THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document you should consult your stockbroker, solicitor, accountant or other independent financial adviser authorised for the purposes of the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of shares and other securities.

This document is an admission document and has been drawn up in accordance with the AIM Rules. It does not constitute a prospectus.

The Directors of Rift Oil PLC, whose names appear on page 4 of this document, accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Directors, who have taken all reasonable care to ensure that such is the case, the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.

Application will be made for the Enlarged Share Capital to be admitted to trading on AIM. AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more established companies. AIM securities are not traded on the Official List. A prospective investor should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with an independent financial adviser. London Stock Exchange plc has not itself examined or approved the contents of this document. Dealings in the Ordinary Shares are expected to commence on AIM on 19 April 2006.

YOUR ATTENTION IS DRAWN TO THE RISK FACTORS SET OUT IN PART III OF THIS DOCUMENT.

RIFT OIL PLC (incorporated in England and Wales under registered number: 5285247)

Placing of 22,200,000 Ordinary Shares of 1p each at 5p per share

Admission of the Enlarged Share Capital to trading on AIM

Nominated Adviser and Broker Insinger de Beaufort

Share capital immediately following the Placing and Admission to AIM

Authorised Issued and fully paid Number of Ordinary

Shares Nominal Value Number of Ordinary

Shares Nominal Value

600,000,000 £6,000,000.00 345,811,999 £3,458,119.99

This document does not constitute an offer for sale or an invitation to subscribe for, or the solicitation of an offer to buy or subscribe for, new Ordinary Shares in any jurisdiction where such an offer or solicitation is unlawful and, subject to certain exceptions is not for distribution in or into the United States, Canada, Japan, Australia, Ireland or South Africa. The new Ordinary Shares have not been, and will not be, registered under the United States Securities Act of 1933 (as amended) or under the applicable securities laws of Canada, Japan, Australia or South Africa nor has this document been filed in Ireland and, subject to certain exceptions, may not be offered for sale or subscription, or sold or subscribed directly or indirectly, within the United States, Canada, Japan, Australia, Ireland or South Africa or to or by any national, resident or citizen of such countries.

Insinger de Beaufort, which is regulated by the Financial Services Authority, is acting exclusively as nominated adviser and broker to the Company in connection with the arrangements set out in this document and is not acting for any other person and will not be responsible to any other person for providing the protections afforded to customers of Insinger de Beaufort, or for advising any other person in connection with the arrangements set out in this document. In particular, Insinger de Beaufort as nominated adviser to the Company under the AIM Rules owes certain responsibilities solely to the London Stock Exchange plc which are not owed to the Company or the Directors or to any other person in respect of his decision to acquire new Ordinary Shares in reliance on any part of this document. In particular, the information contained in this document has been prepared solely for the purposes of the Placing and Admission and is not intended to inform or be relied upon by any subsequent purchasers of Ordinary Shares (whether on or off exchange) and accordingly no duty of care is accepted in relation to them.

The new Ordinary Shares being issued pursuant to the Placing will rank pari passu in all respects with the existing issued Ordinary Shares of the Company and will rank in full for all dividends or other distributions hereinafter declared, made or paid on the Enlarged Share Capital.

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CONTENTS Page

Placing statistics 3

Expected timetable of principal events 3

Exchange rates 3

Directors, secretary and advisers 4 Definitions 5 Glossary of terms 7

Part I Particulars of the Group 9 1 Introduction 9 2 PPL 235 10 3 Licences 10 4 JVOA 11 5 Strategy 12 6 Exploration program 12 7 Resources 13 8 Acquisition of the Rig 14 9 Papua New Guinea 15 10 PNG Hydrocarbons law 16 11 Environmental 16 12 Directors, officers and management 17 13 Corporate governance and share dealing code 18 14 Share options 18 15 Dividend policy 19 16 Current trading and prospects 19 17 Details of the Placing 19 18 Reasons for Admission and use of proceeds 19 19 Admission, settlement and CREST 19 20 Lock-in and orderly market arrangements 20 21 Risk factors 20 22 Additional information 20

Part II Competent Person’s Report 21

Part III Risk factors 50

Part IV Financial information on the Company and its subsidiary undertakings A: Statutory accounts of the Company B: Interim unaudited accounts of the Company

5673

Part V Background to Petroleum exploration legislation in Papua New Guinea 77 Part VI Additional information 80

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PLACING STATISTICS

Placing Price per Ordinary Share 5 pence Number of Ordinary Shares being issued by the Company† 22,600,000 Number of Ordinary Shares in issue immediately following Admission 345,811,999 Number of Ordinary Shares in issue on a fully diluted basis following Admission 496,871,999 Percentage of Enlarged Share Capital being placed pursuant to the Placing 6.4% Market capitalisation at the Placing Price £17,290,600 Proceeds of the Private Placing £1,204,000 Estimated net proceeds of the Placing receivable by the Company £810,000† Assuming 400,000 Ordinary Shares being issued in the Placing and fees totalling £20,000 are settled by the issuance of

new Ordinary Shares at the Placing Price.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Admission and commencement of dealings in Ordinary Shares on AIM 8.00 a.m. on 19 April 2006 CREST accounts credited on 19 April 2006 Despatch of definitive share certificates in respect of the Placing Shares by 26 April 2006

EXCHANGE RATES The rate of exchange used for the purpose of this document is, unless otherwise stated:

£1.00: U$1.85

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DIRECTORS, SECRETARY AND ADVISERS Directors: Ian Roderick Gowrie-Smith (Non-executive Chairman)

Jennifer Margaret Lean (Chief Executive Officer) David John Lees (Finance Director) Peter Mikkelsen (Non-executive Director)

Proposed Director: Sir Ebia Olewale (Proposed Non-executive Director) All of 105 Piccadilly, London, W1J 7NJ

Telephone number: 020 7499 1400 Registered Office: 17 Hanover Square

London W1S 1HU Telephone number: 020 7917 8500

Company Secretary: David Smith Nominated Adviser and Broker: Insinger de Beaufort

131 Finsbury Pavement London EC2A 1NT

Auditors to the Company: Grant Thornton UK LLP

The Explorer Building Fleming Way Crawley, West Sussex RH10 9GT

Solicitors to the Company: As to English law:

Stringer Saul LLP 17 Hanover Square London W1S 1HU

As to Papua New Guinea law: Posman Kua Aisi Level 1, Mogoru Moto Building Champion Parade Port Moresby Papua New Guinea

Solicitors to the Placing: Memery Crystal

44 Southampton Buildings London WC2A 1AP

Reporting Geologist: Scott Pickford Limited

4th Floor, Leon House 233 High Street Croydon CR0 9XT

Registrars: Capita Registrars

The Registry 34 Beckenham Road Beckenham Kent BR3 4TU

Bankers: HSBC Bank PLC

79 Piccadilly London W1J 8EV

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DEFINITIONS

The following definitions apply throughout this document, unless the context requires otherwise: “Act” the Companies Act 1985, as amended

“Admission” admission of the Enlarged Share Capital to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules

“AIM” the market of that name operated by the London Stock Exchange

“AIM Rules” the rules governing the admission to, and operation of, AIM published by the London Stock Exchange

“Austral” Austral Pacific Energy Ltd., a company incorporated in Yukon, Canada and which trades on the Amex, TSX-V and NZSX markets

“Company” or “Rift” Rift Oil PLC

“Coral Sea Drilling Limited” a company incorporated in PNG and whose share capital is owned by Foreland Oil (as to 65%) and TOPPNG (as to 35%)

“CREST” the computer based system and procedures which enable title to securities to be evidenced and transferred without a written instrument and which is operated by CRESTCo

“CRESTCo” CRESTCo Limited, the operator of CREST

“Directors” or the “Board” the directors of the Company whose names are set out on page 4 of this document, including the Proposed Director

“Enlarged Share Capital” the issued share capital of the Company at Admission as enlarged following completion of the Placing

“Existing Options” the options that have been issued by the Company under the Unapproved Share Option Plan

“Existing Ordinary Shares” the Ordinary Shares in issue on the date of this document

“Farm-In Agreement” the farm-in agreement entered into between Foreland Oil (1) TOPPNG (2) further details of which are set out in paragraph 15.1 of Part VI of this document

“Foreland Oil” Foreland Oil Limited, a company registered in the British Virgin Islands under company number 622434 and a wholly owned subsidiary of the Company

“Founder Shareholders” means Thornaby Limited, Ocarina Investments Limited and Indusprojet Establishments SA, the founding shareholders of Foreland Oil, whose holdings in the Company are shown in paragraph 6.5 of Part VI of this document

“Group” the Company, Foreland Oil and Coral Sea Drilling Limited

“JVOA” the joint venture operating agreement dated 31 January 2005, further details of which are set out in paragraph 15.2 of Part VI of this document

“Joint Venture” the unincorporated joint venture between the Company and Austral constituted under the JVOA

“London Stock Exchange” London Stock Exchange plc

“Offer” or “Offer for Subscription” the invitation to subscribe for new Ordinary Shares completed by the Company between December 2004 and March 2005

“Official List” the Official List of the UK Listing Authority

“Oil and Gas Act” or “OGA” the Papua New Guinea Oil and Gas Act 1998

“Operator” TOPPNG being the operator of PPL 235 under the JVOA

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“Ordinary Shares” ordinary shares of 1p each in the capital of the Company

“Placing” the conditional placing by Insinger de Beaufort on behalf of the Company of the Placing Shares pursuant to the Placing Agreement

“Placing Agreement” the conditional agreement dated 10 April 2006 between the Company (1), the Directors (2), and Insinger (3) relating to the Placing, details of which are set out in paragraph 15.6 of Part VI of this document

“Placing Price” 5p per Placing Share

“Placing Shares” the 22,200,000 new Ordinary Shares to be issued pursuant to the Placing

“PNG” or “Papua New Guinea” the Independent State of Papua New Guinea

“PNG Director” the Director appointed pursuant to the Oil and Gas Act, from the Department of Petroleum and Energy of Papua New Guinea

“PPL” a petroleum prospecting licence issued under the Oil and Gas Act

“PPL 235” the 2,910 sq km area in PNG over which the Joint Venture holds the PPL 235 Licence

“PPL 235 Licence” the petroleum prospecting licence number 235 granted to TOPPNG by Papua New Guinea further details of which are set out in paragraph 3 of Part I of this document

“Private Placing” the placing by the Company of 24,080,000 Ordinary Shares at a price of 5p per Ordinary Share to various individuals which was completed by the Company on 10 April 2006

“Proposals” the Placing and Admission

“Proposed Director” Sir Ebia Olewale

“Regulations” the Uncertificated Securities Regulations 2001 (SI 2001/3755)

“the Rig” the rig, formerly called the Longyear 605 Rig and which was renamed the Coral Sea-1, owned by the Joint Venture further details of which are set out in paragraph 8 of Part I of this document

“Scott Pickford” Scott Pickford Limited, the reporting geologist

“Scott Pickford Report” or “Reporting Geologist’s Report”

the report prepared by Scott Pickford, a copy of which is reproduced in Part II of this document

“Shareholders” holders of Ordinary Shares

“Subscribers” the subscribers for Ordinary Shares under the Offer

“TOPPNG” Trans-Orient Petroleum (PNG) Limited, a wholly owned subsidiary of Austral

“Unapproved Share Option Plan” the Rift Oil PLC Unapproved Share Option Plan

“UK” the United Kingdom of Great Britain and Northern Ireland

“US” or “USA” the United States of America, its territories and possessions, any State of the United States of America and the District of Columbia

“Warrants” the warrants to subscribe for Ordinary Shares at an exercise price of 9p per Ordinary Share and constituted by the Warrant Instrument, full details of which are set out in paragraph 9 of Part VI of this document;

“Warrant Instrument” the deed poll constituting the Warrants, dated 22 December 2005, and setting out the terms and conditions upon which the Warrants may be exercised further details of which are set out in paragraph 9 of Part VI of this document

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GLOSSARY OF TERMS

Units of Measurement “g/t” grammes per metric tonne

“M”, “MM”, “B”, “T” Thousands (103), Millions (106), Billions (109), Trillions (1012)

“m” Metres

“km” or “sq km” Kilometres

“km2” square kilometres

“kg” Kilograms

“m3” cubic metres

“Mcf” thousand cubic feet

“MMcf” million cubic feet

“MMboe” million barrels of oil equivalent

“bcf” billion cubic feet

“tscf” trillion cubic feet of gas at standard conditions

“billion” one thousand million

“bbl(s)” barrel(s)

“bbl/d” or “bopd” barrels per day

“BOE” barrels of oil equivalent

“MD” Measured Depth

“psi” Pounds per Square Inch (Unit of Pressure)

“oC” Degrees Centigrade

“oF” Degrees Fahrenheit

“scfd”, “scfpd” Standard Cubic Feet per Day

“RKB”, “rkb” Relative to Kelly Bushing

“%” Per cent

“N:G” net to gross

“HPV” hydrocarbon pore volume

“us/ft” micro seconds per foot

“trillion” one thousand billion

“g/cc” grammes per cc

General Oil & Gas Terms

“GDT” Gas Down To (Lowest occurrence of gas in a well without reaching the GWC)

“ODT” Oil Down To (Lowest occurrence of oil in a well without reaching the OWC)

“WUT” Water Up To (Highest occurrence of water below hydrocarbon in a well without reaching the HWC)

“GWC” Gas-Water Contact

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“OWC” Oil -Water Contact

“HWC” Hydrocarbon-Water Contact

“SCAL” Special Core Analysis

“Sg” Gas Saturation

“So” Oil Saturation

“Sw” Water Saturation

“SG” Specific Gravity

“GIIP” Gas Initially In Place

“STOIIP” Stock Tank Oil Initially In Place

“DST” Drill Stem Test

“RFT” Repeat Formation Test

“Prospective Resources” The potential volume of hydrocarbon that could be commercially produced from an as yet undiscovered field.

“Leads” Those resources considered to be at an early exploration stage which are considered to be of future potential but cannot be classified at this time.

“NPV” Net Present Value

“IRR” Internal Rate of Return

“Spud” The commencement of drilling a well.

Other Abbreviations

“Ø” porosity

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PART I

PARTICULARS OF THE GROUP

1 Introduction

Rift Oil PLC was established in November 2004 to acquire a 65% interest in an oil and gas exploration licence, the PPL 235 Licence, in western Papua New Guinea. It acquired this interest in December 2004 through its subsidiary Foreland Oil, in return for a commitment to spend US$6 million (approximately £3.2 million) on the exploration and development of PPL 235. The remaining 35% interest in the PPL 235 Licence is held by TOPPNG, a wholly owned subsidiary of Austral, a Yukon incorporated, oil exploration company operating in New Zealand whose shares are publicly traded in the US, Canada and New Zealand.

In January 2005, the Company and Austral entered into the JVOA to constitute the Joint Venture in relation to the exploration activities to be undertaken within PPL 235. These include a commitment to drill one exploration well.

Between December 2004 and March 2005, the Company raised a total of £4,505,000 at £0.25 per share from a range of private investors pursuant to the Offer for Subscription to enable it to meet its initial obligations in relation to PPL 235, and as general working capital.

On 10 April 2006 the Company effected a bonus issue to its shareholders, by utilising the share premium reserve created through the Offer for Subscription, by allotting and issuing, credited as fully paid, an additional 7.3 new Ordinary Shares for every 1 Ordinary Share held by such shareholders who were on the Register of Members as at the date of this document. The effect of this was to reduce each shareholder’s cost per share, for those who subscribed under the Offer for Subscription, to approximately £0.03 per Ordinary Share. On the same day, and immediately after the bonus issue was completed, the Company raised an additional aggregate sum of £1,204,000 by way of the Private Placing.

The Joint Venture experienced difficulties in securing an appropriate rig in order to begin the proposed drilling program on PPL 235. This was due to the current high demand worldwide for the hire of drilling rigs. This led to the decision by the Joint Venture, in late July 2005, to purchase the Rig for the purposes of the Joint Venture. Although the decision to acquire the Rig was primarily driven by the need to progress the exploration of the Joint Venture’s own properties, since the Rig was acquired, the Joint Venture has been approached by other exploration companies who are themselves experiencing the same difficulties in hiring suitable rigs. This could therefore allow the Joint Venture to utilise the Rig by providing both an income stream from hire and possible capital gains from farming-in to other exploration areas which may in the future prove to be producing assets.

Following extensive commissioning work, drilling on the Douglas Prospect, the first prospect on PPL 235, commenced on 4 April 2006. The Company expects to reach the planned total depth of around 2,000m after approximately 20 days of drilling. This will be followed by a 4 day wireline logging program to determine what further testwork may be required. Further analysis and interpretation of the results will be necessary during early May before an announcement can be made. The Company will then decide whether the results are sufficiently encouraging to either:

(i) flow test the well; (ii) drill further appraisal well(s); (iii) shoot more seismic over the field; or (iv) drill the Puk Puk-1 Prospect, also on PPL 235.

Rift has lodged an application, together with Austral, for a further PPL (APPL 261) covering an area of some 3,958 sq km immediately north of PPL 235. This application is in the name of Foreland Oil (for and on behalf of Rift) as to 50%, and TOPPNG (for and on behalf of Austral) as to 50%.

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2 PPL 235

PPL 235 covers a total area of approximately 2,910 sq km and lies within the Foreland Basin, an area southwest of the Papua New Guinea highlands approximately 500 km west from the capital, Port Moresby. The Group has chosen the Douglas Prospect and the Puk Puk-1 (previously known as ‘Kamu’) Prospect ("the Prospects") as the initial targets on PPL 235.

The Foreland Basin is relatively simple geologically and has ready access via the Strickland River and its tributaries. Eight wells have been drilled in the Foreland Basin in the past twenty years and all have had shows or flows of oil or gas-condensate. The nearest well to the Prospects is Langia-1, drilled in 1991 by Pecten Nuigini Company Ltd. It recovered a condensate-rich gas from a sandstone above the main reservoir target, whilst fluid inclusion work indicates that oil has actually passed through the structure. Oil shows and bituminised oil residues were also observed in the Langia-1 well.

Figure 1: Map showing location of PPL 235

Source: The Company

3 Licences

The PPL 235 Licence was granted to Austral on 29 August 2003 for an initial period of six years. A 65% interest in the PPL 235 Licence was assigned to Foreland Oil on 31 January 2005 and approval for assignment was given on 25 April 2005. Under its terms, the work commitments of the PPL 235 Licence are broken up into three, two-year tranches of work. In the first two years of the PPL 235 Licence the licensee must:

• undertake sequence stratigraphic analysis of Toro and Imburu sand stone succession; and

• drill an exploration well and, if necessary, drill an appraisal well in order to have sufficient data to create a development plan and budget for the second and third periods of the PPL 235 Licence.

In the second two year period the licensee must:

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• acquire 50 km of 2-D seismic data;

• be able to show the Minister for Petroleum and Energy of Papua New Guinea (“the Minister”) that they have sufficient financial resources to carry out their development plan for years three and four; and

• not less than two months prior to the end of year four, submit acceptable proposals for years five and six of the PPL 235 Licence including:

Department of Petroleum and Energy of Papua New Guinea (the “PNG Director”);

if necessary, the drilling of one appraisal well; and

be able to show the Minister that they have sufficient financial resources to carry out their development plan for years five and six.

If the licensee fails to obtain satisfactory results from its work programme under the PPL 235 Licence, it may be served notice by the Minister or may serve notice itself to the Minister to relinquish its interest in the PPL 235 Licence.

Due to the high demand experienced by the Joint Venture for the hire of drilling rigs, the Operator received a letter dated 14 January 2005 from the Department of Petroleum and Energy (the “Department”), signed by the Acting Secretary Director under the Oil and Gas Act (the “Letter of Extension”), which gave assurance that no action will be taken against the permit holders if the first required exploration well had not been drilled by 29 August 2005, in accordance with the terms of the PPL 235 Licence, so long as site preparation has commenced, a well proposal has been prepared and delivered to the Department and a suitable rig contracted to perform the drilling of the required well.

The Joint Venture completed site preparations in late March 2006 and drilling of the Douglas Prospect commenced during the first week of April 2006. An appropriate well proposal, as required by the Department, has been approved. Furthermore, the purchase by the Joint Venture of the Rig allows the Joint Venture to fulfil the final criteria set out in the Letter of Extension, namely that a suitable rig is contracted to perform the drilling of the required well.

The PNG Director has issued formal directions to the Joint Venture under the Oil and Gas Act reflecting the delays in drilling the Douglas well and the Board is satisfied that the Company is in a position to meet those directions. Furthermore, the PNG Director has confirmed to the Joint Venture that the Licensees are not in breach of any provisions of the Oil and Gas Act and that the PPL 235 Licence is in good standing.

Rift has lodged an application, together with Austral, for a further PPL, namely APPL 261, covering an area of some 3,958 sq km immediately north of PPL 235 (the “Application Area”). This application is in the name of Foreland Oil (for and on behalf of Rift) as to 50%, and TOPPNG (for and on behalf of Austral) as to 50%.

4 JVOA

Foreland Oil and TOPPNG, as the respective subsidiaries of the Company and Austral, have entered into the JVOA regarding the exploration activities to be undertaken in relation to the PPL 235 Licence. Under the terms of the JVOA, the day to day operations are undertaken by the Operator. The JVOA reserves certain decisions, such as the disposal of assets, to the joint decision of the Joint Venture parties. The JVOA provides that TOPPNG will act as Operator unless otherwise agreed; TOPPNG has agreed in the Farm-In Agreement that Foreland Oil may nominate itself as Operator after the first two years of the Joint Venture for so long as it maintains a 65% interest in the Joint Venture.

On the purchase of its 65% interest in the PPL 235 Licence, the Company deposited a total of US$5.9 million (approximately £3.2 million) into an escrow account under the joint control of Austral and the Company, as its contribution to the exploration costs. Expenditure incurred to date by the Joint Venture, including some of the costs associated with the purchase and commissioning of the Rig, has utilised all of the funds that were deposited in the escrow account. Under the terms of the JVOA, now that the contents of the escrow account have been duly applied to expenditure on exploration on PPL

o the drilling of one exploration well, to test a target approved by the Director of the

o

o

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235, TOPPNG and Foreland Oil are obliged to contribute to all further approved expenditure in the proportions of 35% (TOPPNG): 65% (Foreland Oil).

Further details on the JVOA are set out at paragraph 15.2 of Part VI of this document.

5 Strategy

The Company’s strategy in relation to PPL 235 is initially to seek to confirm the presence of hydrocarbons in commercial quantities by undertaking an exploration program involving the drilling of wells and, where appropriate, the acquisition of additional seismic data.

In the event of a discovery of commercial quantities of hydrocarbons from the wells drilled on Douglas, the Joint Venture intends to evaluate immediately the possibility of early production of hydrocarbons.

In the case of an oil or condensate discovery, it will be necessary to construct basic production facilities in the Douglas area and make necessary arrangements for the transportation of the liquids to market. It is here that PPL 235’s position close to the Strickland River will prove to be helpful. The intention is to transport any liquids down the Strickland River, along the Fly River and then through the Delta to Port Moresby. In the event that gas is also discovered, along with oil, then, unless a buyer can be found for any such gas, it is intended that it be re-injected into the reservoir.

It is possible that there will be a local market for small amounts of gas for electricity generation. As global demand for gas products increases, there may be various possibilities if larger amounts of gas are discovered, but this will depend on technical issues such as flow rates and chemical composition, as well as global markets for gas products at that time.

6 Exploration program

The Company has commenced drilling Douglas-A, the first well to be drilled on the Douglas Prospect. Commissioning of the Rig was delayed by the recent hurricanes which hit Louisiana and Houston but the Rig is now in position and drilling commenced during the first week of April 2006.

To date, all commercial hydrocarbon discoveries in PNG have been located along the Fold Belt trend of the Papuan Basin. Here, success has been tempered by difficult logistics, mountainous topography which makes seismic and drilling costly, and complex geology which impacts on drilling due to tectonically stressed holes with over pressures. The main Fold Belt exploration risks are those associated with definition of subsurface structures.

In contrast, the structural geology of the Foreland Basin is much simpler. Principal play types are compactional drape over basement highs and tilted fault blocks. The low relief topography allows for relatively easy, quick and cheap seismic acquisition. This allows prospects to be defined by relatively close 2D seismic grids, thus reducing structural risk.

Prospectivity of the Foreland Basin has been low graded in the past because of the perception that the area as a whole is gas prone. The drilling results do not support this perception. The majority of wells drilled in this area of the Foreland Basin have either produced, or had shows of oil or condensate. Fluid inclusion analysis of drill cuttings also indicates the presence of oil.

The primary reservoir targets in the area are sandstones within the Early Cretaceous Toro Formation. Sandstones within the Late Jurassic Digimu Formation provide deeper targets. These sands are seen to have good reservoir properties in offset wells. Recent drilling in the Foreland Basin also demonstrates the presence of a shallower sand at the top of the Ieru Formation and within the Early Tertiary section. These sandstones have excellent reservoir properties and, from interpretation of seismic character, are present over the West Bosavi prospects.

