Hulf Hamilton

Commentary on First Calgary Petroleums Ltd.

Presented

October 2005

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Hulf Hamilton CONTENTS

Summary and Conclusion 1 Corporate Overview 2

3 Reserves and Production

4 Valuation

5 Financial Projections Appendices

Disclaimer

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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 consent 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

Conclusion Summary

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.

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. 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.

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).

FCPL’s 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. 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.

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. The value of FCPL shares has fallen recently following failed

negotiations to sell the company in June 2005. 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. Does the current share price range of 400p fairly reflect the

potential value of the company from a previous range of 700p? 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

First Calgary Petroleum Share Price History

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

16/4/05 FCPL announces that it is looking at strategic alternatives

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.

15/6/05 FCPL announces termination of discussions with Repsol

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Hulf Hamilton

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&P’s from 81 to 96 (Tangent Oil and Petrostar). Joined FCPL as CEO in 1997.

Finance Director Exploration Director UK National settled in Canada - Geophysicist and exploration geoscientist with small Canadian E&P’s (Dome Petroleum, Westcoast Petroleum/Numac Energy). Joined FCPL in 1999.

Canadian Accountant with small E&P background – (Shelter Hydrocarbons, Opinac Exploration, CN Exploration, Arakis Energy and Scorpion Energy). Joined FCPL in 1999. Garry Worth Non executives Include an interesting selection of ex Eurosov

Executives (sold to Sibir in the 1990’s) including – Alastair Beardsall and Yuri Shafranik. Ray Anthony is now a non-exec but started out as a Director in 1997.

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)

Executive Director Corporate Financier with O&G M&A background in

small Canadian E&P’s (Bonanza Oil, Maximum Energy Group). Joined FCPL as Executive Vice President in 2004

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 pro’s 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. Source: Photographs – First Calgary Petroleum.

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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Hulf Hamilton 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

Source: Algerian Ministry of Mines

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.

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.

Algeria hydrocarbons are produced from good quality (mostly Triassic) sandstone in 4 areas: Potential Eastern Sahara, mature oil

and gas production with potential for more major discoveries (First Calgary here).

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. Central Sahara, gas prone with

renewed interest with recent oil strikes.

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.

Western Sahara, chiefly gas prone but remains practically unexplored.

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. Northern Algeria is geologically

very complex and its hydro-carbon potential remains only partially known.

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Hulf Hamilton Algeria Reserves and Production

General Oil: Proved reserves 1984 1994 2003 2004 Share R/P(bn bbls) (bn bbls) (bn bbls) (bn bbls) of world ratio Algeria is experiencing an economic upturn, in large part aided by

strong oil and natural gas export revenues. Algeria 9.0 10.0 11.8 11.8 1.0% 16.7Angola 2.1 3.0 8.8 8.8 0.7% 24.3Chad - - 0.9 0.9 0.1% 14.6Rep. of Congo (Brazzaville) 0.8 1.4 1.4 1.8 0.2% 20.3Egypt 4.0 3.9 3.5 3.6 0.3% 13.8Equatorial Guinea - 0.3 1.3 1.3 0.1% 10.0Gabon 0.6 1.4 2.3 2.3 0.2% 26.6Libya 21.4 22.8 39.1 39.1 3.3% 66.5Nigeria 16.7 21.0 35.3 35.3 3.0% 38.4Sudan 0.3 0.3 6.3 6.3 0.5% 57.3Tunisia 1.8 0.3 0.5 0.6 0.1% 25.2Other Africa 1.0 0.6 0.6 0.5 8.6Total Africa 57.8 65.0 111.8 112.2 9.4% 33.1

Natural Gas: Proved reserve 1984 1994 2003 2004 Share R/P(tcm) (tcm) (tcm) (tcm) of world ratio

Libya 0.63 1.31 1.49 1.49 0.8% *Nigeria 1.36 3.45 5.00 5.00 2.8% *Other Africa 0.56 0.78 1.18 1.18 0.7% *Total Africa 6.22 9.13 13.94 14.06 7.8% 96.9

Algeria Production

Algeria 3.44 2.96 4.55 4.55 2.5% 55.4Egypt 0.24 0.63 1.72 1.85 1.0% 69.1

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 re-elected 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.

