Oilexco entered the UK

North Sea in 2001 after

identifying several

favourable reasons for

operating in the region.

Management recognized

the UK North Sea had

been explored extensively

since the 1960’s and several

reservoirs remained

undeveloped. It is believed

proven oil and gas

basins still contain almost

30 billion boe. In addition,

after nearly 40 years

of work in the region the

infrastructure exists to

bring new discoveries into

production quickly. Both

off-shore and on-shore

facilities are in place including,

equipment, personnel

and technical

expertise. With previously

identified reservoirs and

extensive infrastructure in

place, Oilexco recognized

the opportunity to lower

costs and increase the

speed of the discovery and

development process.

The UK North Sea also

provides a favourable fiscal

regime. There are no

royalties in the North Sea

affording Oilexco the opportunity

to recover 100%

of the Company’s capital

and operating expenses

before paying taxes. The

region also has a favourable

regulatory regime,

where the DTI is committed

to providing a framework

that assists companies

to explore and

develop prospects efficiently

and fairly. The

region is politically stable

and provides little geopolitical

and social risk for

emerging producers like

Oilexco.