Hulf Hamilton

Commentary on First Calgary Petroleums Ltd.

Presented

October 2005

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Hulf Hamilton
CONTENTS

Summary and Conclusion Corporate Overview Reserves and Production Valuation Financial Projections Appendices

1 2 3 4 5

Disclaimer The material in this report is for the general information of clients of Hulf Hamilton only. This material has been written for technical purposes and should not be construed as an offer to sell or solicitation to buy any security or other financial instrument. The material in this report is based on information that we consider reliable, but we do not represent that it is accurate, complete or not misleading and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only. We endeavor to update the material in this report on a timely basis, but regulatory, compliance, or other reasons may prevent us from doing so. Neither should any of this material be redistributed without the prior 2consent of Hulf Hamilton Limited. Hulf Hamilton Limited accepts no liability whatsoever for-any loss or damage of any kind arising out of the use of all or any of this material.

Hulf Hamilton

Summary and Conclusion

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Hulf Hamilton
Summary and Conclusion
Summary
First Calgary Petroleum Limited (FCPL) is a Canadian based E&P that listed on AIM on 30 July 2002 raising $25MM. FCPL signed acreage in Algeria in 2000 prior to that the company had assets in China, Tunisia, Oman and North America and all have now been relinquished. FCPL is now singularly focused on Algeria where it has subsequently made significant gas discoveries. The acreage is in eastern Algeria in the prolific Berkine basin where Lasmo found fame and eventually accepted a bid from ENI who is now a major acreage holder in Algeria along with Anadarko and others (see page 38 for more). The company is led by Richard Anderson who joined the company as CEO in 1997 and is assisted by key board members that joined the company from 1999 onwards. The value of FCPL shares has fallen recently following failed negotiations to sell the company in June 2005. Does the current share price range of 400p fairly reflect the potential value of the company from a previous range of 700p?

Conclusion
The headline numbers are impressive - Gross proven + probable (2P) gas reserves of 2.165 trillion cubic feet (tcf). - Upside of more than double this. - liquids as well as gas giving total combined gross reserves of 13tcf. But gross reserves are not the full story. The fiscal regime in Algeria tends to be quite punishing to western companies with the Algerian State taking a large share of production via participation of the State oil company Sonatrach. FCPLs equity interest in its main Block (405) which probably represents about 90%-95% of the above reserves is 75% to FCPL. After the fiscal system has done its work, FCPL ends up with about 20% of the total reserve value. On top of this about 70% of the big (13tcf) gross reserve number is in the possible category, or in probabalistic speak 10% chance of commercial success by no means certain. FCPL did not want us to see the reserve report that derived these numbers so we have no way finding out if the report is conservative. We therefore base our valuation on the 2p reserve values and recreate the strict fiscal system in the form of discounted cash flows. On this basis the core value of the company is $948MM or 254p share and including the upside (risked) we get to $1569MM or 421p share; based on: - $36/bbl long term liquids prise/ $4.5/MCF gas price/ 10% discount rate We can imagine how the company failed to agree a sale/joint venture when the shares were trading around 800p when bids were likely at 400p. But that is where the shares are now and we think this is a fair value for the current discoveries and identified upside. The company appears to have been advised by Leman Brothers that developing the discoveries on its own may be the best option. We doubt this, consider: - The gross capital expenditure required for development is nearly $2billion - FCPL is not experienced at massive developments like this - Consider neighbouring development partners ENI, Anadarko, Burlington - FCPL cost of capital is relatively high for the complex liquids/gas treatment plant necessary. - FCPL will have to recruit a large number of operations staff from scratch So we think the shares are fairly valued at the 400p level and the companies problems are only just geginning if it sticks to the current plan. Upside is more likely in the form of another bid at this stage.

First Calgary Petroleum Share Price History

16/4/05 FCPL announces that it is looking at strategic alternatives 15/6/05 FCPL announces termination of discussions with Repsol

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Corporate Overview

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Hulf Hamilton
Management
Richard Anderson Martin Layzell Ken Rutherford

Chief Exec Practical oil industry background, founded and ran 2 other E&Ps from 81 to 96 (Tangent Oil and Petrostar). Joined FCPL as CEO in 1997. Garry Worth

Exploration Director UK National settled in Canada - Geophysicist and exploration geoscientist with small Canadian E&Ps (Dome Petroleum, Westcoast Petroleum/Numac Energy). Joined FCPL in 1999. Non executives Include an interesting selection of ex Eurosov Executives (sold to Sibir in the 1990s) including Alastair Beardsall and Yuri Shafranik. Ray Anthony is now a non-exec but started out as a Director in 1997.

Finance Director Canadian Accountant with small E&P background (Shelter Hydrocarbons, Opinac Exploration, CN Exploration, Arakis Energy and Scorpion Energy). Joined FCPL in 1999.

Executive Director Corporate Financier with O&G M&A background in small Canadian E&Ps (Bonanza Oil, Maximum Energy Group). Joined FCPL as Executive Vice President in 2004
Source: Photographs First Calgary Petroleum.

The company has been operating in North Africa since it first started raising public funds in 1997 when Ray Anthony and Art Milholland (now Oilexco) were Directors. The company first had assets in Tunisia (Suda Nefta & Bazma), Louisiana, Texas, China and Yemen. The company signed the first Algerian agreements in early 2000. The company entered Yemen in 1998 and sold the final interests in Feb 2004 to DNO (DNO went on to make the 70mmbbl Nabrajah oil discovery that launched the shares) Our judgement of management is that Martin and Ken joined to beef up the team when Algeria took off and Garry joined to help mastermind the sale of the company (that fell through earlier this year). Seasoned pros might be an appropriate expression but perhaps lacking an Arab Board member to aid in negotiations with Sonatrach and perhaps a Director with big project management experience.

Conclusion: Canadian globetrotters get lucky in Algeria after years of trying around the world. Current management hand picked to do the job in Algeria but will need a strong Operations Director with big oil project experience to complete the picture.

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Introduction
Algerian Cambro-Ordovician sandstones General
First Calgary Petroleums (FCPL) has been in Algeria since 2000 when it first signed the Ledjmet 405b (75% working interest) and Rhourde Yacoub Block 406a (49%). The terms of the original exploration license required the company to relinquish parts of the original acreage which it now has and the remaining prospective acreage is summarised on the following pages. The real headline hydrocarbons have been the gas discoveries on Block 405 where gross proven plus probable (2P) recoverable gas is 2165bcf or about the size of the gas recovered from the Beryl field in the North Sea pretty large by any standards. Block 406 looks as if it may hold oil, although end 2004 estimates may have to be downgraded after some slightly disappointing appraisal drilling in 2004/05. Although Algeria is also known for its prolific oil and gas fields it is also known for a fairly harsh fiscal regime that on average will likely leave FCPL with an economic benefit from 405b as little as 20% of the value of the gas.

