Pakistan Awards Exploration License to Scimitar

Scimitar Hydrocarbons Corporation has been awarded an exploration license over the Safed Koh Block in Pakistan on November 10, 2001. The award, which follows Scimitar's successful bid on October 1st, is subject to execution of an Exploration License Deed and Concession Agreement which is expected to occur by the end of 2001 or early 2002. Scimitar was successful in negotiating a capital commitment of US$553,000 during the initial two-year evaluation period (primarily on geological and geophysical studies), with an option in the third year to drill a new well or re-entry into the existing discovery well.

The Safed Koh Block covers an area of 272,000 acres of the frontal part of the Sulaiman Fold Belt in the Punjab Province. The block contains three large surface anticlines that are on trend with the adjacent producing Dhodak gas/condensate field. One of the anticlines on the Safed Koh block has a gas/condensate discovery made by the state oil company in the early 1970's. Scimitar believes that the Russian drilling and evaluation technology used at the time may not have fully evaluated the potential of the discovery and will utilize advances in technology over the last 30 years to further evaluate the potential of the structure. The Dhodak field, also discovered in the early 1970's, was subsequently appraised and developed in the 1990's, along with new pipeline infrastructure, making the appraisal of nearby prospects more attractive for further exploration.

The Safed Koh prospects are located within easy access of pipelines with unused capacity serving Pakistan's largest combined cycle gas turbine power station (currently using fuel oil due to a gas shortage) as well as regional, urban and industrial markets nearby.

The award of the Safed Koh Block in Pakistan, represents further fulfillment of Scimitar management's strategy to give shareholders access to significant growth opportunities in exploration, appraisal and development of surrounding discovered reserves in the Middle East and Asia. This follows the recent declaration of commerciality of its 100% operated Issaran heavy oil project in Egypt where the company secured a 20-year production period.