Easy access to the area is provided by tributaries of the Fly and Strickland Rivers. These rivers dissect the area and are of sufficient size to allow mobilisation of drilling and production equipment and could be used for export of produced liquids. This access greatly reduces costs associated with drilling and production and thus reduces the minimum pool size for economic development.

Seismic data acquired in 1999, together with earlier surveys, has confirmed two prospects close to the Strickland River to drillable status. Puk Puk-1 is a 19 km2 drape closure over a basement high, while

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Douglas is a combination drape and fault closure of some 51 km2. Both have Toro sands as the main objective, with prominent DHI’s evident within the target reservoir sequence over Douglas.

Following completion of the first exploration well on Douglas and analysis of the well data, the Company will decide whether the results are sufficiently encouraging to either:

(i) flow test the well; (ii) drill further appraisal well(s); (iii) shoot more seismic over the field; or (iv) drill Puk Puk-1.

The Company also expects to complete seismic data gathering on further potential PPL 235 targets.

7 Resources

The areas of closure calculated by Scott Pickford in the structural mapping have been combined with the independently derived reservoir parameters as set out below. Various scenarios are possible depending on whether the Prospects are successfully drilled and which reservoirs are found to contain recoverable hydrocarbons.

Table 1: Volumetric Assumptions and Results

* Douglas A is fault bounded so is more like a 'box', hence the shape factor has been increased to account for the different structural geometry. Douglas B&C and Puk Puk-1 are set to 0.5 as they are more conventional 4-way dip closures.

** 40% recovery factor is the world-wide average from moderate to good sandstone reservoirs with relatively light oil.

Scott Pickford have calculated the net present values of the prospective resources for the Douglas Prospect in each of the following three cases which are summarised on Table 2:

Case 1 Douglas A, 14.7 million barrels of condensate;

Case 2 Douglas A, 55.0 million barrels of oil; and

Case 3 Douglas A, B and C, 34.8 million barrels of condensate.

Prospect Area km2

Gross thickness

m

Shape factor N:G porosity So HPV

(000's m3)HPV (000's

barrels) RF** Bo Resource

(000's barrels)

Douglas A Toro/Alene 16 94 0.8* 50% 13% 50% 39,104 247,528 40% 1.8 55,006

Douglas A Imburu 0 85 0.4 50% 13% 50% 0 0 40% 1.8 0

Puk Puk-1 Toro/Alene 19 94 0.5 50% 13% 50% 29,023 183,712 40% 1.8 40,825

Puk Puk-1 Imburu 0 85 0.4 50% 13% 50% 0 0 40% 1.8 0

A & Puk Puk-1

Barrels per m3 6.33 95,831

Prospect Area km2

Gross thickness

m

Shape factor N:G porosity So HPV

(000's m3)HPV (000's

barrels) RF** Bo Resource

(000's barrels)

Douglas B&C Toro/Alene 35 94 0.5 50% 13% 50% 53,463 338,418 40% 1.8 75,204

Douglas B&C Imburu 0 85 0.4 50% 13% 50% 0 0 40% 1.8 0

B&C 75,204

Douglas A,B&C

Barrels per m3 6.33 130,210 TOTAL 171,035

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Indicative net present values have been discounted by 10%, 12.5% and 15%.

Table 2: Indicative net present values of the Douglas Prospect

Case

Recoverable Oil

(MMbbl)

NPV @ 10%

Variable Oil Price

NPV @ 10% US$

40/bbl

NPV @ 12.5%

Variable Oil Price

NPV @ 12.5% US$

40/bbl

NPV @ 15%

Variable Oil Price

NPV @ 15% US$

40/bbl 1 14.7 20.7 0.8 1.7 -15.7 -14.3 -29.7 2 55.0 485 390 402 322 333 266 3 34.8 239 209 187 162 142 121

NPVs in million US$ for the Douglas Prospect. Rift net revenue interest (“NRI”) is 65% of the numbers shown.

The expected monetary values of the three cases are given on Table 3 and have been calculated using the relation

EMV = (NPV x CoS) – (COF x (1 – CoS))

in which NPV is the indicative net present value, CoS is the chance of success and COF the cost of failure to find oil (i.e. the cost of drilling one dry exploration well).

In Scott Pickford’s opinion, there is a low risk of hydrocarbon charge in the Douglas Prospect, with the risk of condensate (Cases 1 and 3) regarded as about 1 in 3 (a 33% chance of success). However, the chance of the 55MMbbl oil case is less, about 1 in 8 (a 12.5% chance of success). The cost of drilling one exploration well is assumed to be US$7.7 million (including contingency).

Table 3: Expected monetary values for the Douglas Prospect

Case Recoverable Oil (MMbbl)

EMV @ 10%

Variable Oil Price

EMV @ 10% US$

40/bbl

EMV @ 12.5%

Variable Oil Price

EMV @ 12.5% US$

40/bbl

EMV @ 15%

Variable Oil Price

EMV @ 15% US$

40/bbl 1 14.7 1.7 -4.9 -4.6 -10.3 -9.9 -14.9 2 55.0 53.9 42.0 43.5 33.5 34.9 26.5 3 34.8 73.7 63.8 56.6 48.3 41.7 34.8

EMVs in million US$ for the Douglas Prospect. Rift NRI is 65% of the numbers shown.

From the work carried out and summarised above, Scott Pickford concludes that, if the Prospects are oil bearing, they could contain 55 to 270 million barrels of recoverable oil, with a most likely prospective resource of approximately 170 million barrels of oil.

There have been relatively significant gas discoveries in the surrounding region and there is a possibility that the Prospects are gas bearing. In the event of a gas discovery Scott Pickford calculates a gas potential of up to 2.1 tscf recoverable. However, it should also be noted that a reasonably high condensate to gas ratio would be expected in the case of a gas discovery. The Company’s interest would be 65% of these resource estimates.

The Scott Pickford Report is reproduced in full in Part II of this document.

8 Acquisition of the Rig

Following difficulties experienced in hiring a suitable rig to enable the Joint Venture to meet its obligations under the terms of PPL 235, the Joint Venture completed the purchase of the Rig. The Rig, which is second hand, was formerly called the Longyear 605 Rig but has been renamed the Coral Sea-1. The Rig, which was purpose built and operated in Irian Jaya, is, in the opinion of the Directors, ideal for use in Papua New Guinea.

The Rig is heli-transportable free standing double, capable of withstanding 75 knot wind loads (with full rack of pipe) and drilling for oil and gas approximately 2,600m running 7" casing. It can also drill to approximately 4,700m using heavy duty mineral drill rods/pipe used for continuous wireline core drilling, which is often used in slimhole oilfield exploration.

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All sections of the Rig can be broken down into 4,000lb lift modules. It features a deck mounted crane which gives the unit the capability to erect and dismantle itself without the use of ancillary equipment or costly helicopter hover time.

The Rig was commissioned in Idaho and is currently drilling the first exploration well on the Douglas Prospect. Although the decision to acquire the Rig was primarily driven by the need to progress with the exploration of the Joint Venture’s own properties, since it was acquired, the Joint Venture has been approached by other exploration companies who are themselves experiencing the same difficulties in hiring suitable rigs. New Guinea Energy Limited (“NGE”), an exploration company currently operating in PNG, has indicated its interest in the use of the Rig at some point in the future. NGE’s Information Memorandum, published in August 2005, specifically mentions the Joint Venture’s Rig and the possibility of using it to drill its prospects.

Whilst the Company is focussed on its strategy of exploration on its own properties, ownership of the Rig does offer, at some stage in the future, the possibility of a separate income stream for the Group. The reason the Joint Venture felt it prudent to purchase the Rig in the first place, is due to the current lack of availability of suitable rigs within the market. This factor should, if it persists, help make the Rig a desirable asset for other operators within PNG. Furthermore, it may, in the Directors’ opinion, allow the Joint Venture to negotiate farm-in agreements, in return for forgoing the hire costs of the Rig with other operators. The Directors believe that this may, in the future, allow the Joint Venture to utilise the Rig to provide both an income stream from hire and possible capital gains from farming-in to other exploration areas.

9 Papua New Guinea

The Independent State of Papua New Guinea is a country in Oceania, occupying the eastern half of the island of New Guinea and numerous offshore islands. It is located in the south-western Pacific Ocean, in a region defined as Melanesia. Its capital and one of its few major cities is Port Moresby. It is one of the most diverse countries on Earth. There are over 700 indigenous languages and at least as many indigenous societies, out of a population of just over 5 million.

The majority of the population lives in indigenous societies and practises subsistence-based agriculture. The PNG legislature has enacted various laws in which a type of tenure called "customary land title" is recognised, meaning that the traditional lands of the indigenous peoples have some legal basis to inalienable tenure. This customary land notionally covers most of the usable land in the country (some 97% of total land area); the remainder is either in private freehold or the property of the PNG Government.

Its geography is similarly diverse, and in places extremely rugged. A spine of mountains runs the length of the island of New Guinea, forming a populous highlands region. Dense rainforests can be found in the lowland and coastal areas. This terrain has made it difficult for the country to develop transportation infrastructure. In some areas, planes or helicopters are the only mode of transport. After being colonised by three external powers since 1888, Papua New Guinea gained its independence in 1975.

The northern half of the country came into German hands in the late 19th Century as German New Guinea. During World War I, it was occupied by Australia, which also administered the southern part as Papua (formerly British New Guinea). The two territories were combined into the Territory of Papua and New Guinea, and later simply referred to as "Papua New Guinea".

Papua New Guinea is a member of the Commonwealth of Nations and Queen Elizabeth II is the head of state. Actual executive power lies with the Prime Minister, who heads the cabinet. The unicameral parliament has 109 seats, of which 20 are occupied by the governors of the 20 provinces. The members of parliament are elected every five years.

Papua New Guinea is mostly mountainous (highest peak: Mount Wilhelm at 4,509 m/14,793 ft) and covered with rain forest; there are small plains along the coast. Situated along a fault line, earthquakes and the resultant tsunamis are relatively common in Papua New Guinea.

Papua New Guinea is one of the regions closest to the equator that experience snowfall, which occurs in the elevated regions.

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Geologically, the island of New Guinea is a northern extension of the Indo-Australian tectonic plate, forming part of a single landmass Australia-New Guinea (also called Sahul or Meganesia). Consequently, many species of birds and mammals found on New Guinea have close genetic links with corresponding species found in Australia.

Agriculture provides a subsistence livelihood for 85% of the population. Mineral deposits, including oil, copper and gold, account for 72% of export earnings.

There are three official languages for Papua New Guinea, in addition to over 700 indigenous Papuan and Melanesian languages. English is an official language, although few people speak it. Most people speak the creole language Tok Pisin as a lingua franca. In the southern region of Papua, people may use the third official language, Hiri Motu, rather than Tok Pisin. With an average of only 7,000 speakers per language, Papua has a greater density of languages than any other nation on earth except Vanuatu.

The culture of Papua New Guinea is many-sided and complex. It is estimated that more than 1,000 different cultural groups exist in PNG.

The PNG Gas Project

The proposed PNG Gas Project (the “Project”) involves tapping vast quantities of natural gas in PNG’s Southern Highlands and transporting the gas via a pipeline over 3,000 kilometres to customers in Australia. This pipeline would be the longest in the Southern Hemisphere. Flexibility will be retained for a future liquefied petroleum gas project if market conditions warrant and the incremental capital investment can be justified.

The Australian and Queensland Governments have both provided strong support for the Project and the PNG Government has been committed to the Project since it was first envisioned. The Project has the potential to enhance PNG’s petroleum exploration and production sector. It will provide a focus for ongoing exploration that could help to attract future investment and development.

Worldwide interest in oil and gas has increased over the last 12 months. Inter Oil has raised US$125 million for oil exploration (in addition to their investment in the Napa Napa refinery in Port Moresby); Oil Search has substantial exploration programmes underway in PNG and Transeuro Energy of Canada has raised C$25m partly for area PPL 259, near the Group’s interests at PPL 235.

10 PNG Hydrocarbons law

Investors’ attention is drawn to Part V of this document which sets out a summary of the relevant provisions of the laws of PNG in relation to the exploration and production of oil and gas as well as the laws surrounding the PNG State participation in royalties and foreign exchange requirements.

11 Environmental

Petroleum activities are guided, inter alia, by the Papua New Guinea Environment Act 2000 and the Oil and Gas Act. The Environment Act 2000 requirements include environmental permits, registration of intention to carry out preparatory work and environment impact assessments. OGA sets out the environmental guidelines for the petroleum activities of tenement holders.

The Joint Venture currently holds the required permits for exploration work under a PPL and has undertaken the preliminary social mapping studies and landowner identification studies required by section 47 of OGA.

An applicant for a Petroleum Development Licence (“PDL”) must satisfy environmental requirements and obtain the relevant environmental permit(s) under the Environment Act 2000 prior to commencing activities pursuant to the PDL. These may include the performance of an Environmental Impact Assessment.

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12 Directors, officers and management

The Directors and officers of the Company

The following are the Directors and officers of the Company:

Ian Roderick Gowrie-Smith (Non-executive Chairman - aged 57)

Ian Gowrie-Smith has been founder and developer of mining and pharmaceutical public companies over the past 31 years. In 1984 he listed TiO2 Corporation, a company that was responsible for the largest ilmenite deposit in Western Australia and which continues to be one of the largest in the world. He is chairman of the board of Tiberon Minerals Limited, a Toronto listed public company developing the Nui Phao project in Vietnam which will make Tiberon one of the world’s largest primary Tungsten producer. He is chairman of Triple Plate Junction plc, a company with mineral exploration acreage in Vietnam and Papua New Guinea. He is founder and former non-executive Chairman of SkyePharma plc, a UK domiciled drug delivery company. Prior to establishing SkyePharma, Ian Gowrie-Smith was the founder and Managing Director of Medeva plc, a successful UK specialty pharmaceuticals company active in vaccines, generics and respiratory products.

Jenni Margaret Lean (Chief Executive Officer - aged 54)

Jenni has nine years’ experience in the oil and gas exploration and development industry. She was part of the senior management team which founded and developed Austral Pacific Energy Ltd., a successful exploration and development company based in New Zealand. Jenni has a BSc and MBA from Victoria University of Wellington, New Zealand. Her role initially included human resources, accounts and administrative management, Joint Venture activities including negotiation and conclusion of Joint Venture Operating Agreements as well as compliance work for stock exchanges in USA, Canada and New Zealand and governments where the company was active in Papua New Guinea, New Zealand and Australia. Jenni was Commercial Manager primarily managing farm-out negotiations and contracts, in which she has been highly successful. She is Chairman of Epiphany Games, a start up company in the process of developing a Massively Multiplier Online Role Playing Game, “Champions of Atlantis”.

David John Lees (Finance Director - aged 58)

David is a qualified chartered accountant with many years’ experience in the public company arena. He has been a founding director of several public companies (such as Medeva plc, SkyePharma plc, Names.co Internet plc). He is currently a director of Namesco Limited (a domain registration and hosting company), Triple Plate Junction plc (gold exploration in Vietnam and PNG), Accident Exchange Group plc (vehicle hire while car in accident repair), Metis Biotechnologies plc (biotech in food testing), Network Estates Limited (industrial property) and Deal Group Media plc (Internet marketing).

Peter Mikkelsen (Non-Executive Director - aged 52)

Peter is a geologist with 29 years of upstream oil industry experience, including 15 years at Exploration Manager level or equivalent. He received a BSc (Hons) degree in Geology from Oxford University in 1976. He then joined Carless Exploration Ltd, working on their UK onshore and offshore portfolio and was primarily responsible for their onshore discoveries in the early 1980s. He became VP Exploration of Carless US subsidiary in 1986 and then returned to the UK to join Brabant in 1988. As Exploration Director, he was involved in a number of North Sea discoveries, including Malory, Hannay and Goldeneye, together with an expansion of Brabant’s international portfolio into Europe and Tunisia. Since leaving Brabant/EDC in 1999, he has become an independent consultant with several affiliations, of which Simco Petroleum Management is the principal. He specialises in the initiation and development of exploration projects at an early stage, particularly in regional evaluation, government negotiation and licence application. In the last four years, he has had a wide range of international projects, with particular experience of NW Europe, Mediterranean, North and West Africa, Australasia, the Caribbean, China and US.

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Sir Ebia Olewale (Proposed Non-Executive Director - aged 65)

Sir Ebia Olewale grew up in a remote village in the Western Province of Papua New Guinea near the Fly River delta in Torres Straight. He was educated at the London Missionary Society School at the village, Daru village school, Sogeri Secondary School and Port Moresby Teachers College.

After teaching in high schools, Sir Ebia found his true vocation in politics. He entered the PNG House of Assembly in 1968 as Member for South Fly Open Electorate and he was re-elected in 1972 in the historic first self-governing Government with Sir Michael Somare as the Chief Minister. He has variously held the Education, Commerce, Foreign Affairs, Trade and Customs and Immigration portfolios and at Independence in 1975 he was the Minister for Justice in charge of passing the constitution of PNG in the Constituent Assembly.

In 1978, Sir Ebia became Deputy Prime Minister and finally in 1982 after 14 years in politics he was not re-elected. In 1994, he was chosen by the PNG Government and Commonwealth Secretariat in London to be observer at the first multi-racial general election in South Africa.

Sir Ebia is Chancellor of the University Council of University of Goroka and Director of Papua New Guinea Sustainable Development Program Ltd.

Senior management

As the Joint Venture is currently operated by TOPPNG there is little need for senior management. Jenni Lean, as Chief Executive Officer, is responsible for the day to day operations of the Company in PNG and is actively involved with the Company’s PNG lawyers, Posman Kua Aisi, in liaising and negotiating with the various governmental departments in PNG. In order to keep costs down to a minimum, the Company has, when required to do so under the JVOA, engaged independent contractors on an ad hoc basis.

13 Corporate governance and share dealing code

The Directors recognise the importance of sound corporate governance commensurate with the size of the Company and interests of the Shareholders. So far as is practicable, taking into account the size and nature of the Company, the Directors will take steps to comply with the Combined Code. Accordingly, the Company currently has in place an audit committee and a remuneration committee which will continue to operate after Admission.

From Admission, the audit committee will consist of Ian Gowrie-Smith and Peter Mikkelsen and will be responsible for ensuring that the financial performance, position and prospects of the Company are properly monitored and reported on and for meeting with the auditors and discussing their reports on the accounts and the Company’s internal controls.

From Admission, the remuneration committee will consist of Ian Gowrie-Smith and Peter Mikkelsen and will be responsible for reviewing the performance of the executive directors, setting their remuneration, determining the payment of bonuses and considering the grant of options under the Share Option Plan.

The Company has adopted a model code for directors’ dealings in securities of the Company which is appropriate for a Company quoted on AIM. The Directors and Proposed Director will comply with Rule 21 of the AIM Rules relating to directors’ dealings and will take all reasonable steps to ensure compliance by the Company’s “applicable employees” (as defined in the AIM Rules).

14 Share options

The Directors consider that an important part of the Company’s remuneration policy should include equity incentives through the grant of share options to attract, incentivise and retain talented directors and employees.

The Company currently has the Unapproved Share Option Plan in place under which the Existing Options have been and further options may be granted to directors and employees of the Company at not less than the market value of the Ordinary Shares, at the time of grant over an aggregate maximum

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of ten per cent. of the Company’s issued ordinary share capital from time to time.

The Company has at the date of this document issued the Existing Options granting the right to subscribe for a total of 1,494,000 Ordinary Shares to David Lees (830,000) and Jenni Lean (664,000) which are exercisable at 3p per share at any time from 21 March 2008 (being three years from the date of grant) in accordance with the terms and conditions of the Unapproved Share Option Plan, details of which are set out in paragraph 8 of Part VI of this document.

15 Dividend policy

The Company is unlikely to be generating profits at least until successful development of the Prospects. Once the Company is generating profits, however, the Directors’ intention is to follow a progressive dividend policy while retaining a significant proportion of the Company’s earnings to facilitate the Board’s plans for the continued growth of the Company.

16 Current trading and prospects

The accounts of the Company for the period from incorporation to 31 March 2005 are reproduced in full in Part IV of this document. Since 31 March 2005 the Company has continued to participate in the preparation for drilling the Prospects under the JVOA, including participation in the purchase of the Rig, and as at the date of this document the funds deposited in the escrow account have been fully applied to the approved expenditure obligations of Foreland Oil under the JVOA.

17 Details of the Placing

Insinger de Beaufort has conditionally placed the Placing Shares at the Placing Price on behalf of the Company to raise a total of £810,000 (net of expenses). The Placing Shares will represent approximately 6.4 per cent. of the Enlarged Share Capital. The Placing is not underwritten. The Placing Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions thereafter declared, made or paid on the Ordinary Shares.

18 Reasons for Admission and use of proceeds

The Company is seeking Admission of its Ordinary Shares to trading on AIM in order to position it to explore and exploit PPL 235. Admission is intended to help enhance the Company’s corporate profile. As a quoted company the Directors believe that Rift will be able to access equity finance sufficient for it to perform the initial exploration program as well as to take advantage of opportunities that may arise to allow the Company to achieve its strategic objectives.

The Company intends to apply both the funding received from the Private Placing and the net proceeds of the Placing (amounting to in aggregate approximately £2.0 million) as follows:

• to drill the initial exploration well planned under the exploration program; and

• to provide working capital for the Group. 19 Admission, settlement and CREST

Application has been made to the London Stock Exchange for all of the Existing Ordinary Shares and the Placing Shares to be admitted to trading on AIM. Admission is expected to become effective and trading in the Enlarged Share Capital to commence on 19 April 2006.

Application will be made, as and when necessary, to the London Stock Exchange for any Ordinary Shares issued pursuant to the exercise of the Warrants to be admitted to trading on AIM. Application will not be made for the Warrants to be admitted to trading on AIM.

CREST is a paperless settlement system enabling securities to be evidenced otherwise than by certificate and transferred otherwise than by written instrument in accordance with the Regulations. The Company’s articles of association permit its shares to be evidenced in uncertificated form in accordance with the Regulations.

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The Directors have applied for the New Ordinary Shares to be admitted to CREST with effect from Admission and CRESTCo Limited has agreed to such admission. Accordingly, settlement of transactions in the Ordinary Shares following Admission may take place within the CREST system if the relevant shareholders so wish. CREST is a voluntary system and holders of Ordinary Shares who wish to receive and retain share certificates will be able to do so.

Following Admission, share certificates representing the Placing Shares are expected to be despatched by post to placees who do not wish to receive shares in uncertificated form, by no later than 26 April 2006, at the relevant placee’s sole risk. The CREST accounts of placees who have duly elected to receive their Ordinary Shares in uncertificated form are expected to be credited to the designated CREST account on 19 April 2006. The Company’s Registrars, Capita Registrars, are responsible for keeping the Company’s register of members.

20 Lock-in and orderly market arrangements

In accordance with the AIM Rules, the Directors, related parties and certain significant shareholders who are interested in an aggregate of 172,886,272 Ordinary Shares representing 50.0 per cent. of the Enlarged Share Capital, have undertaken to the Company and Insinger de Beaufort that (and subject to the exceptions permitted by the AIM Rules) they will not dispose of any interest in Ordinary Shares for a period of twelve months from Admission without the prior written consent of Insinger de Beaufort, and for a following twelve months will only dispose of any Ordinary Shares through Insinger de Beaufort or the broker of the Company from time to time, so as to ensure the maintenance of an orderly market in the Ordinary Shares.

A certain other Shareholder, who, following Admission, will be interested in 34,200,000 Ordinary Shares, representing 9.9 per cent. of the Enlarged Share Capital, has agreed not to dispose of Ordinary Shares or interests in Ordinary Shares without the prior written consent of Insinger de Beaufort for a period of one year following Admission.

Further details of the lock-in and orderly market arrangements are set out in paragraphs 15.8 and 15.9 of Part VI of this document.

21 RISK FACTORS

Your attention is drawn to the risk factors set out in Part III of this document.

22 ADDITIONAL INFORMATION

Your attention is drawn to the information contained in Part V of this document, which contains a summary of relevant legislation in Papua New Guinea concerning petroleum prospecting and production.

Potential investors should read the whole of this document and should not rely solely on the information contained in this Part I. The attention of potential investors is also drawn to the information contained in Parts II to IV and Part VI of this document, which contain further information on the Company.

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PART II

Competent Person’s Report

The Directors Rift Oil plc 105, Piccadilly London W1J 7NJ United Kingdom Insinger de Beaufort 131 Finsbury Pavement London EC2A 1NT United Kingdom 10 April 2006 Dear Sirs,

Competent Persons Report on the Douglas and Puk Puk Prospects, PPL 235, Papua New Guinea

In response to your request we have reviewed and given indicative volumes and values for the Douglas and Puk Puk Prospects in PPL 235, Papua New Guinea in which Rift Oil plc (“Rift”) has a 65% working and entitlement interest. In our statements and calculations below, the license interests quoted are those presented to us by Rift. We have not checked the title to these interests although the current status of ownership is described in the Introduction and Background section of the report. This report has been undertaken based upon data supplied to us by Rift. These data consisted of 2D seismic lines with interpretation in a GeoFrame format, geological and petrophysical analyses both on paper and digitally. The digital data consisted of raw and interpreted (CPI) log data in LAS format. Miscellaneous geological reports and other relevant documents were also available. In our report, a number of possible ‘success case’ scenarios have been envisaged which would yield differing quantities and type of hydrocarbons. These scenarios have then been evaluated to determine their economic value, should they prove to be confirmed by the exploration campaign proposed by Rift. The report has been prepared in accordance with the March 2006 AIM Guidance Note using the guidelines laid out in the 2001 SPE/WPC/AAPG publication (see Appendix 2 for the definitions) as the ‘Standard’ for classification and reporting. Accordingly, the hydrocarbon volumes discussed in this report are referred to as Prospective Resources.

