Regal in the Barlad Concession

Regal has spudded exploration well RBN-4 in the Barlad Concession in which the company holds a 100% working interest. It is planned that the RBN-4 well, once completed, will be followed by the second planned exploration well, RBN-3.

The RBN-4 well is being drilled on a Sarmatian formation gas prospect identified by Regal in late 2006 using the 2D seismic data acquired in 2006 and is planned to reach a target depth of 1,050 meters. The well will be logged on completion of drilling and the rig moved to the RBN-3 location approximately 5 kilometers to the northwest.

It is envisaged that the RBN-4 well will take approximately 18 days to drill at a cost of approximately U.S. $1 million. Any testing of the well, if required, will be deferred until a lower cost well workover unit can be mobilized.

The RBN-3 well is also planned to test a Sarmatian formation gas prospect and is estimated to take approximately 20 days to drill at a cost of approximately $1.1 million.

These prospects are supported by seismic amplitudes and have been assessed as having geological probability of success of approximately 30%. Regal has computed best estimate un-risked undiscovered gas-initially-in-place volumes of 30 bcf for the RBN-4 prospect and 61 bcf for the RBN-3 prospect. The proximity of a network of gas pipelines coupled with the low costs of both drilling and gas handling facilities allows small gas accumulations to be commercially exploited.