Geology
The sedimentary basins of Algeria cover more than 1.5 million km2 with an average thickness exceeding 3 km in some places.
Source: Algerian Ministry of Mines

Algeria hydrocarbons are produced from good quality (mostly Triassic) sandstone in 4 areas: Eastern Sahara, mature oil and gas production with potential for more major discoveries (First Calgary here). Central Sahara, gas prone with renewed interest with recent oil strikes. Western Sahara, chiefly gas prone but remains practically unexplored. Northern Algeria is geologically very complex and its hydrocarbon potential remains only partially known.

The presence of thick source rocks rich in organic material, the right conditions for hydrocarbon generation, and multiple reservoir layers and seals spread throughout the stratigraphic section, offer excellent oil and gas potential on the Sahara platform and throughout the northern part of the country.

Potential
With an average exploration drilling density of approximately 7 wells /10,000 km2, Algeria is under explored (world average is 95 wells /10,000 km2). The majority of exploration wells in Algeria were drilled before the mid 1970s, using methods and technology which are now considered obsolete. The history of exploration activities and discoveries highlights the adverse effects of interruptions and uncertainties caused by events outside the control of the petroleum industry. If FCPL can develop its significant Algerian gas discoveries in a timely fashion and is adequately capitalized to do so then there may be a significant cash flow prize that could enable the company to go forth and repeat the Algerian success elsewhere.

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Algeria Reserves and Production
Oil: Proved reserves Algeria Angola Chad Rep. of Congo (Brazzaville) Egypt Equatorial Guinea Gabon Libya Nigeria Sudan Tunisia Other Africa Total Africa Natural Gas: Proved reserve Algeria Egypt Libya Nigeria Other Africa Total Africa Algeria Production 9
8 7 6 5 4 3 2 1 0
19 70 19 72 19 74 19 76 19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04

1984 (bn bbls) 9.0 2.1 0.8 4.0 0.6 21.4 16.7 0.3 1.8 1.0 57.8 1984 (tcm) 3.44 0.24 0.63 1.36 0.56 6.22

1994 (bn bbls) 10.0 3.0 1.4 3.9 0.3 1.4 22.8 21.0 0.3 0.3 0.6 65.0 1994 (tcm) 2.96 0.63 1.31 3.45 0.78 9.13

2003 (bn bbls) 11.8 8.8 0.9 1.4 3.5 1.3 2.3 39.1 35.3 6.3 0.5 0.6 111.8 2003 (tcm) 4.55 1.72 1.49 5.00 1.18 13.94

2004 (bn bbls) 11.8 8.8 0.9 1.8 3.6 1.3 2.3 39.1 35.3 6.3 0.6 0.5 112.2 2004 (tcm) 4.55 1.85 1.49 5.00 1.18 14.06

Share of world 1.0% 0.7% 0.1% 0.2% 0.3% 0.1% 0.2% 3.3% 3.0% 0.5% 0.1% 9.4% Share of world 2.5% 1.0% 0.8% 2.8% 0.7% 7.8%

R/P ratio 16.7 24.3 14.6 20.3 13.8 10.0 26.6 66.5 38.4 57.3 25.2 8.6 33.1 R/P ratio 55.4 69.1 * * * 96.9

2500

Gas Oil 2000

1500

1000

500

Source: BP Statistical Review, 2005

General Algeria is experiencing an economic upturn, in large part aided by strong oil and natural gas export revenues. Real GDP growth is expected to reach 6.9% in 2005, following estimated growth of 6.1% in 2004. President Abdelaziz Bouteflika, elected President in 1999 and reelected in 2004, is restoring social stability and economic reform. The hydrocarbons reform bill will shortly become law. The bill will reform Sonatrach (state oil company) along corporate lines, allow foreign operators to act independently of Sonatrach, and possibly private Sonatrach or its subsidiaries and this is a good thing. Energy Minister Chekib Khelil has stated his goal is to double the number of companies operating in Algeria. Oil Algeria is underexplored, even though the country has produced oil since 1956, and Algeria's National Council of Energy believes that the country still contains vast hydrocarbon potential. Over the last few years, there have been significant new oil and gas discoveries, largely by foreign companies: (Anadarko, BHP, Amerada Hess and ENI). Algeria's oil sector, unlike that of most OPEC producers, has been open to foreign investors for more than a decade. Algeria hopes to increase its crude oil production capacity significantly over the next few years by attracting more foreign investment. Gas Sonatrach dominates natural gas production and wholesale distribution in Algeria, while Sonelgaz, controls retail distribution. Algeria has increasingly allowed greater foreign investment in the sector, and foreign gas producers have entered into numerous partnership agreements with Sonatrach. There are also plans to allow foreign participation in the retail natural gas sector. In order to attract foreign investment, the government has pushed efforts to liberalize domestic natural gas prices. The latest push at price liberalization in 2005 coincided with record freezing temperatures in Algeria, and there were protests and riots against the liberalization plans in several cities. Algeria is a major natural gas exporter, mostly to Europe and the United States. (Source EIA Algeria Country profile, March 2005)

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Oil Prod (000 b/d)

Gas Prod (bcf/d)

Hulf Hamilton
Acreage locations
Algerian Main Oil and Gas Fields Commentary
The FCPL acreage is in the Ghadames Basin. Of the 13 sedimentary basins in Algeria, four are producing: - Triassic Basin, comprising the Oued Mya Basin, Timimoun, Hassi Messaoud Ridge, Tilrhmet Dome, Touggourt Saddle, and Dahar Dome - Illizi - Ghadames - Constantine. Currently, hydrocarbon production in Algeria comes primarily from the Triassic and Illizi basins, with oil from the Ghadames and a tiny amount from the Constantine basins. The distribution split of the countrys reserves is similar, with the Triassic Basin hosting about 80% of the recoverable reserves, the Illizi Basin about 15%, and the Ghadames Basin about 5%. The FCPL acreage is in the Ghadames basin in the excellent Devonian-Triassic sandstones. Exploration successes by First Calgary, Anadarko, AGIP and Petro-Canada in the Ghadames and Illizi basins indicate that considerable additional reserves remain to be discovered in the Paleozoic basins of the Saharan Platform in addition to the 16 billion barrels of known recoverable oil and 25tcf of gas. Other companies active in Algeria are shown in the Appendices on p38. From the generalized geology we are of the opinion that - FCPL acreage is in a proven hydrocarbon province - Significant gas reserves are being established on Block 405 - Some oil reserves are present on Block 406 - Reservoir quality is generally excellent and this is reflected in well flow rates - The geology of source/trap/migration is complex so hydrocarbon type (oil/gas/condensate), associated production facilities and ongoing development may be complex and expensive.

FCPL Acreage

Source: Petroleum Economist

Algerian Geological Basins

Constantine

Ghadames

Triassic Illizi

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Algerian Assets

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Algerian License Block Summary
Algerian License Blocks
Block 405b Ledjmet The gas discovery Block now under development.

