Operations in Indonesia

Biliton PSC

Serica 90% (45% post farm-out) (operator)

The Biliton PSC covers an area of approximately 3,940 square kilometres in the Java Sea between the Indonesian islands of Java and Kalimantan. It lies in about 40 metres of water .

Serica is the operator of the Biliton PSC and currently holds a 90% interest. In March 2007, Serica entered into a farm-out agreement under the terms of which Nations Petroleum (Biliton) B.V. will earn a 45% interest in the Biliton PSC by paying a contribution to Serica`s back costs and bearing the majority of the costs of drilling two wells in the PSC in 2007. Following the completion of this agreement, Serica will have a retained 45% interest in the PSC and will remain the operator of the block.

The Biliton PSC lies in a virtually unexplored Indonesian basin which has many of the characteristics of analogous basins nearby which have, to date, produced substantial volumes of oil and gas. Only one exploration well has been drilled in the area, the Parang-G1 well drilled by Ashland Petroleum Indonesia Inc. in 1974. Although this was a dry hole, it encountered potential source rocks and up to 200 feet of reservoir sands with oil shows. In 1990, BP plc carried out a seabed survey that showed the presence of nine oil seeps within the current block boundary. Taken together with the oil shows found in the well, the indications are that hydrocarbons have been generated within the basin.

Serica has acquired a total of approximately 4,500 line kilometres of 2D seismic data in the Biliton PSC and has identified several large prospects that could be oil-bearing. Drilling locations have been selected and two exploration wells will be drilled in 2007, one on the Ismaya prospect and the other on the Indra prospect.

The Biliton PSC is located between the islands of Java and Kalimantan and is relatively remote from existing oil and gas infrastructure. Any development is therefore expected to involve offshore production, storage and offtake facilities.