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Algeria hopes to increase its crude oil production capacity significantly over the next few years by attracting more foreign investment.

Gas

Oil

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)

Source: BP Statistical Review, 2005

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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,

Source: Petroleum Economist

Algerian Geological Basins

Tilrhmet Dome, Touggourt Saddle, and Dahar Dome FCPL Acreage - 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 country’s 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.

Constantine

Ghadames

Triassic

Illizi

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Hulf Hamilton

Algerian Assets

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Hulf Hamilton Algerian License Block Summary

Algerian License Blocks Block 405b Ledjmet

Source: Algerian Ministry of Energy & Mines

The gas discovery Block now under development.

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

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

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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

Source: FCPL

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.

Frasnian oil source

Silurian gas source

Reservoir

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Hulf Hamilton License Map showing Hydrocarbon discoveries Berkine Basin Discoveries - Algeria

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.

FCPL MLE gas discoveries on Ledjmet

FCPL Oil discoveries on Rhourde Yacoub

Anadarko – Hassi Berkine giant oil field

CEPSA - Rhourde Yacoub oil discovery on adjacent Block

Sonatrach – Ourhoud giant oil discovery

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

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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.

Source Rock Distribution

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: 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.

Well Flowrates Well Liquids Gas

(mmcfd) (bbl/d)

Gross Recoverable Gas Reserves Estimate

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.

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

Possible 4439bcf

Probable 1432bcf

Proven 560bcf

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

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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 Liquids Gas

(mmcfd)

(bbl/d) RKFN-1 Un commercial

Source: FCPL, Hulf Hamilton YCB-1 Dry hole ZCH-1 8,545 56 ZCH-2 Drilling Oct 2005 ZCHW-1 Un commercial RTN-1 Pending

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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Hulf Hamilton

Reserves and Production

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Hulf Hamilton Proven + Probable (2P) Reserves Degolyer & Macnaughton Hulf Hamilton First Calgary GROSSGas

1P 2P 3P(bcf) (bcf) (bcf)

405b 560 1992 6431406a 49 173 559

609 2165 6990

Liquids1P 2P 3P

(MMbbl) (MMbbl) (MMbbl)405b 71 300 922406a 6 26 80

77 326 1002

Total 1071 4121 13002

Reserves

Reserves

NETGas

1P 2P 3P(bcf) (bcf) (bcf)

405b 177 411 1081406a 36 85 223

213 495 1304

Liquids1P 2P 3P

(MMbbl) (MMbbl) (MMbbl)405b 17 57 162406a 4 13 36

21 69 198

338 911 2491

Reserves

Reserves

NETGas

1P 2P 3P(bcf) (bcf) (bcf)

405b406a

152 353 920

Liquids1P 2P 3P

(MMbbl) (MMbbl) (MMbbl)405b406a

22 71 199

284 779 2114

Reserves

Reserves

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

Forms the basis of our Core valuation on p24. 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 Gross 2P Liquids production - 406 Commentary

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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.

Gross 2P Gas Production - 405 Gross 2P Gas production - 406

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Significant 500mmcfd plateau gas rate

Very low 45mmcfd plateau for 406.

Source: Hulf Hamilton

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Hulf Hamilton

Valuation

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Hulf Hamilton 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

lower

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 s

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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Hulf Hamilton Algeria Asset Deal History

Year Buyer Seller AssetValue Oil Gas Total Value($MM) (MMbbl) (bcf) (Mmboe) ($/boe) KEY ASSETS