Gulf Keystone acreage

406a Rhourde Yacoub Oil discovery Block with exploration potential in the north

Enlarged area showing Lasmo/ENI acreage (yellow) to the south and Anadarko (purple) adjacent acreage in the centre.

Source: Algerian Ministry of Energy & Mines

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Hulf Hamilton
Algeria Hydrocarbon Basins
Trias/Ghadames Province Commentary
This diagram shows the active basins in the area of Blocks 405 and 406. Most of the oil and gas fields are located on subtle, low-relief structures within the central and northeast portions of the Ghadames (Berkine) Basin. Most of these accumulations are within anticlines, faulted anticlines, or fault blocks developed during Hercynian and Austrian deformation. Accumulations in combination traps, those containing both structural and stratigraphic components, are common. The Ghadames Petroleum System is an important total petroleum system with respect to known oil and gas volumes, containing about 30 percent of the discovered oil and 60 percent of the discovered gas in the province. A small portion of this total petroleum system extends into the neighboring Illizi, Hamra, and Pelagian Provinces. Middle to Upper Devonian-aged mudstone may be the primary source rock.

Ledjmet and Rhourde Yacoub

Source: USGS, Hulf Hamilton

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Hulf Hamilton
Stratigraphic section across FCPL Blocks 405b and 406a

Frasnian oil source Reservoir

Source: FCPL

Silurian gas source

Source: USG, Total Petroleum Systems of the Trias/Ghadames Province, Algeria, Tunisia, and Libya

Conclusion: Clearly a proven hydrocarbon system exists but there are complexities in the source migration, resulting in some uncertainties on oil/gas/condensate volumes and associated reservoir engineering complications.

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Hulf Hamilton
License Map showing Hydrocarbon discoveries
Berkine Basin Discoveries - Algeria
Anadarko Hassi Berkine giant oil field

Sonatrach Ourhoud giant oil discovery

CEPSA - Rhourde Yacoub oil discovery on adjacent Block

FCPL Oil discoveries on Rhourde Yacoub

FCPL MLE gas discoveries on Ledjmet

Anadarko - El Merk 600MMbbl oil discovery, 156 well development.

Source: FCPL, Hulf Hamilton

Conclusion: Some impressive discoveries and partners in adjacent licenses making development infrastructure access (pipelines) more probable if the company acts fast to start negotiations with ENI on the El Merk development to the south.

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Hulf Hamilton
Generalised Geology
Triassic Reservoir Sand Distribution. Commentary
Source Our lower left diagram shows deeper Silurian (oil) source rock around the outside of the Blocks and shallower Frasnian (oil and gas) source rocks in the centre. Silurian source rocks are presently in the peak to late oil generation phase, whereas Frasnian source rocks are presently in the early to peak oil generation window. Silurian rocks are presently in the wet to dry gas generation phase. This partly explains the difference in hydrocarbon content across the FCPL acreage although from this theory we would have expected to see oil rather than gas discovered in the south of Block 405. The reality proves the complexity of hydrocarbon prediction in the region. Reservoir Multiple reservoir rocks are from lower Devonian to Triassic in age. The upper left diagram clearly shows the demarcation of reservoir rock across the bottom of Block 406 that has been proven by drilling. Devonian rocks consist of interbedded marine and deltaic sand and mudstone and quality is generally very good. Triassic reservoir rocks are generally fluvial and we would expect a slight degradation in quality here. High well test results to date have generally borne out the story of quality reservoir on 405 in particular. Trap Low relief anticlinal structures and fault blocks appear to form the trapping mechanisms in Blocks 405 and 406. Seal Triassic to Jurassic evaporates (salts) provide a regional top seal. Risk factors We would see migration from deeper Silurian (oil) source rocks to the shallower Triassic sandstones as a potential risk factor to be considered in the case of undiscovered hydrocarbons. For the development scenarios the structural nature of the trapping mechanisms on 405 and 406 should make reservoir rock volume fairly predictable, especially after some production testing can confirm volumes and reservoir extent. We do not have sufficient reservoir information (FCPL did not want us to see the engineers report from Degolyer and Macnaughton) so we could not comment further. We are still curious what FCPL did not want us to see in the engineers report and regard this as a risk factor in itself.

Source Rock Distribution

Source: First Calgary Petroleum

Conclusion: Potential migration risk for oil discoveries on Block 406 but no obvious development risk factor for the gas development on Block 405 apart from the fact that FCPL did not want us to see the Engineers report that could have given us more detail.

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Hulf Hamilton
Block 405b Development
Ledjmet Block 405b Commentary
The 3-D visualization left shows the gas (red) discoveries across the Block in main designated blocks - Menzel Ledjmet East (MLE) - Menzel Ledjmet (MZ) - Ledjmet (LE) Flowrates from wells tested to date has been impressive and this gives us confidence for a fairly bullish production profile to support the development case. The Ledjmet reserves contribute between 90%-95% of the overall booked reserves for FCPL. The proven and probable reserves are in the lower Devonian reservoirs based around the: - MZLS-1, LES-1 and LES 2 wells on the MZ and LE structures. - MLE-1 to MLE-5 wells on the MLE structure - LEW-1 well on the LEW structure. The significant possible reserve (70%) is in the undrilled portions of LE to the south west of the Block. We would expect to see rapid development of reserves around the 2P area followed by appraisal drilling in the south west in 2006 to prove up the area. This uncertainty on reserves was probably what undermined the negotiations to sell the company earlier in 2005.

Well Flowrates Well MLE-1 MLE-2 MLE-3 MLE-4 MLE-5 MLE-6 LEC-1 MZLN-1 MZLS-1 LEW-1 LES-1 LES-2 Liquids Gas (bbl/d) (mmcfd) 1,418 38 12,949 184 3,677 130 1,223 23 1,590 39 Pending 2,153 92 9,058 208 5,447 55 8,539 15 10,707 11 18,325 92

Gross Recoverable Gas Reserves Estimate

Proven 560bcf Probable 1432bcf

Possible 4439bcf

Conclusion: Proven gas play but still uncertainties hanging over the upside (possible) reserves that are a big proportion of overall volumes.

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Hulf Hamilton
Block 406a Development
Rhourde Yacoub Block 406a Commentary
Block 406a is estimated to contain between 5%-10% of the overall 3P reserves currently attributed to FCPL. ZCH-1 has been the only positive success to date with an 8,454b/d gross flowrate. The ZCH-2 well is currently drilling in the adjacent fault block and we would expect a similar result to ZCH-1. The potential reserves on this block have actually decreased since the end of 2004 as drilling this year (ZCHW-1) has disproven the extension of oil across the bottom of the block. Because we do not know the precise split of reserves between Blocks 405 and 406 but we know the 406 contribution is small we have not adjusted our overall reserve data downwards. Furthermore we think an increase in 2P reserves from the 405 Block contribution is likely to cancel out the slight reduction in 406.