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This report relates specifically and solely to the subject assets and is conditional upon various assumptions. This report must, therefore be read in its entirety. This report may be used in its entirety without prior permission from Scott Pickford and we specifically consent for its inclusion in an admission document compiled for the purposes of a placement on the AIM Market of the London Stock Exchange (“AIM”) in April 2006. However, should excerpts from this report be used by Rift (or its affiliates and advisers) express permission must be obtained from Scott Pickford. Any such excerpts should specifically draw the reader’s attention to the need to read the entire report. It is an express condition of permission of such use that Rift (or its affiliates and advisers) shall grant access to the report if such notice is acted upon. This procedure is to ensure that all use of information and views expressed in the report are represented in a true and fair manner. A glossary of the technical terms and abbreviations included within this report is attached as Appendix 1. Yours faithfully, Andy Kirchin Managing Director Scott Pickford Ltd

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INDEPENDENT EVALUATION REPORT

Of

The DOUGLAS and PUK PUK Prospects,

Block PPL 235, Papua New Guinea

For

This report relates specifically and solely to the subject assets and is conditional upon various assumptions that are described herein. This report must, therefore, be read in its entirety. This report was provided for the sole use of Rift Oil plc on a fee basis. Except with permission from Scott Pickford Limited, this report may not be reproduced or redistributed, in whole or in part, to any other person or published, in whole or in part, for any purpose without the express written consent of Scott Pickford Limited. Our estimates of potential reserves, resources, un-risked and risked values are based on data provided by Rift Oil plc. We have accepted, without independent verification, the accuracy and completeness of these data. All interpretations and conclusions presented herein are opinions based on inferences from geological, geophysical, engineering or other data. The report represents Scott Pickford Limited’s best professional judgement and should not be considered a guarantee of results. Our liability is limited solely to Rift Oil plc and Insinger de Beaufort.

March 2006

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Table of Contents Executive Summary 26 Introduction and Background 27 Structural Mapping 31 Rock Property Modelling 35 Volume of Shale 35 Porosity 35 Water Saturation 39 Permeability 40 Volumetric Analysis (Oil) 40 Volumetric Comparison for Gas 41 Economics 41 Production Profiles 42 Capital Costs 42 Operating Costs 44 Royalty and Tax 44 Oil Price 45 Cash Flows 45 Conclusions and Summary Tables 46 Professional Qualifications 48 Appendix 1 – Glossary of Terms 49 Appendix 2 – Reserve and Resource Definitions 50

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The DOUGLAS and PUK PUK prospects, Block PPL 235, Papua New Guinea Executive Summary Rift Oil has acquired a 65% Working Interest (WI) within licence PPL 235 in Papua New Guinea containing the Douglas and Puk Puk prospects (“the Prospects”) which are the specific focus of this report. The PPL is operated by Austral Pacific Energy Ltd. and an exploration well targeting the ‘Toro’ sandstones of the Douglas Prospect is due to spud at the end of March 2006. The Company hopes to find oil in the Douglas Prospect but there is a risk that if a discovery is made it will be gas-condensate which would need to be carefully appraised for commerciality. Scott Pickford has investigated various scenarios and run indicative success case economics to asses the viability of the various options that might transpire. The Prospective Resources attributable to the Prospects are summarized below.

Asset Operator Interest (%) Status

Licence Expiry Date

Licence Area Comments

Douglas and Puk Puk prospects, PPL235, Papua New Guinea

Austral Pacific 65% Exploration

29th August

2009 2910 km2

Douglas exploration

well spuds at the end of

March

Summary table of currently identified assets Oil Case – Prospective Resources Gross (MMbbls) Net Attributable (MMbbls) Risk

Factor Operator

Low Estimate

Best Estimate

High Estimate

Low Estimate

Best Estimate

High Estimate

Oil Prospective Resource

55 MMbbls

170 MMbbls

271 MMbbls

35.8 MMbbls

110.5 MMbbls

176.2 MMbbls 1 in 8 Austral

Pacific Summary of Reserves and Resources by Status Gas/Condensate Case – Prospective Resources Gross (MMbbls or Bcf) Net Attributable (MMbbls or

Bcf) Risk Factor

Operator

Low Estimate

Best Estimate

High Estimate

Low Estimate

Best Estimate

High Estimate

Condensate Prospective Resource

14.7 MMbbls

34.8 MMbbls

73.5 MMbbls

9.56 MMbbls

22.62 MMbbls

47.78 MMbbls 1 in 3 Austral

Pacific Gas Prospective Resource

420 Bcf 994 Bcf 2099 Bcf

273.0 Bcf

646.1 Bcf

1363.4 Bcf 1 in 3 Austral

Pacific Summary of Reserves and Resources by Status

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Introduction and Background The Douglas and Puk Puk prospects lie within licence PPL 235 in Papua New Guinea. The PPL 235 licence is located in the foreland, southwest of the main frontal thrust which defines the edge of the Papua New Guinea highlands and is shown in its regional context in figure 1 below. PPL 235 replaced two previous PPL's, PPL 192 and PPL 215. The PPL is operated by Austral Pacific Energy Ltd., and Rift Oil plc (ROIL) has acquired a 65% working interest (WI) and entitlement for an initial expenditure of US$6M (£3.2million) on the block.

Figure 1: Regional setting of PPL 235, Papua New Guinea The main historical hydrocarbon exploration activity and success in Papua New Guinea has been concentrated to the northeast of the licences in question along the Papuan Thrust Fold Belt. The mountainous topography and tectonically complex geology (including over-pressure problems and difficult drilling conditions) associated with the Fold Belt contribute to significant cost implications throughout the exploration through development cycle. As a result, the perception has been that only very significant 'pools' of oil (historically, gas has not been highly prized in this region, though this may of course change with time) would sustain a commercially viable development. In contrast, the Foreland Basin is much simpler geologically and makes for easier access and engineering logistics via the Fly and Strickland Rivers and their tributaries (see figure 2). This allows the possibility for smaller accumulations to be commercially attractive.

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Figure 2: PPL 235 showing the river system, prospects and seismic database The main formation of interest is the “Toro Sandstone" which has become a generic name for the basal Cretaceous Alene, the underlying Toro (sensu stricto) sand and the late Jurassic Digimu, Hedinia and Iagifu (Imburu) sands. The main target sands are the Alene and Toro but it is postulated that secondary reservoirs may be found in the late Jurassic Digimu and Imburu sands. It is also possible that there may be potential in some excellent quality Palaeocene sands higher in the section, but there is a substantial degree of risk on the seal for these Tertiary sands. The Douglas and Puk Puk Highs are described as being draped by a thick (~500m) dominantly shale sequence of the Ieru Formation which provides a thick continuous seal to the Toro Sands. This is the likely differentiator between the Douglas and Puk Puk prospects (the Prospects) and the "failed" Bujon-1 and Koko-1 wells (east of the PPL 235 licence) which although having received an oil charge were deemed to have been breached into the karsted Darai Limestones. A generalised stratigraphic column for the area is shown as figure 3. Eight wells have been drilled in the Foreland Basin in the past twenty years and all have had shows or flows of oil or gas-condensate. The nearest well to the Prospects is Langia-1, drilled in 1991 by Pecten Nuigini Company Ltd. It sampled gas comprising methane (C1) through to hexane (C6) from RFT in the topmost Alene Sand, whilst fluid inclusion work indicates that oil has actually passed through the structure. Oil shows and bituminised oil residues are observed in the well from Darai level down to TD. The reservoir quality in Langia-1 shows a marked diagenetic effect in the lower Toro sands which meant this well was not a success. This is discussed in more detail later. To the east, the Koko-1 well, drilled in 1999 by Oil Search, recovered oil to the surface via SFT, whilst Kimu-1, drilled by the same company in the same year

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slightly further to the east again, flow-tested gas to surface. The gas is reported as being typed as the bio-degraded product of an oil accumulation. The test rates for these wells are not known in detail but the website of one of the participants in Kimu-1, Mosaic Oil, states "The structure holds 3P recoverable reserves in the order of 1 trillion cubic feet of gas, and the Kimu 1 well has the potential to flow at rates in excess of 100 million cubic feet of gas per day." We assume that these rates are AOF (i.e. theoretical absolute open flow, as calculated from well data); nonetheless it would appear that the well productivity is very high in the Toro reservoir. Figure 3: Generalised stratigraphic column for Western Onshore Papua New Guinea. The Bujon-1 well was drilled in 1994 by Phillips Petroleum Company and has "extensive shows", which fluid inclusion analyses have been interpreted as revealing a palaeo oil column. To the northwest, the Elevala -1 well, drilled by BP Exploration in 1990 (now in PRL 5), tested gas from the Alene Sandstone at 11.9 MMscfd and condensate at 634 bbls/d. It is reported that PVT analysis identifies a saturated reservoir, i.e. that there should be a down-dip oil rim in equilibrium with the gas cap penetrated by the well. Ketu-1, just to the north of Elevala-1, also drilled by BP in

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1991, exhibited similar shows but was reportedly not tested due to mechanical difficulties. Further to the northwest still, Kiunga-1x, drilled by Gulf Niugini Ltd in 1980, had "excellent" oil shows in 3 side-wall cores from an unnamed, but presumed Palaeocene sand, whilst Stanley-1 (now in PRL 4), drilled by Santos Niugini Exploration Ltd in 1999, recorded log gas pay in the Toro sands but was not flow-tested. The conclusion from the above history is that there are definitely hydrocarbons in the system but that gas-condensate would appear at least as likely as oil. However, burial history modelling demonstrates that the Jurassic source rocks adjacent to the frontal thrust are expected to be in the gas window but that, updip and nearer to Douglas/Puk Puk they are expected to be in the oil window. The maturity modelling is illustrated below as figure 4.

Figure 4: Jurassic Source Rock Maturity (as modelled by Austral Pacific)

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Structural Mapping Scott Pickford has undertaken an independent seismic interpretation of the available 2D data comprising some 60 lines of variable vintage and quality. The 1988, 1989 and 1990 surveys were considered to be the best quality. The Top Alene, Top Basement, Base Durai Limestone and an Ieru marker were easily recognisable and readily tracked from line to line. A composite seismic line running from Langia-1 through Douglas and up to Puk Puk is shown as figure 5. Figure 5: Composite seismic line Independent mapping was carried out for each horizon and the closure areas for each prospect were calculated. The structural mapping supports the work done by Austral Pacific (see figure 6). In the case of Douglas there appears to be a pronounced 'dimming' of the reflection strength at top Toro seismic event within the horst block indicated above and henceforth known as Douglas A (also see figure 6). This is in stark contrast with the distinct 'brightening' over the Langia-1 well and this is an important differentiator between the unsuccessful Langia-1 well and the Douglas prospect. Austral Pacific attribute the 'dimming' effect as a hydrocarbon indicator. This is hard to prove conclusively but it is true to say that there is something significantly different about the Douglas A horst relative to Langia-1. Moreover, the DHI assertion is further supported by the strengthening of the underlying top Basement event at Douglas. Given that the basement is unlikely to vary rapidly, the only way one can create such a strengthening is to reduce the acoustic impedance of the overlying section, i.e. that of the lower Cretaceous and upper Jurassic sediments relative to the otherwise uniformly 'hard' Basement. The most obvious way to create both the top Toro and the top Basement amplitude effects is to charge the Toro reservoirs with oil or gas to reduce their acoustic impedance. Austral Pacific remain convinced that further confirmatory seismic evidence for hydrocarbon charge of Douglas reservoir comes in the form of Type II Fluid Factor and I*G AVO

Langia-1 Douglas Puk Puk

Dimming in Douglas A

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(Amplitude versus Offset) anomalies seen right across the structure at Toro level, which are widespread within Douglas but do not extend beyond the mapped Douglas trap. However, the processing report that has been made available to Scott Pickford during this review is, in our opinion, very poorly presented and does not provide sufficient detail to allow confidence that the AVO modelling is any more reliable than the general seismic observations made above. The Langia-1 well exhibits a dramatic secondary diagenetic silica cementation, which although not affecting the topmost Alene Sand, has reduced the Toro and older sandstones' porosities such that they are completely tight. This cementation and consequent destruction of reservoir quality in Langia-1 must be regarded as a potential risk for Douglas due to its proximity to Langia-1 (figure 2). However, the following arguments convince us that this risk is almost entirely mitigated by the seismic evidence. In areas where such secondary diagenetic effects are observed, it is not uncommon to find that early hydrocarbon charge (particularly oil) masks the effect, since the water, usually responsible for such events, cannot access the oil filled rock. A particularly good example of this is the Nelson Field in the UKCS. Here the seismic shows a pronounced brightening of amplitudes at the oil-water contact (OWC) where cementation has continued in the water-leg but been impeded in the oil leg. The result is a considerably harder (and faster) rock below the contact which creates a larger acoustic impedance (AI) and hence 'brighter' amplitudes at base of hydrocarbon column. This 'dim-spot' or 'bright-rim' feature is slightly counter-intuitive to the generally accepted view of direct hydrocarbon indicators (DHI), which is that 'bright-spots' correspond to hydrocarbons (particularly gas), but is merely a consequence of the reduction of AI within the reservoir and its effect on AI contrasts at top and bottom of reservoir. It should also be noted that the "conventional wisdom" does not fully account for the variable polarity of seismic data (the response to an AI increase has been variously 'standardised' in different parts of the world and by different processing contractors in an inconsistent way for ease of display and interpretation of local reflectors of interest) and careful geophysical modelling is required to understand the expected response to variable fluid saturation within any given lithology compared with its overlying (and underlying) strata. Indeed, it is possible that the conventional wisdom on DHI's may have led Pecten to believe that Langia-1 was a good drilling target (instead of Douglas) as it does indeed show a very strong amplitude response at the Toro level. As will be shown in the petrophysics section, this can now almost certainly be proved to be the opposite case. The Douglas structure is mapped as three distinct culminations with a potentially common closing contour (see figure 6).

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Figure 6: Comparison of Scott Pickford and Austral Pacific mapping of Top Alene over Douglas. The prospect is an extensive but simple feature that may possibly be sub-divided into a series of three separate highs (Areas A, B and C) or may alternatively consist of three linked culminations within the same overall high. The highest and most extensive of these culminations is Area A which comprises a NW-SE trending fault bounded horst block. To the southwest is a graben, which separates this area from the up-dip feature tested by the Langia-1 well. Displacement across the graben bounding faults is in the region of 250+m and 50-60m respectively, whilst the down to the NE fault has a 35-45m throw. Seal will be provided by the overlying Cretaceous age Ieru shale which is regionally some 500+m thick. There is clear evidence that the faulting which helps to define the prospect penetrates through the shale upwards to the overlying Oligocene Sirga sandstone and possibly the Miocene age carbonates. However, the seismic shows the shale section to be uniform in character and given its thickness it should be adequate to provide a cross fault seal. The reflection strength over Douglas B&C does not show as pronounced a dimming as Douglas A. This is probably a consequence of lesser hydrocarbon column height, although there may be a risk that the fault separating Douglas A & B could seal and separate these traps (though with an expected sand-on-sand juxtaposition this is thought to be unlikely). It is more likely that the reduced hydrocarbon column height in B&C relative to A (B&C exhibit less relief than A) has contributed to the reduction of the amplitude dimming seen in the seismic due to the interaction of the hydrocarbon thickness and the band-width of the seismic. Nonetheless a risk remains, and for transparency we have calculated our areas and volumetrics separately for Douglas A and Douglas B&C so that they can be modelled as either separate or combined areas. The areas of closure for Douglas A is mapped as 16km2, whilst B&C have a closure of 35km2. The total closure therefore is some 51km2, which is in close agreement with the figures presented by Austral Pacific.

Douglas C

Douglas B

Douglas A

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The Puk Puk prospect is structurally simpler than Douglas, and consists of a robust anticlinal feature with little or no associated faulting. The seismic coverage, which comprises only two good quality lines over the feature itself and two more lines on the flanks, could be better. This means that it is not possible to confirm closure in all directions. However, the offsetting data is good enough to allow for reasonable confidence in the mapping. The comparison between the Scott Pickford mapping and the Austral Pacific mapping is shown as figure 7. Figure 7: Comparison of Scott Pickford and Austral Pacific mapping of Top Alene over Puk Puk. The area of closure for Puk Puk is mapped as 19km2.

Puk Puk

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Rock Property Modelling An independent petrophysical analysis was carried out by Scott Pickford in order to verify the 'reservoir' parameters presented by Austral Pacific. Digital LAS files for 6 wells were loaded to GeoLog for analysis. The wells were:

• Bujon-1 • Elevala-1 • Ketu-1 • Kiunga-1 • Koko-1 • Langia-1

Deterministic petrophysical calculations were carried out to determine the following

• Volume of shale • Porosity from wireline response • Water Saturation from wireline response

Volume of Shale To account for the clay in the section it was deemed appropriate to calculate the volume of shale using the Gamma Ray response. The individual shale volumes are computed by using the linear equation (clipped to zero and one hundred percent): VClay_GR = (GR - GR_MA) / (GR_SH - GR_MA) Where GR_SH and GR_MA are the (100%) shale and (clean) matrix gamma ray values respectively. The gamma ray clean and gamma ray shale were determined for each section separately. Porosity Two different methods were used to evaluate the porosity in the formation. The first method uses the density/neutron crossplot method where the logs are both available and in good quality hole.

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Figure 8: Typical density / neutron crossplot from two wells in the area With no core analysis available, the sands have been presumed to be predominantly quartz with some heavier minerals present due to the proximity of the granite wash facies. Therefore, a matrix density of 2.67 g/cc has been used to calculate the porosity, and a standard shale value of 2.4 g/cc. The fluid density was taken as 1g/cc. The second method uses just the sonic log. The equations for this are shown below. Sonic porosity derivation. PHIEQ=(DT-DTMA-VCL*(DTCLAY-DTMA))/(DTF-DTMA)/CP Where: DTMA is matrix response, DTCLAY is shale response and DTF is fluid response. The DTMA value utilised was 55 us/ft, DTCLAY was set to 89us/ft and DTF was set to 189 us/ft. Net to Gross values for the Toro/Alene effective reservoir section in three wells (Elevala-1, Bujon-1 and Langia-1) are in the range 40-60%. It should be noted that

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the Toro sand section of the Langia-1, using a porosity cut-off of 5%, exhibits a net to gross of approximately 10% only. If the porosity cut-off is raised even marginally the Toro sand has a net to gross of almost zero. Since Langia-1 is the nearest well to Douglas this was identified as a major risk to the reservoir quality likely to be encountered in the Douglas Prospect. However, against this is the acoustic impedance modelling supporting Toro porosity at Douglas relative to Langia. Toro porosity values range from 10%-22% and averages around 12%-13%. As noted above, apart from the Alene, the Langia-1 Toro Sands exhibit low porosity. However, as described above, the seismic character over Langia-1 is markedly different to that seen in the Douglas area and elsewhere (e.g. Elevala-1 and Ketu-1). Figure 9 shows the differing seismic responses observed at the Top Alene.

Figure 9: Toro Seismic Comparison Examination of the Langia-1 logs (along with Elevala-1 for control) reveals a pronounced sonic response coinciding with the tight-cemented sands in the Toro sand (see figure 10). The sonic kick is so strong that it was suspected that this would manifest itself as a seismic response. By comparison, the Elevala-1 well (for instance) shows reasonably good porosity throughout the Toro/Alene (figure 11) and does not exhibit the strong sonic 'kick' seen in Langia-1. Synthetic seismograms were generated for each well and compared with the nearest available seismic. The correlation was very good, with a pronounced doublet being seen on the Langia-1 synthetic and in the seismic line through the well. In contrast, the Elevala-1 well showed a moderate positive break reflector at Top Alene but little further reflective sequence until the Basement. We believe this to be reasonably strong evidence that the tight lower Toro sands found in Langia-1 will not be found in Douglas or Puk Puk but rather that the Toro will have properties more like those seen in Elevala-1 and Ketu-1.

Langia Douglas 'Normal'

Top Alene

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Figure 10: Langia-1 Log Suite

Top Alene

Note pronounced sonic kick

Upper Alene sand

Lower Toro sand

Reasonable porosity showing some gas saturation

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Figure 11: Elevala-1 Log Suite Water Saturation The water saturation was computed using Archie’s Law, and is based on total porosity as described below: Swn = (a* Rw)/ Øm * Rt The Rt was taken to be the deepest reading resistivity log available. Test data in the area shows that certain sands are hydrocarbon bearing. With this in mind, the resistivity logs have been used to derive a saturation curve based on the Archie Equation. Due to the absence of special core analysis, a, m and n values have been assumed to be 1, 2 and 2 respectively. The Rw of the formation water was determined by a picket plot. The Rw has been set at 0.1 ohm-m. A figure provided to Scott Pickford from the Elevala-1 well showing a salinity of 3450ppm, should be ignored as this would give an Rw of approximately 0.8 ohm-m

Top Alene Upper Alene sand

Lower Toro sand

Good porosity showing high hydrocarbon saturation

No Sonic kick at Lower Toro

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which would not calculate movable hydrocarbons even in the zones that flowed. We speculate that the sample was probably from the drilling fluid. Permeability No core measurements of permeability are available, but permeabilities from a DST test and RFT test have been provided. The two measurements reported were 600mD in the RFT and 204mD from the DST. The DST also had a calculated high skin factor. Both measurements were taken in clean sands. Volumetric Analysis (Oil) The areas of closure calculated by Scott Pickford in the structural mapping have been combined with the independently derived reservoir parameters as set out below. Various scenarios are possible depending on whether both prospects are successfully drilled and which reservoirs are found to contain recoverable hydrocarbons.

Table 1: Volumetric Assumptions and Results * Douglas A is fault bounded so is more like a 'box', hence the shape factor has been increased to account for the different structural geometry. Douglas B&C and Puk Puk are set to 0.5 as they are more conventional 4-way dip closures. ** 40% recovery factor is the world-wide average from moderate to good sandstone reservoirs with relatively light oil.