2005 BP, BHP, Shell, Gulf KeystoneGovernment of Algeria 9 projects in 6th licensing awards2005 Gulf Keystone Government of Algeria 2 projects in 6th licensing awards2004 First Calgary Sonatrach 105 15 121 35 3.00 5% net profits interest in 2 Algeria blocks2004 Repsol , Gas Natural Sonatrach 1680 Gassi Touil LNG2004 PTT Exploration PetroVietnam two onshore oil blocks in Algeria2003 Statoil ASA BP plc 740 47 582 144 5.14 31.85% - In Salah, 50% - Amenas gas project2003 First Calgary Sonatrach Menzel Ledjmet East field in Berkine Basin 2003 Total Government of Algeria Interest in an Algeria exploratory permit2002 Anadarko, Maersk Olie Government of Algeria Exploration rights over Block 403c/e 2002 Repsol YPF SA Woodside, Partex Exploration block 401-d2002 Total SA Government of Algeria exploration permit in the Timimoun Basin2001 Tullow Oil plc ENI 30% participating interest in Block 222b 2001 First Calgary Sonatrach Block 405b Menzel Lejmat 2000 Amerada Hess Sonatrach 434 147 147 2.95 49% interest in Gassi El Agreb project2000 Sonatrach Arco, BP plc 350 98 98 3.57 40% interest in Rhourde El Baguel oil field

3310 307 703 424 $3.84/boe

Year Buyer Seller AssetValue Oil Gas Total Value($MM) (MMbbl) (bcf) (Mmboe) ($/boe) KEY ASSETS

2005 BP, BHP, Shell, Gulf KeystoneGovernment of Algeria 9 projects in 6th licensing awards2005 Gulf Keystone Government of Algeria 2 projects in 6th licensing awards2004 First Calgary Sonatrach 105 61 406 129 0.82 5% net profits interest in 2 Algeria blocks2004 Repsol , Gas Natural Sonatrach 1680 225 5538 1148 1.46 Gassi Touil LNG2004 PTT Exploration PetroVietnam two onshore oil blocks in Algeria2003 Statoil ASA BP plc 740 31.85% - In Salah, 50% - Amenas gas project2003 First Calgary Sonatrach Menzel Ledjmet East field in Berkine Basin 2003 Total Government of Algeria Interest in an Algeria exploratory permit2002 Anadarko, Maersk Olie Government of Algeria Exploration rights over Block 403c/e 2002 Repsol YPF SA Woodside, Partex Exploration block 401-d2002 Total SA Government of Algeria exploration permit in the Timimoun Basin2001 Tullow Oil plc ENI 30% participating interest in Block 222b 2001 First Calgary Sonatrach Block 405b Menzel Lejmat 2000 Amerada Hess Sonatrach 434 49% interest in Gassi El Agreb project2000 Sonatrach Arco, BP plc 350 40% interest in Rhourde El Baguel oil field

3310 286 5944 1277

Proven + Probable

Proven

$1.40/boe

Historic 1P reserve multiple

Historic 2P reserve multiple

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.

- 23 -

Hulf Hamilton 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 - Gas price long term $4.5/mcf at Algerian border.

Zero inflation real economics. 405 Life of field Gross Capex $1900MM ($3.04/boe) – mid range for regional trends

Regional Capex trends El Merk (ENI): $2.51/boe Ian EOR (ENI): $4.09/boe 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 VALUE

Asset Dev Risked Unit RiskedLiquids Gas Total Risk Entitlement Value Asset Value

(MMbbl) (bcf) (Mmboe) (%) (Mmboe) ($/boe) ($MM) (p)Algeria 405b 57 411 125 1 125.1 7.03 880 236 p

406a 13 85 27 1 26.7 1.23 33 9 pCore Assets 69 495 152 152 8 912 245 p

Financial effectsDebt 0 0Cash 40 11 pOptions & Warrants -4 -1 p

36 10 pCore NAV 152 MMboe 152 MMboe $6.2/boe $948 MM 254 p

Upside VALUEProspect Expl Risked Unit Risked

Liquids Gas Total Risk Entitlement Value Asset Value(MMbbl) (bcf) (Mmboe) (%) (Mmboe) ($/boe) ($MM) (p)

Algeria 405b 105 670 217 0.40 87 2.81 610 164 p406a 23 138 46 0.2 9 0.25 11 3 p

Upside NAV 263 MMboe 96 MMboe $6.5/boe $621 MM 167 p

Total NAV 415 MMboe 248 MMboe $6.3/boe $1569 MM 421 p

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

2005 2006 2007+Oil 45 50 36Gas 4 4.8 4.5

3P Net Reserves

2P Net ReservesRESERVES

RESERVES

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.

