The WAB-21 contract area is located in the West Wan’an Basin (Nam Con Son) on the South China Sea. Its western edge lies approximately 50 miles southeast of the Dai Hung (Big Bear) Oil Field, which recently discovered additional oil reserves in deeper Miocene zones. The block is adjacent to the east of BP’s giant natural gas discoveries at Lan Tay and Lan Do, which are estimated to contain two trillion cubic feet of natural gas. It is also adjacent to the 2005 Thien Ung discovery which tested oil and natural gas. The contract area covers several similar structural trends involving similar geological formations, each with potential for hydrocarbon reserves in possible multiple pay zones.
Due to the border dispute (related to the Spratley Islands) between China and Vietnam, we have been unable to pursue an exploration program during phase one of the contract. As a result, we have obtained license extensions, with the current extension in effect until May 31, 2007. While no assurance can be given, we believe we will continue to receive license extensions so long as the border disputes persist.