Petroceltic Takes Bigger Bite of Offshore Italian Permit

Petroceltic has signed a Farm-in Agreement with Vega Oil S.p.A., a wholly owned subsidiary of Cygam Energy Inc., to increase its participating interest in permit B.R268.RG, which includes the Elsa discovery, offshore Italy, from 40% to 70%. Petroceltic will also assume operatorship of the Permit. Vega will retain a 30% interest.

Under the Agreement, Vega will transfer a thirty percent (30%) participating interest in the Permit to Petroceltic and in exchange Petroceltic has agreed to pay one hundred percent (100%) of the drilling and completion costs for the proposed Elsa-2 well ("the Well").

Petroceltic and Vega have agreed that, from the effective date of the Agreement, de facto operatorship of the Permit shall be transferred from Vega to Petroceltic and Petroceltic shall become the operator with respect to all operations conducted in relation to the Permit under the Elsa Joint Operating Agreement.

In September 2009, DeGolyer and MacNaughton Canada Limited ("D&M"), a worldwide petroleum and engineering consulting firm, prepared a report for Cygam Energy and determined that a best estimate, as detailed in the table below, of the unrisked contingent recoverable oil and gas resource attributable to the 13.65 km2 Elsa structure identified in the Permit is 104.23 million barrels of oil and 31.49 Bcf of gas.