Prospect Area km2

Gross thickness

m Shape factor N:G porosity So HPV (000's

m3) HPV (000's

barrels) RF** Bo Resource

(000's barrels)

Douglas A Toro/Alene 16 94 0.8* 50% 13% 50% 39,104 247,528 40% 1.8 55,006 Douglas A

Imburu 0 85 0.4 50% 13% 50% 0 0 40% 1.8 0 Puk Puk

Toro/Alene 19 94 0.5 50% 13% 50% 29,023 183,712 40% 1.8 40,825 Puk Puk Imburu 0 85 0.4 50% 13% 50% 0 0 40% 1.8 0

A & PUK PUK

Barrels per m3 6.33 95,831

Prospect Area km2

Gross thickness

m

Shape factor N:G porosity So HPV (000's

m3) HPV (000's

barrels) RF** Bo Resource

(000's barrels)

Douglas B&C Toro/Alene 35 94 0.5 50% 13% 50% 53,463 338,418 40% 1.8 75,204

Douglas B&C Imburu 0 85 0.4 50% 13% 50% 0 0 40% 1.8 0

B&C 75,204

Douglas A,B&C

Barrels per m3 6.33 130,210 TOTAL 171,035

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For the purposes of presenting the Prospective Resources, we have not included the potential upside reservoirs of the Imburu or Tertiary sands. It is considered most likely, given the available well data, that if the Imburu is found to be of reservoir quality, this will be a local preservation in the Douglas area alone. If this proves to be the case there is an upside potential for a further 100 million barrels in the Douglas prospect. It should also be noted that the report focuses on the Douglas and Puk Puk prospects and that there are many other leads within the licence which, after success at Douglas, would be firmed up with seismic and should result in further drilling targets. From the work we have carried out and summarised above we estimate that IF the Douglas and Puk Puk prospects are oil bearing they are capable of delivering approximately 170 million barrels of oil. In our opinion this is a Prospective Resource. If one regards the seismic dimming seen in Douglas A as directly attributable to oil charge as discussed above, it is possible that Douglas B&C and Puk Puk are not oil charged or have lesser hydrocarbon columns (since the dimming is not seen to the same degree) and that only Douglas A will be an economically viable oil discovery. In this case we calculate Douglas A to be capable of delivering 55 million barrels of oil. If Douglas works as a whole (A, B & C) but Puk Puk fails we calculate a recoverable resource of approximately 130 million barrels. Volumetric Comparison for Gas We believe that the chance of not finding hydrocarbons in any of these prospects (Douglas A, Douglas B&C and Puk Puk) is minimal. However, there is a risk that the traps will be gas-condensate charged with only minimal oil (similar to Elevala-1). For the reasons detailed above we believe that there is a reasonable chance of finding oil but, again, for completeness and transparency we have run the volumetrics assuming a gas charge. We have run a similar analysis to that summarised above but for a gas case using the same basic reservoir assumptions but with the appropriate substitutions of a gas saturation of 80%, a recovery of 75% and a formation volume factor of 240. The Douglas A prospect is capable of delivering 420 Bcf from the Toro/Alene sandstone alone. Taking the Douglas prospect as a whole (including the Imburu sandstone) together with the Puk Puk Toro reservoir, we calculate a recoverable gas volume of up to 2.1 Tcf, of which 794 Bcf are attributed to the Imburu in Douglas. It should be noted that the surrounding gas fields exhibit a fairly consistent condensate yield at between 25 bbls/MMcf and 45 bbls/MMcf. The Elevala–1 well tested 634 barrels of condensate a day from a gas flow of 11.9 MMscfd. Although this was a relatively short test, this results in a condensate ratio of 57.6 bbls/MMcf. We believe, given the above, that a condensate yield of 35 bbls/MMcf is a reasonable assumption to make. This means that Douglas A could be capable of producing 14.7 MMbbls of condensate from the Toro/Alene alone. Economics The Douglas A prospect has been evaluated by calculating indicative cash flows for the 14.7 MMbbl condensate case (Case 1) and a 55.0 MMbbl oil case (Case 2). Case 1 is the most conservative assumption. In addition, a condensate case has been

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evaluated for Douglas A, B and C. In this case a total of 994 Bcf gas may be reservoired in the Toro sandstone in Douglas A, B and C. Assuming a condensate yield of 35bbls/MMcf, this means Douglas A, B and C could produce 34.8 MMbbl of condensate (Case 3). Cash flows for each of the cases have been analysed using net present values (NPVs) and expected monetary values (EMVs). Production Profiles Production in all three cases modelled was assumed to commence at the beginning of 2008. In the case of the Douglas A condensate (Case 1) initial flow rates of 32 MMcf/d of gas and 1120 bbl/d condensate have been modelled, with a decline rate of 10% per annum and a total of 350 operating days a year. It was assumed that a total of 6 producers and 1 injector were required for the development and that the Douglas-1 exploration well was converted to a producer. It was further assumed that a single rig was available to drill all of the development wells with three producers coming on stream at the beginning of 2008 with a further three producers at the beginning of 2009. In the Douglas A oil case (Case 2) initial flow rates of 3200 bbl/d were assumed with a decline rate of 10% per annum and a total of 350 operating days a year. As in the condensate case, it was assumed that a total of 6 producers and 1 injector were required for the development and that the Douglas-1 exploration well was converted to a producer. Also, it was further assumed that a single rig was available to drill all of the development wells with three producers coming on stream at the beginning of 2008 with a further three producers at the beginning of 2009. In the Douglas A, B and C condensate case (Case 3) the initial flow rate assumptions for a single producer were the same as the Douglas A case, i.e. 32 MMcf/d of gas and 1120 bbl/d condensate. In the Douglas A cases each producer drains ~2.7km2 and this assumption was also made for Douglas A, B and C, so that a total of 18 producers and 3 injectors were required for the development. It was assumed that two rigs will be available to drill the development wells, with a total of six wells coming on stream at the beginning of 2008, six at the beginning of 2009 and the remaining six at the beginning of 2010. Note: The current exploration licence expires on the 29th August 2009. In our assumptions above we have assumed that successful discovery and appraisal will result in the licence being converted to a full ongoing production licence. The production profiles generated are highly conceptual in nature and require verification with actual field data when this becomes available. Capital Costs In Cases 1 and 2, which involve the development of Douglas A, it has been assumed that 100 line km of 2D seismic will be required to further delineate the Douglas A prospect prior to development. The cost of 100 line km of 2D seismic is US$ 2.5 MM at US$ 25,000 per line km. However, in Case 3 it was assumed that the Douglas A, B

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and C structures will require a further 500 line km of 2D seismic at a cost of US$ 12.5 MM. The cost of a single dry exploration well was incorporated into all three cases and was assumed to cost US$ 10 MM. The cost of a single completed development well was assumed to be US$ 10MM (for a producer or an injector). Field infrastructure, field processing, export terminal construction and engineering costs were obtained from Austral Pacific and were assumed to be the same cases 2 and 3. Field infrastructure costs are summarised on Table 2: Item Cost (US$ MM) Intra Field Flowlines – 30km length 3.75 Roads 4.5 Buildings Access and Communal Areas 18.0 Earthworks 2.0 Table 2: Costs of field infrastructure In the condensate cases (1 and 3) it was assumed that the solution gas was re-injected into the reservoir in order to maintain reservoir pressure and the cost of gas re-injection lines and compressor was US$ 2.5 MM. The gas is re-injected as there is no local market for the gas at present; though this is expected to change and we are told that Rift have verbal expressions of interest in the gas should that be what is eventually discovered. No gas revenue value is assumed, although the gas remains available for commercialisation in the future. The predicted good quality of the reservoir will simplify gas injection but careful monitoring and management of field production will then be required to ensure that problems such as early gas “breakthrough” do not occur. Field processing costs are summarised on Table 3: Item Cost (US$ MM) Separation 15.0 Treatment 15.0 Site works and tankage 27.5 Table 3: Costs of field processing The total cost of the oil export line alongside the Strickland River is estimated as US$ 13 MM while the cost of the marine terminal is estimated as US$ 49.5 MM. Additional costs in the construction of the central camp facility, together with other engineering and indirect costs are estimated as another US$ 32 MM. The costs provided by Austral Pacific outlined above are for a 50MMbbl condensate development. Consequently, in Case 1 which involves developing only 14.7MMbbl of condensate, the field processing costs, together with the costs of the marine

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terminal and central camp are assumed to be 80% of those provided by Austral Pacific. It is assumed in condensate cases 1 and 3 that the gas cap will be “blown down” at a much latter date when a local market for the gas has been established. Consequently, no abandonment costs have been incorporated into the models presented in this study. In addition, a 10% contingency for capital costs have been incorporated into the cases presented here. Operating Costs Operating costs consist of a fixed cost component and a variable cost component. Fixed operating costs may be subdivided into those for the field and pipeline, together with those for the export terminal. Estimates of annual fixed operating costs were provided by Austral Pacific and are summarised on Table 4: Location Item Cost (US$ MM) Field and Pipeline Local Staff (PNG) 3.0 Expatriate Staff 6.0 Support Staff 3.0 Supplies 3.5 Maintenance 6.0 Workovers (1 per annum) 1.25 Export Terminal Local Staff (PNG) 0.5 Expatriate Staff 1.5 Maintenance 3.45 Table 4: Annual fixed operating costs Fixed operating costs were escalated at a rate of 1% per annum in all of the models in order to account for inflation. In addition a 10% contingency has been added to the fixed operating costs. The fixed operating costs proposed by Austral Pacific are for a 50MMbbl condensate development. Consequently, in Case 1 that involves the development of only a 14.7MMbbl condensate field, the fixed operating costs have been reduced to 70% of those proposed by Austral Pacific. Variable operating costs of $4/bbl have been incorporated into all three cash flow cases. Royalty and Tax The rate of royalty is 2%. In addition, tax is charged at 30% but capital costs can be offset against tax for a period of up to seven years. Also, the costs associated with Douglas-1 are fully written off against tax. In the cash flow models it was assumed that tax was paid in the year following that in which it was liable. The PPL 235 license is not liable to APT.

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Oil Price Two oil price scenarios were used to calculate cashflows for each of the three economic cases. A variable oil price declining from US$ 58/bbl in 2006 to US $ 40/bbl in 2009 and then increasing at 2.5% per annum to US$ 50.2/bbl in 2019, as shown in Table 5, has been employed in the cashflow calculations. Also, a price of a constant US$ 40/bbl has been used for comparison purposes.

Year Oil Price (US $/bbl) 2006 58.0 2007 52.0 2008 46.0 2009 40.0 2010 41.0 2011 42.0 2012 43.1 2013 44.2 2014 45.3 2015 46.4 2016 47.6 2017 48.7 2018 50.0 2019 51.2 2020 52.5 2021 53.8 2022 55.1 2023 56.5 2024 57.9 2025 59.4

Table 5: Variation of oil price with time Cash Flows The calculated net present values of the prospective resources for the Douglas prospect in each of the three cases is summarised on Table 6. Indicative net present values have been discounted by 10%, 12.5% and 15%. Case Recoverable

Oil (MMbbl)

NPV @ 10%

Variable Oil

Price

NPV @

10% US$

40/bbl

NPV @ 12.5%

Variable Oil

Price

NPV @

12.5% US$

40/bbl

NPV @ 15%

Variable Oil

Price

NPV @

15% US$

40/bbl 1 14.7 20.7 0.8 1.7 -15.7 -14.3 -29.7 2 55.0 485 390 402 322 333 266 3 34.8 239 209 187 162 142 121

NPVs in Million US$ for Douglas Prospect. N.B. Rift NRI is 65% of the numbers shown. Table 6: Indicative net present values of the Douglas prospect

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The expected monetary values of the three cases are given on Table 7 and have been calculated using the relation

EMV = (NPV x CoS) – (COF x (1 – CoS)) in which NPV is the indicative net present value, CoS is the chance of success and COF the cost of failure to find oil (i.e. the cost of drilling one dry exploration well). In our opinion, there is a low risk of hydrocarbon charge in the Douglas prospect, with the risk of condensate (Cases 1 and 3) regarded as about 1 in 3 (a 33% chance of success). However, the chance of the 55MMbbl oil case is less, about 1 in 8 (a 12.5% chance of success). The cost of drilling one exploration well is assumed to be US$ 7.7 MM (including contingency).

Case Recoverable

Oil (MMbbl)

EMV @ 10%

Variable Oil

Price

EMV @

10% US$

40/bbl

EMV @ 12.5%

Variable Oil

Price

EMV @

12.5% US$

40/bbl

EMV @ 15%

Variable Oil

Price

EMV @

15% US$

40/bbl 1 14.7 1.7 -4.9 -4.6 -10.3 -9.9 -14.9 2 55.0 53.9 42.0 43.5 33.5 34.9 26.5 3 34.8 73.7 63.8 56.6 48.3 41.7 34.8

EMVs in Million US$ for Douglas Prospect. N.B. Rift NRI is 65% of the numbers shown. Table 7: Expected monetary values for the Douglas prospect For the purposes of this report, we have not considered the other leads within the licence but would expect these to be worked up in the event of a success at Douglas. Douglas-1 was scheduled to be drilled in Q2 2005 with initial flow testing in July/August if successful. However, the company had major difficulties securing a local rig. As a result the joint venture, by which a subsidiary of Rift Oil holds the 65% interest in PPL 235, has purchased and tested a rig in America and have mobilized this rig to commence drilling in late March 2006. The rig is capable of drilling to 2600m with 7” casing and can reach to 4700m using slimhole exploration techniques. As the reservoir is expected at around 1700m the rig would seem to have ample capacity for the exploration of the Block. The ownership of the rig (in conjunction with the shortage of supply in the region) opens up some intriguing follow-on opportunities for the joint venture and, therefore, the Company, even in the event that Douglas is not a commercial discovery in its own right; while it provides the means to push forward appraisal and development of the Douglas field in the event of success.. Conclusions and Summary Tables Our conclusion is that the Douglas and Puk Puk prospects within PPL 235 could contain 55 to 270 million barrels of recoverable oil, with a most likely Prospective Resource of 170 million barrels in the oil case. There are certain technical data that support the hypotheses that the licence maybe oil prone and these are detailed in the report. These include:

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• Very good seismic evidence of an acoustic impedance diminution within the

reservoir target in the Douglas prospect that strongly suggests a differential fluid fill in a hydrocarbon rich basin.

• Oil shows and biodegraded gas products from oil in the majority of nearby wells.

• Favourable location and migration pathways relative to the Jurassic source rocks, which are modelled to be actively in the oil window.

• PVT analysis from Elevala (described as a gas discovery) that supports an oil rim in equilibrium with the penetrated gas cap.

However, there is clearly a lot of gas in the surrounding discoveries and this must remain a risk at this time. In the case of a gas discovery we calculate a gas potential of up to 2.1 Tcf recoverable. However, it should also be noted that a reasonable condensate to gas ratio of 35 bbls/MMcf would be expected in the case of a gas discovery. As shown above, in the event of a rich gas discovery, condensate stripping and re-injection of the gas for later production just about pays for itself even in the ‘Douglas A Only’ worst case (14.7 MMbbls of condensate), and does have the advantage of allowing time for the gas market to develop and will generate some cashflow to further explore the licence. If Douglas A, B & C contain rich gas then the condensate operation alone appears to be economic in its own right. As mentioned above the gas market is expected to improve in future years with a pipeline proposed to connect Papua New Guinea to the Northwest Territories of Australia. In addition, we are told that Rift have already received verbal interest in any gas that might be discovered. Our economics show that the ‘Douglas A Only’ case for oil is robust in its own right.

Asset Operator Interest (%) Status

Licence Expiry Date

Licence Area Comments

Douglas and Puk Puk prospects, PPL235, Papua New Guinea

Austral Pacific 65% Exploration

29th August

2009 2910 km2

Douglas exploration

well spuds at the end of

March

Summary table of currently identified assets Oil Case – Prospective Resources Gross (MMbbls) Net Attributable (MMbbls) Risk

Factor Operator

Low Estimate

Best Estimate

High Estimate

Low Estimate

Best Estimate

High Estimate

Oil Prospective Resource

55 MMbbls

170 MMbbls

271 MMbbls

35.8 MMbbls

110.5 MMbbls

176.2 MMbbls 1 in 8 Austral

Pacific Summary of Reserves and Resources by Status

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Gas/Condensate Case – Prospective Resources Gross (MMbbls or Bcf) Net Attributable (MMbbls or

Bcf) Risk Factor

Operator

Low Estimate

Best Estimate

High Estimate

Low Estimate

Best Estimate

High Estimate

Condensate Prospective Resource

14.7 MMbbls

34.8 MMbbls

73.5 MMbbls

9.56 MMbbls

22.62 MMbbls

47.78 MMbbls 1 in 3 Austral

Pacific Gas Prospective Resource

420 Bcf 994 Bcf 2099 Bcf

273.0 Bcf

646.1 Bcf

1363.4 Bcf 1 in 3 Austral

Pacific Summary of Reserves and Resources by Status Professional Qualifications Scott Pickford Ltd is a consultancy specialising in geology, geophysics, petrophysics, petroleum engineering and economic analyses. Scott Pickford Ltd began undertaking reserves reporting and valuation functions in 1986 and all its personnel involved in such exercises have at the very minimum a first degree in geoscience or petroleum engineering and many have masters degrees or doctorates. All personnel have a minimum of five years relevant valuation experience and in the case of the senior project leaders involved in this exercise this period exceeds ten years. Except for the provision of professional services on a fee basis, Scott Pickford Ltd and its employees has no commercial arrangement with any person or company involved in the interests that are the subject of this report. Yours faithfully, Andrew J. Kirchin, BSc (Geophysics with Geology, University of Liverpool), Member of the Petroleum Exploration Society of Great Britain (PESGB) and European Association of Geoscientists and Engineers (EAGE). Managing Director Scott Pickford Ltd 4th Floor, Leon House 233 High Street Croydon Surrey CR0 9XT UK

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Appendix 1 – Glossary of Terms

“/d, pd, PD” “°API” “AI” “AVO” “bbl(s)” “bopd”,”bbls/d” “COF” “CoS” “DHI” “EMV” “g/cc” “GOC” “GOR” “GRV” “GWC” “HPV” “Hydrocarbon” “km”,“m”,“cm”,“mm” “Kr” “Lead” “mD” “M”, “MM”, “B” “NRI” “NPV” “ODT” “OWC” “PPL” “ppm” “Prospect” “PTD” “PVT” “Reserves” “Resources” “RFT” “RMS” “So” “Sw” “s”, “scf”, “SCF” “SPE” “stb”, “STB” “STOIIP” “tvdss”,”TVDSS” “UKCS” “us/ft” “Vsh“ “WI” “WPC”

means per day means American Petroleum Institute units of specific gravity of liquid hydrocarbon means Acoustic Impedence, the reflection coefficient of strata which is controlled by density and rigidity means Amplitude versus Offset, a technique used to differentiate fluid fill from seismic means barrel(s) means barrels of oil produced per day means Cost of Failure to find hydrocarbons means Chance of Success of finding hydrocarbons means direct hydrocarbon indicator means Expected Monetary Value means grams per cubic centimetre means gas-oil-contact means gas:oil ratio means gross rock volume means gas-water-contact means hydrocarbon pore volume means oil and/or gas and/or condensate means kilometres, metres, centimetres and millimetres means relative permeability means a structure that requires further technical appraisal prior to a decision to drill or not means milli-Darcy, a unit of permeability means thousands, millions, billions (thousand million) respectively means Net Revenue Interest means Net Present Value and is the total present value of a series of cash flows discounted at a specified rate, to a specified date. means oil-down-to means oil-water-contact means Petroleum Production Licence means parts per million means a structure that has been technically evaluated to a state where it is ready to be drilled means Proposed Total Depth means pressure - volume - temperature means potential volume of hydrocarbon that could be commercially produced from a field. Note that no reserves are presented in this report. Formal reserves cannot be attributed to the prospects at this stage of exploration since the existence of commercially developable hydrocarbon accumulations is conceptual. In all of the prospects there is uncertainty about reservoir presence and quality, hydrocarbon presence and, on the assumption that hydrocarbons are found, their type and the potential well deliverability means those volumes of hydrocarbons either yet to be found (prospective) or if found the development of which depends upon a number of factors being resolved (contingent) means repeat formation tester which tests for movable hydrocarbons means root mean squared means hydrocarbon saturation means water saturation (compliment of hydrocarbon saturation) means standard cubic feet (of gas) means Society of Petroleum Engineers means stock tank barrel(s) measured at 14.7 psia and 60° Fahrenheit means stock tank volume of oil initially-in-place, i.e. prior to production means true vertical depth sub sea means United Kingdom Continental Shelf means micro-seconds per foot means volume of shale means Working Interest means World Petroleum Congress

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Appendix 2 - Reserve and Resource Definitions The diagram below illustrates the different reserve and resource categories as defined by the SPE and adhered to in this report.

Given below are brief definitions of the main reserve and resource categories, fuller definitions can be found on the Society of Petroleum Engineers (SPE) website (www.spe.org) Proved Reserves Based on the available evidence and taking into account technical and economic factors these reserves will have a better than 90 percent chance of being produced. Probable Reserves Based on the available evidence and taking into account technical and economic factors these reserves will have a better than 50 percent chance of being produced. Possible Reserves Based on the available evidence and taking into account technical and economic factors these reserves will have a better than 10 percent chance of being produced. Contingent Resources Volumes of hydrocarbon that are potentially recoverable from a known accumulation subject to the formulation of an economic development scheme. Prospective Resources The potential volume of hydrocarbon that could be commercially produced from an as yet undiscovered field.

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PART III

RISK FACTORS

An investment in Ordinary Shares involves a high degree of risk. An investment in the Ordinary Shares is suitable only for individuals who are financially able to withstand a complete loss of their investment. The exploration and development of hydrocarbon resources is a highly speculative activity. Accordingly, prospective investors should carefully consider the specific risk factors set out below in addition to the other information contained in this document before investing in Ordinary Shares. The Directors consider the following risks and other factors to be the most significant for potential investors in the Company, but the risks listed do not necessarily comprise all those associated with an investment in the Company and are not set out in any particular order of priority. Additional risks and uncertainties not currently known to the Directors may also have an adverse effect on the Group’s business. If any one or more of the following risks actually occur, the Group’s business, financial condition, capital resources, results or future operations could be materially adversely affected. In such a case, the price of the Ordinary Shares could decline and investors may lose all or part of their investment.

Exploration, production and general operational risks

The exploration for and production of oil and other natural resources is speculative and involves a high degree of risk. In particular, the operations of the Group may be disrupted by a variety of risks and hazards which are beyond the control of the Group, including environmental hazards, industrial accidents, occupational and health hazards, technical failures, labour disputes, earthquakes, unusual or unexpected geological formations, flooding and extended interruptions due to inclement or hazardous weather conditions, explosions and other accidents. These risks and hazards could also result in damage to, or destruction of wells or production facilities, personal injury, environmental damage, business interruption, monetary losses and possible legal liability.

The nature of reserve quantification studies means that there can be no guarantee that estimates of quantities and quality of oil discovered will be available for extraction.

Delays in the construction and commissioning of projects or other technical difficulties may result in the Group’s current or future projected target dates for production being delayed or further capital expenditure being required. If the Group fails to meet its work and/or expenditure obligations, the rights granted therein will be forfeited and the Group will be liable to pay large sums, which could jeopardise its ability to continue operations.

Ownership of the Rig

Whilst the Rig is owned by the Joint Venture it is therefore not owned in its entirety by the Group. The Relationship between the parties to the Joint Venture is set out in more detail in the summary of the JVOA contained in paragraph 15.2 of Part VI. As a consequence, the Company is restricted from making decisions in relation to the Rig as such decisions (including the transfer of the Rig out of the Joint Venture and to a subsidiary of the Group) require TOPPNG’s consent.

Reliance on the Rig

Whilst the Rig is a key asset to the prospects of the Group and may also provide a separate income stream should other operators within PNG hire it or the Joint Venture farms-in to other exploration areas, in the event it is destroyed or severely damaged the Group, as a consequence, would face the same problems as other operators in finding another suitable rig within the area, and would not be able to profit from Rig.

Short operating history

The Group’s business operations are at an early stage of development and its success will

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depend largely upon the outcome of the projects that the Group is undertaking and proposes to undertake.

Risks related to the oil and gas industry

Oil and gas drilling is speculative

Drilling oil and gas wells is speculative, may be unprofitable and may result in a total loss of your investment. The Group may never identify commercially exploitable deposits or successfully drill, complete or develop oil and gas reserves. Completed wells may never produce oil or gas, or may not produce sufficient quantities to be profitable or commercially viable. An investment in the Ordinary Shares is suitable only for individuals who are financially able to withstand a complete loss of their investment.

Following completion of the first exploration well on Douglas and analysis of the well data, the Company may decide, given the results, that neither the Douglas Prospect nor the Puk Puk-1 Prospect merit any further exploration.

Oil and gas pricing and demand

The price of and demand for oil and gas is highly dependent on a number of factors, including worldwide supply and demand levels, energy policies, weather, competitiveness of alternative energy sources, global economic and political developments and the volatile trading patterns of the commodity futures markets. Natural gas prices also continue to be highly volatile. Changes in oil and gas prices can impact on the Group’s valuation of reserves. International oil and gas prices have fluctuated widely recently and may continue to do so in the future. Lower oil and gas prices will adversely affect the Group’s revenues, business or financial condition and its valuation of its reserves. In periods of sharply lower commodity prices, the Group may curtail production and capital spending projects and may defer or delay drilling wells because of lower cash flows. In addition, the demand for and supply of oil and gas in Papua New Guinea and worldwide may affect the Group’s level of production.

Foreign country operations

There are various risks inherent in foreign operations including, among other things, loss of revenue, property and equipment as a result of hazards such as expropriation, war, terrorism, insurrection and other political risks, increases in taxes and governmental royalties, renegotiation of contracts with governmental entities, changes in laws and policies governing operations of foreign-based companies, price or gathering rate controls, environmental protection regulation, currency restrictions and exchange rate fluctuations and other uncertainties arising from foreign governmental sovereignty over the Group’s operations. These risks may adversely affect the Group’s business and operations.

Significant competition

The Group’s competitors include the major oil and gas companies and independent oil and gas companies. The oil and gas business is highly competitive in the search for and acquisition of reserves and in the gathering and marketing of oil and gas production and in the recruitment and employment of qualified personnel. In addition, in Papua New Guinea, the Group will compete with oil and gas companies in the bidding for exploration and production licences. The Group’s competitors have significantly greater financial, technical and other resources than the Group and are able to devote greater resources to the development of their businesses. If the Group is unable to successfully compete, its business will suffer.

Increase in drilling costs and the availability of drilling equipment

The oil and gas industry historically has experienced periods of rapid cost increases. Increases in the cost of exploration and development would affect the Group’s ability to invest in prospects and to purchase or hire equipment, supplies and services. In addition, the availability of drilling rigs and other equipment and services is affected by the level and location of drilling activity around the world. An increase in drilling operations outside of

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Papua New Guinea or in other areas of Papua New Guinea may reduce the availability of equipment and services to the Group. The reduced availability of equipment and services may delay its ability to exploit reserves and adversely affect the Company’s operations and profitability.

Delays in production, marketing and transportation

Various production, marketing and transportation conditions may cause delays in oil production and adversely affect the Group’s business. Drilling wells in areas remote from distribution and production facilities may delay production from those wells until sufficient reserves are established to justify construction of the necessary transportation and production facilities. The Group’s inability to complete wells in a timely manner would result in production delays.

