(* Exoil and Cue Energy’s interests reduce to 10% in the Spikey Beach Blocks in T/38P in which Beach Petroleum Limited (“Beach”) is to drill the Spikey Beach-1 well to earn an 80% interest in those blocks only. Gascorp Australia Pty Ltd (“Gascorp”) holds no interest in the Spikey Beach Blocks.)

Each of the T/37P and T/38P are subject to separate Joint Ventures and each Joint Venture consists of:

Figure 2 above shows the location of both T/37P and T/38P and also displays exploration wells, gas fields and existing pipelines. For a geological description of T/37P and T/38P see Section 7 of the Information Memorandum.

The Joint Venturers hold the two adjacent permits, T/37P and T/38P, located in the Bass Strait region, north of Tasmania and east of King Island. Each permit consists of 40 graticular blocks covering areas of approximately 2,670 kms² (T/37P) and 2,655 kms² (T/38P). Water depths across the permits are less than 75 metres.

The T/38P Joint Venture is the same make up as the T/37P Joint Venture but with the difference that Beach has agreed to farmin to 18 graticular blocks in T/38P (the Spikey Beach Blocks). Beach will earn an 80% interest in only those blocks within the permit by meeting the drilling costs of the Spikey Beach-1 exploration well. Spikey Beach-1 will be operated by Beach and is expected to be drilled in the Q1 of 2009. Figure 3 below shows the Spikey Beach Blocks and the location of Spikey Beach-1.

The T/37P permit is immediately adjacent to the Yolla gas/condensate field that has recently begun production - Yolla also contains oil. Additionally, T/38P contains the undeveloped Pelican gas/condensate discovery.

In early 2008, Exoil joined with a group of companies which together mobilized a seismic vessel to the Gippsland, Bass and Otway areas. As a result, 3,000 line kms of new 2D seismic data was acquired in T/37P and 660 line kms in T/38P.

Exoil farmed out its share of costs of this survey to Gascorp and as a consequence, the Company’s interest in each of the permits and the Joint Ventures has reduced to 35%.

Interpretation of the existing seismic data has been completed and both time and depth maps have been constructed and integrated with existing well information. Prospects and leads have been identified and have been analysed. The recently acquired 2D seismic survey should provide more certainty of these interpretations.

The Bass Basin is a moderately explored basin with 33 wells drilled since 1965. The basin has a drilling density of approximately one well per 1,320 kms².

The Company’s target in these two Permits is oil. Significantly, a number of wells in the Bass Basin have either found reservoired oil or encountered strong live oil indications.

The permits are not subject to Native Title claims.

Budgeted Expenditure – T/37P