The geology is Upper Devonian, deep marine shale and limestone source rocks, which reached peak hydrocarbon generation by middle Mesozoic time.

Azerbaijan

Since independence in 1991, foreign investors have been encouraged to help Azerbaijan develop its oil and gas reserves in the Caspian Sea Basin. The completion of the Baku-Tbilisi-Ceyhan pipeline is expected to allow the country to become an important energy exporter in the next decade.

Azerbaijan has proven natural gas reserves of 30 trillion cubic feet, according to the EIA. State statistics show that 177 billion cubic feet were extracted in 2004 which the Government plans to increase to 390 billion by 2008.

Arawak’s asset in Azerbaijan is its non-operating interest in the South West Gobustan oil and gas fields. Arawak holds a 37.17% share in the Commonwealth Gobustan Limited (“CGL”) joint venture which has an 80% stake in the Exploration, Development and Production Sharing Agreement (“EDPSA”) for the 604 sq km South West Gobustan oil and gas fields. The remaining share of CGL is held by two affiliates of the project operator, the China National Petroleum Corporation (CNPC).