Kazakhstan

Akzhar

The 71.5 sq km Azkar field is a suprasalt development of unconsolidated sands with about 35% porosity, 70 km from the town of Kenkiyak in the Aktyubinsk province of Western Kazakhstan. The prospective structure is the Middle Jurassic and Lower Cretaceous reservoirs located in three wings of a salt dome structure at a depth of 270-515 metres.

The field is currently operated under a trial production period.

Akzhar, originally a 3.8 sq km block, was expanded to 71.5 sq km in January 2006.

Production from the original 3.8 sq km contract area totalled 1,180,400 barrels in 2006, an average daily rate of 3,234 bopd which was a rise of 50% from the average 2,151 bopd produced in 2005.

In 2006, Arawak improved the 70 km steppe road to Kenkiyak to facilitate evacuation of the oil to the KazTransOil terminal. From there the oil is sent for sale in both the export and the domestic markets. Crude oil for export is transported in one of two ways: by pipeline to a rail terminal at Bestamak and then by train to Atyrau, or piped directly from Kenkiyak to Atyrau. From Atyrau it is sent through the KazTransOil pipeline to Samara in Russia where it is delivered into the Transneft pipeline system.

The Company acquired a 3D seismic survey over the entire field in 2006, for 2007, there will be substantial drilling in Akzhar both in the original core areas and at new exploration targets, some of which may be at depths greater than 1,000 metres.

Besbolek

The 49 sq km Besbolek field, 150 km from the city of Atyrau in the Atyrau oblast of Western Kazakhstan, is another suprasalt block, again with unconsolidated sands and 35% porosity but shallower than Akzhar. The Company’s deepest well is drilled to 325 metres and the average is 300-320 metres here.

The productive structure is the Upper Triassic, Middle Triassic and Lower Cretaceous reservoirs located in two wings of a salt dome structure. Arawak has acquired 3D seismic over 21 sq km of the field.

Production from Besbolek was 326,980 barrels from the resumption of production in April 2006 after a seven month shut in due to due to the extension of the regulatory period. The field is currently operated under a trial production period.

Output was temporarily restricted in 2006 by third party bottlenecks. To alleviate which, Arawak completed and commissioned its own central oil processing facility, and the construction of a company-owned transfer facility into the KazTransOil system is underway and scheduled for completion in 2007.

Karataikyz

Arawak’s smallest producing field in Kazakhstan is the 14 sq km Karataikyz field, 15 km from the Besbolek field in the Atyrau province of western Kazakhstan. The productive structure is the Middle Jurassic and Lower Cretaceous reservoirs located in two wings of a salt dome structure at a depth of 250-360m.

Production totalled 46,412 barrels in 2006 after output resumed in July following a ten-month shut in between the expiry of the exploration period and the approval of the Technical Plan for Development.

Alimbai

The Alimbai exploration block, 210 km from the city of Atyrau in the Atyrau oblast, was acquired in December 2005. The block has a similar structure to the Besbolek field, just 60 km away. It is prospective for the suprasalt and the subsalt horizons; Arawak’s Contract for the Exploration and Production of Hydrocarbons includes exploitation rights to both.

Although no reserves are currently attributable to the 133 sq km block, oil was discovered in 1944 in the Middle Jurassic, Aptian-Neocomian and Permian Triassic horizons. Arawak intends to re-enter, rejuvenate and re-perforate the shallow wells drilled then.

The contract terms specify a spending commitment of US$1.8 million over a 6-year Exploration Phase, (with the possibility of two two-year extensions on execution of the work program), which, on declaration of commercial discovery, will be followed by a 25-year production period.

East Zharkamys III

Arawak acquired the 1,845 sq km East Zharkamys III exploration block in December 2006. Just 80 km southwest of the Akzhar field, the block offers potential for long term reserve growth and synergy with Arawak’s experience from current operations in the area.

Prospective plays in the region include deep subsalt Lower Permian clastics, suprasalt Upper Permian-Triassic complex and Jurassic and Cretaceous clastic horizons.

The initial four year exploration contract has a minimum work program of US $59.7 million, to be followed, on a commercial discovery, by rights to conduct production. The exploration period can be extended for two terms of two years.