Four Oaks – PEDL 145

This area is located both north and south of the Mersey, between Liverpool and Warrington. The area is made up of two licences, PEDL 145 and PEDL 116.

Geologically, the area under licence is formed by strata of Carboniferous and Permo-Triassic Age, gently dipping to the south and south-east. The British Geological Society maps show that these strata are cut by a number of north-south striking normal faults, throwing to the east and west, creating a number of normal fault blocks and horsts. The Carboniferous Westphalian coal measures sequence outcrops to the north of the licences and were the principal coal measures exploited in the Lancashire coalfields. The dip of the strata places the Westphalian at depths greater than 6,500 feet to the very south of the licence. This depth has been adopted as the maximum depth for CBM exploitation in the independent GIIP estimates.

Activity in the area has been concentrated at Doe Green, a drill site located between Warrington and Widnes between the A562 and the Liverpool-to-Manchester railway line. Two wells were drilled at this site in the last quarter of 2006: one was extensively cored and logged, and a lateral leg was drilled from the other. In 2007, this well was successfully dewatered and put on long-term production test. This leg continuously produced good quality gas to surface. In January 2008, an additional, longer lateral leg was drilled into the same well as the previous lateral.

A connection agreement has been obtained with the local electricity grid to allow the venture to export up to 1MW of electricity from the site. In addition, this area has the benefit of planning permission for two more wells with laterals at another location within PEDL 145. This site would also allow export of the gas directly to a customer. Site access discussions are advanced at a further site within the licence block.

The first licence term on PEDL 116 was extended by BERR to 30 November 2008. On 15 April 2008, an assay well was spudded at Fox Hill Farm. The well achieved its objective to both core and log the coal sequence, and has been plugged and abandoned. The drilling of this well has satisfied the commitments under the first term of the licence and extended it into its second term with an expiry date of 30 November 2013.

Equipoise Solutions Ltd, which prepared the competent persons report used in the Net Risked GIIP range above, assessed PEDL 145 but did not include PEDL 116 in its findings. An assessment for PEDL 116 is currently ongoing at Equipoise Solutions Ltd.

Source: Equipoise Solutions Limited as per competent persons report published on 7 November 2007, a copy of which can be found in the admission document sent to shareholders on 27 November 2007 and in the Investors section of the website.