AGENDA

1. Description of South East Armenia Project

2. The South East Armenia Project Consortium– Blackstairs Energy plc (Ireland)

– Vangold Resources Limited (Canada)

– Hereward Resources Limited (UK)

3. Progress to date and Future Plans

4. Discussion

Aims of the Consortium

• To negotiate Production Sharing Agreements (‘PSA’s) for blocks in the South East Armenia Project area with the Armenian Government

• To start Work Programs once the Exploration Licences have been issued

Location of SE Armenia Project area

South East Armenia Project area

The South East Armenia Project Partners

The Consortium consists of -

• BLACKSTAIRS ENERGY PLC, Dublin, Ireland a company formed in 2006 by two ex-senior executives with proven track

records from Irish oil company, Tullow Oil. The company specialises in eastern Europe and West Africa

• VANGOLD RESOURCES LIMITED, Vancouver, Canada a successful Canadian minerals company listed on the Toronto Venture

Exchange with extensive gold interests, and several profitable oil properties – their slogan is ‘Gold and Black Gold’

• HEREWARD RESOURCES LIMITED, Bedford, UK an exploration consulting company which has been involved in oil and

gas exploration in Armenia since 1994 (and other countries)

SE Armenia Project (blocks 4, 5, 6) - summary

• HEREWARD RESOURCES was given exclusive rights until the end of 2006 by the Ministry of Energy (see following slide) to study the oil and gas potential of South East Armenia

• HEREWARD carried out a detailed data review of the area over one year until late 2006 (using topographic/geological maps; borehole data; gravity and other geophysical data etc.)

• HEREWARD wishes to apply for Production Sharing Agreements (‘PSA’s) for blocks 4, 5 and 6, and will offer reasonable work programs and financial commitments

• A branch of HEREWARD has been registered in Armenia and basic office set up

Official Ministry letter dated 2nd May 2005

Does SE Armenia have oil and/or gas potential?We think so, because of -

oil traces found in Upper Cretaceous of Azat-1 well (eight kms from western border of Block 4), and one cubic metre of oil recovered (plus extensive oil shows) from Paleocene in Shorakhpur-1P well, eight kms further west;

extensive oil shows in Upper/Middle Eocene of Garni-1G well (five kms from western border of Block 4), and oil found in Middle Eocene of Shorakhpur-1P;

an oil seep in the Yeranos borehole, SE of Lake Sevan (Block 4); gas seeps in Lake Sevan and some shallow boreholes (Block 4); gas shows in the Vedi-1T well in the Cretaceous (western part of Block 5); heavy, waxy, asphaltic residual oil found within Triassic coals in the Jermanis-

4 borehole, north east of Ararat town (Block 5); the presence of Permian organic rich, mature, oil- and gas-prone calcareous

shales and mudstones in Block 5, and an unsubstantiated report of an oil show in the Meghri area (Block 6); also

bitumen in the Shahumian borehole and Coniacian of the Spitakjour River area, which may be derived from a Devonian source

Hydrocarbon Potential Summary

History of oil/gas exploration (1)

• 1947-1990: many boreholes drilled primarily for research and located using limited data - primarily surface geology and gravity

• Because of surface basalt useable seismic data only obtained from early 1980s onwards (after most drilling completed)

• 1993/4 California Energy Commission basic study of hydrocarbon potential

• 1994 onwards Armenian diaspora group prepared a two well drilling program which does not come to fruition

• 1994/5 Tacis (EU) financed detailed study on hydrocarbon potential; followed by promotional efforts to find investors

History of oil/gas exploration (2)

• Promotional phase culminates in AAEC (Armenian American Exploration Company) signing an agreement with Ministry of Energy January 1997; commences operations April 1997

• July 1997 to March 1998: 200 kilometres of seismic data acquired using Armenian seismic contractor

• December 1997 to July 1998: Azat-1 well outside Garni drilled to 3,524 metres, some oil shows at depth

• Operations ceased because of high cost, but technical work continues

• AAEC reassigned the licence to Transeuro Energy in April 30th 2004

• Transeuro Energy acquiring seismic and to drill two wells early 2007

• SE ARMENIA CONSORTIUM makes a PSA application for blocks 4, 5 and 6

Prospective areas identified in Armenia (Block 2)

• Oktemberyan Basin, 40-50 kms SW of Yerevan - South Karmir undeveloped gas field; North Karmir and two Artamet prospects (recent unofficial estimate of 180 BCF in place for South Karmir); also significant surface geochemical anomaly nearby

• Near Yerevan Basin, 20-30 kms due E of Yerevan (two 20 MMbls reserve Shorakhpur and Nubarashen prospects; recent ‘unofficial’ estimate of 7 MMbbls but that is for the Middle Eocene alone) which is directly adjacent to Block 4 (oil seep seen at Yeranos well, SW Lake Sevan area)

Summary of Armenian geology

•

Factors to consider

• Petroleum geology is complex; reasonable quality seismic data difficult (but possible) to obtain

• Gas pipe line currently under construction from north Iran to Yerevan passes through blocks 4, 5 and 6, and is expected to become operational during 2007

• In order to keep costs to a minimum, local seismic crew (AtomEnergoSeismoProjects) and perhaps Transeuro Energy’s drilling rig and equipment can be used

• As well as normal techniques, unconventional technology can be used, such as surface geochemical surveying, passive seismic etc.

SE Armenia Project oil and gas potential • BLOCK 4 - numerous gas shows around Lake Sevan, old oil show

at Yeranos borehole. Garni and Shorakhpur type structures could extend eastwards into the block. Source kitchen area due north of these structures. Numerous structures based upon gravity data have been identified.

• BLOCK 5. Unexplored Vayotsdzor part of prospective Central Depression; heavy, waxy residual oil found in Germanis-4 borehole. Some surface anticlines present.

• BLOCK 5. Presence of Permian organic-rich, mature, oil/gas prone calcareous shales and mudstones of Permian age. May also be Devonian source potential.

• BLOCK 6. Unexplored Jurassic-Cretaceous Kafan block. Also many gravity and structural highs identified.

Oil and gas potential in summary

• Blocks 4 and 5 have the most oil and gas potential, with the area southwest of Lake Sevan being the most interesting

• Gravity surveys and surface geological mapping indicate the presence of many structures

• There are apparently potential source rocks present but their quality and level of maturity are poorly known

• Potential reservoir rocks exist but their quality needs to be studied as well as potential sealing rocks

• Poor source rocks and a lack of good reservoir rocks could downgrade the potential

• The SE ARMENIA PROJECT is FRONTIER and HIGH RISK!

Gegharkunik and Lake Sevan areas (Block 4)(note: only some of the gravity highs are shown)

East Ararat and Vayotsdzor areas (Block 5)

Vayotsdzor (Block 5) area: general geology

Syunik area, including the Kapan Dome (Block 6)

Syunik area, incl. Kapan Dome: general geology

and finally …..

• The SE Armenia Project area has some positive features for oil and gas

• It is unexplored and therefore should be considered HIGH RISK

• Considerable exploration work over several years is needed before the drilling of any wells could be considered

• The members of the SE ARMENIA PROJECT CONSORTIUM are technically well qualified

• AND can bring sufficient financial resources to carry out the Exploration Task and ‘do a proper job’

• Protection of the environment will be the major consideration in ALL aspects of ALL tasks

• Continuous and detailed consultation with OUR PARTNERS in GOVERNMENT will be ALWAYS taken seriously