PENNYBUSTER Wednesday, 02/22/12 06:32:16 PM Re: PENNYBUSTER post# 6 Post # of 56 gypt's has a long, successful history of petroleum exploration and production, with crude oil production contributing significantly to the country's economy for almost 100 years. In recent years however, oil production has declined from a 1996 peak production rate of approximately 935,000 bopd to the current 635,000 bopd, due to ageing fields located primarily in the Gulf of Suez. Egypt's proven oil reserves stand at an estimated 3.7 billion barrels. Egypt's domestic crude consumption has continued to increase in recent years and now slightly exceeds domestic production levels. Decreases in oil production and petroleum revenues have been offset by industry's successful gas exploration program and the rapid development of the natural gas infrastructure to support both domestic consumption and gas export initiatives. Egypt currently has a pipeline network which exports gas to the Eastern Mediterranean countries and LNG facilities for exports of gas to Europe, Asia and the Americas. Egypt's oil sector is controlled by the state entity Egyptian General Petroleum Corporation (EGPC) which is responsible for managing upstream activities, including infrastructure, licensing and production. International and foreign national oil companies play a significant role in Egypt's upstream sector on a production sharing contract basis with EGPC. The energy sector is broken up into three holding companies in addition to the EGPC and the Egyptian Mineral Resource Authority (EMRA). These include: the Egyptian Natural Gas Holding Company (EGAS), The Egyptian Petrochemicals Holding Company (ECHEM), and Ganoub El Wadi Petroleum Holding Company (GANOPE). Both small and large international E&P companies view the Egyptian upstream sector as an attractive place to invest. A combination of competitive technical opportunities, fiscal stability and overall commercial attractiveness, especially for oil, have made Egypt's petroleum sector the most active in North Africa. Success rates in Egypt exceed world averages and discovery sizes remain competitive. Berg El Arab Field, Egypt In November, 2010, East West Petroleum purchased a 20% participation interest in the 72 sq. km. BEA field producing license operated by Kuwait Energy Company (55% W.I.). The remaining 25% interest is held by a local Egyptian firm, Gharib. The license is held by production until 2016, with a 5 year extension possible. Key Terms of Deal Total acreage of 72 square kilometres 20% Participation Interest in BEA acquisition effective date of Nov 1, 2010 Total remaining/pending cost recovery pool as at Sept 30, 2010 was c. $30 mm (gross) AMI with Kuwait Energy surrounding the BEA production license Current production of c. 100 bopd (net) with substantial growth forecast more than 20 development wells planned Application of unconventional technologies thought to be able to increase recoveries Production currently from the shallower Bahariya formation cumulative production to date of 1.6 mmb generally tighter reservoir potential to apply unconventional techniques to increase production Apache Corp. has successfully applied unconventional techniques to the Bahariya field in the Western Desert increased production from 2,500 to 20,000 b/d Multiple prospects for additional reserve upside on the block existing zones have undrilled fault blocks Deeper zones in the lower Cretaceous and Tertiary targets have tested hydrocarbons Comparison of East West Petroleum's Partnership With Other Acquisitions In The Same Region The Burg el Arab Field acquisition is at a significant discount to recent transactions completed in Egypt and provides East West with immediate cash flow and value uplift.