In addition, market demand, which tend to be seasonal, may reduce or delay production from wells. The marketability and price of oil and natural gas that may be produced or discovered by the Company will be affected by numerous factors beyond the control of the Group. The ability of the Group to market its natural gas may depend upon its ability to acquire space on pipelines that deliver natural gas to commercial markets. The Group is also subject to market fluctuations in the prices of oil and natural gas, deliverability uncertainties related to the proximity of its reserves to adequate pipeline and processing facilities and extensive government regulation relating to price, taxes, royalties, licences, land tenure, allowable production, the export of oil and natural gas and many other aspects of the oil and natural gas business. Moreover, weather conditions may impede the transportation and delivery of oil by sea.

Decommissioning costs

The Group may become responsible for costs associated with abandoning and reclaiming wells, facilities and pipelines which it may use for production of oil and gas. Abandonment and reclamation of facilities and the costs associated therewith is often referred to as “decommissioning”. There are no immediate plans to establish a reserve account for these potential costs, rather, the costs of decommissioning are expected to be paid from the proceeds of production in accordance with the practice generally employed in onshore and offshore oilfield operations. Should decommissioning be required, the costs of decommissioning may exceed the value of reserves remaining at any particular time to cover such decommissioning costs. The Group may have to draw on funds from other sources to satisfy such costs. The use of other funds to satisfy such decommissioning costs could have a materially adverse effect on the Group’s financial position and future results of operations.

Need for additional capital

The Company will need to raise additional funds in the future in order to fully develop its drilling programmes in Papua New Guinea. Additional equity financing will be dilutive to holders of the Company’s then-existing Ordinary Shares and could contain rights and preferences superior to the Ordinary Shares. Debt financing may involve restrictions on the Company’s financing and operating activities. In either case, additional financing may not be available to the Company on acceptable terms. If the Company is unable to raise additional funds as needed, the scope of its operations may be reduced and, as a result, the Company may be unable to fulfil its long-term expansion programme.

Limited diversification

Generally, risk is reduced through diversification. Diversification is maximised by drilling a large number of wells over a large area of prospects having different geological characteristics. The drilling and development programme, therefore, will have only a limited amount of diversification with a correspondingly higher degree of financial risk for investors.

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Insurance coverage

There are significant exploration and operating risks associated with drilling oil and gas wells, including blowouts, sour gas releases, uncontrollable flows of oil, natural gas or well fluids, adverse weather conditions, environmental risks and fire, all of which can result in injury to persons as well as damage to or destruction of oil and gas wells, equipment, formations and reserves, production facilities and other property. In addition, the Group will be subject to liability for environmental risks such as pollution and abuse of the environment. Although the Group will exercise due care in the conduct of its business and will maintain what it believes to be customary insurance coverage for companies engaged in similar operations, the Group is not fully insured against all risk in its business. The occurrences of a significant event against which the Group is not fully insured could have a material adverse effect on its operations and financial performance. In addition, in the future some or all of the Group’s insurance coverage may become unavailable or prohibitively expensive.

Risk of operations in Papua New Guinea

There are inherent risks in foreign operations in the oil and gas industry. The Group’s exploration assets are located in Papua New Guinea. As a result, the Company may be subject to political, economic and other uncertainties, including, but not limited to, terrorism, military repression, war, unrest or typhoons, changes in energy policies and regulation or in the personnel administering them, nationalisation or expropriation of property, cancellation or modification of contractual rights, foreign exchange rates and restrictions, currency instability or non-convertibility, high rates of inflation, royalty and tax increase, changes in policies or laws governing foreign ownership and the operations of foreign-based companies and other risks arising out of foreign ownership and the operations of foreign-based companies and other risks arising out of foreign governmental sovereignty over the areas in which the Group’s operations are conducted.

In the event of a dispute arising in connection with its foreign operations, the Group may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting a foreign person to the jurisdiction of the courts in the Group’s home jurisdiction or enforcing judgments obtained in its home jurisdiction in such other jurisdictions.

In addition, jurisdictions in which the Group operates may have relatively less developed legal systems than in more established economies. Local business, judicial or regulatory customs and practice may not favour strict adherence to legal requirements or the negotiated terms of contractual agreements. As a result, the Group’s operations may be subject to a higher degree of uncertainty, and legal redress, if needed, may be limited or uncertain.

Terrorism and the uncertainty of war

The terrorist attacks on the United States on 11 September 2001, the US-led war on terrorism backed by the UK and other acts of violence or war may affect the Group’s operations and profitability. The potential near-term and long-term effects these attacks may have on the Group’s business are uncertain. The consequences of any terrorist attacks or any armed conflicts, which may result, are unpredictable, and the Group may not be able to foresee events that could have an adverse effect on its business.

Governmental regulation and control

Papua New Guinean governmental, legal and regulatory restrictions may have a negative impact on the Group’s profitability. Increased restraints on the ability of the Group to repatriate funds may limit its ability to distribute profits. Changes in tax laws and tax withholding requirements may reduce the availability of funds to the Group. The Papua New Guinea Government may freeze the Group’s assets to collect taxes or as a penalty for the excessive repatriation of funds, which would limit the Group’s ability to access its working capital and to distribute its profits. Restrictions on payments to intermediaries may make it more difficult to obtain equipment and supplies and to transport and market oil and gas. In

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addition, uncertainties arising from governmental sovereignty over the Group’s operations creates additional risks, including the potential nationalisation of its operations. Regulations relating to labour may increase the Group’s costs or otherwise alter the Group’s relationships with its employees.

Environmental regulation in Papua New Guinea

The Group’s operations in Papua New Guinea are subject to environmental regulations promulgated by the Papua New Guinean Government. Should the Group initiate operations in other countries, such operations will be subject to environmental legislation in such jurisdictions. Current environmental legislation in Papua New Guinea provides for restrictions and prohibitions on spills, releases or emissions of various substances produced in association with oil, condensate and natural gas operations. In addition, certain types of operations may require the submission and approval of environmental impact assessments. The Group’s operations will be subject to such environmental policies and legislation. Environmental legislation and policy is periodically amended. Such amendments may result in stricter standards of enforcement and in more stringent fines and penalties for non-compliance. Environmental assessments of existing and proposed projects carry a heightened degree of responsibility for companies and their directors, officers and employees. The costs of compliance associated with changes in environmental regulations may result in the imposition of material fines and penalties. In an extreme case, such regulations may result in temporary or permanent suspension of production operations. There can be no assurance that these environmental costs or effects will not have a materially adverse effect on the Group’s future financial condition or results of operations.

Requirements for permits and licences

The operations of the Group require licences, permits and in some cases renewals of existing licences and permits from various governmental authorities. The Board believes that the Group has the benefit of all necessary licences and permits to carry on the activities which it conducts under applicable laws and that the company is complying in all material respects with the terms of such licences and permits. However, the Group’s ability to obtain, sustain or renew such licences and permits on acceptable terms is subject to change in regulations and policies and to the discretion of the applicable governments.

As stated in Part I if this document, the licences of PPL 235 have been issued, at the Company’s request, with directions which include the requirement, by 31 March 2006, to apply for a formal variation to certain conditions of PPL 235 to reflect the delays experienced in drilling the Douglas Project. The Company has been advised that the processing and grant of such an application is a formality.

General economic conditions

Changes in the general economic climate in which the Group operates may adversely affect the financial performance of the Group. Factors, which may contribute to that general economic climate, include the level of direct and industrial disruption, the rate of growth of Papua New Guinea’s gross domestic product, interest rates and the rate of inflation.

Foreign currency exchange rates

As an international operator, the Group’s business transactions may not be denominated in the same currencies. To the extent that the Group’s business transactions are not denominated in the same currency, the Group is exposed to foreign currency exchange rate risk. In addition, holders of the Group’s shares are subject to foreign currency exchange rate risk to the extent its business transactions are denominated in currencies other than the US Dollar. Fluctuations in foreign currency exchange rates may adversely affect the Group’s profitability. At this time, the Group does not plan to actively hedge its foreign currency exchange rate risk.

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Attraction and retention of key personnel, including Directors

The Group has a small management team, and the loss of a key individual or inability to attract suitably qualified staff could materially adversely impact the business. Difficulties may also be experienced in certain jurisdictions in obtaining suitable staff and retaining staff who are willing to work in that jurisdiction. The success of the Group depends on the ability of the Directors to interpret market and geological data correctly and to interpret and respond to economic, market and other conditions in order to locate and adopt appropriate investment opportunities, monitor such investments, and ultimately, if required, successfully divest such investments. Further, no assurance can be given that the Group’s investment strategies can be successfully implemented in the future, that individuals with the required skills will continue their association or employment with the Group or that replacement personnel with comparable skills can be found. The Board has sought to and will continue to ensure that Directors and any key employees are appropriately incentivised. However, their services cannot be guaranteed.

Other risk factors

• The value of stocks or shares may go down as well as up.

• The Placing has not been priced to offer immediate gains and investors must be prepared to take a medium to long-term view of their investment. Substantial movement in the price of shares should not be expected until sufficient time has elapsed for the Company to demonstrate its ability to achieve its projections.

The investment offered in this document may not be suitable for all recipients and investors are accordingly strongly advised to consult a person authorised under the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of shares and other securities in unquoted companies. The risks above do not necessarily comprise all those faced by the Group and are not intended to be presented in any assumed order of priority.

The investment offered in this document may not be suitable for all of its recipients. Investors are accordingly advised to consult an investment adviser, who is authorised under the Financial Services and Markets Act 2000 and who or which specialises in investments of this kind before making a decision to invest.

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PART IV

FINANCIAL INFORMATION ON THE COMPANY AND ITS SUBSIDIARY UNDERTAKINGS

A: STATUTORY ACCOUNTS OF THE COMPANY

CHAIRMAN'S STATEMENT

Dear Shareholder, We enclose our first accounts for the period from incorporation on 12 November 2004 to 31 March 2005. We last updated shareholders through an open letter dated 18 June 2005. In that update we referred to the possible availability of a Parker 140 rig, if Oil Search would release it. As it transpired it was not available within the required time frame. You might also recall that whilst not particularly well suited and expensive, the Parker 140 was the only rig on offer. Costs of site preparation and drilling with the P140 were some US$2m more than the most appropriate rig. We were therefore forced to look at the possibility of buying a second hand rig where some considerable part of the purchase price might be recovered through the elimination of rig lease costs. After a thorough search we located a suitable rig and through great effort the joint venture between Austral Pacific and Rift has purchased a rig for a reasonable price. So we are in the drilling business! As a result of the purchase of the rig, we should be drilling in November and December. With the worldwide shortage of rigs, we might find the rig acquisition not only crucial but also profitable. We expect to earn revenue or interest in permits as compensation for drilling third party wells with the drill rig. We are comfortable that from either re-sale, charter or savings, not to mention getting Douglas drilled, the purchase was the best option available. Purchase of the rig has earned Rift significant kudos with the Government of PNG because it represents a significant increase in the country’s ability to maintain growth in its exploration programme. Confronted with the possibility of an increase in the drilling budget of US$4m (65% or US$2.6m to Rift’s account), which is considerably higher than projected due to competitive demand for all rig services, the J/V decided to test if there was an appetite to farm out a minor interest in Douglas or Kamu in PPL 235. I am happy to report that we are in discussion with several parties to farm out up to 20% of the J/V interest on terms attractive to Rift. We are also exploring the possibility of raising funds by listing Rift Oil in London. Clearly one of the motivating factors is to avoid cash calls. If these discussions are conclusive we will of course advise you immediately. Finally we continue to keep all options open for an earlier listing or merger given the asset of a soon to be drilled large prospect. Ian Gowrie-Smith Chairman 20th September 2005

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REPORT OF THE DIRECTORS

The directors present their report together with the financial statements for the period from incorporation to 31 March 2005. Incorporation The company was incorporated on 12 November 2004. Principal activity The Company's principal activity is an oil exploration company. Further details are given in the Chairman's Statement. Business review A review of the business during the period and an indication of likely future developments may be found in the Chairman's Statement. The consolidated loss for the financial period after taxation amounted to £111,000. Shares issued in the period are set out in note 9. Directors The directors holding office during the period are set out below: I R Gowrie-Smith (appointed 12 November 2004) D J Lees (appointed 12 November 2004) J M Lean (appointed 31 January 2005) P Mikkelsen (appointed 29 March 2005) All of the directors offer themselves for election at the Annual General Meeting. The directors' interests in the shares of the Company are shown in the Remuneration Report. Biographic details Ian Roderick Gowrie-Smith (Non-Executive Chairman) (aged 56) Ian Gowrie-Smith has been founder and developer of mining and pharmaceutical public companies over the past 31 years. In 1984 he listed TiO2 Corporation, a company that was responsible for the largest ilmenite deposit in Western Australia and which continues to be one of the largest in the world. He is chairman of the board of Tiberon Minerals Limited, a Toronto listed public company developing the Nui Phao project in Vietnam which will make Tiberon the worlds largest primary Tungsten producer. He is chairman of Triple Plate Junction plc, a company with oil exploration acreage in Vietnam and Papua New Guinea. He was founder and is now non-executive Chairman of SkyePharma plc, a UK domiciled drug delivery company. SkyePharma plc had its initial public offering in 1996 and its shares are now listed in both London and New York. SkyePharma plc's market capitalisation is currently approximately £330 million. Prior to establishing SkyePharma, Ian Gowrie-Smith was the founder and Managing Director of Medeva plc, a successful UK specialty pharmaceuticals company active in vaccines, generics and respiratory products. From its foundation in 1987 to the time when Ian Gowrie-Smith left the company (in 1994), Medeva's market capitalisation grew to over $1 billion. Both Medeva plc and SkyePharma plc have been 'FTSE 250' companies, a position which SkyePharma plc still occupies.

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REPORT OF THE DIRECTORS

Jenni Margaret Lean (Chief Executive Officer) (aged 54) Jenni has nine years experience in the oil and gas exploration and development industry. She was part of the senior management team which founded and developed Austral Pacific Energy Ltd., a successful exploration and development company based in New Zealand. Jenni has a BSc and MBA from Victoria University of Wellington, New Zealand. Her role initially included human resources, accounts and administrative management, joint venture activities including negotiation and conclusion of joint venture operating agreements as well as compliance work for stock exchanges in USA, Canada and New Zealand and governments where the company was active in Papua New Guinea, New Zealand and Australia. Jenni was commercial manager primarily managing farmout negotiations and contracts, in which she has been highly successful. David John Lees (Finance Director) (aged 57) David is a qualified chartered accountant with many years' experience in the public company arena. He has been a founding director of several public companies (such as Medeva plc, SkyePharma plc, Names.co Internet plc). He is currently a director of Namesco Limited (a domain registration and hosting company), Triple Plate Junction plc (gold exploration in Vietnam and PNG), Accident Exchange Group plc (vehicle hire while car in accident repair), Metis Biotechnologies plc (biotech in food testing), Network Estates Limited (industrial property) and Deal Group Media plc (internet marketing). Peter Mikkelsen (Non Executive Director) (aged 52) Peter is a geologist with 29 years of upstream oil industry experience, including 15 years at exploration manager level or equivalent. He received a BSc (Hons) degree in Geology from Oxford University in 1976. He then joined Carless Exploration Ltd, working on their UK onshore and offshore portfolio and was primarily responsible for their onshore discoveries in the early 80s. He became VP Exploration of Carless US subsidiary in 1986 and then returned to the UK to join Brabant in 1988. As exploration director, he was involved in a number of North Sea discoveries, including Malory, Hannay and Goldeneye, together with an expansion of Braban's international portfolio into Europe and Tunisia. Since leaving Brabant/EDC in 1999, he has become an independent consultant with several affiliations, of which Simco Petroleum Management is the principle. He specialises in the initiation and development of exploration projects at an early stage, particularly in regional evaluation, government negotiation and licence application. In the last four years, he has had a wide range of international projects, with particular experience of NW Europe, Mediterranean, North and West Africa, Australasia, the Caribbean, China and US. Charitable and political contributions There were no charitable or political contributions made in the period. Creditors payment policy and practice It is the Company's policy to settle the terms of payment with suppliers when agreeing the terms of the transaction, to ensure that suppliers are aware of these terms and endeavour to abide by them. Trade creditors at the year end amounted to one day’s average supplies for the year. Directors' responsibilities for the financial statements Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing those financial statements, the directors are required to: � select suitable accounting policies and then apply them consistently; � make judgements and estimates that are reasonable and prudent; and � state whether applicable accounting standards have been followed, subject to any material

departures disclosed and explained in the financial statements.

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REPORT OF THE DIRECTORS

The directors are responsible for keeping proper accounting records, for safeguarding the assets of the Company and for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for ensuring that the directors’ report and other information included in the annual report is prepared in accordance with United Kingdom company law. The maintenance and integrity of the Company's website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions. Auditors Grant Thornton UK LLP were appointed auditors to fill a casual vacancy in accordance with section 388(1) of the Companies Act 1985. Grant Thornton UK LLP offer themselves for reappointment as auditors in accordance with section 385 of the Companies Act 1985, special notice pursuant to section 399(3) having been given, a resolution to re-appoint Grant Thornton UK LLP as auditors will be put to the Annual General Meeting. ON BEHALF OF THE BOARD D J Lees 20th September 2005

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REMUNERATION REPORT For the period ended 31 March 2005 AUDITED INFORMATION Directors' emoluments

Emoluments £'000

Executive directors D J Lees 4 J M Lean 4 Non-executive directors I R Gowrie-Smith 2 P Mikkelsen 1 11

Unapproved share option schemes The interests of the directors and other staff in the options of the Company at 31 March 2005 were:

Price (p) Exercise Date Expiry date Grant Exercised

At 31 March

2005 Directors D J Lees 25 21.3.08 21.3.15 100,000 - 100,000 J M Lean 25 21.3.08 21.3.15 80,000 - 80,000 180,000 - 180,000 During the period 180,000 options were granted under the Unapproved Share Option Scheme. The options may only be exercised between the third and tenth anniversaries of the date of grant by a person who remains a director or employee and for a limited period following cessation of employment. The exercise of options under the Unapproved Share Option Scheme may be subject to satisfaction of certain performance criteria.

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REMUNERATION REPORT For the period ended 31 March 2005 UNAUDITED INFORMATION Service contracts The executive directors have contracts for an initial period of one year with a six month notice period on either side thereafter. The non-executive director has a contract with a two month notice period on either side. Remuneration policy for executive directors The company's policy on executive director remuneration is to: � attract and retain high quality executives by paying competitive remuneration packages

relevant to each director's role and experience and the external market. The packages include employment related benefits; and

� incentivise directors to maximise shareholder value through share options. Directors' interests The beneficial interests of the directors holding office at 31 March 2005 in the shares of the Company are set out below:

At 31 March 2005 1p ordinary shares Options Warrants I R Gowrie-Smith* 8,954,534 - 3,068,000 D J Lees** 6,886,533 100,000 1,000,000 J M Lean*** 180,200 80,000 - P Mikkelsen - -

At date of appointment 1p ordinary shares Options Warrants I R Gowrie-Smith* 1 - - D J Lees** 9 - - J M Lean*** - - - P Mikkelsen 8,000 - - * I R Gowrie-Smith's shares and warrants are held by Thornaby Limited, a company whose entire share capital is owned by the I R Gowrie-Smith Family Settlement, of which Mr Gowrie-Smith is a beneficiary. **D J Lees' shares and warrants are held in the name of Ocarina Investments Limited, a company whose entire share capital is owned by the trustee of the D J Lees Family Settlement, the beneficiaries of which are D J Lees and certain members of his family. *** 180,200 of J M Lean’s shares are held for and on behalf of the DJ and JM Bennett Family Trust, of which J M Lean is a trustee and beneficiary. Austral Pacific Energy (NZ) Limited holds 180,200 ordinary shares in Rift Oil Plc. Ms Lean was formerly a director of Austral Pacific Energy (NZ) Limited which is a subsidiary company of Austral Pacific Energy Ltd., and David Bennett, her spouse, is currently a director of Austral Pacific Energy Ltd. and this subsidiary. Warrants 14,396,000 warrants were issued on 31 January 2005 and 3,624,000 warrants were issued on 21 March 2005. The warrants may be exercised at any time before the expiry of a two year period from the date of issue. Each warrant will entitle the holder to receive, upon exercise of the warrants, one share at an exercise price of 75p per share.

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REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF RIFT OIL PLC We have audited the financial statements of Rift Oil PLC for the period ended 31 March 2005, which comprise the principal accounting policies, the consolidated profit and loss account, the balance sheets, the consolidated cash flow statement and notes 1 to 16. These financial statements have been prepared under the accounting policies set out therein. We have also audited the information in the remuneration report that is described as having been audited. This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in any auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for the audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors The directors' responsibilities for preparing the annual report and the financial statements in accordance with United Kingdom law and accounting standards are set out in the statement of directors' responsibilities included within the directors’ report. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and United Kingdom auditing standards. We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the directors' report is not consistent with the financial statements, if the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and transactions with the Group is not disclosed. We read other information contained in the annual report and consider whether it is consistent with the audited financial statements. This other information comprises only the chairman's statement, the report of the directors and the unaudited part of the remuneration report. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. Basis of opinion We conducted our audit in accordance with United Kingdom auditing standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Group's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion the financial statements give a true and fair view of the state of affairs of the Group and the Company at 31 March 2005 and of the loss of the group for the period then ended and have been properly prepared in accordance with the Companies Act 1985. GRANT THORNTON UK LLP Registered Auditors Chartered Accountants Gatwick 20th September 2005

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PRINCIPAL ACCOUNTING POLICIES Basis of preparation The financial statements have been prepared in accordance with United Kingdom applicable accounting standards and under the historical cost convention and the International Reporting Standard 6 'Exploration for and Evaluation of Mineral Resources'. Group financial statements The group financial statements consolidate those of the Company and its subsidiary undertaking drawn up to 31 March 2005. All intra-group transactions are eliminated on consolidation. Acquisitions of subsidiaries are dealt with by the acquisition method of accounting. Fixed assets Exploration and development costs The Group follows the full cost method for accounting for oil and gas assets. Under this method, all expenditure relating to the acquisition, exploration, appraisal and development of oil and gas interests are capitalised in geographical cost pools. The Group currently has only one cost pool for Papua New Guinea. Exploration cost comprise costs which are directly attributable to researching and analysing existing exploration data. It also includes the costs incurred in acquiring petroleum prospecting licences, the entry premiums paid to gain access to areas of interest and amounts payable to third parties to acquire interests in existing project. Expenditures incurred in relation to exploration assets are carried as intangible assets; when a decision is made on commercial development of a field or property then the relevant expenditure is reclassified as tangible. When it has been established that an oil reserve has development potential, all costs (direct and applicable overhead) incurred in connection with the exploration and development of the oil reserve are capitalised until either production commences or the project is not considered economically viable. In the event of production commencing, the capitalised costs are amortised over the expected life of the oil reserves on a unit of production basis. Other pre-trading expenses are written off as incurred. Where a project is abandoned or is considered to be of no further interest the related costs are written off. Impairment and ceiling test Capitalised expenditure which is held as an intangible asset is reviewed each year for possible impairment. Expenditure which is judged to be impaired is transferred to the appropriate tangible cost pool (to the extent of the impairment) and is included in the relevant depletion calculation. In the case of licence acquisition costs, impairment is considered if there is no drilling after one year or in the case of successful exploration wells requiring further appraisal, such appraisal does not take place within two years of the discovery being made. Investments Investments are stated at cost less amounts written off.

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Foreign currency transactions Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction or at the contracted rate if the transaction is covered by a forward exchange contract. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date or if appropriate at the forward contract rate. The accounts of overseas subsidiary undertakings are translated at the rate of exchange ruling at the balance sheet date. The exchange difference arising on the retranslation of opening net assets is taken directly to reserves. All other translation differences are taken to the profit and loss account with the exception of differences on foreign currency borrowings to the extent that they are used to finance or provide a hedge against group equity investments in foreign enterprises, which are taken directly to reserves together with the exchange difference on the net investment in these enterprises. Deferred tax Deferred tax is recognised on all timing differences where the transactions or events that give the group an obligation to pay more tax in the future, or a right to pay less tax in the future, have occurred by the balance sheet date. Deferred tax assets are recognised when it is more likely than not that they will be recovered. Deferred tax is measured using rates of tax that have been enacted or substantively enacted by the balance sheet date.

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CONSOLIDATED PROFIT AND LOSS ACCOUNT For the period ended 31 March 2005

Note £'000 Turnover 1 - Administrative expenses (124) Operating loss 1 (124) Bank interest receivable 13 Loss on ordinary activities before taxation 1 (111) Tax on loss on ordinary activities 3 - Loss after taxation for the period 10,11 (111)

All operations are continuing. There were no recognised gains or losses other than the loss for the financial period. The accompanying accounting policies and notes form an integral part of these financial statements.