Well Flowrates Well RKFN-1 YCB-1 ZCH-1 ZCH-2 ZCHW-1 RTN-1 Liquids Gas (bbl/d) (mmcfd) Un commercial Dry hole 8,545 56 Drilling Oct 2005 Un commercial Pending

Source: FCPL, Hulf Hamilton

Conclusion: Oil discovery in the south shrinking with each well the next result (ZCH-2) almost certainly to be positive newsflow. FCPL seem more likely to have clipped an oil field on the 208 Block to the south (Anadarko), see page 36 for more details.

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Reserves and Production

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Proven + Probable (2P) Reserves
Degolyer & Macnaughton
GROSS Gas 1P (bcf) 560 49 609 Reserves 2P (bcf) 1992 173 2165 3P (bcf) 6431 559 6990

Hulf Hamilton
NET Gas 1P (bcf) 177 36 213 Reserves 2P (bcf) 411 85 495 3P (bcf) 1081 223 1304

First Calgary
NET Gas 1P (bcf) 405b 406a 152 353 920 Reserves 2P (bcf) 3P (bcf)

405b 406a

405b 406a

Liquids

405b 406a Total

Reserves 1P 2P 3P (MMbbl) (MMbbl) (MMbbl) 71 300 922 6 26 80 77 326 1002 1071 4121 13002

Liquids

405b 406a

Reserves 1P 2P 3P (MMbbl) (MMbbl) (MMbbl) 17 57 162 4 13 36 21 69 198 338 911 2491

Liquids

Reserves 1P 2P 3P (MMbbl) (MMbbl) (MMbbl)

405b 406a 22 284

Forms the basis of our Core valuation on p24.

71 779

199 2114

Source: Reserve Estimate News Release, 31/12/04

Commentary

The only immovable data is the Gross Equity Reserve data shown in the green table top left. Net recoverable entitlement reserves are a function of the fiscal regime which is in turn a function of expenditures and forward commodity price assumptions. The First Calgary reserves are shown on the far right and these are based on the same fiscal assumptions as our own data but unknown forward commodity price assumptions. We elaborate on fiscal assumptions in the following pages but basically the revenue share to First Calgary decreases as the ratio of revenue to cumulative investment increases so if commodity prices are high in the short term, so are revenues so the FCPL share decreases sooner than if commodity prices are relatively lower in future years. A curious situation arises in this complex formula where the company net entitlement reserves could be higher but each barrel is worth relatively less than for certain cases where reserves could be lower. The bottom line is that absolute valuation is more important than entitlement reserves. Conclusion: Our net reserves are greater than the company estimates but this is more a function of our conservative commodity price assumptions. Our ultimate values ($/boe basis) are lower than FCPL estimates.

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Hulf Hamilton
Production Potential
Gross 2P Liquids Production - 405
180 160 140 Production (000 b/d) 120 100 80 60 40
2 Production (000 b/d)

Gross 2P Liquids production - 406

16 14 12 10 8 6 4

Commentary
The dominant profile is the gas production from Ledjmet 405. We have based our assumption on the 3P profile cases provided in the company update in September 2005. The 3P case is for an 800MMcfd profile based on 125 wells. We have assumed fewer wells for the 2P case but similar inflow potential. Liquids production is also based on company guidance on gas oil ratios.

20
0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Gross 2P Gas Production - 405

600 500 Production (MMcfd)

Gross 2P Gas production - 406

50

Significant 500mmcfd plateau gas rate

Production (MMcfd)

45 40 35 30 25 20 15 10 5

Very low 45mmcfd plateau for 406.

400

300

200

100

0
20 05 20 07 20 11 20 13 20 17 20 19 20 23 20 25 20 29 20 31 20 09 20 15 20 21 20 27 20 33 20 35

0
25 13 19 21 23 20 27 09 11 20 15 20 05 20 17 20 29 07 31 33 20 20 20 20 20 20 20 20 20 20 20 35

Source: Hulf Hamilton

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Valuation

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Algeria Fiscal Regime
Comparison of Government take on oil projects Commentary
The fiscal regime in Algeria is generally regarded as harsh by international standards as the chart left shows. But different sets of fiscal terms are applied to oil and gas operations in Algeria depending upon whether they are undertaken by Sonatrach or by Joint Venture partners. Ledjmet 405 FCPL has a 75% working interest FCPL entitlement to revenues is based on the formula: Entitlement = 75% x ((R- Production Volume Factor) Rate of Return) = 75% x ((R PVF) RRF) R = 77% (biddable factor by which FCPL secured the license) PVF = 0 20kbd 48% 20kbd 40kbd 45% 40kbd - 60kbd 39% 60kbd+ 39% RRF = 0%-23% for 7<Z<8 where Z = Revenue/cumulative dev capex Sonatrach pays all taxes and royalties Overall we estimate that FCPL takes roughly 22%-27% economic entitlement compared to its original 75% equity interest after the fiscal regime.
Source: IHS Energy, 2004

Rhourde Yacoub 406 FCPL has a 49% working interest in a JV with Sonatrach FCPL pays tax (65%) and royalty (3%-12.5%) production based. Because FCPL has full tax and royalty exposure on this Block the overall entitlement is low. We are not surprised that the pace of development on 406 has been slower than on 405 the fiscal motivation is not high.

Conclusion: Although the official line is for a State take of 90%, with individual concessions on the FCPL licenses (tax and royalty breaks), the state take is probably closer to 75%-80%.

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Algeria Asset Deal History
Year Buyer Seller Asset Value Oil ($MM) (MMbbl) Proven Gas Total (bcf) (Mmboe) Value ($/boe) KEY ASSETS 9 projects in 6th licensing awards 2 projects in 6th licensing awards 5% net profits interest in 2 Algeria blocks Gassi Touil LNG two onshore oil blocks in Algeria 31.85% - In Salah, 50% - Amenas gas project Menzel Ledjmet East field in Berkine Basin Interest in an Algeria exploratory permit Exploration rights over Block 403c/e Exploration block 401-d exploration permit in the Timimoun Basin 30% participating interest in Block 222b Block 405b Menzel Lejmat 49% interest in Gassi El Agreb project 40% interest in Rhourde El Baguel oil field

2005 2005 2004 2004 2004 2003 2003 2003 2002 2002 2002 2001 2001 2000 2000

BP, BHP, Shell, Gulf KeystoneGovernment of Algeria Gulf Keystone Government of Algeria First Calgary Sonatrach Repsol , Gas Natural Sonatrach PTT Exploration PetroVietnam Statoil ASA BP plc First Calgary Sonatrach Total Government of Algeria Anadarko, Maersk Olie Government of Algeria Repsol YPF SA Woodside, Partex Total SA Government of Algeria Tullow Oil plc ENI First Calgary Sonatrach Amerada Hess Sonatrach Sonatrach Arco, BP plc

