Niko Resources Updates Operations in India

Niko says the fourth and fifth new wells drilled on the offshore platform in Hazira were put on production during the quarter resulting in a total of six wells, including an appraisal well, currently producing on the platform. Gas production from the field was curtailed during the quarter due to a fire in the plant of Essar Steel, which is one of the largest customers of Hazira gas. Production from Hazira for the quarter averaged 41 million cubic feet per day (net). The sixth planned gas well is currently drilling from the platform, which will complete the current stage of the gas development. This well will be drilled to the prospective oil interval and will be tested if oil sands are encountered. The Oil Development Plan at Hazira has been approved. The drilling of at least three additional wells from the platform for oil production will commence immediately after completion of the sixth and final gas well, which is currently being drilled.

In Surat, the Company drilled the NSA-8 well, which has been tied in and wellsite facilities are currently being installed. This well is expected to increase gas production to between 12 and 14 million cubic feet per day on average for fiscal 2006.

In the D6 Block, an additional gas discovery was made during the quarter in the E-1 well. This discovery is in addition to the large gas discoveries made in 2002, 2003 and 2004 on the block and further confirms the D6 Block's reputation as being a "world class" gas province. The E-1 well, which is located near the edge of the new 3D seismic area, encountered thick channel sand gas pay. The P-1A well, the fifteenth well in the block, is currently testing and has encountered thick channel sand gas pay during drilling in three stratigraphic intervals and is the first well on the newly acquired 3D seismic area. The well drilled to a total depth of 3,675 meters, which is the deepest well drilled to date on the D6 block. Testing of one of the zones is currently underway. These very encouraging results from both the E-1 and P-1A wells confirm the potential of discovering large reserves on the new 3D seismic area. After completion of the P-1A well, drilling will commence on the AA-1 well, which is also located on the new 3D seismic. An additional drilling rig, capable of drilling in the deeper water depths on the prospects in the new 3D seismic area, has been contracted and is expected to commence drilling in September 2006. The Company is looking forward to continued drilling success on this block.

In the NEC-25 Block, front end engineering and reserve evaluation work was undertaken by the operator and third party engineering firms. This work is necessary to prepare development plans for the six consecutive gas discoveries made to date. All of these discoveries are within the original 1,800 square kilometer 3D seismic area. Currently, a 1,700 square kilometer 3D seismic program is being acquired that will extend to the south of the existing 3D seismic coverage. Drilling on this new seismic area is expected to begin in late calendar 2005.

The Company has been awarded two blocks under the most recent round of bidding of the Government of India's New Exploration Licensing Policy, NELP V.

The Company was awarded a 100% working interest in the 236,379 acre onland block CY-ONN-2003/1 (Cauvery) located in the Cauvery basin on the southeastern coast of India. The Cauvery Block is adjacent to several producing oilfields and is located within the Cauvery Delta. The Company's Phase I commitment, which must be executed over the next three years, consists of shooting approximately 550 square kilometers of 3D seismic and the drilling of five wells.

The Company and its partner, Reliance Industries Limited (Reliance), have also been awarded the 4,211,350 acre deep water block MN-DWN-2003/1 (D-4) located in the Mahanadi basin off the northern part of the east coast of India. The Company has a 15% working interest in this block, of which Reliance will be the operator.