Scomi Group Expands Operations

Scomi Group has increased its international presence with operations into Iran, Qatar, Turkmenistan and Angola taking its operations into 34 countries and 60 locations.

The inroads into these four new countries are for its drilling fluids and drilling waste management businesses under Scomi's subsidiary companies, which is in line with Scomi's strategic international expansion plan. It is also in line with an independent survey which indicated that for this year, drilling in the international market will expand by 5% with operators increasing their activities in terms of rigs, wells and footage by between 4% and 6% in most regions. Global expenditures on drilling and completing new wells are expected to increase by up to 15%.

Our achievement in penetrating into Turkmenistan is a testimony of the successful integration of our drilling fluids and drilling waste management businesses. With Turkmenistan's stringent 'zero' discharge policy of drilling waste, we further attribute our success to proven track records, such as in Norway, which adopts the same stringent policy of 'zero' discharge.

Scomi is pleased to announce that its subsidiary company has received a letter of award from Petronas Carigali (Turkmenistan) Sdn Bhd ("Petronas") for the provision of Drilling Fluid Services for 2005/2006 exploration/appraisal drilling program in Block 1, offshore Turkmenistan. This involves the provision of drilling fluids and related engineering services; drilling waste management services comprising of thermal desorption and solids control systems, and related engineering services.

The contract is for the duration of one (1) year with the option to extend for an additional one (1) year. This contract is expected to commence in October 2005. Subject to the actual drilling activities to be undertaken by Petronas, it is estimated that this contract will contribute approximately RM57 million per annum to the revenue of the group.

Turkmenistan, formerly known as the Turkmen Soviet Socialist Republic, is located in Central Asia and is bordered by Afghanistan, Iran, Kazakhstan, Uzbekistan and has a coastline on the Caspian Sea. Turkmenistan possesses the world's fifth-largest reserves of natural gas as well as substantial oil resources. The Turkmen sector of the Caspian sea is estimated to have reserves of 11 billion tonnes of oil and 23 trillion cubic meters of gas. Petronas is the first foreign company to sign an oil and gas production sharing agreement with Turkmenistan on Block 1 which includes three oil fields, Gubkina, Jdanova and Livanovo.

In Iran, Qatar and Angola, we have set up a marketing team to intensively market our range of products and services to capture a bigger market share. Todate we have successfully introduced to the market, a range of drilling waste management products which include shaker installations and the best rated shale shaker pyramid Derrick screens. We believe that these markets offer great potential for our portfolio of products and services, especially as they are major producers of oil and gas with huge reserves.

In Iran, the oil and gas activity is mainly onshore with the National Iranian Oil Company, NIOC, being the major operator. The international oil majors are mainly involved in the offshore activity. Iran's reserves are estimated at 125.8 billion barrels of oil and 26.3 trillion cubic meters of gas.

In Qatar, the activity remains primarily offshore with minimal activity onshore. While Qatar Petroleum Company ("QPC") is the national oil company, many international operators have activities in this market working under production sharing agreements with QPC. Qatar's reserves are estimated at 15.2 billion barrels of oil and 14.6 trillion cubic meters of gas.

In Angola, 90% of its export is derived from the export of crude oil with all its drilling activities concentrated offshore. Exploration activities by many international operators have resulted in major deepwater oil discoveries indicating large reserves in Angola's deepwater blocks. Angola is the second largest oil producer in sub-Saharan Af>rica, with an estimate 5.4 billion barrels of oil and 1.6 trillion cubic feet of gas.

The rich reserves of the above countries and the world demand fuelled by the increasing energy consumption, is a positive outlook for the industry. This demand has spurred greater activity in exploration and development of oil and gas fields.

It is this positive outlook that is greatly beneficial to Scomi as it opens avenues of opportunities for us to drive our business forward. With our proven technology and excellent track records coupled with our cost efficient solutions as we bring technology from Malaysia; we are confident of our ability to offer a high quality, holistic approach to our clients' drilling fluids and waste management needs.