105 1680 740

15

121

35

3.00

47

582

144

5.14

Historic 1P reserve multiple

434 350 3310

147 98 307

703

147 98 424

2.95 3.57 $3.84/boe

Year

Buyer

Seller

Proven + Probable Asset Value Oil Gas Total Value ($MM) (MMbbl) (bcf) (Mmboe) ($/boe)

2005 2005 2004 2004 2004 2003 2003 2003 2002 2002 2002 2001 2001 2000 2000

BP, BHP, Shell, Gulf KeystoneGovernment of Algeria Gulf Keystone Government of Algeria First Calgary Sonatrach Repsol , Gas Natural Sonatrach PTT Exploration PetroVietnam Statoil ASA BP plc First Calgary Sonatrach Total Government of Algeria Anadarko, Maersk Olie Government of Algeria Repsol YPF SA Woodside, Partex Total SA Government of Algeria Tullow Oil plc ENI First Calgary Sonatrach Amerada Hess Sonatrach Sonatrach Arco, BP plc

105 1680 740

61 225

406 5538

129 1148

0.82 1.46

Historic 2P reserve multiple

434 350 3310

KEY ASSETS 9 projects in 6th licensing awards 2 projects in 6th licensing awards 5% net profits interest in 2 Algeria blocks Gassi Touil LNG two onshore oil blocks in Algeria 31.85% - In Salah, 50% - Amenas gas project Menzel Ledjmet East field in Berkine Basin Interest in an Algeria exploratory permit Exploration rights over Block 403c/e Exploration block 401-d exploration permit in the Timimoun Basin 30% participating interest in Block 222b Block 405b Menzel Lejmat 49% interest in Gassi El Agreb project 40% interest in Rhourde El Baguel oil field

286

5944

1277

$1.40/boe

Source: JS Herold, 2005

Conclusion: Historic acquisition multiples are low and may reflect the historic political uncertainty associated with the region. This may have been another factor in the failed negotiations with other buyers driving down agreed prices.

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Valuation Assumptions
Valuation Methodology
What are the Algerian reserves and prospectivity of First Calgary worth? This would be easier to answer if there were cash flows which there are not yet. But we do know the theoretical value of the entitlement cash flows because we know the terms of the PSC from theoretical DCF calculations.

DCF Assumptions

We have therefore modeled potential production from Block 126a based on the profiles on p22 and with the following assumptions - Fiscal regime as described on P22 - Oil price $45/bbl, $50/bbl then flat $36/bbl from 2007 on Regional Capex trends - Gas price long term $4.5/mcf at Algerian border. El Merk (ENI): $2.51/boe Zero inflation real economics. Ian EOR (ENI): $4.09/boe 405 Life of field Gross Capex $1900MM ($3.04/boe) mid range for regional trends Hassi Mersoud (Anadarko): $4.19/boe 405 Life of field Gross Opex $700MM ($1.14/boe) low for regional trends
Source: Company data

Industry Multiples

As shown on the previous page we can see how the oil industry has valued oil and gas. The $1.4/boe - $3.84/boe seems to reflect the historic uncertainties associates with the country but are nevertheless important This was illustrated by the Repsol First Calgary negotiations where clearly market expectations of the value of First Calgary were miss-aligned with oil industry estimates resulting in a correction to the First Calgary share price. However, we believe Algeria will become a more active market for oil and gas exploration by the major oil companies so there will be upward pressure on these multiples.

- 24 -

Hulf Hamilton
Valuation
Commentary
Core Assets Asset RESERVES VALUE 2P Net Reserves Dev Risked Unit Risked Liquids Gas Total Risk Entitlement Value Asset Value (MMbbl) (bcf) (Mmboe) (%) (Mmboe) ($/boe) ($MM) (p) 57 411 125 1 125.1 7.03 880 236 p 13 85 27 1 26.7 1.23 33 9p 69 495 152 152 8 912 245 p 0 40 -4 36 $948 MM 0 11 p -1 p 10 p 254 p
Our core valuation is based on the 2P gross data as shown on page 18. We show actual entitlement reserves based on the fiscal regime described on previous pages. We then add financial effects (options data shown in appendices on page 34) The upside is the possible reserve data also shown on page 18, risked as shown and valued at $7.08/boe. Commodity assumptions are as shown, sensitivities are on the following page.

Algeria

405b 406a Core Assets Debt Cash Options & Warrants

Financial effects

Core NAV Upside Prospect

152 MMboe RESERVES 3P Net Reserves Liquids Gas Total (MMbbl) (bcf) (Mmboe) 105 670 217 23 138 46 263 MMboe 415 MMboe

152 MMboe $6.2/boe

Algeria Upside NAV Total NAV

405b 406a

VALUE Expl Risked Unit Risked Risk Entitlement Value Asset Value (%) (Mmboe) ($/boe) ($MM) (p) 0.40 87 2.81 610 164 p 0.2 9 0.25 11 3p 96 MMboe $6.5/boe $621 MM 167 p 248 MMboe $6.3/boe $1569 MM 421 p

Diluted Shares: 208.6 $/ Exchange: 1.787 Share Price: 410 Oil Price assumptions Oil Gas

2005 45 4

2006 50 4.8

2007+ 36 4.5

Conclusion: With risked upside we feel that the company is fairly valued at 421p and only a traditional bid premium for the sector (30%?) could take it higher.

- 25 -

Hulf Hamilton
Valuation Sensitivity
Commentary
$2.7/mcf $3.6/mcf $4.5/mcf $5.1/mcf $6.0/mcf $6.9/mcf $25/bbl $30/bbl $36/bbl $40/bbl $45/bbl $50/bbl (p) (p) (p) (p) (p) (p) 89 p 169 p 236 p 256 p 319 p 367 p 4p 6p 9p 11 p 13 p 15 p 92 p 175 p 245 p 267 p 332 p 383 p 0 11 p -1 p 10 p 102 p 0 11 p -1 p 10 p 185 p 0 11 p -1 p 10 p 254 p 0 11 p -1 p 10 p 277 p 0 11 p -1 p 10 p 342 p 0 11 p -1 p 10 p 392 p
Because of the way our valuation is driven by the 2P unit value of $6.68/boe, changing the oil price in the DCF model has a minimum impact on the final valuation. In our opinion we see a better spread of results by proposing a range of PVs from $2/boe-$10.boe. In approximate terms this is like varying the oil price from a range of $20/boe to $45/boe. The exploration upside is unaffected as we use a constant $1.4/boe value. The analysis shows that even on a very low PV of $2/boe We would have to assume $3/boe to get our core value to the current share price of 75p. We would have to assume long term oil prices of $20/bbl and gas prices of $3/mcf in our DCF model of Block 126 to get this PV.