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BALANCE SHEETS At 31 March 2005

Note Group Company £’000 £’000 Fixed assets Intangible assets 5 7,704 - Investments 6 - 4,505 7,704 4,505 Current assets Debtors 7 111 3,432 Cash at bank and in hand 1,057 1,057 1,168 4,489 Creditors: amounts falling due within one year 8 (41) (41) Net current assets 1,127 4,448 Total assets less current liabilities 8,831 8,953 Capital and reserves Called up share capital 9 360 360 Share premium account 10 8,582 8,582 Profit and loss account 10 (111) 11 Equity shareholders’ funds 11 8,831 8,953

The financial statements were approved by the Board of Directors on 20 September 2005. The accompanying accounting policies and notes form an integral part of these financial statements. DJ Lees Director 20th September 2005

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CONSOLIDATED CASH FLOW STATEMENT For the period ended 31 March 2005

Note £’000 £’000 Net cash outflow from operating activities 12 (194) Returns on investments and servicing of finance Interest received 13 Capital expenditure Purchase of intangible fixed assets (3,199) Net cash outflow before financing (3,380) Financing Issue of ordinary share capital 4,505 Expenses paid in connection with share issues (68) 4,437 Increase in cash 1,057

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NOTES TO THE FINANCIAL STATEMENTS For the period ended 31 March 2005

1 TURNOVER AND LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION There were no sales during the period. An analysis of operating loss by geographical market is given below: £’000 United Kingdom (25) Rest of the world (86) (111) No segmental analysis of net assets has been provided, as the assets and liabilities attributable to overseas sales are not separately identified. The loss on ordinary activities before taxation is stated after charging: £’000 Auditors’ remuneration - audit services 15 - non audit services 3 In addition, an amount of £15,000 was paid to the auditors in respect of non-audit services for work as reporting accountants during the period which was charged to the share premium account.

2 DIRECTORS AND EMPLOYEES Staff costs Staff costs during the period (including directors’ emoluments) were as follows: £’000 Wages and salaries 11 Social security costs 1 12 The average number of employees of the Company (including directors) during the year was three. Details of the emoluments paid to directors are contained in the Remuneration Report on page 60.

3 TAX ON LOSS ON ORDINARY ACTIVITIES There is no tax charge or credit for the year. An explanation of the tax position compared to the Group reported results is set out below: £’000 Loss on ordinary activities before taxation (111) Loss on ordinary activities before taxation multiplied by small companies corporation tax rate of 19% (21) Effect of: Expenses not deductible 17 Tax losses not recognised 4 Current tax charge for the year - There are tax losses of approximately £22,000 to carry forward and use against future profits of the same trade.

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NOTES TO THE FINANCIAL STATEMENTS For the period ended 31 March 2005

4 LOSS FOR THE FINANCIAL PERIOD The company has taken advantage of section 230 of the Companies Act 1985 and has not included its own profit and loss account in these financial statements. The parent company’s profit after tax for the period was £11,000 . 5 INTANGIBLE FIXED ASSETS Oil and gas exploration and appraisal assets

Group Oil and gas

prospecting licence £’000 Cost and net book value Additions and at 31 March 2005 7,704

6 INVESTMENTS

Company Investments in

subsidiary undertaking £’000 Cost and net book value Additions and at 31 March 2005 4,505 At 31 March 2005 the subsidiary undertaking was: Subsidiary undertaking Country of incorporation Class of share held Proportion held Foreland Oil Limited British Virgin Islands Ordinary 100%

7 DEBTORS Group £’000 VAT recoverable 14 Other debtors 97 111

Company £’000 Amounts owed by Group undertakings 3,321 VAT recoverable 14 Other debtors 97 3,432

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NOTES TO THE FINANCIAL STATEMENTS For the period ended 31 March 2005

8 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Group and company £’000 Trade creditors 4 Social security and other taxes 2 Other creditors 9 Accruals and deferred income 26 41

9 SHARE CAPITAL £’000 Authorised 100,000,000 ordinary shares of 1p each 1,000 Allotted, called up and fully paid 36,040,000 ordinary shares of 1p each 360

Issue of new shares The Company made allotments of 36,040,000 ordinary 1p shares during the period as follows:

Number of shares Average

price Consideration Aggregate

nominal value (pence) £’000 £’000 12 November 2004 10 1 - - 21 December 2004 13,999,990 25 *3,500 140 31 January 2005 14,396,000 25 3,599 144 21 March 2005 3,624,000 25 906 36 22 March 2005 4,020,000 25 *1,005 40 36,040,000 9,010 360 *This was consideration for the acquisition of the subsidiary. The remaining shares were issued for cash. The difference between the consideration received of £9,010,000 and the nominal value of £360,000 has been credited to the share premium account.

Share options issued

Price (pence) Exercise date Expiry date Grant Exercised

At 31 March

2005 25 21 March 2008 21 March 2015 180,000 - 180,000

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NOTES TO THE FINANCIAL STATEMENTS For the period ended 31 March 2005

10 SHARE PREMIUM ACCOUNT AND RESERVES

Group and Company

Share premium

account

Group Profit and

loss account

Company Profit and

loss account

£’000 £’000 £’000 Retained loss for the period - (111) 11 Premium on issue of new shares 8,650 - - Share issue costs (68) - -

At 31 March 2005 8,582 (111) 11

11 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS Group £’000 Loss for the financial period (111) Issue of shares 9,010 Issue costs written off to share premium account (68) Shareholders’ funds at 31 March 8,831

12 NET CASH OUTFLOW FROM OPERATING ACTIVITIES £’000 Operating loss (124) Increase in debtors (111) Increase in creditors 41

Net cash outflow from operating activities (194)

13 ACQUISITION On 21 December 2004 the company acquired 2 ordinary shares of US$1 in Foreland Oil Ltd, being 100% of its nominal share capital for a consideration of £4.5 million, satisfied by the issue of 18,020,000 shares at 25p per share. The purchase of Foreland Oil Ltd has been accounted for by the acquisition method of accounting.

The only asset of Foreland Oil Ltd when it was acquired was a Petroleum Prospecting Licence at a fair value of £4,505,000, the book value of such assets was £53,000.

14 CAPITAL COMMITMENTS Neither the Company nor the Group had any capital commitments at 31 March 2005. 15 CONTINGENT LIABILITIES Neither the Company nor the Group had any contingent liabilities at 31 March 2005.

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NOTES TO THE FINANCIAL STATEMENTS For the period ended 31 March 2005 16 RELATED PARTY TRANSACTIONS

During the period the Group entered into transactions with the following organisations, which were related by virtue of common directors and officers: During the period, Foreland Oil Ltd entered into a Joint Venture Agreement with Trans-Orient Petroleum (PNG) Ltd, a company in which Jenni Lean was formerly a director.

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B: INTERIM UNAUDITED ACCOUNTS OF THE COMPANY CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended 30 September 2005

Note

Six months ended 30

September 2005

Year to 31 March 2005

(unaudited) (audited) £’000 £’000 Turnover - - Administrative expenses (70) (124) Operating loss (70) (124) Bank interest receivable 36 13 Loss on ordinary activities before taxation (34) (111) Tax on loss on ordinary activities 2 (30) - Loss after taxation for the period (64) (111) All operations are continuing.

There were no recognised gains or losses other than the loss for the financial period.

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CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2005

30

September 31 March 2005 2005 (unaudited) (audited) £'000 £'000 Fixed assets Intangible assets 7,721 7,704 Current assets Debtors 22 111 Cash at bank and in hand 1,077 1,057 1,099 1,168 Creditors: amounts falling due within one year (53) (41) Net current assets 1,046 1,127 Net Assets 8,767 8,831 Capital and reserves Called up share capital 360 360 Share premium account 8,582 8,582 Profit and loss account (175) (111) Equity shareholders’ funds 8,767 8,831

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CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 September 2005

Note

Six months ended 30

September 2005

Year to 31 March 2005

(unaudited) (audited) £'000 £'000 Net cash inflow/(outflow) from operating activities 4 1 (194) Returns on investments and servicing of finance Interest received 36 13 Capital expenditure Purchase of intangible fixed assets (17) (3,199) Net cash inflow/( outflow) before financing 20 (3,380) Financing Issue of ordinary share capital - 4,505 Share issue costs - (68) Net cash inflow from financing - 4,437 Increase in cash 5 20 1,057

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NOTES TO THE INTERIM RESULTS For the six months ended 30 September 2005

1 BASIS OF PREPARATION

The interim unaudited financial statements have been prepared in accordance with applicable accounting standards and under the historical cost convention. The principal accounting policies of the group have remained unchanged from those set out in the group's 2005 annual report and financial statements. The financial information herein does not constitute the statutory accounts as defined in section 240(5) of the Companies Act 1985. The Report and Accounts for the year ended 31 March 2005, on which the auditors' report was unqualified, have been filed with the Registrar of Companies. Copies of the interim report will be available to the public from the Company's registered office at 17 Hanover Square, London, W1S 1HU.

2 TAXATION

UK Corporation taxation for the half year is £30,000 and has been provided at the effective rate of taxation expected to apply to the whole year.

3 DIVIDENDS

The directors are have not declared a dividend for the six months ended 30 September 2005.

4 NET CASH OUTFLOW FROM OPERATING ACTIVITIES

Six months ended 30

September 2005

Year to 31 March 2005

(unaudited) (audited) £'000 £'000 Operating loss (70) (124) Decrease/(Increase) in debtors 89 (111) (Decrease)/Increase in creditors (18) 41

Net cash inflow/(outflow) from operating activities 1 (194)

5 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT

Six months ended 30

September 2005

Year to 31 March 2005

(unaudited) (audited) £'000 £'000 Increase in cash in the period 20 1,057 Change in net funds during the period 20 1,057 Net funds at beginning of period 1,057 -

Net funds at end of period 1,077 1,057

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PART V

BACKGROUND TO PETROLEUM EXPLORATION LEGISLATION IN PAPUA NEW GUINEA

Exploration for and the development of oil and gas is regulated primarily by the Department, in accordance with the Oil and Gas Act and applicable Regulations. The OGA requires that the relevant licence be obtained prior to exploration for and/or the commercial production of petroleum.

“Petroleum” is defined in section 3 of the OGA to include oil and gas. It defines “petroleum” to mean –

(a) any naturally occurring hydrocarbons, whether in a gaseous, liquid, or solid state;

(b) any naturally occurring mixture of hydrocarbons, whether in a gaseous, liquid or solid state; or

(c) any naturally occurring mixture of one or more hydrocarbons, (whether in a gaseous, liquid, or solid state) and any other substance,

and includes any processed petroleum, and any petroleum as defined by paragraph (a), (b) or (c) above, that has been returned to a natural reservoir, but does not include coal, shale, or other substance that may be extracted from coal, shale, or other rock.

The OGA also provides for participation by the State of PNG, project area Provincial Governments and project area landowners where a feasible deposit is to be developed for commercial purposes.

The OGA provides for the following types of licences:

• Petroleum Prospecting Licence (“PPL”) - relates to exploration. K10,000.00 (approximately £2,000) application fee and is for a 6-year term. Term may be extended for a period of five years or as determined by the Minister for Petroleum (the “Minister”). Annual rent is payable on each block. A PPL confers on the licence holder, subject to the OGA and the conditions specified in the licence, “the exclusive right to explore for petroleum, and to carry out appraisal of a petroleum discovery, and to carry on such operations and execute such works as are necessary for the purposes, in the licence area, including the construction and operation of water lines, and, if authorised by the PNG Director, the completion of wells, the conduct of drill stem or extended production tests for appraisal of a petroleum pool (including the construction in accordance with the authorisation and the operation of pipes and facilities to gather and transport petroleum to a point of testing or treatment or disposal), and the recovery and sale or other disposal of all petroleum so produced.”

Where a petroleum discovery is made, the licence holder must inform the PNG Director and furnish written particulars within three months. PNG Director may serve an instrument on the licence holder requiring written particulars of, among other things, chemical composition and physical properties of the petroleum, the nature of the subsoil in which the petroleum occurs and any other matter relating to the discovery.

Where the Minister has been notified of a discovery, the Minister may declare the “discovery block and such adjoining blocks as the Minister thinks proper” to be a “location” for the purposes of the OGA. Following the declaration of a “location” the Minister serves written directions to the licence holder to carry out “such investigations and studies as the Minister thinks proper to assess the feasibility of the construction, establishment and operation of an industry for recovery of petroleum from the location” and provide reports, analyses and data resulting from those investigations and studies to

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the Minister.

It is a condition of every PPL that preliminary social mapping studies and preliminary landowner identification studies are undertaken in accordance with section 47 of the OGA.

• Petroleum Retention Licence (“PRL”) - the holder of a PPL in respect of blocks that constitute a “location” may apply for a PRL “in respect of such blocks as the licensee satisfies the Minister contain a gas field or a part of a gas field or, for the better administration of petroleum activities, should be included in a” PRL. K10,000.00 (approximately £2,000) application fee and is for a term of 5 years and may be extended for a further 5 years at a time. Annual rent is payable at the annual rate of K30,000.00 (approximately £6,000). A PRL confers on the licence holder:

subject to OGA and to the conditions specified in the licence, exclusive rights –

(a) to explore for petroleum in the PRL area;

(b) to carry on field studies to obtain information to ensure timely economic development of the gas field in the PRL area;

(c) to carry on such operations and execute such works in the PRL area as are necessary for or in connection with the purposes specified in paragraphs (a) and (b) above, including the construction and operation of water lines; and

(d) if authorised by the PNG Director, to complete wells, carry out drill stem tests or extended production tests for appraisal of a petroleum pool (including the construction and the operation of pipes and facilities to gather and transport petroleum to a point of testing or treatment or disposal), and to recover and sell or otherwise dispose of all petroleum so produced.

It is a condition of every PRL that preliminary social mapping studies and preliminary landowner identification studies are undertaken in accordance with section 47 of the OGA.

• Petroleum Development Licence (“PDL”) - where a licence holder of a PRL or PPL is satisfied that it has a commercially viable deposit of petroleum, the licence holder may apply for a PDL. K50,000.00 (approximately £10,000) application fee, term is for a period of 25 years and may be extended for a further 20 years at a time. Annual rent of K100,000.00 (approximately £20,000) payable.

A PDL confers on the licence holder, subject to the OGA and to the conditions specified in the licence, exclusive rights:

(a) to explore for petroleum in the licence area; and

(b) to carry on operations for the recovery of petroleum in the licence area; and

(c) to sell or otherwise dispose of the petroleum so recovered; and

(d) to carry on such operations and execute such works in the licence area as are necessary for or in connection with the purposes specified in Paragraphs (a), (b) or (c) above including the construction and operation of flow lines or gathering lines and water lines.

It should be noted that, among other things, an applicant for a PDL must satisfy environmental requirements and obtain the relevant environmental permit(s) under the Environment Act 2000 prior to commencing activities pursuant to a PDL. Other statutory requirements would also need to be satisfied, such as obtaining the required certification under the Investment Promotion Act 1992 (if required).

• Pipeline Licence (“PL”) and Petroleum Processing Facility Licence (“PPFL”) - these licences relate to the construction and operation of processing facilities. K50,000.00

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(approximately £10,000) application fee for each licence and term corresponds to that of the relevant PDL. Annual rent payable at the rate of K100,000.00 (approximately £20,000) for a PPFL and K10,00.00 (approximately £2,000) or for each PL, K1,000.00 (approximately £200) multiplied by number of kilometres in length of pipeline, whichever is the lesser.

State and Project Area Landowner Participation/Royalties

Prior to the grant of a PDL, the Minister is required by section 48 of the OGA to convene a development forum. Participants at the development forum are the applicant, project area landowners, project area provincial governments and Local-level Governments, the State and any other person whom the Minister considers would be affected by the PDL and other licences to be granted in respect of a project. The purpose of the development forum is twofold: (a) to enable the Minister to gather and consider the views of those persons/organisations

who would be affected by the project; and (b) to endeavour to reach agreement on matters on which agreements amongst the parties

is desirable. Such matters include state equity entitlement and project benefits that are prescribed under Part IV of the OGA.

In particular, section 165(1) of the OGA gives the State of PNG the right, but not the obligation, to acquire, directly or through a nominee, up to a 22.5% interest in each petroleum project. The State of PNG may exercise this right at the time of grant of the relevant PDL. The consideration for that 22.5% interest is equal to 22.5% of the un-recuperated sunk costs attributable to the licence holder’s interest in the project.

The project area landowners and affected Local-level Governments are entitled to 2% of the 22.5% State of PNG equity entitlement. In accordance with section 167, the acquisition costs of the 2% are borne solely by the State of PNG. Under section 176, that 2% is required to be held on trust by a corporate trustee that is a wholly owned by the Mineral Resources Development Company Ltd (“MRDC”). MRDC is wholly owned by the State of PNG and was established for the purposes of holding and managing landowner/provincial government equity in resource projects on trust. The need for a company such as MRDC arose as a result of the inability of project area landowners, affected Local-level Governments and affected Provincial Governments to properly manage such commercial assets given their lack of required financial, human and other required resources. MRDC also holds and manages the State of PNG’s equity entitlement in petroleum projects.

Project area landowners, affected Local-level Government and affected Provincial Governments are entitled to a royalty benefit pursuant to section 168 of the OGA.

In relation to a petroleum project, the State always enters into either a Petroleum Agreement or a Gas Agreement with the licence holder of a PDL, for: (a) the definition of the extent of that project; (b) the transfer and assignment of the State equity entitlement to MRDC; and (c) any other matters relating to that project such as the application of particular

provisions of the OGA or other Acts to that project. For example, a licence holder in a petroleum project may negotiate tax concessions with the State. Such tax concessions would be set out in the Petroleum Agreement. Note that under sections 183 and 184 of the OGA, Petroleum Agreements and Gas Agreements override other provisions of the OGA.

Foreign Exchange Requirements

There are no restrictions placed on the free flow of funds in and out of PNG, including distributions of income from drilling operations, apart from compliance with foreign exchange procedural requirements and the Internal Revenue Commission’s requirements (such as dividend withholding tax).

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PART VI

ADDITIONAL INFORMATION

1. RESPONSIBILITY

1.1 The Directors of Rift, whose names and functions within the Company appear on page 4 of this document, accept responsibility for the information contained in this document including individual and collective responsibility for compliance with the AIM Rules. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and makes no omission likely to affect the import of such information.

2. THE COMPANY 2.1 The Company was incorporated and registered in England and Wales under the

Companies Act 1985 with registered number 5285247 on 12 November 2004 as a public company limited by shares with the name of Rift Oil PLC and was issued with a certificate to commence business under section 117 of the Act by the Registrar of Companies on 22 December 2004.

2.2 The principal legislation under which the Company operates is the Act and the

liability of its members is limited. 2.3 The Company is domiciled in the United Kingdom. 3. SHARE CAPITAL 3.1 The Company was incorporated with ten subscriber shares of 1p each, issued and

paid up to par, nine of which were subscribed for by a Founder Shareholder, and the other one of which was subsequently transferred for value to another of the Founder Shareholders.

3.2 On 21 December 2004, in accordance with the Acquisition Agreement (details of

which are set out in paragraph 15.4 of Part VI of this document) the Company issued to the Founder Shareholders 13,999,990 Ordinary Shares of 1p each, fully paid up as to 25p per share.

3.3 On 31 January 2005 and 21 March 2005 the Company issued 14,396,000 and

3,624,000 Ordinary Shares of 1p each respectively (being a total of 18,020,000 Ordinary Shares), fully paid up to 25p per share both such issues being made for cash under and in accordance with the terms and conditions of the Offer for Subscription.

3.4 On 22 March 2005, the Company issued a further 4,020,000 Ordinary Shares of 1p

each, fully paid up as to 25p per share to the Founder Shareholders under the terms of the Acquisition Agreement so as to ensure that the Founder Shareholders held, upon finalisation of the Offer for Subscription 50% of the issued share capital of the Company (excluding any further Ordinary Shares subscribed for, at 25p per share, under the Offer for Subscription).

3.5 Under the terms of the Offer for Subscription, each of the Subscribers received one

Warrant for every Ordinary Share subscribed for. As such on 31 January 2005 and 21

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March 2005 the Company issued 14,396,000 and 3,624,000 Warrants respectively (being a total of 18,020,000 Warrants), to the Subscribers.

3.6 On 10 April 2006, the Company issued a total of 263,091,999 new Ordinary Shares

of 1p each to the holders of the then issued Ordinary Shares on the basis of 7.3 Ordinary Shares for each Ordinary Share then held. These new Ordinary Shares were paid up by applying a total of £2,630,919.99 standing to the credit of the Company’s share premium account. As part of this reorganisation, and following confirmation by the Auditors of the Company in accordance with the terms of the Warrant Instrument, each Warrant holder received 7.3 new Warrants for every Warrant owned and the exercise price for the Warrants was reduced from £0.75 to £0.09.

3.7 On 10 April 2006, immediately after the bonus issue set out in paragraph 3.6 above,

the Company issued a further 24,080,000 Ordinary Shares as part of the Private Placing to various subscribers at an issue price of 5p per Ordinary Share raising an aggregate of £1.2 million.

3.8 As at the date of this Document, and immediately following Admission, the

Company’s authorised and issued share capital is, and is expected to be, as follows:

Existing Following Admission

Nominal Value

Number of Ordinary

Shares Nominal value

Number of Ordinary

Shares

Authorised £6,000,000 600,000,000 £6,000,000 600,000,000

Issued and fully paid

£3,232,119.99 323,211,999 £3,458,119.99 345,811,999

The balance of the authorised but unissued share capital of the Company immediately following Admission, amounting to 254,188,001 Ordinary Shares will remain unissued and unreserved subject to 149,566,000 Ordinary Shares which are reserved for issue to the Warrantholders upon exercise of their Warrants and 1,494,000 Ordinary Shares which are reserved for issue to the holders of options upon exercise of their Options.

3.9 On 21 December 2004 the Founder Shareholders passed the following resolutions by way of a Written Resolution:

3.9.1 the Directors were generally and unconditionally authorised, in substitution for all previous powers granted to them, to allot relevant securities (within the meaning of section 80 of the Companies Act 1985) (the “Act”) up to an aggregate nominal amount of £999,999.90 provided that this authority shall expire on the earlier of the conclusion of the Annual General Meeting of the Company to be held in 2006 or 15 months from the passing of this resolution (whichever is earlier) save that the Company may before such expiry make an offer or agreement which would, or might, require relevant securities to be allotted after such expiry and the Directors may allot relevant securities in pursuance of such offer or agreement as if the authority conferred hereby has not expired; and

3.9.2 the acquisition of ordinary shares in Foreland Oil Limited by the Company from (a) Ocarina Investments Limited, a company deemed to be connected with David John Lees and (b) Thornaby Limited, a company deemed to be connected to Ian Roderick Gowrie-Smith, pursuant to a share sale agreement between, inter alia, the Company (1) Ocarina Investments Limited (2) and Thornaby Limited (3) be and is hereby approved (subject to any variations the Directors of the Company

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shall deem expedient) for the purpose of section 320 of the Companies Act 1985;

3.9.3 the Rift Oil PLC Unapproved Share Option Plan (the “plan”) be adopted and the directors of the Company be authorised to do all such acts and things necessary to give effect to the Plan;

3.9.4 the Directors were authorised and empowered pursuant to section 95 of the Act (in substitution for all previous powers granted thereunder) to allot equity securities (as defined in section 94(2) of the Act) for cash pursuant to the authority granted under paragraph 3.9.1 above for the purposes of section 80 of the Act as if section 89(1) of the Act did not apply to such allotment, such power to expire on the earlier of the conclusion of the Annual General Meeting of the Company to be held in 2006 or 15 months from the passing of this resolution (whichever is earlier), and such power is limited to the allotment of equity securities:

a) in connection with rights issues to holders of ordinary shares where the equity securities respectively attributable to the interests of such holders are proportionate (as nearly as may be practicable) to the respective numbers of ordinary shares held by them, but subject to such exclusions or other arrangements as the directors may deem necessary or expedient to deal with any fractional entitlements or any legal or practical problems under law of, or requirements of any regulatory body or any recognised stock exchange in, any territory;

b) in connection with the issue of Ordinary Shares and Warrants under the Offer for Subscription; and

c) (otherwise than pursuant to paragraphs (a) and (b) above) up to a maximum aggregate nominal amount of £160,000;

provided that the Company may, before expiry of this power, make any offer or agreement which would or might require equity securities to be allotted after the expiry of this power and the directors may allot equity securities in pursuance of such offer or agreement as if the power had not expired.

3.9.5 the Company adopted the Articles of Association, details of which are set out in paragraph 5.2 of Part VI of this document.

3.10 At an extraordinary general meeting of the Company held on 10 April 2006, the Shareholders passed, inter alia, the following resolutions:

3.10.1 the authorised share capital of the Company be increased from £1,000,000 to £6,000,000 by the creation of an additional 500,000,000 Ordinary Shares of £0.01 each ranking pari passu in all respects with existing Ordinary Shares;

3.10.2 subject to and conditional upon the passing of resolution set out in paragraph 3.9.1 above, the directors be and they were generally and unconditionally authorised (in substitution for all previous powers granted thereunder) to allot relevant securities (within the meaning of Section 80 of the Companies Act 1985) (the “Act”) up to an aggregate nominal amount of £5,457,600 provided that this authority shall expire at the conclusion of the annual general meeting of the Company to be held in 2006 and, unless and to the extent that such authority is renewed or extended prior to such date, that the Company may before such expiry make an offer or agreement which would, or might, require relevant securities to be allotted after such expiry and the directors may allot relevant securities in pursuance of such offer or agreement as if the authority conferred hereby has not expired; and

3.10.3 the Directors be and they were hereby empowered pursuant to section 95 of the

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Companies Act 1985 (the “Act”) (in substitution for all previous powers granted thereunder) to allot equity securities (within the meaning of section 94 of the Act) for cash pursuant to the authority conferred by the ordinary resolution set out at paragraph 3.10.2 Resolution 8 above as if section 89(1) of the Act did not apply to such allotment provided that this power shall be limited to:

a) the allotment of equity where the equity securities respectively attributable to the interests of all shareholders are proportionate (as nearly as maybe) to the number of Ordinary Shares held by them but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient to deal with legal or practical problems in respect of overseas holders, fractional entitlements or otherwise;

b) the allotment (other than pursuant to sub-paragraphs (a) above) of equity securities up to an aggregate nominal amount of £1,328,000;

and shall expire on the earlier of the conclusion of the Annual General Meeting of the Company to be held in 2006 save that the Company may, before such expiry, make an offer or agreement which would or might require equity securities to be allotted after such expiry and the directors may allot equity securities in pursuance of such offer or agreement as if the authority conferred hereby had not expired.