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 p4 p 6 p 9 p 11 p 13 p 15 p92 p 175 p 245 p 267 p 332 p 383 p

0 0 0 0 0 011 p 11 p 11 p 11 p 11 p 11 p-1 p -1 p -1 p -1 p -1 p -1 p10 p 10 p 10 p 10 p 10 p 10 p

102 p 185 p 254 p 277 p 342 p 392 p

(p) (p) (p) (p) (p) (p)61 p 117 p 164 p 178 p 222 p 256 p1 p 2 p 3 p 4 p 5 p 5 p

62 p 119 p 167 p 182 p 227 p 261 p

164 p 304 p 421 p 458 p 569 p 654 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 PV’s 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.

- 26 -

Hulf Hamilton

Financial Projections

- 27 -

Hulf Hamilton FCPL Projected Key Financials

Summary Data Commentary

We have attempted to model the finances of FCPL forward to 2010.

Key NumbersFirst Calgary

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

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.

Key Assumptions 2004 2005 2006 2007 2008 2009 2010Interest on debt 4.00% 4.75% 4.50% 4.50% 4.50% 4.50% 4.50%Corporate Tax rate 38.60% 33.00% 33.00% 33.00% 33.00% 33.00% 33.00%No shares 191.684 208.6 208.6 208.6 208.6 208.6 208.6$/$ Exchange 1.8 1.8 1.8 1.8 1.8 1.8 1.8

Financing costs continue to drag on finances until 2010.

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 2004 2005E 2006E 2007E 2008E 2009E 2010E

AssumptionsWTI Oil Price ($/bbl) 45.00 50.00 50.00 36.00 36.00 36.00 36.00US$ / £ exchange rate 1.80 1.80 1.80 1.80 1.80 1.80 1.80Production (mboe/d) 0.0 0.0 0.0 0.0 21.7 41.5 73.0

Profit and Loss AccountTurnover 1.3 0.0 0.0 0.0 279.6 533.2 946.6 - operating costs (2.2) (3.8) (9.2) (21.4) (21.4) (21.4) (21.4) - depreciation and abandonment (0.1) 0.0 0.0 0.0 (19.0) (34.1) (56.2)Total cost of sales (2.3) (3.8) (9.2) (21.4) (40.4) (55.6) (77.6)Gross profit (1.0) (3.8) (9.2) (21.4) 239.2 477.6 868.9

Exploration expenditure/reserves written off (10.0) (12.0) (14.4) (17.3) (20.7) (24.9)Administrative costs (4.0) (6.0) (6.6) (7.3) (15.0) (16.5) (18.2)Operating profit (5.0) (19.8) (27.8) (43.1) 207.0 440.4 825.9

JV/other income 0.0 0.0 0.0 0.0 0.0 0.0 0.0Foreign Exchange gains (loss) (1.5) 0.0 0.0 0.0 0.0 0.0 0.0Exceptional gains 0.0 0.0 0.0 0.0 0.0 0.0 0.0Net Interest 0.0 0.4 (27.3) (37.8) (34.9) (27.7) (18.6)

Profit before tax (6.6) (19.3) (55.0) (80.9) 172.1 412.7 807.3

Taxation 0.0 0.0 0.0 0.0 0.0 (113.2) (266.4)Profit after tax (6.6) (19.3) (55.0) (80.9) 172.1 299.5 540.9

Dividend 0.0 0.0 0.0 0.0 0.0 0.0 0.0Retained Profit 0.0 (19.3) (55.0) (80.9) 172.1 299.5 540.9