(p) 61 p 1p 62 p 164 p

(p) 117 p 2p 119 p 304 p

(p) 164 p 3p 167 p 421 p

(p) 178 p 4p 182 p 458 p

(p) 222 p 5p 227 p 569 p

(p) 256 p 5p 261 p 654 p

- 26 -

Hulf Hamilton

Financial Projections

- 27 -

Hulf Hamilton
FCPL Projected Key Financials
Summary Data
Key Numbers First Calgary Revenue EBITDA EBIT Pre-tax profit Tax rate % Net Income Gross cash Gross debt Net cash/(debt) Net assets EPS EV / EBITDA (x) 2004 1.3 (6.5) -6.6 (6.6) 38.6% (6.6) 81.9 0.0 81.9 362.2 0.00 -183.3 2005E 0.0 (18.9) -18.9 (19.3) 33.0% (19.3) 42.1 (72.0) (29.9) 463.7 -0.09 -84.9 2006E 0.0 (82.3) -82.3 (55.0) 33.0% (55.0) 40.1 (742.5) (702.4) 1008.7 -0.26 -27.7 2007E 0.0 (118.8) -118.8 (80.9) 33.0% (80.9) 40.0 (877.5) (837.5) 1228.7 -0.39 -20.3 2008E 279.6 156.1 137.2 172.1 33.0% 172.1 76.9 (877.5) (800.6) 1400.7 0.82 15.2 2009E 533.2 419.1 384.9 412.7 33.0% 299.5 93.3 (877.5) (784.2) 1700.2 1.44 5.6 2010E 946.6 845.0 788.8 807.3 33.0% 540.9 609.3 (877.5) (268.2) 2241.1 2.59 2.2

Commentary
We have attempted to model the finances of FCPL forward to 2010. We have done this as the capital expenditures for the company going forward will be significant so financing cost and cash flow becomes an important part of the equation. If the company intends to go it alone on the development it will need significant further equity and debt injections. As our data shows the company will likely not see positive cash flow until 2008. Financing costs continue to drag on finances until 2010.

Key Assumptions Interest on debt Corporate Tax rate No shares $/$ Exchange

2004 4.00% 38.60% 191.684 1.8

2005 4.75% 33.00% 208.6 1.8

2006 4.50% 33.00% 208.6 1.8

2007 4.50% 33.00% 208.6 1.8

2008 4.50% 33.00% 208.6 1.8

2009 4.50% 33.00% 208.6 1.8

2010 4.50% 33.00% 208.6 1.8

Conclusion: Two more years of losses before big cash flows kick-in, assuming the company can manage the capital expenditures to keep the project on track.

- 28 -

Hulf Hamilton
FCPL Projected Profit and Loss (US$)
Commentary
First Calgary Petroleum Assumptions
WTI Oil Price ($/bbl) US$ / exchange rate Production (mboe/d) 45.00 1.80 0.0 1.3 (2.2) (0.1) (2.3) (1.0) (4.0) (5.0) 0.0 (1.5) 0.0 0.0 (6.6) 0.0 (6.6) 0.0 0.0 0.00 0.00 50.00 1.80 0.0 0.0 (3.8) 0.0 (3.8) (3.8) (10.0) (6.0) (19.8) 0.0 0.0 0.0 0.4 (19.3) 0.0 (19.3) 0.0 (19.3) (0.09) (0.12) 50.00 1.80 0.0 0.0 (9.2) 0.0 (9.2) (9.2) (12.0) (6.6) (27.8) 0.0 0.0 0.0 (27.3) (55.0) 0.0 (55.0) 0.0 (55.0) (0.26) (0.31) 36.00 1.80 0.0 0.0 (21.4) 0.0 (21.4) (21.4) (14.4) (7.3) (43.1) 0.0 0.0 0.0 (37.8) (80.9) 0.0 (80.9) 0.0 (80.9) (0.39) (0.42) 36.00 1.80 21.7 279.6 (21.4) (19.0) (40.4) 239.2 (17.3) (15.0) 207.0 0.0 0.0 0.0 (34.9) 172.1 0.0 172.1 0.0 172.1 0.82 0.68 36.00 1.80 41.5 533.2 (21.4) (34.1) (55.6) 477.6 (20.7) (16.5) 440.4 0.0 0.0 0.0 (27.7) 412.7 (113.2) 299.5 0.0 299.5 1.44 1.44 36.00 1.80 73.0 946.6 (21.4) (56.2) (77.6) 868.9 (24.9) (18.2) 825.9 0.0 0.0 0.0 (18.6) 807.3 (266.4) 540.9 0.0 540.9 2.59 2.87 2004 2005E 2006E 2007E 2008E 2009E 2010E

Finances assume the company keeps 75% and 49% working interest of 405 and 406 respectively.

Profit and Loss Account

Turnover - operating costs - depreciation and abandonment Total cost of sales Gross profit Exploration expenditure/reserves written off Administrative costs Operating profit JV/other income Foreign Exchange gains (loss) Exceptional gains Net Interest Profit before tax Taxation Profit after tax Dividend Retained Profit EPS (c) CFPS (c)

Significant depreciation as production commences. We assume the company continues to explore with some dry holes.

Admin costs increase as operations pick up.

Company must start borrowing in 2006 and repays from 2009 on.

Some tax shelter for 2008.

- 29 -

Hulf Hamilton
FCPL Projected Cash flows
Commentary
Cashflow
US$ millions Oil price Operating profit Depreciation Exploration write off Working capital & other gains/losses Net cash inflow from operations 2004 45.00 (6.6) (0.1) 0.0 5.1 (1.5) 2005E 50.00 (19.8) 0.0 (10.0) 4.0 (25.8) 2006E 50.00 (27.8) 0.0 (12.0) 5.0 (34.8) 2007E 36.00 (43.1) 0.0 (14.4) 6.0 (51.5) 2008E 36.00 207.0 (19.0) (17.3) 6.0 176.7 2009E 36.00 440.4 (34.1) (20.7) 6.0 391.5 2010E 36.00 825.9 (56.2) (24.9) 6.0 750.8

Returns on investment and servicing of finance Net interest paid 0.0 Other 1.6 Net cash outflow 1.6 Pre-tax cashflow Taxation Post tax cashflow Investing Activities Development Capex Exploration Capex Acquisitions/Disposals other Net cash outflow Dividends paid Cashflow before financing Equity Financing Debt Financing Net Cashflow 0.1 0.0 0.1

0.0 0.0 0.0 (25.8) 0.0 (25.8)

(29.3) 0.0 (29.3) (64.0) 0.0 (64.0)

(35.4) 0.0 (35.4) (86.9) 0.0 (86.9)

(35.4) 0.0 (35.4) 141.3 0.0 141.3

(33.8) 0.0 (33.8) 357.7 (56.6) 301.1

(19.5) 0.0 (19.5) 731.3 (133.2) 598.1

(38.6) (70.0) 16.2 (92.4) 0.0 (92.2) 78.9

(120.0) (30.0) 0.0 (150.0) 0.0 (175.8) 114.0 72.0 10.3

(1117.5) (36.0) 0.0 (1153.5) 0.0 (1217.5) 545.0 670.5 (2.0)

(225.0) (43.2) 0.0 (268.2) 0.0 (355.1) 220.0 135.0 (0.1)

(52.5) (51.8) 0.0 (104.3) 0.0 36.9

(22.5) (62.2) 0.0 (84.7) 0.0 216.4

(7.5) (74.6) 0.0 (82.1) 0.0 515.9

Significant capital expenditures from 2006 onwards.

