Arawak Acquires Second Exploration Block this Month

Arawak Energy Corporation announced its second acquisition this month: a 100-percent interest in the Kymbozhyuskaya Block (the "Block") in the Komi Republic of Russia, close to the Company's existing producing fields. This, together with Arawak's purchase last week of the East Zharkamys III block in Kazakhstan, a neighbor to existing producing properties there, adds 2,022 square kilometers of exploration area to the Company's extensive portfolio of production and development and provides significant opportunities for drilling in the future.

Alastair McBain, Chief Executive Officer of Arawak, said: "The successful acquisition of Kymbozhyuskaya comes right after our recent purchase of the huge East Zharkamys III block in Kazakhstan, so we can now enter 2007 with a significantly larger exploration portfolio in Russia as well as Kazakhstan. These additional blocks further increase the upside potential offered by the Company's Alimbai block and extended Akzhar contract area, both in Kazakhstan, and also the recent exploration success in the newly acquired North Irael field in Russia."

Arawak was awarded, for an acquisition cost of less than US $1 million, the rights to subsoil usage for geological prospecting, exploration and extraction of hydrocarbons at Kymbozhyuskaya through a federal auction held on December 12, by the Territorial Agency on Subsoil Use of the Komi Republic.

The 177 sq km Block, which straddles the administrative regions of Inta and Pechora, is 113 km from the town of Pechora and approximately 275 km from the Company's existing operations. The Block is 45 km east of the Transneft trunk oil pipeline and 20 km from the Northern railway, which has spurs suitable for the construction of an oil loading terminal.

Except for the northeast section, the Block is evenly covered by a network of seismic lines. The exploration phase will include reprocessing the existing seismic coverage followed by a 150-200 km 2D shoot prior to exploratory drilling to assess block potential.

Under contract terms, success in the initial five-year exploration period will be followed by the rights to an additional 20-year production phase.

The prospect relates to the Kochmessk step and Abez'sk depression of the south-western part of the Kosyu-Rogovsk syncline and is defined as a north-west trending narrow asymmetric anticline. Within the hydrocarbon geological zoning of the Timan-Pechora Basin, the Block is in the Kochmessk petroleum district of the North-SubUral marginal trough. The Block is prospective for oil and gas reservoirs associated with the Permian terrigenous and Middle Vizean-Lower Permian carbonate sediments based on offset commercial hydrocarbon accumulations throughout the Kosyu-Rogovsk depression.