EPS (c) 0.00 (0.09) (0.26) (0.39) 0.82 1.44 2.59CFPS (c) 0.00 (0.12) (0.31) (0.42) 0.68 1.44 2.87

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

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

CashflowUS$ millions 2004 2005E 2006E 2007E 2008E 2009E 2010EOil price 45.00 50.00 50.00 36.00 36.00 36.00 36.00

Operating profit (6.6) (19.8) (27.8) (43.1) 207.0 440.4 825.9Depreciation (0.1) 0.0 0.0 0.0 (19.0) (34.1) (56.2)Exploration write off 0.0 (10.0) (12.0) (14.4) (17.3) (20.7) (24.9)Working capital & other gains/losses 5.1 4.0 5.0 6.0 6.0 6.0 6.0Net cash inflow from operations (1.5) (25.8) (34.8) (51.5) 176.7 391.5 750.8

Returns on investment and servicing of financeNet interest paid 0.0 0.0 (29.3) (35.4) (35.4) (33.8) (19.5)Other 1.6 0.0 0.0 0.0 0.0 0.0 0.0Net cash outflow 1.6 0.0 (29.3) (35.4) (35.4) (33.8) (19.5)

Pre-tax cashflow 0.1 (25.8) (64.0) (86.9) 141.3 357.7 731.3Taxation 0.0 0.0 0.0 0.0 0.0 (56.6) (133.2)Post tax cashflow 0.1 (25.8) (64.0) (86.9) 141.3 301.1 598.1

Investing ActivitiesDevelopment Capex (38.6) (120.0) (1117.5) (225.0) (52.5) (22.5) (7.5)Exploration Capex (70.0) (30.0) (36.0) (43.2) (51.8) (62.2) (74.6)Acquisitions/Disposals 0.0 0.0 0.0 0.0 0.0 0.0 other 16.2Net cash outflow (92.4) (150.0) (1153.5) (268.2) (104.3) (84.7) (82.1)

Dividends paid 0.0 0.0 0.0 0.0 0.0 0.0 0.0Cashflow before financing (92.2) (175.8) (1217.5) (355.1) 36.9 216.4 515.9

Equity Financing 78.9 114.0 545.0 220.0Debt Financing 72.0 670.5 135.0 0.0 0.0 0.0

Net Cashflow (13.3) 10.3 (2.0) (0.1) 36.9 216.4 515.9

Significant capital expenditures from 2006 onwards.

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

Debt portion of 60% of required financing assumed.

- 30 -

Hulf Hamilton FCPL Projected Balance Sheet Data

Commentary

Balance SheetUS$ millions 2004 2005E 2006E 2007E 2008E 2009E 2010EFixed AssetsTangible Fixed Assets end 310.1 348.7 471.7 1595.5 1849.4 1950.2 2047.9Intangible Fixed Assets end 0.0 30.0 63.0 99.9 141.8 189.8 245.5Investments 0.0 0.0 0.0 0.0 0.0 0.0 0.0

310.1 378.7 534.7 1695.4 1991.1 2140.0 2293.3Current AssetsStock 0.8 0.8 0.8 0.8 0.8 0.8 0.8Debtors 0.4 0.4 0.4 0.4 0.4 0.4 0.4Cash 81.9 42.1 40.1 40.0 76.9 93.3 609.3

83.0 (56.8) 41.2 41.1 78.0 94.4 610.4

Creditors: within one year (30.9) (34.4) (37.5) (45.8) (51.3) (51.2) (56.3)

Net Current (liabilities)/assets 52.1 (91.2) 3.7 (4.8) 26.7 43.2 554.1

Total assets less current liabilities 362.2 287.4 538.4 1690.6 2017.9 2183.2 2847.4

Creditors: due after one year 0.0 (72.0) (692.5) (827.5) (827.5) (827.5) (527.5)

Provisions for liabilities and charges 0.0 248.2 1162.8 365.7 210.4 344.4 (79.1)Net Assets 362.2 463.6 1008.7 1228.8 1400.8 1700.1 2240.8