Company must come back to the market for significant equity in 2006.

0.0 36.9

0.0 216.4

0.0 515.9

(13.3)

Debt portion of 60% of required financing assumed.

- 30 -

Hulf Hamilton
FCPL Projected Balance Sheet Data
Commentary
Balance Sheet
US$ millions Fixed Assets Tangible Fixed Assets end Intangible Fixed Assets end Investments Current Assets Stock Debtors Cash 2004 310.1 0.0 0.0 310.1 0.8 0.4 81.9 83.0 (30.9) 52.1 362.2 0.0 0.0 362.2 2005E 348.7 30.0 0.0 378.7 0.8 0.4 42.1 (56.8) (34.4) (91.2) 287.4 (72.0) 248.2 463.6 2006E 471.7 63.0 0.0 534.7 0.8 0.4 40.1 41.2 (37.5) 3.7 538.4 (692.5) 1162.8 1008.7 2007E 1595.5 99.9 0.0 1695.4 0.8 0.4 40.0 41.1 (45.8) (4.8) 1690.6 (827.5) 365.7 1228.8 2008E 1849.4 141.8 0.0 1991.1 0.8 0.4 76.9 78.0 (51.3) 26.7 2017.9 (827.5) 210.4 1400.8 2009E 1950.2 189.8 0.0 2140.0 0.8 0.4 93.3 94.4 (51.2) 43.2 2183.2 (827.5) 344.4 1700.1 2010E 2047.9 245.5 0.0 2293.3 0.8 0.4 609.3 610.4 (56.3) 554.1 2847.4 (527.5) (79.1) 2240.8

Cash is managed to pay back debt by 2010 when free cash accumulates.

Creditors: within one year Net Current (liabilities)/assets Total assets less current liabilities Creditors: due after one year Provisions for liabilities and charges Net Assets Capital and Reserves Called up share capital P&L account Equity shareholders funds diff Gearing

Equity doubles from injections in 2006/07 to 2010

362.2 0.0 362.2 0.0 0%

463.7 0.0 463.7 0.0 6%

1008.7 0.0 1008.7 0.0 70%

1228.7 0.0 1228.7 0.1 68%

1228.7 172.1 1400.7 0.0 57%

1228.7 471.5 1700.2 -0.1 46%

1228.7 1012.5 2241.1 -0.3 12%

Gearing managed at 70% max with equity injection.

- 31 -

Hulf Hamilton

Appendices

- 32 -

Hulf Hamilton
Algerian Sedimentary basins
Algerian Sedimentary Basins

Source: BGS

- 33 -

Hulf Hamilton
Share Option and Warrant valuation
Current Value $1.33 per share Exercise Price ($) Share Options Warrants Totals Total Intrinsic Option Value 0.86 0.01 No OptionsCash raised 'In money' & Warrants ($) ($) 5700000 1167640 6867640 4889232 11676.4 4900908.4 4.9009084 0.5 1.3 Intrinsic Value ($) 2699264 1542820 4242084 4.24

- 34 -

Hulf Hamilton
Algeria Block 405 Fiscal model
Algeria 405
First Calgary 75.00% As at 1 Jan 2005 Oil (mmbls) NGL (mmbls) Gas (bcf) Total mmboe Entitlement Basis Inputs 2007 oil price 2007 gas price Discount to Brent FX Rate (2004+) Tax rate K Factor Royalty rate Production Profile (kb/d) GROSS Block 405 - Gas Block 405 - liquids Cumulative Gas (bcf) Cumulative Oil (MMbbl) 220.19 NPV mm NPV $mm 1,493.78 469.16 125.13 0.27 36 4.5 0.00 1.79 45% 0.770 0.110 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Total (mmbbl) Gross 1992 294 751 492 880 Outputs Unit capex Unit opex NPV10 IRR 3.04 1.14 7.03 24%

1992 294

0.00 0.0 0.00 0.0

0.00 0.0 0.00 0.0

0.00 0.0 0.00 0.0

200.00 33.3 73.00 12.2

350.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 328.45 215.75 141.73 93.10 61.16 40.17 26.39 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 64.6 156.3 156.3 112.3 80.7 58.0 41.7 30.0 21.5 15.5 11.1 8.0 5.8 4.1 3.0 2.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 200.75 383.25 565.75 748.25 930.75 #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### 35.8 92.8 149.8 190.8 220.3 241.5 256.7 267.6 275.5 281.1 285.2 288.1 290.2 291.7 292.8 293.6 293.6 293.6 293.6 293.6 293.6 293.6 293.6 293.6

Revenue & Cost Data Oil Price Brent Oil price Discount to Brent Net realised value Gas Price Algeria-Tunisia Operating Cost Total Opex

Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 45.00 0.00 45.00 4 50.00 0.00 50.00 4.8 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5 36.00 0.00 36.00 4.5

700.0

1.0

2.0

3.0

4.0

5.0

10.0

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

26.35

710

Capital Expenditures ($M) G&G, Field studies, Start-up Facilities Pipelines Drilling & Workover Capital Expenditure - Real Capital Expenditure - Escalated

2000 440 250 1210 1900 0 0

2001

2002

2003

2004

2005

2006 440 250 800 1490 1490

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032 440 250 1210 1900 1900

0 0

0 0

0 0

0 0

0 0

300 300 300

70 70 70

30 30 30

10 10 10

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

Production (kb/d) 20 40 60 60

Fiscal assumptions Royalty Profit share 48% 45% 39% 39% 0% 12% 23% R-factor 7.0 7-8 8.0

Cost Recovery Calculation ($ Million) Gross Oil/Gas Sales less: royalty Gross Revenues

2001 0.0 0.0 0.0

2002 0.0 0.0 0.0

2003 0.0 0.0 0.0

2004 0.0 0.0 0.0

2005 0.0 0.0 0.0

2006 0.0 0.0 0.0

2007 0.0 0.0 0.0

2008 766.5 -84.3 682.2

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019 500.7 -55.1 445.6

2020 337.9 -37.2 300.8

2021 228.5 -25.1 203.4

2022 154.8 -17.0 137.7

2023 105.0 -11.6 93.5

2024 71.4 -7.9 63.6

2025 0.0 0.0 0.0

2026 0.0 0.0 0.0

2027 0.0 0.0 0.0

2028 0.0 0.0 0.0

2029 0.0 0.0 0.0

2030 0.0 0.0 0.0

2031 0.0 0.0 0.0

2032 0.0 0.0 0.0

1423.9 2874.4 2874.4 2297.0 1882.0 1583.7 1369.3 1215.2 1104.4 743.0 -156.6 -316.2 -316.2 -252.7 -207.0 -174.2 -150.6 -133.7 -121.5 -81.7 1267.3 2558.2 2558.2 2044.3 1675.0 1409.5 1218.7 1081.5 982.9 661.3

