Gold Oil Enters Farm Out Agreement for Peru Block

Gold Oil has signed a Farm Out Agreement and a Joint Operating Agreement with Vale S.A. (Vale) for its onshore Block XXI, located in the Sechura Basin in Northwest Peru.

Under the agreements, which are subject to Perupetro approval, Vale will pay an upfront cash consideration of US $2million and will carry Gold through the remaining exploration programme capped at US $10million (gross total exploration programme). In return Vale will receive a 70% interest in the Block and will become Operator after assignment. Gold will retain 30% of the block.

In parallel the Company has requested Perupetro to unify the current exploration phase (Phase III) and Phase IV which, if accepted by Perupetro, would increase the minimum exploration commitment to the equivalent of 400km of 2D seismic or a combination of seismic and other exploration activities. This would extend the end date of the combined phases until November 2012.

Commenting on the update, Chief Executive Officer Richard Mew said, "I am very pleased to announce these agreements with Vale concerning our Block XXI in onshore Peru. We believe that Vale will bring considerable resources to assist in the thorough evaluation of this block and we welcome them as our new partner. This farm out deal with Vale is another important milestone for the Company as we seek to reduce our exposure to exploration risk whilst building on potential opportunities for growth."