Capital and ReservesCalled up share capital 362.2 463.7 1008.7 1228.7 1228.7 1228.7 1228.7P&L account 0.0 0.0 0.0 0.0 172.1 471.5 1012.5Equity shareholders funds 362.2 463.7 1008.7 1228.7 1400.7 1700.2 2241.1diff 0.0 0.0 0.0 0.1 0.0 -0.1 -0.3Gearing 0% 6% 70% 68% 57% 46% 12%

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

Equity doubles from injections in 2006/07 to 2010

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 No OptionsCash raised 'In money' IntrinsicPrice & Warrants Value($) ($) ($) ($)

Share Options 0.86 5700000 4889232 0.5 2699264

Warrants 0.01 1167640 11676.4 1.3 1542820

Totals 6867640 4900908.4 4242084

Total Intrinsic Option Value 4.9009084 4.24

- 34 -

Hulf Hamilton Algeria Block 405 Fiscal model

A

lgeria 405

First Calgary As at 1 Jan 2005 OutputsOil (mmbls) 220.19 NPV £mm 492 Unit ca

75.00%pex 3.04

NGL (mmbls) - NPV $mm 880 Unit opex 1.14Gas (bcf) 1,493.78 NPV10 7.03Total mmboe 469.16 IRR 24%

Entitlement Basis 125.13 751

Inputs 0.27 2007 oil price 362007 gas price 4.5Discount to Brent 0.00FX Rate (2004+) 1.79Tax rate 45%K Factor 0.770Royalty rate 0.110

Production Profile 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(kb/d) (mmbbl)GROSS GrossBlock 405 - Gas 1992 0.00 0.00 0.00 200.00 350.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 328.45 215.75 141.73 93.10 61.16 40.17 26.39 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1992Block 405 - liquids 294 0.0 0.0 0.0 33.3 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 294Cumulative Gas (bcf) 0.00 0.00 0.00 73.00 200.75 383.25 565.75 748.25 930.75 #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### ####Cumulative Oil (MMbbl) 0.0 0.0 0.0 12.2 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 TotalOil PriceBrent Oil price 0.00 0.00 0.00 0.00 45.00 50.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00Discount to Brent 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Net realised value 0.00 0.00 0.00 0.00 45.00 50.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00Gas PriceAlgeria-Tunisia 4 4.8 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5

Operating CostTotal Opex 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) 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 2032G&G, Field studies, Start-upFacilities 440 440 440Pipelines 250 250 250Drilling & Workover 1210 800 300 70 30 10 1210Capital Expenditure - Real 1900 0 0 0 0 0 1490 300 70 30 10 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1900

Capital Expenditure - Escalated 0 0 0 0 0 0 0 1490 300 70 30 10 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1900

Fiscal assumptionsProduction Royalty

(kb/d) Profit share R-factor20 48%40 45% 0% 7.060 39% 12% 7-860 39% 23% 8.0

Cost Recovery Calculation 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($ Million)Gross Oil/Gas Sales 0.0 0.0 0.0 0.0 0.0 0.0 0.0 766.5 1423.9 2874.4 2874.4 2297.0 1882.0 1583.7 1369.3 1215.2 1104.4 743.0 500.7 337.9 228.5 154.8 105.0 71.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0less: royalty 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -84.3 -156.6 -316.2 -316.2 -252.7 -207.0 -174.2 -150.6 -133.7 -121.5 -81.7 -55.1 -37.2 -25.1 -17.0 -11.6 -7.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Gross Revenues 0.0 0.0 0.0 0.0 0.0 0.0 0.0 682.2 1267.3 2558.2 2558.2 2044.3 1675.0 1409.5 1218.7 1081.5 982.9 661.3 445.6 300.8 203.4 137.7 93.5 63.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