K' factor- A ROI factor- B PV factor - C FCPL Entitlement (75%((.77-C)-B) Cumulative Return Calculation A:Cumulative Revenue D:Cumulative Investment R-factor (A+B/C+D) FCPL PSC Cash Flow Entitlement Oil (000 boe/d) Turnover Bonus Operating Cost Capital Expenditure Profit Tax Net Cash Flow Capital Allowance Balance C/F Capital allowance used Unused Allowance c/f Exchange Gross Present Value 1/1/05 8% 10.0% 12% 15% (%) share 100.00% 100.00% 100.00% 100.00%

0.8 0% 48% 22%

0.8 0% 48% 22%

0.8 0% 48% 22%

0.8 0% 48% 22%

0.8 0% 48% 22%

0.8 0% 48% 22%

0.8 0% 48% 22%

0.8 0% 39% 29%

0.8 0% 39% 29%

0.8 0% 39% 29%

0.8 0% 39% 29%

0.8 0% 39% 29%

0.8 0% 39% 29%

0.8 12% 39% 20%

0.8 12% 39% 20%

0.8 23% 39% 11%

0.8 23% 39% 11%

0.8 23% 39% 11%

0.8 23% 39% 11%

0.8 23% 39% 11%

0.8 23% 48% 5%

0.8 23% 48% 5%

0.8 23% 48% 5%

0.8 23% 48% 5%

0.8 23% 48% 5%

0.8 23% 48% 5%

0.8 23% 48% 5%

0.8 23% 48% 5%

0.8 23% 48% 5%

0.8 23% 48% 5%

0.8 23% 48% 5%

0.8 23% 48% 5%

0.0 0.0 0.00 2001 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 1.79 $MM MM 1196.1 669 879.5 492 674.0 377 427.9 239 * Entitlement barrels ** Gross barrels

0.0 1.0 0.00 2002 0.0 0.0 0.0 -1.5 0.0 -1.5 0.0 0.0 0.0 0.00

0.0 3.0 0.00 2003 0.0 0.0 0.0 -2.3 0.0 -2.3 0.0 0.0 0.0 0.00

0.0 6.0 0.00 2004 0.0 0.0 0.0 -3.0 0.0 -3.0 0.0 0.0 0.0 0.00

0.0 6.0 0.00 2005 0.0 0.0 0.0 -3.8 0.0 -3.8 0.0 0.0 0.0 0.00

0.0 1496.0 0.00

0.0 1796.0 0.00

766.5 1866.0 0.41 2008 16.6 218.5 0.0 -19.8 -52.5 146.2 -52.5 0.0 198.7 1196.31

2190.4 5064.8 7939.2 #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### 1896.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1906.0 1.16 2.66 4.17 5.37 6.36 7.19 7.91 8.54 9.12 9.51 9.78 9.95 10.07 10.16 10.21 10.25 10.25 10.25 10.25 10.25 10.25 10.25 10.25 10.25 2009 30.9 405.8 0.0 -19.8 -22.5 2010 62.3 819.2 0.0 -19.8 -7.5 2011 62.3 819.2 0.0 -19.8 0.0 2012 49.8 654.6 0.0 -19.8 0.0 2013 40.8 536.4 0.0 -19.8 0.0 2014 24.0 314.8 0.0 -19.8 0.0 2015 20.7 272.1 0.0 -19.8 0.0 2016 10.4 136.7 0.0 -19.8 0.0 2017 9.5 124.2 0.0 -19.8 0.0 2018 6.4 83.6 0.0 -19.8 0.0 63.8 0.0 0.0 0.0 0.00 2019 4.3 56.3 0.0 -19.8 0.0 36.6 0.0 0.0 0.0 0.00 2020 2.9 38.0 0.0 -19.8 0.0 18.3 0.0 0.0 0.0 0.00 2021 0.8 10.3 0.0 -10.0 0.0 0.3 0.0 0.0 0.0 0.00 2022 0.5 7.0 0.0 -10.0 0.0 -3.0 0.0 0.0 0.0 0.00 2023 0.4 4.7 0.0 -5.0 0.0 -0.3 0.0 0.0 0.0 0.00 2024 0.2 3.2 0.0 -5.0 0.0 -1.8 0.0 0.0 0.0 0.00 2025 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 2026 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 2027 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 2028 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 2029 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 2030 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 2031 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 2032 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00 Gross 125.13 4505 0 -321 -1425 2755 -1425 0 1425

& other

2006 2007 0.0 0.0 0.0 0.0 0.0 0.0 -7.5 -19.8 -1117.5 -225.0 -1125.0 -244.8 -1117.5 -225.0 0.0 0.0 0.0 0.0 1117.50 ####

363.6 791.9 799.4 634.9 516.6 295.0 252.4 116.9 104.5 -22.5 -7.5 0.0 0.0 386.1 799.4 832.75 40.81 0.0 0.0 40.8 0.00 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.00 0.0 0.0 0.0 0.00

$/bbl* $/bbl** 9.56 1.91 7.0 1.41 5.39 1.08 3.42 0.68

- 35 -

Hulf Hamilton
Algeria Surrounding acreage - Anadarko
Anadarko Acreage Surrounding FCPL Blocks Commentary

Prospect across the north of 406 have so far not been proven on 406.

Prospect south of 406 supports the case for FCPL oil discovery on south of 406 Block

Oil discoveries here are more fragmented than those shown on FCPL maps

Source: Anadarko, September 2005

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Hulf Hamilton
Algeria Surrounding acreage - ENI
ENI acreage surrounding FCPL Blocks

Source: ENI, September 2005

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Hulf Hamilton
Foreign Companies in Algeria
Company AGIP Burlington SINOPEC Gulf Keystone Repsol Cepsa BHP/Billiton Petronas Rosneft Stroytransgaz Total Fina Elf First Calgary Petroleum Gaz de France Petrocanada Anadarko BP Amerada Hess Medex PIDC
Source: Ministry of Energy & Mining, Algeria

Address 28. Rue Med Amallal - El-Biar - Alger

10 Rue des Pins Hydra, Alger 26. Rue Hadj Ahmed Mohamed -Hydra - Alger 13,Lotissement Altitude ,chemin de la madelaine -Hydra-Alger 5, Chemin Macklay - El-Biar -Alger Hotel Sheraton Club Des Pin -Alger 67, rue des idrissides (ex.Rue Badin) El-Biar -Alger 17, Chemin de la Madeleine 16030 -El-Biar -Alger

48, Rue des Frres Benali (ex Parmentier), Hydra, Alger 172, Rue Hassiba Ben-Bouali 4, Chemin des Glicines, El-Biar -Alger 12, Rue Slimane Amirat, Colonel Voirol, Aler Htel Sheraton, Club des Pins, Alger

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