3.11 Subject to the Options issued under the Share Option Plan (details of which are set out in paragraph 8 of this Part VI), no share or loan capital of the Company is proposed to be issued or is under option or agreed, conditionally or unconditionally, to be put under option.

3.12 There are no shares in the capital of the Company currently in issue with a fixed date on which entitlement to a dividend arises and there are no arrangements in force whereby future dividends are waived or agreed to be waived.

3.13 Subject to the Warrants issued pursuant to the Warrant Instrument (details of which are set out in paragraph 9 of this Part VI) and the Options issued under the Share Option Plan (details of which are set out in paragraph 8 of this Part VI) there are no outstanding convertible securities issued by the Company.

3.14 The Ordinary Shares were created under the Act, are issued in British Pounds Sterling and have ISIN GB00B05HSB23.

3.15 The Placing Shares will be subject to the City Code on Takeovers and Mergers (“the Code”). Under Rule 9 of the Code (“Rule 9”), any person, or group of persons acting in concert, who acquires, whether by a series of transactions over a period of time or not, shares which taken together with shares already held by him or shares held or acquired by persons acting in concert with him, carry 30 per cent. or more of the voting rights of a company which is subject to the Code, or any person who, together with persons acting in concert with him, holds not less than 30 per cent. but not more than 50 per cent. of the voting rights and such person, or any person acting in concert with him, acquires additional shares which increase his percentage of the voting rights, is normally required by the Panel to make a general offer in cash to acquire the remaining shares in the company to all its shareholders at not less than the highest price paid by him or any persons acting in concert with him within the preceding twelve months. Rule 9 is subject to a number of dispensations. In addition, in the event an offeror acquires at least nine-tenths in value of the issued share capital of the Company to which the offer relates the offeror may in accordance with the procedure set out in sections 428-430 of the Act require the holders of any shares he has not acquired to sell them subject to the terms of the offer, and such Shareholders may in turn require the offeror to purchase such shares on the same terms.

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3.16 No person has made a public takeover bid for the Company’s issued share capital in the financial period to 31 March 2005 or in the current financial period.

3.17 A shareholder is required pursuant to sections 198 to 210 of the Act to notify the Company when he acquires or disposes of a material interest in shares in the capital of the Company equal to or in excess of 3 per cent. of the nominal value of that share capital. The Ordinary Shares will be subject to the Rules Governing Substantial Acquisitions of Shares issued on behalf of the Panel (“SARs”). Rule 1 of the SARs provides that no person may, in any period of 7 days, acquire shares carrying voting rights in the Company, or rights over such shares, representing 10 per cent. or more of the voting rights if such acquisition, when aggregated with any shares or rights over shares which are already held by that person, would carry 15 per cent. or more, but less that 30 per cent., of the voting rights of the Company. Rule 1 of the SARs is subject to a number of dispensations. A shareholder is required pursuant to Rule 3 of SARs to notify the Company, the Panel and a Regulatory Information Service of an acquisition of shares carrying voting rights in the Company, or rights over such shares, and of his total holding of shares in the Company if, as a result of the aforementioned acquisition, he comes to hold, with any shares or rights over shares already held by him, shares or rights over shares representing 15 per cent. or more of the voting rights in the Company or his holding of shares or rights over shares already represents 15 per cent. or more of the voting rights and, as a result of the acquisition, is increased to or beyond any whole percentage figure.

4. SUBSIDIARY UNDERTAKINGS

The Company’s subsidiaries (and subsidiaries of such companies), and the jurisdiction in which they are registered, are as follows:

Name Jurisdiction Percentage held

Foreland Oil Limited British Virgin Islands 100%

Coral Sea Drilling Limited PNG 65% held by Foreland Oil Limited

Coral Sea Drilling (PNG) Limited British Virgin Islands 100%

PPL 261 Limited British Virgin Islands 100%

5. MEMORANDUM AND ARTICLES OF ASSOCIATION

5.1 Memorandum of association

The objects of the Company are set out in clause 4 of the Company’s memorandum of association and its principal objects are, among others, to carry on business as a general commercial company and to do all such things as are incidental or conducive to the carrying on of any trade or business by it.

5.2 Articles of association

The articles of association of the Company (“Articles”) which were adopted on 21 December 2004 contain provisions, among others, to the following effect:

5.2.1 Voting Rights

Subject to any special rights or restrictions as to voting attached to any shares and subject to any suspension or abrogation of voting rights pursuant to the Articles at a general meeting on a show of hands every member who (being an individual) is present in person and every proxy and every member (being a corporation) who is present by a duly authorised representative not being himself a member, shall have one vote, so however that no individual shall have more

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than one vote and on a poll every member present in person or by proxy shall have one vote for every share of which he is the holder.

5.2.2 Dividends

Subject to the provisions of the Act, the Company may by ordinary resolution declare dividend to be paid to the members according to their respective rights and interest, but no dividend shall exceed the amount recommended by the directors. Subject to the provisions of the Act, the directors may pay such interim dividends as appear to them to be justified by the profits of the Company available for distribution. No dividend shall be payable except out of the profits of the company.

All dividends shall be declared and paid according to the amounts paid on the shares in respect of which the dividend is paid, but no amount paid on a share in advance of calls shall be treated as paid up on the share. All dividends shall be apportioned and paid proportionately to the amounts paid on the shares during any portion of the period in respect of which the dividend is paid; but if any share is issued on terms providing that it shall rank for dividends as from a particular date such share shall rank for dividend accordingly.

No dividend or other monies payable by the Company on or in respect of any share shall bear interest as against the Company.

Any general meeting declaring a dividend or bonus may direct payment of such dividend or bonus wholly or partly by the distribution of specific assets and in particular of paid up shares or debentures of any other company or in any one or more of such ways.

All dividends unclaimed for a period of twelve years after having become due shall be forfeited and shall (unless the directors otherwise resolve) revert to the Company.

5.2.3 Distribution of Assets on Liquidation

On a winding up, any surplus assets will belong to the holders of any ordinary shares then in issue according to the numbers of shares held by them. In addition, the liquidator may, with the authority of a special resolution and any other sanction required by the Acts, divide among the members in kind the whole or any part of the assets of the Company. For this purpose the liquidator may set such value as he deems fair upon any class or classes or property and may determine how the division is carried out as between the members or different classes of members. No contributory shall, however, be compelled to accept any asset in respect of which there is a liability.

5.2.4 Transfer of Shares

Subject to the restrictions referred to below, any member may transfer all or any of his certificated shares by instrument in writing in any usual or common form, or in such other form as the directors may approve and in the case of uncertificated shares through CREST in accordance with and subject to the relevant regulations from time to time and in the manner provided by the rules and procedures of the relevant system concerned. The instrument of transfer shall be signed by or on behalf of the transferor and, in the case of a partly paid up share, by or on behalf of the transferee.

The directors may, in their absolute discretion and without assigning any reason, refuse to register a transfer of any share, not being a fully paid up share, or being in respect of a share on which the Company has a lien, provided that the directors shall not exercise their discretion in such a way as to prevent dealings in shares

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admitted to listing or trading on the Stock Exchange taking place on an open and proper basis. They may also refuse to register any transfer of any share (whether fully paid or not) to be held jointly by more than four persons.

The directors may also decline to register any instrument of transfer unless:

a) it is deposited duly stamped, at the registered office of the Company, or such other place as the directors may appoint, accompanied by the certificate for the shares to which it relates and such other evidence as the directors may reasonably require to show the right of the transferor to make the transfer; and

b) it is in respect of only one class of certificated share.

The registration of transfers may be suspended by the directors for any period not exceeding 30 days in any year as the Directors determine.

5.3 Issue and Allotment of Shares

Subject to the provisions of the Articles relating to the authority to allot shares, the pre-emption rights of shareholders, and otherwise and to any resolution of the Company in general meeting passed pursuant thereto, the unissued shares of the Company (whether forming part of the original or any increased capital) or rights to subscribe for or convert any security into shares, shall be under the control of the directors who may offer, allot, grant options over or otherwise dispose of them to such persons, on such terms and conditions and at such times as they shall think fit, but so that no share shall be allotted at a discount.

5.4 Variation of Rights

Subject to the provisions of the Acts, all or any of the special rights and privileges attached to any share or class of shares may be varied or abrogated with the consent in writing of the holders of not less than three-quarters in nominal value of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class.

Subject to the terms upon which any shares may be issued, the rights or privileges attached to any class of shares shall not be deemed to be varied or abrogated by the creation or issue of any new shares ranking pari passu in all respects with those already issued, or by the purchase or redemption by the Company of its own shares.

5.5 Changes in Share Capital

5.5.1 The Company may by ordinary resolution increase its share capital by such sum as the resolution prescribes, consolidate and divide all or any of its share capital into shares of a larger amount, cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled and sub-divide its shares or any of them into shares of smaller amount and determine that, as between the holders of the shares resulting from such sub-division, one or more of the shares may have any such preferred or other special rights over, or may have such deferred rights or be subject to any such restrictions as compared with, the other or the others as the Company has power to attach to unissued or new shares.

5.5.2 Subject to the Act and to any rights for the time being attached to any shares, the Company may by special resolution reduce its share capital or any capital redemption reserve, share premium account or other undistributable reserve in any manner. Subject to the Act, the Company may issue shares which are, or at the option of the Company or the holder are, liable to be redeemed and it may also purchase its own shares (including redeemable shares).

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5.6 Directors

5.6.1 Unless otherwise determined by the Company by ordinary resolution, the number of directors shall not be subject to any maximum but shall not be less than two. A director shall not require any shareholding qualification and shall not be required to retire on attaining any specific age.

5.6.2 A director shall not vote on (or be counted in the quorum in respect of) any resolution of the directors, or of a committee of the directors, concerning any contractor arrangement or any other proposal in which he has an interest which is to his knowledge a material interest otherwise than by virtue of his interests in shares, debentures or other securities of, or otherwise in or through, the Company. Notwithstanding the foregoing, a director shall (in the absence of some other material interest than as indicated below) be entitled to vote (and be following matters: counted in the quorum) in respect of any resolution concerning any of the following matters:

(i) a contract or arrangement for giving to the director a security, guarantee in respect of money lent or obligations incurred by him or any other person at the request of or for the benefit of the Company or of any of its subsidiaries;

(ii) a contract or arrangement for giving to the director security, guarantee or indemnity of a debt or obligation of the Company or any of its subsidiaries for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security;

(iii) any proposal concerning any offer of shares or debentures or other securities of or by the Company or any of its subsidiary undertakings for subscription or purchase, in which offer he is, or may be, entitled to participate as a holder of securities or in the underwriting or sub-underwriting of the offer;

(iv) any proposal concerning any other company in which he and any persons connected to him do not to his knowledge hold an interest in shares as that term is used in Sections 198 to 211 of the Act) representing 1 per cent or more of any class of the equity share capital or of the voting rights in that company;

(v) any proposal relating to a pension, superannuation or similar scheme or retirement, death or disability benefits scheme or employees share scheme) which does not award him any privilege or benefit not awarded to the employees to whom such arrangement relates; and/or

(vi) any proposal concerning the purchase, and/or maintenance of any policy of insurance for the benefit of directors or for the benefit of persons including directors.

5.6.3 A director shall not vote on (or be counted in the quorum in respect of) a resolution of the directors, or of a committee of the directors, concerning his own appointment as the holder of an office or place of profit with the Company or another company in which the Company is interested (including the arrangement or variation of its terms or its termination).

5.6.4 The non-executive directors of the Company, shall be entitled to ordinary remuneration for their services as directors not exceeding £450,000 (excluding any other amounts payable under any other provision in the Articles of Association of the Company) The other directors shall be paid out of the funds of the Company by way of remuneration for their services as they may determine.

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The directors shall also be entitled to be paid all travelling and hotel expenses properly incurred by them in attending and returning from meetings of the directors or of committees of the directors or general meetings of the Company or in connection with the business of the Company. Any director who at the request of the Board performs any special services or goes or resides abroad for any purposes of the Company may, (unless otherwise expressly resolved by the Company in a general meeting) receive such extra remuneration by way of salary, commission, participation in profits otherwise as the Board determines.

5.6.5 A director may be appointed by the directors to any other office or employment under the Company, except that of auditor, in conjunction with his office as director for such period, on such terms and at such remuneration (by way of salary, commission, participation in profits, retirement benefits scheme or other benefits) as the directors may determine.

5.6.6 Any director may act by himself or his firm in a professional capacity for the Company(except that of Auditor) and he or his firm shall be entitled to remuneration for professional services as if he were not a director.

5.6.7 At each annual general meeting of the Company, one third of the directors who are subject to retirement by rotation or, if their number is not 3 or a multiple of 3, then the number nearest but not less than one-third shall retire from office. A retiring director shall be eligible for re-election.

5.7 Borrowing Powers

The directors may exercise all the powers of the Company to borrow money and to mortgage or charge all or any part of its undertaking, property and assets (both present and future), including its uncalled capital and, subject to the Act, to issue debentures and other securities, whether outright or as collateral security, for any debt, liability or obligation of the Company or of any third party. The directors shall restrict the borrowings of the Company and exercise all voting and other rights or powers of control exercisable by the Company in relation to its subsidiaries so as to secure (but as regards subsidiary undertakings only insofar as, by the exercise of the rights or powers of control, the directors can secure) that the aggregate principal amount outstanding of all borrowings by the Group (exclusive of borrowings owing by one member of the Group to another member) does not, without the previous sanction of an ordinary resolution, exceed seven times the adjusted capital and reserves (as defined in the Articles).

5.8 Pensions and Benefits

5.8.1 The directors may establish and maintain or procure the establishment and maintenance of or participation in or contribution to any contributory or non-contributory pension or superannuation fund, scheme or arrangement or life assurance scheme or arrangement for the benefit of, or give or procure the giving of donations, gratuities, pensions, allowances or emoluments to, any persons who are or were at any time in the employment of the Company, or of any company which is or was a subsidiary of the Company or allied or associated with the Company or any subsidiary, or who are or were at any time directors or officers of the Company or of any such other Company, and the spouses, former spouses, families and dependants of any such persons;

5.8.2 The directors may procure any of the above matters to be done by the Company either alone or in conjunction with any other company.

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5.9 Untraced Shareholders

The Company may sell the shares of a member, or the shares to which a person is entitled by virtue of transmission on death or bankruptcy, if;

5.9.1 during the period of 12 years prior to the date of the publication of the advertisements referred to below (or, if published on different dates, the first date), being a period during which at least 3 dividends have been payable, all warrants and cheques in respect of the shares in question sent in the manner authorised by the Articles have remained uncashed;

5.9.2 the Company on or after expiry of the period of 12 years has given notice, by advertisement in a newspaper circulating in the area in which the last known address of the member, or the address at which service of notices may be effected in the manner authorised by the Articles, is located, of its intention to sell the shares;

5.9.3 during the period of 12 years and the period of 3 months following publication of the advertisement the Company has received no indication either of the whereabouts or of the existence of the member or person; and

5.9.4 notice has been given to the Nominated Adviser (where the Company’s shares have been admitted to trading on AIM) or (as the case may be) the UK Listing Authority (where the Company’s shares are admitted to the Official List) of the Company’s intention to make the sale.

5.10 Notices

Notices may be served by the Company upon any member either personally or by post to such member’s registered address or, under the provisions of the Electronic Communications Act 2001, to an e-mail address as notified by the member to the Company. A member is entitled to receive notices from the Company notwithstanding that his registered address as appearing in the register of members is outside the United Kingdom.

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6. DIRECTORS’ INTERESTS

6.1 The interests of the Directors (all of which are, unless otherwise stated, beneficial) in the issued share capital of the Company as at the date of this Document and immediately following the Placing and Admission, such interests being those which are required to be notified by each Director to the Company under the provisions of section 324 or 328 of the Act or which are required to be entered in the register of interests required to be maintained pursuant to section 325 of the Act or which are interests of persons connected with the Director within the meaning of section 346 of the Act, the existence of which is known or which could, with reasonable diligence, be ascertained by a director are, and will be, as follows:

As at the date

of this document Following the Placing

and Admission

Director

Number of Ordinary

Shares

% of Existing Ordinary

Shares

Number of Ordinary

Shares % of Enlarged Share Capital

Ian Gowrie-Smith1 73,647,560 22.79 73,647,560 21.30

David Lees2 57,047,551 17.65 57,047,551 16.50

Jenni Lean3 1,998,993 0.62 1,998,993 0.58

Peter Mikkelsen 126,400 0.04 126,400 0.04

Sir Ebia Olewale - - - -

Notes: 1. Mr Gowrie-Smith’s shares are held by Thornaby Limited, a company whose entire issued share

capital is owned by the IR Gowrie-Smith Family Settlement, of which Mr Gowrie-Smith is a beneficiary;

2. Mr Lees’ shares are held in the name of Ocarina Investments Limited a company whose entire issued share capital is owned by the trustee of the DJ Lees Family Settlement the beneficiaries of which are DJ Lees and certain members of his family;

3. Ms Lean’s shares are held for and on behalf of the DJ and JM Bennett Family Trust, of which Ms Jenni Lean is a trustee and beneficiary.

On Admission, the Director will hold the following options and warrants over Ordinary Shares, further details of which are set out in paragraphs 8 and 9 below: Director Options Warrants

Ian Gowrie-Smith4 - 24,900,000

David Lees5 830,000 8,300,000

Jenni Lean 664,000 -

Peter Mikkelsen - 66,400

Sir Ebia Olewale - -

Notes: 4. Mr Gowrie-Smith’s warrants are held by Thornaby Limited, a company whose entire issued share

capital is owned by the IR Gowrie-Smith Family Settlement, of which Mr Gowrie-Smith is a beneficiary;

5. Mr Lees’ warrants are held in the name of Ocarina Investments Limited a company whose entire issued share capital is owned by the trustee of the DJ Lees Family Settlement the beneficiaries of which are DJ Lees and certain members of his family.

6.2 Jenni Lean was Commercial manager of Austral. Rift has agreed that Jenni may consult to Austral, and she is Austral’s PNG Projects Manager and now mostly resides in Port Moresby which greatly assists in the management of the Douglas Prospect. Jenni and her husband Dave Bennett (former CEO and employee of Austral) are beneficially interested in 221,768 shares in the capital of Austral. Dave

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Bennett has also been granted 900,000 options to subscribe for shares in Austral, 600,000 of which have already vested.

6.3 Save as disclosed in this paragraph 6 no Director has or has had an interest in any transaction which is or was of an unusual nature, contains or contained unusual terms or is or was significant in relation to the business of the Company and which was effected during the current or immediately preceding financial year or remains in any respect outstanding or unperformed.

6.4 Save as set out in paragraph 6.1 above, following the Placing and Admission no Director will, and no person connected with a Director is expected to, have any interest in the share capital of the Company.

6.5 As at 10 April 2006 (being the latest practicable date prior to publication of this document) in so far as is known to the Company, no person or persons, other than as set out in paragraph 6.1 above and this paragraph 6.6, are or will, immediately following the Acquisition and Admission, be interested, directly or indirectly, in 3 per cent or more of the capital of the Company.

Name

Number of Ordinary

Shares

Percentage of Existing

Ordinary Shares

Percentage of Enlarged

Share Capital

following the Placing Warrants

Thornaby Limited1 73,647,560 22.79 21.30 24,900,000

Ocarina Investments Limited2 57,047,551 17.65 16.50 8,300,000

Indusprojet Establishments 40,065,768 12.40 11.59 2,988,000

Syncbeam Limited 34,200,000 10.58 9.89 33,200,000

Gillian McWilliams 10,956,000 3.39 3.17 1,245,000

Notes:

1. Thornaby Limited is a company whose entire issued share capital is owned by the IR Gowrie-Smith Family Settlement, of which Mr Gowrie-Smith is a beneficiary;

2. Ocarina Investments Limited is a company whose entire issued share capital is owned by the trustee of the DJ Lees Family Settlement the beneficiaries of which are DJ Lees and certain members of his family.

6.6 The Company’s major shareholders do not have different voting rights.

6.7 As at 10 April 2006 (being the latest practicable date prior to publication of this document) and save as disclosed in this paragraph 6, the Company is not aware of any person or persons who, directly or indirectly, jointly or severally, at the date of this Document, or following the Placing and Admission, exercise or could exercise control over the Company.

7. EMPLOYEES

7.1 The following table shows the number of employees (including executive Directors but excluding non-executive directors) of the Company by activity as at 30 March 2005.

Category 30 March 2005

Directors/Management 2

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8. THE SHARE OPTION PLAN AND OUTSTANDING OPTIONS

The principal provisions of the Unapproved Share Option Plan (the “Plan”) are as follows:

8.1 Eligibility

Any person who is a bona fide employee (including executive directors) of any member of the Group is eligible to participate in the Plan.

8.2 Grant of Option

Options (which may relate to new and/existing ordinary shares of the Company) may be granted at any time between the Adoption Date (being the date upon which the Plan will be adopted) and the date being 10 years from the Adoption Date. An option may not be granted:

(i) to any person within a period of 2 years ending with the date on which that person is bound to retire in accordance with the terms of his/her contract of employment; or

(ii) to a director of the Company unless such grant has been previously approved in writing by the majority of the directors.

8.3 Individual Participation

The extent of any individual’s participation in the Plan is at the discretion of the directors.

8.4 Exercise price

Save for the Options to be granted to David Lees and Jenni Lean (as set out in paragraph 14 of Part I), which were granted prior to Admission, the price per ordinary share payable upon the exercise of an Option will not be less than the higher of:

(i) the middle-market quotation of an ordinary share on the London Stock Exchange on the date of the grant or such other price as the directors from time to time of the Company may determine; and

(ii) the nominal value of an ordinary share (unless the option is expressed to relate only to existing shares).

8.5 Exercise of Options

In normal circumstances, an option will only be capable of being exercised after three years and may not be exercised later than the tenth anniversary of the date of the grant or such other earlier date as the Company shall determine and notify the optionholder on the date of the grant. In addition, the exercise of the options may be made subject to the satisfaction of certain performance criteria.

Exercise of options is permitted for a limited period (irrespective of the period for which the option has been held, or whether the performance criteria have been satisfied) following death, cessation of employment by reason of injury, ill health, disability, redundancy ort whether the optionholder’s employer ceases to be within the Group.

Options may also be exercised early on retirement at the age, which the optionholder is bound to retire under his contract of employment, provided the performance condition is satisfied. Where the optionholder ceases employment in other circumstances, options can only be exercised if and to the extent that the Board so decides.

Options may be exercised early in the event of an amalgamation, takeover, reconstruction or winding-up of the Company. In such circumstances, the Board at

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that time may, at its discretion, treat the performance condition as satisfied taking into account the underlying financial performance of the Company up until the relevant event.

The periods within which options may be exercised by “leavers” are:

(a) death - 18 months from death;

(b) injury, disability, redundancy, retirement at contractual age or leaving the Group - 6 months of leaving; and

(c) other circumstances - 3 months of leaving, subject to the Board’s discretion.

8.6 Rights attaching to shares

All shares allotted under the Plan will rank pari passu with all other ordinary shares of the Company for the time being in issue (save as regards ay rights attaching to such shares by reference to a record date prior to the date of allotment).

8.7 Variation of capital

In the event of any variation of share capital the directors of the Company for the time being may make such adjustments as it considers appropriate to the number of shares subject to options and the price payable on exercise of options.

8.8 Alterations of the Plan

The directors of the Company for the time being may at any time alter or add to the Plan in any respect, provided that the prior approval of shareholders is obtained for alterations or additions to the advantage of participants. The requirement to obtain the prior approval of shareholders will not, however, apply in relation to any alteration or addition which is minor in nature and is made to benefit the administration of the Plan, to take into account of a change in legislation or to obtain or maintain favourable tax, exchange control, or regulatory treatment for participants or the Group.

8.9 Limits to the issue of shares under the Plan

No options may be granted under the Plan which would cause the number of shares which have been or may be issued in pursuance of options granted under the Plan or any other employees’ share scheme over a ten year period to exceed 10 per cent. of the Company’s issued ordinary shares capital from time to time.