K' factor- A 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8ROI factor- B 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 12% 12% 23% 23% 23% 23% 23% 23% 23% 23% 23% 23% 23% 23% 23% 23% 23% 23% 23%PV factor - C 48% 48% 48% 48% 48% 48% 48% 39% 39% 39% 39% 39% 39% 39% 39% 39% 39% 39% 39% 39% 48% 48% 48% 48% 48% 48% 48% 48% 48% 48% 48% 48%FCPL Entitlement (75%((.77-C)-B) 22% 22% 22% 22% 22% 22% 22% 29% 29% 29% 29% 29% 29% 20% 20% 11% 11% 11% 11% 11% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%

Cumulative Return CalculationA:Cumulative Revenue 0.0 0.0 0.0 0.0 0.0 0.0 0.0 766.5 2190.4 5064.8 7939.2 #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### #### ####D:Cumulative Investment 0.0 1.0 3.0 6.0 6.0 1496.0 1796.0 1866.0 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 1906.0R-factor (A+B/C+D) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.41 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

FCPL PSC Cash Flow 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 GrossEntitlement Oil (000 boe/d) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 16.6 30.9 62.3 62.3 49.8 40.8 24.0 20.7 10.4 9.5 6.4 4.3 2.9 0.8 0.5 0.4 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 125.13Turnover 0.0 0.0 0.0 0.0 0.0 0.0 0.0 218.5 405.8 819.2 819.2 654.6 536.4 314.8 272.1 136.7 124.2 83.6 56.3 38.0 10.3 7.0 4.7 3.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4505Bonus & other 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 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0Operating Cost 0.0 -1.5 -2.3 -3.0 -3.8 -7.5 -19.8 -19.8 -19.8 -19.8 -19.8 -19.8 -19.8 -19.8 -19.8 -19.8 -19.8 -19.8 -19.8 -19.8 -10.0 -10.0 -5.0 -5.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -321Capital Expenditure 0.0 0.0 0.0 0.0 0.0 -1117.5 -225.0 -52.5 -22.5 -7.5 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 -1425Profit TaxNet Cash Flow 0.0 -1.5 -2.3 -3.0 -3.8 -1125.0 -244.8 146.2 363.6 791.9 799.4 634.9 516.6 295.0 252.4 116.9 104.5 63.8 36.6 18.3 0.3 -3.0 -0.3 -1.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2755

Capital Allowance 0.0 0.0 0.0 0.0 0.0 -1117.5 -225.0 -52.5 -22.5 -7.5 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 -1425Balance C/F 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 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0Capital allowance used 0.0 0.0 0.0 0.0 0.0 0.0 0.0 198.7 386.1 799.4 40.8 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 1425Unused Allowance c/f 0.00 0.00 0.00 0.00 0.00 1117.50 #### 1196.31 832.75 40.81 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Exchange 1.79Gross Present Value 1/1/05 (%) share $MM £MM $/bbl* $/bbl**

8% 100.00% 1196.1 £669 9.56 1.9110.0% 100.00% 879.5 £492 7.0 1.4112% 100.00% 674.0 £377 5.39 1.0815% 100.00% 427.9 £239 3.42 0.68

* Entitlement barrels** Gross barrels

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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 Address

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

Burlington

SINOPEC

Gulf Keystone 10 Rue des Pins Hydra, Alger

Repsol 26. Rue Hadj Ahmed Mohamed -Hydra - Alger

13,Lotissement Altitude ,chemin de la madelaine -Hydra-Alger Cepsa

BHP/Billiton 5, Chemin Macklay - El-Biar -Alger

Petronas Hotel Sheraton Club Des Pin -Alger

Rosneft Stroytransgaz 67, rue des idrissides (ex.Rue Badin) El-Biar -Alger

Total Fina Elf 17, Chemin de la Madeleine 16030 -El-Biar -Alger

First Calgary Petroleum

Gaz de France 48, Rue des Frères Benali (ex Parmentier), Hydra, Alger

Petrocanada 172, Rue Hassiba Ben-Bouali

Anadarko 4, Chemin des Glicines, El-Biar -Alger

BP 12, Rue Slimane Amirat, Colonel Voirol, Aler

Amerada Hess Hôtel Sheraton, Club des Pins, Alger

Medex

PIDC Source: Ministry of Energy & Mining, Algeria

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