PETROLEUM EXPLORATION INTERESTS
Exmouth Sub-basin Royalty Interests

The Company holds a 37.5% interest in royalties in respect of exploration tenements WA-329-P and WA-322-P
in the offshore Exmouth Sub-basin of Australia following the sales of those tenements during the past two years.

The royalty arrangements will see the Company participate in the most cost effective way, in a significantly
more intensive exploration program than might otherwise have been undertaken. The Exmouth Sub-basin is a
highly desirable exploration area, with a high level of exploration and development activity being carried out by
major international oil companies.

WA-329-P

In July 2005 the company and its joint venturers entered into an agreement with BHP Billiton Petroleum Pty Ltd
(“BHP”) and Apache Energy Limited (“Apache”) for the sale and subsequent assignment of a 100% working
interest in WA-329-P.
The sale consideration consists of the buyers becoming responsible for the terms and conditions of the Permit, a
cash payment, a deferred cash payment contingent upon the drilling of a well in WA-329-P, and the grant of an
overriding royalty interest should there be any future production, less applicable petroleum resource rent tax,
depending on the level of aggregate production.





WA-322-P

In early 2004 the company and its joint venturers entered into an agreement with BHP for the sale and
subsequent assignment of a 100% working interest in WA-322-P.

In return BHP agreed to the acquisition and processing of 3D seismic in the Joint Venture’s adjacent exploration
permit, WA-329-P, as well as an initial cash payment, a deferred cash payment contingent upon BHP drilling a
well in WA-322-P and the granting of an overriding royalty interest with respect to revenue from any future
production from WA-322-P, less applicable petroleum resource rent tax, depending on the level of aggregate
production.

In addition, BHP is required to offer to reconvey the Permit to the Exmouth Joint Venturers should BHP decide
not to proceed further with exploration and to relinquish the Permit before its full-term expiry.

The joint venturers were informed in October 2005 that BHP had completed the acquisition of 635 km² of 3D
seismic in WA-322-P and 107 square kilometres of 3D seismic on in WA-329-P.

WA-329-P and WA-322-P are centrally located in the Exmouth Sub-basin close to numerous Barrow Group
discoveries, both to the northeast and in the southwest. The Vincent 1 oil discovery in 1998 was significant in
that it proved producible oil, and has become the harbinger of successful exploration drilling campaigns in this
area. The Vincent/Van Gogh oil accumulation is located approximately 15 kilometres west of WA-329-P.

The Novara/Coniston oil accumulation, discovered on the Novara Arch, is also in the same area. The Macedon
gas and Pyrenees oil accumulations, which are collectively known as the West Muiron accumulation, are
another example of successful plays on the Novara Arch.

Importantly, the Basal Barrow Group plays have emerged as a successful exploration play concept in recent
years. The basal sandstone (Macedon Formation) of the Barrow Group is the oil-bearing reservoir of the
Enfield, Laverda, Stybarrow, Ravensworth, Crosby and Stickle accumulations. These accumulations are located
about 30 km southwest of WA-329-P.

DAMPIER JOINT VENTURE WA-321-P, WA-323-P & WA-330-P

Octanex holds a 50% interest in the Dampier Project in which three underlying contiguous tenements comprise
a discrete project area of 1,200 kms². They are explored as a joint venture. During the year the joint venture
completed the shooting of the Tourmaline Survey of 1,578 line km of new 2D seismic over the permits.

The Dampier project area covers parts of the Rankin Trend, Kendrew Trough, Parker Terrace (Kendrew
Terrace), Madeleine Trend and part of Lewis Trough. All are proven locations for the formation and location of
oil and gas. Major commercial hydrocarbon discoveries in close proximity include the giant gasfields of the
North West Shelf; these being the Goodwyn, North Rankin and Perseus Gasfields, while the significant oil
fields in Lambert, Wanaea and Cossack are in the same region. The undeveloped Dixon gas and condensate
discovery is in immediately adjacent acreage. Recently, important new gas discoveries have been made at Pluto
and Wheatsone, to the west.

The proximity of existing infrastructure and the likely future extensions, as well as new infrastructure bodes
well for any discovery, whether oil or gas, in this project area. Significant future demand for gas to supply the
North West Shelf JV LNG plant and the proposed Pluto LNG development are anticipated, so that any gas
discovery in our permits should be valuable and capable of monetisation.

Geologic and seismic interpretation of the Late Jurassic, Angle Formation submarine fan play continues. A
sand pinchout trend has been defined along the west flank of the Hartog anticlinal trend, and a drape trap over
the North Webley horst structure similar to, and on trend with, the adjacent Dixon Field has been identified.
There is potential for a Triassic or Early Jurassic structural traps within both the North Webley and Webley
horst structures. Further potential is seen in the vicinity of the Withnell well which had good hydrocarbon
shows.


Northern Deeps Joint Venture – WA-362-P & WA-363-P

Octanex holds a 35% interest in two exploration blocks known as WA-362-P and WA-363-P. The permits,
which cover an area of approximately 21,765 kms2, are on the northern margin of the Exmouth Plateau, 300-400
kms north west of the Western Australian coastline. The Exmouth Plateau is the largely unexplored deepwater
frontier of the Carnarvon Basin, Australia’s largest petroleum basin which includes the giant gas resources of
the North West Shelf (Rankin Trend), the Greater Gorgon region and Io/Janz.

The Carnarvon Basin is one of a number of sedimentary basins and sub-basins which together lay within the
extensive world class North West Shelf hydrocarbon province of Australia. This province contains an estimated
2.6 billion barrels of oil, 2.6 billion barrels of condensate and 152 trillion cubic feet of gas within numerous
hydrocarbon fields. The WA-362-P and WA-363-P permits lie 150 kilometres north west of the presently
producing North Rankin Field complex, which was discovered in 1971, and has provided the bulk of more than
7.75 million tonnes of LNG which has been exported overseas.

The planned 3 year work program by the consortium includes reprocessing existing seismic data acquisition,
and the acquisition of more than 2,200 kms of 2D seismic.





Western Otway Joint Venture – EPP 34

EPP 34, in which Octanex has a 15% interest, is located in the Otway Basin, offshore from South Australia, and
covers an area of 76 graticular blocks or approximately 4,850 sq km in water depths ranging from 75 metres in
the north to over 2,000 metres in the southwest. The main potential identified in EPP 34 lies in prospects and
leads within the Late Cretaceous Sherbrook Group plays, to the north and south of the inverted Morum High,
which bisects EPP 34 centrally. Hydrocarbon source may be derived from Late Jurassic to Late Cretaceous
petroleum systems, which are considered to be mature for hydrocarbon generation in the Morum Sub-basin. A
700 line km 2D seismic survey is planned for 2007.


Southern Exmouth Joint Venture – WA-384-P and WA-385-P

In August 2006 two new exploration permits were granted to a joint venture between Octanex NL (50%) and
Strata Resources NL (50%). The two new exploration permits known as WA-384-P and WA-385-P located in
the southern Exmouth Sub-basin will be explored as one joint venture. The joint venture has committed to shoot
not less than 1,800 line km of 2D seismic survey over the permits in the first three years of the Permits.

The two new permits are located within a poorly explored region just south of Australia’s newest oil province
(Enfield, Lavenda, Skiddaw and Stybarrow discoveries). There is a significant amount of non-exclusive seismic
available, but just one structural test well, Herdsman-1, in the far south of the blocks. A typical North West
Shelf type Mesozoic sedimentary section is inferred in the northern part of the permits, with the Jurassic section
apparently in the “oil window”.