8.10 Outstanding Options

At the date of this document the following Options have been issued, and remain outstanding, to the following individuals who are both Directors:

Name Number of options First exercise date Exercise price

David Lees 830,000 21 March 2008 £0.03

Jenni Lean 664,000 21 March 2008 £0.03

9. WARRANTS

9.1 The Warrants were created pursuant to the Warrant Instrument. The Warrants are exercisable at any time before the expiry of the two year period from the date of grant (the “Final Exercise Date”) at an exercise price of £0.09 per share. The Warrants are freely transferable.

9.2 The Warrants may be exercised in whole or in part at any time before the Final Exercise Date. Exercise is by notice in writing lodged at the Company’s registered office accompanied by a cheque or banker’s draft for the appropriate remittance. The Company is obliged to allot the appropriate number of Ordinary Shares within one

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month of such exercise notice and, in the case of Warrants in certificated form, despatch definitive share certificates within one month of such exercise notice.

9.3 The exercise price of the Warrants is subject to adjustment in the following circumstances: if there is an alteration in the nominal value of the Ordinary Shares; or if the Company issues any Ordinary Shares credited as fully paid by way of capitalisation of reserves of profits.

9.4 If at any time during the period in which the Warrants remain capable of being exercised, an offer is made to acquire the whole or any part of the issued ordinary share capital of the Company, the Company shall procure that the Warrantholder is provided with a like offer as if the Warrants had been exercised in full.

9.5 If an order is made or an effective resolution is passed on or before the Final Exercise Date of the Warrants for the mandatory winding up of the Company (except for the purpose of reconstruction or amalgamation), each Warrantholder will be treated as if he had exercised his Warrants immediately before the passing of the said resolution or order and will be entitled to receive our of assets available in the liquidation, pari passu with the holders of the Ordinary Shares, such a sum as he would have received if he had held such Ordinary Shares less the aggregate subscription price of such Ordinary Shares under the terms of the Warrants. Subject to this, the Warrants shall lapse on the liquidation of the Company.

9.6 As at the date of this document there are 149,566,000 Warrants in issue.

10. ADDITIONAL INFORMATION ON THE DIRECTORS

10.1 The directorships and partnerships currently held by the Directors and held over the five years preceding the date of this document are as follows:

Present Directorships

Previous Directorships

David John Lees Accident Exchange Group plc D Squared Management Limited Deal Group Media plc Foreland Oil Limited Metis Biotechnologies plc Namesco Limited NDO Limited Network Estates Limited Rist Oil Limited Simply.com Limited Triple Plate Junction plc Webcall.com Limited

Accident Exchange 2004 Limited Dakevson Limited1 Goodwill Credit Limited2 Ibnet (UK) Limited8 Network Estates Development

Limited XecutiveResearch Limited3

Ian Roderick Gowrie-Smith

Rist Oil Limited Triple Plate Junction plc

Micap Plc Skyepharma plc

Jenni Lean

Epiphany Games Limited Foreland Oil Limited

Ngatoro Energy Limited4 Indo-Pacific Energy (PNG) Ltd Durum Energy (PNG) Limited Durum Energy (New Zealand)

Limited Gondwana Energy Ltd Gondwana Energy NZ Limited6 AMG Oil Holdings (NZ) Limited6 AMG Oil (NZ) Limited6 Trans-Orient Petroleum NZ

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Present Directorships

Previous Directorships

Limited7 Reservoir Rock Holdings Limited7 Source Rock Holdings Limited Austral Pacific Energy (NZ)

Limited Millennium Oil & Gas Limited Rata Energy Limited Totara Energy Limited Trans-Orient Petroleum (PNG) Ltd Trans New Zealand Oil (PNG)

Ltd5 Durum (Aust) Pty Ltd5

Peter Mikkelsen -

Pegasus Energy Ventures Limited

Sir Ebia Olewale Papua New Guinea Sustainable Development Programme Limited

-

Notes: 1. Dissolved on 14 October 2004. 2. Dissolved on 19 June 2001. 3. Dissolved on 20 January 2005. 4. Ngatoro Energy Limited (NEL) was a subsidiary of APX, engaged in petroleum exploration and production.

Jenni Lean was a director. NEL was the defendant in a civil claim over the interpretation of a contract, in which there were 11 causes of action claimed, which included claims of misconduct within the definitions in the contract and of breach of fiduciary duty. The fiduciary duty claim was not upheld, but there was one finding that a lack of cooperation by NEL with the other parties to the dispute amounted to misconduct.

5. Trans New Zealand Oil (PNG) Ltd and Durum (Aust) Pty Ltd are in process of being de-registered (voluntary). 6. Gondwana Energy NZ Limited, AMG Oil Holdings (NZ) Limited and AMG Oil (NZ) Limited liquidated

August 2003 (voluntary). 7. Trans-Orient Petroleum NZ Limited and Reservoir Rock Holdings Limited liquidated January 2003 (voluntary). 8. Ibnet (UK) Limited liquidated July 2005 (voluntary).

10.2 Save as disclosed above none of the Directors has:

10.2.1 any unspent convictions in relation to indictable offences;

10.2.2 had a bankruptcy order made against him or made an individual voluntary arrangement;

10.2.3 been a director of a company which has been placed in receivership, compulsory liquidation, administration, creditors voluntary arrangement or made any composition or arrangement with its creditors generally or of any class of its creditors whilst he was a director of that company or within 12 months after he ceased to be a director of that company;

10.2.4 been a partner in a partnership which has been placed in compulsory liquidation, administration or made a partnership voluntary arrangement whilst he was a partner in that partnership or within 12 months after he ceased to be a partner in that partnership;

10.2.5 had any asset placed in receivership or any asset of a partnership in which he was a partner placed in receivership whilst he was a partner in that partnership or within 12 months after he ceased to be a partner in that partnership; or

10.2.6 been publicly criticised by any statutory or regulatory authority (including

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recognised professional bodies) or disqualified by a court from acting as a director of a company or from acting in the management or conduct of the affairs of any company.

10.3 No Director has or has had any interest, whether direct or indirect, in any transaction which is or was of an unusual nature, contains or contained unusual terms or is or was effected during the current or immediately preceding financial year, or which was effected during any earlier financial year and remains in any respect outstanding or un-performed.

10.4 No loans or guarantees have been granted or provided to or for the benefit of the Directors by the Company.

10.5 No Director or member of such a Director’s family has a related financial product referenced to Ordinary Shares.

11. DIRECTORS’ SERVICE AGREEMENTS, LETTERS OF APPOINTMENT AND EMOLUMENTS

David Lees

11.1 A service agreement entered dated 1 January 2005 into between the Company (1) and Mr David Lees (2) relating to his employment by the Company for an aggregate of 2 days a week at an annual salary of £25,000 (the ‘‘Lees Agreement’’). The Lees Agreement is terminable on 6 months’ notice by either party. The salary will increase to £50,000 per annum from Admission. The Lees Agreement provides that the Company will provide Mr Lees with insurance cover for death and permanent disablement, private medical expenses insurance and a group travel insurance policy. The Company also contributes an amount equivalent to 10 per cent. of Mr Lees’ annual salary to his personal pension plan. The Lees Agreement contains provision for garden leave, intellectual property rights, confidentiality and post termination restrictions.

Jenni Lean

11.2 A service agreement dated 1 January 2005 entered into between the Company (1) and Ms Jenni Lean (2) relating to her employment by the Company in the UK for 52 days per annum at an annual salary of NZ$49,500 per annum (the “Lean UK Agreement”). The Lean UK Agreement is for an initial period of 12 months and is terminable on 6 months’ notice by either party, such notice to expire on or at any time after the initial 12 month period. Ms Lean is not entitled to any benefits under this agreement.

The Lean UK Agreement contains provisions regarding garden leave, intellectual property rights, confidentiality and post termination restrictions.

11.3 A service agreement dated 1 January 2005 entered into between the Company (1) and Ms Jenni Lean (2) relating to her employment in New Zealand and elsewhere for 208 days per annum for a salary of NZ$198,000 (the ‘‘Lean NZ Agreement’’). The Lean NZ Agreement is for an initial period of 12 months and is terminable on 6 months’ notice by either party, such notice to expire on or at any time after the initial 12 month period. The Lean NZ Agreement provides that the Company will reimburse Ms Lean for private medical expense insurance up to NZ$3,000 each year and she will be a member of the Company’s group personal accident and travel insurance policy. The Lean NZ Agreement contains provisions regarding garden leave, confidentiality, intellectual property rights and restrictions after termination of employment. The Lean NZ Agreement is governed by New Zealand law.

Ian Gowrie-Smith

11.4 Ian Gowrie-Smith has signed a Letter of Appointment relating to his appointment as Chairman and non-executive director of the Company which sets out his duties and

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provides that he will receive an annual fee of £15,000 (the ‘‘Gowrie-Smith Letter’’). The Gowrie-Smith Letter provides that his fee will increase to £30,000 with effect from Admission. The appointment was for an initial period of 12 months but is now terminable at any time on 2 months’ notice by either party. He is also a member of the Audit and Remuneration Committees.

Peter Mikkelsen

11.5 By way of a letter of appointment, dated 23 November 2005 (the “Mikkelsen Agreement”), the Company has agreed to the continuation of Peter Mikkelsen’s appointment as a non-executive director of Rift. The terms of his continuing appointment are subject to Admission and will be for an initial period of 12 months, thereafter terminable on two months’ notice. He is entitled to receive a fee of £20,000 per annum. Peter is also entitled to reimbursement of all travel and other reasonable expenses incurred in connection with his duties. He is entitled to the benefit of directors’ and officers’ liability insurance. He is a member of the Audit and Remuneration Committees. During his appointment he has agreed not to be interested or concerned in any competing business or in a business which is a significant customer or supplier to the Group. The Mikkelsen Agreement contains the usual confidentiality provisions and a requirement that he comply at all time with the share dealing restrictions and disclosure requirements of Rule 21 of the AIM rules and the spirit of the model code of the UKLA.

Sir Ebia Olewale

11.6 By way of a letter of appointment, dated 8 November 2005 (the “Olewale Letter”), the Company has agreed to appoint Sir Ebia Olewale as a non-executive director of Rift with effect from Admission. His appointment is subject to Admission and will be for an initial period of 12 months, thereafter terminable on two months’ notice. He is entitled to receive a fee of £20,000 per annum. He is also entitled to reimbursement of all travel and other reasonable expenses incurred in connection with his duties. He is entitled to the benefit of directors’ and officers’ liability insurance. During his appointment he has agreed not to be interested or concerned in any competing business or in a business which is a significant customer or supplier to the Group. The Olewale Agreement contains the usual confidentiality provisions and a requirement that he comply at all time with the share dealing restrictions and disclosure requirements of Rule 21 of the AIM rules and the spirit of the model code of the UKLA.

11.7 Save as provided in paragraphs 11.1 to 11.6 above, there are no existing or proposed service agreements between any of the Directors and the Company.

11.8 The aggregate remuneration and benefits in kind paid to the Directors for the period from 12 November 2004 to 31 March 2005 was £11,000. It is estimated that the aggregate remuneration and benefits in kind paid to the Directors in the financial year ended 31 March 2006 under arrangements currently in force was £72,000.

12. TAXATION

The following statements are intended only as a general guide to the current tax position under UK taxation law and practice. An investor who is in any doubt as to his or her tax position or is subject to tax in any jurisdiction other than the UK should consult his or her professional adviser without delay.

12.1 United Kingdom taxation

The statements set out below are general in nature and are intended only as a general guide to certain aspects of current UK law and practice and apply only to certain categories of persons. The summary does not purport to be a complete analysis of all the potential tax consequences of acquiring, holding and disposing of Ordinary Shares

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and only relates to the position of shareholders who are the beneficial owners of their Ordinary Shares and who hold their Ordinary Shares as investments; in particular it does not address the position of certain classes of shareholders, such as dealers in securities.

Prospective purchasers of Ordinary Shares who are in any doubt about their tax position, and in particular those who are subject to taxation in any jurisdiction other than the UK, are strongly recommended to consult their own tax advisers concerning the tax consequences of the acquisition, ownership and disposal of Ordinary Shares.

This summary is based upon UK law and practice as of the date of this document. UK law and practice may be subject to change, possibly with retroactive effect.

12.2 Dividends

No tax is withheld on dividends paid by the Company.

In respect of dividends on Ordinary Shares, individual shareholders who are resident in the UK for tax purposes are entitled to a tax credit at the rate of one ninth of the cash dividend or ten per cent. of the aggregate of the cash dividend and the associated tax credit. Dividend income will be treated as the top slice of an individual’s income. Shareholders receiving dividends will be liable to income tax (if at all) on the aggregate of the dividend and the associated tax credit at, in the case of starting and basic rate taxpayers, the dividend ordinary rate (10 per cent. in 2006-2007) or, in the case of higher rate taxpayers, the dividend upper rate (32.5 per cent. in 2006-2007). The tax credit is offset against the total income tax liability. Taxpayers who, after taking into account dividend income, are liable to UK income tax at only the starting or basic rate will have no further liability to income tax. Higher rate taxpayers will, after taking into account the tax credit, have an additional tax liability of 25 per cent. of the cash dividend.

No repayment of the tax credit in respect of dividends can be claimed by a UK resident Shareholder.

Subject to certain exceptions, UK tax resident corporate shareholders are not normally liable to UK corporation tax or income tax in respect of dividends paid by the Company.

Non-UK resident shareholders and shareholders subject to tax in a jurisdiction other than the UK should consult an appropriate professional adviser concerning their liabilities to tax on dividends received.

12.3 Taxation of chargeable gains

A disposal of all or any part of a holding of Ordinary Shares may, depending on the shareholder’s individual circumstances, give rise to a liability to pay UK taxation on chargeable gains. Individuals, personal representatives and trustees resident or ordinarily resident for tax purposes in the UK may be entitled to business or non-business asset taper relief which, depending on their circumstances has the effect of reducing the chargeable gain. Corporate shareholders are not entitled to taper relief but may receive indexation allowance, which reduces the gain, broadly, by the value of inflation.

12.4 UK inheritance tax

The Ordinary Shares will be assets situated in the UK for the purposes of UK inheritance tax. A gift of such assets by, or on the death of, an individual holder of such assets may (subject to certain exemptions and reliefs) give rise to a liability to UK inheritance tax. This is regardless of whether or not the individual holder is domiciled or deemed to be domiciled in the UK and whether or not the holder is resident and/or ordinarily resident in the UK for tax purposes. For inheritance tax

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purposes, a transfer of assets at less than full market value may be treated as a gift and particular rules apply where the donor reserves or retains some interest or benefit in the property being transferred. Special rules also apply to close companies and to trustees of settlements who hold Ordinary Shares which may bring them within the charge to UK inheritance tax.

12.5 Stamp duty and stamp duty reserve tax

The subscription for Placing Shares pursuant to the Placing will not be subject to stamp duty and stamp duty reserve tax unless the Placing Shares are acquired for the purposes of an arrangement for the provision of clearance services or the issue of depository receipts. The Company will not be responsible for the payment of stamp duty or stamp duty reserve tax in any such case.

13. WORKING CAPITAL

The Directors are of the opinion, having made due and careful enquiry and having regard to available facilities, that the working capital available to the Company will, from the time of Admission, be sufficient for its present requirements, that is for at least the 12 months following Admission.

14. LITIGATION

There are no governmental, litigation or arbitration proceedings, active, pending or threatened against, or being brought by, any member of the Group which may have or have had in the recent past a significant effect on the Group’s financial position.

15. MATERIAL CONTRACTS

The following contracts, (not being contracts entered into in the ordinary course of business) have been entered into by the Company during the two years preceding the date of this document and are or may be material:

15.1 Farm-in Agreement

On 17 November 2004 Foreland Oil Limited (“Foreland Oil”) entered into a Farm-In Agreement with Trans-Orient Petroleum (PNG) Limited (“TOPPNG”). Under the Farm-In Agreement (as amended by a Supplemental Agreement dated 23 December 2004), Foreland Oil had the right to exercise an option to farm-in to PPL 235 (the “Farm-In Option”), upon the payment of UD$100,000 to TOPPNG. That payment was made on 25 November 2004.

Following exercise of the Farm-In Option, Foreland Oil will had the right to have a 65% interest in PPL 235 assigned to it after 30 August 2005 (or, in certain circumstances, earlier) by the payment of US$5.9 million into an escrow account, the contents of which are to be applied towards exploration expenditure on PPL 235. Foreland Oil’s right to receive such an assignment is conditional upon appropriate governmental consent, but in the event that such consent was delayed or, ultimately, withheld, TOPPNG undertook to hold the assigned interest on trust for Foreland Oil and Foreland Oil was to be shall be entitled to all assets, including produced petroleum, shall be subject to all obligations, as a participant in the exploitation of PPL 235 to the extent of 65%. Consent was duly granted and the assignment effected on 31 January 2005.

The Farm-In Option was duly exercised on 31 January 2005.

15.2 Joint Venture Operating Agreement (“JVOA”)

On 31 January 2005, and pursuant to exercise of the Farm-In Option, TOPPNG and Foreland Oil entered into a JVOA regarding the exploration activities to be undertaken in relation to PPL 235. The JVOA provides that TOPPNG will act as Operator unless otherwise agreed; TOPPNG has agreed in the Farm-In Agreement

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that Foreland Oil may nominate itself an Operator after the first two years of the joint venture.

Once the contents of the escrow account referred to in paragraph 15.1 have been duly applied in expenditure on exploration on PPL 235, TOPPNG and Foreland Oil will be obliged to contribute to further approved expenditure in the proportions of 35% (TOPPNG) : 65% (Foreland Oil). Exploration budgets are to be prepared by the Operator and approved by a management committee comprising representatives of the parties. The day to day matters under the JVOA are reserved for the Operator; certain decisions such as the disposal of assets of the Joint Venture require the consent of both Joint Venture parties. The JVOA contains provisions for ‘sole risk operations’ in the event that one party’s wish to proceed with particular expenditure is blocked by the management committee. In the event that a party fails to meet its obligations to provide additional finance then that party’s interest in the project can be acquired by the other party at an independently assessed valuation, less a discount of 10%, and less any retentions to cover (inter alia) expenditure made by the continuing party to cover the defaulting party’s shortfall.

15.3 Guarantee

On 17 November 2004 Austral executed a guarantee in favour of Foreland Oil in contemplation of the JVOA being entered into by its wholly-owned subsidiary TOPPNG. Under the guarantee Austral guarantees due performance of the obligations of TOPPNG under the JVOA.

15.4 Acquisition Agreement

On 21 December 2004 the Company entered into an acquisition agreement (the ‘‘Acquisition Agreement’’) with Ocarina and Thornaby Limited (the ‘‘Vendors’’) under which the Company acquired the entire issued share capital of Foreland Oil from the Vendors.

Under the terms of the Acquisition Agreement, Rift Oil PLC paid the Vendors £3,500,000 million upon completion of the Acquisition Agreement, which was satisfied by the issue to the Vendors (and others) of the 13,999,990 Ordinary Shares credited as fully paid at 25p per share.

Under the terms of the Acquisition Agreement if the Minimum Subscription, of 14,000,000 Ordinary Shares, was exceeded under the Offer then the Vendors (and others) would be entitled to receive, as deferred consideration for the acquisition of Foreland Oil, the further Ordinary Shares, equal to the difference between the 14,000,000 Ordinary Shares held by the Vendors at the date of the Acquisition Agreement and the total number of Ordinary Shares subscribed for under the Offer. A further 4,020,000 Ordinary Shares were allotted pursuant to this provisions.

15.5 Warrant Instrument

The Warrants were created pursuant to the Warrant Instrument and their issue was conditional on completion of the Offer for Subscription. The terms and conditions of the Warrants are summarised in paragraph 9 above.

15.6 Placing Agreement

On 10 April 2006, the Company entered into a Placing Agreement with the Directors and Insinger de Beaufort. Under the agreement, Insinger de Beaufort undertook as agent for the Company to use its reasonable endeavours to procure persons to subscribe for the Placing Shares at the Placing Price. The Placing Agreement contains customary warranties from the Company and the Directors in favour of Insinger de Beaufort and the placees of the Placing Shares. The liability of the Directors is subject to certain limitations. Under the Placing Agreement the Company agreed to

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pay to Insinger de Beaufort a corporate finance fee equal to £100,000, of which £80,000 will be payable in cash and £20,000 will be settled through the issue of new Ordinary Shares at the Placing Price together with commissions amounting to £30,500.

The Placing Agreement is conditional on, inter alia, Admission becoming effective on or before 19 April 2006 or such later time as the Company and Insinger de Beaufort may agree being, in any event, not later than 5 May 2006. The agreement may be terminated if certain conditions, including Admission, are not satisfied.

15.7 Nominated Adviser and Broker Agreement

On 10 April 2006 the Company and the Directors entered into an agreement with Insinger de Beaufort pursuant to which Insinger has agreed to act as the Company’s Nominated Adviser and Broker for a period of 12 months subject to termination on at least 30 day’s notice by Insinger de Beaufort or the Company to the other (the “Nominated Adviser and Broker Agreement”).

15.8 Lock-in Agreements

The Directors, Thornaby Limited, Ocarina Investments Limited and Indusprojet Establishment have agreed (under the terms of the Placing Agreement in the case of the Directors) that they will not (save in certain specific circumstances) dispose of, or agree to dispose of any Ordinary Shares or interests in Ordinary Shares for a period of one year following Admission or dispose of Ordinary Shares without the prior written consent of Insinger de Beaufort for a period of one year thereafter save in certain limited circumstances.

15.9 Orderly Market Agreements

Syncbeam Limited has agreed that it will not (save in certain specific circumstances) dispose of, or agree to dispose of any Ordinary Shares or interests in Ordinary Shares, for a period of one year following Admission without the prior written consent of Insinger de Beaufort.

16. GENERAL

16.1 The registered office of the Company is 17 Hanover Square, London, W1S 1HU. The principal place of business of the Company is 105 Piccadilly, London, W1J 7NJ.

16.2 The Nominated Adviser and Broker to the Company is Insinger de Beaufort which is regulated by the FSA.

16.3 Save as disclosed in this Document, there are no significant investments under active consideration.

16.4 The expenses of or incidental to the Placing and Admission are payable by the Company and are estimated to amount to £300,000 (excluding value added tax). A further £20,000 of expenses will be settled by the issuance of new Ordinary Shares to Insinger de Beaufort at the Placing Price.

16.5 The price of a Placing Share represents a premium over nominal value of 4p per Ordinary Share.

16.6 The accounting reference date of the Company is 31 March.

16.7 Insinger de Beaufort has given and not withdrawn its written consent to the inclusion in this document of references to its name and the form and context in which it appears.

16.8 Scott Pickford has given and not withdrawn its written consent to the inclusion in this document of its report set out in Part II of this document.

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16.9 The Directors are unaware of any exceptional factors, which have influenced the Company’s activities.

16.10 The Directors are unaware of any patents or other intellectual property rights, licences (other than PPL 235) or particular contracts, which are or may be of fundamental importance to the Company’s business.

16.11 There has been no significant change in the trading or financial position of the Company nor recent trends concerning the development of the Company’s business nor any significant acquisitions or disposals of assets since 31 March 2005, being the date to which the audited accounts shown in Part IV are made up.

16.12 Share certificates in respect of the Placing Shares are expected to be despatched to the applicants by first class post, at their risk, within 7 days of Admission. In respect of uncertificated shares it is expected that shareholders’ CREST stock accounts will be credited on 19 April 2006.

16.13 No person (other than professional advisers otherwise disclosed in this document and trade suppliers) has received, directly or indirectly, from the Company within 12 month preceding the date of this document; or entered into contractual arrangements (not otherwise disclosed in this document) to receive, directly or indirectly, from the Company on or after completion of the Placing and Admission any of the following:

(a) fees totalling £10,000 or more;

(b) securities in the Company with a value of £10,000 or more calculated by reference to the issue price; or

(c) any other benefit with a value of £10,000 or more at the date of completion of the Placing and Admission.

16.14 The investments made by the Company, other than its continuing obligations under the JVOA, comprise the purchase of the Rig. Commissioning of the Rig is ongoing and therefore the total cost is, as yet, unknown. The Board anticipates that the total cost of the Rig will be between £3 million and £8 million.

16.15 Save for the obligations of the Company under the JVOA and PPL 235, Rift has no investments that are in progress and the Directors have made no firm commitments in relation to any principle future investments.

16.16 Save as set out in the Risk Factors in Part III of this document, there are no environmental issues that have or, to the knowledge of the Directors, may affect the Company’s utilisation of its tangible fixed assets.

16.17 Save for general trends in world oil and gas prices which affect operations in exploration in that business, there are no significant recent trends in sales and costs since the end of the last financial year to the date of this document.

16.18 It is the nature of hydrocarbon exploration that the outcomes are uncertain, and investors’ attention is drawn in particular to the Risk Factors in Part III of this document. Subject to that there are no known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the Company’s prospects for at least the current financial year.

17. AVAILABILITY OF ADMISSION DOCUMENT

Copies of this Admission Document will be available to the public during normal business hours on any weekday (except Saturdays and public holidays), free of charge from the date of this document until the date which is one month after Admission at the offices of Stringer Saul LLP, 17 Hanover Square, London W1S 1HU.

Dated: 10 April 2006

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