OPERATING IN COTE D’IVOIRE

UK - Cote d'Ivoire Trade & Investment ForumLondon30 October 2013

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OVERVIEW OF RIALTO IN COTE D’IVOIRE

Key shareholders include a number of UK and Australian institutions plus the International Finance Corporation (part of the World Bank group)

Entered Cote d’Ivoire via acquisition of majority interest in existing operator in 2010

More than US$ 150 mln spent to-date on activities including 3D seismic survey and drilling of two new wells (plus one sidetrack)

Around US$ 13 mln spent to 30 June 2013 on “true” local content, eg local staff, contracts, social fees etc

Local operating company Rialto CdI Limited 100% Ivorian - 10 employees / contractors

COTE D’IVOIRE BLOCK CI-202 OVERVIEW

Proven basin with five discovered, undeveloped oil and gas fields

• Proven basin (15 wells drilled all of which have encountered hydrocarbons), but geologically complex

• April 2013: Vitol Farm-In for 65% of Rialto Cote d’Ivoire

* Upon completion, Vitol will hold 65% of Rialto Cote d’Ivoire

** Excluding Gazelle EEA, for which Rialto’s working interest is 74%

Party Participating Interest

Effective Interest

Rialto Cdl* 95% 85%**

Belier

Kudu(1984)

~200 bcf

Belier(1974)

20 mmbbls

Eland~100 bcf

Ibex(1985)~77 bcf

Gazelle (1977)Addax (1977)Impala (1978)Bubale (1981)Hippo (2000)

Virgo(2010)Gas

Discovery

Gazelle EEA is located within Block CI-202: 25 year production licence granted for Gazelle pursuant to the Block CI-202

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OUTLINE PLAN FOR DEVELOPMENT OF GAZELLE

Low cost, minimum facilities:

3 production wells planned (plus one contingent) targeting around 40 bcf P90 / 85 bcf P50;

Conductor supported offshore facility;

Multiphase pipeline to beach (ca. 8 km);

Minimum processing

Schedule and Costs:

14 to 18 months from Final Investment Decision to first gas;

Ca. $140 – 150 mln total capex to First Gas

First step in area development plan

REGIONAL DEVELOPMENT CONCEPT

Cote d’Ivoire has a mature power generation network and exports electricity from gas fired power stations

Major new energy-intensive mining projects planned

Current gas supply deficit and increasing demand predicted

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Mature Gas Market and Onshore Infrastructure

Regional Infrastructure Concept

Existing discoveries on Block CI-202, e.g.:

• Gazelle

• Hippo/Bubale

• Stranded discoveries in neighbouring blocks

• Additional exploration targets in CI-202 and neighbouring blocks

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SIGNIFICANT PROJECTED DEMAND FOR NATURAL GAS

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SO IS THERE POLITICAL RISK IN COTE D’IVOIRE?

Conventional political risk insurance tends to cover the following matters:

Political violence, such as revolution, insurrection, civil unrest, terrorism or war;

Governmental expropriation or confiscation of assets;

Governmental frustration or repudiation of contracts;

Business Interruption; and

Inconvertibility of foreign currency or the inability to repatriate funds.

Generally in Cote d’Ivoire (and indeed the continent as a whole), whilst there have been examples of civil unrest, occurrences of other forms of political risk which affect the oil industry have been rare

In fact, the UK is far more “politically risky” from an investment standpoint given the periodic revisions to economic terms!!

OUR EXPERIENCES – GOVERNMENT RELATIONS

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Constructive engagement with Ministry of Energy (Directorate Hydrocarbons – DGH) and State Oil Company (Petroci)

Relatively high degree of competence given industry history in Cote d’Ivoire

Key aim is to create good relations at all levels:

Local staff key – they are the “front office” for your company on the ground, not your chaperones for when you visit from abroad. Good, motivated Ivorian staff available

Understand the political and governmental environment and constraints in which Govt. department/ state partner works

Engage constructively with other O&G operators

A Company needs to build confidence which is best done by outperforming on commitments

OUR EXPERIENCES – LEGAL, FISCAL AND FINANCIAL

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Some ambiguity of interpretation in PSC, e.g. cost oil / gas allocation

Some disagreement regarding approach to negotiating new PSC for CI-202 – shallow water, marginal discoveries as opposed to deepwater exploration. “It’s in the model PSC” not always appropriate justification.

Good availability of local legal and fiscal expertise:

French speaking legal support with relevant experience a must

Recent DGH and Petroci financial audits conducted co-operatively, some disagreement on recoverability of certain costs

OUR EXPERIENCES – ENVIRONMENTAL MANAGEMENT

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Communications could be improved with Environmental Regulator (ANDE)

Lack of direct relationship with operators, as all must be via locally approved ESIA companies

Lack of updates or changes to environmental laws communicated directly to operators preparing ESIAs.

Extensive list of local companies (provided by ANDE) with average experience of preparing ESIAs to international standards

Emergency Response:

Local security company and medivac available

Lack of Emergency Response equipment (stockpile) available in-country to tackle any major incident if it occurs. Operators must source internationally, which is very costly.

OUR EXPERIENCES - INFRASTRUCTURE

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Abidjan airport better than Heathrow

Easy entry into country (3 month visa, also “urgent” Visa On Arrival capability)

Roads, hotels and offices in Abidjan are good standard

Communications:

Internet to international countries not great. Infrastructure within country not established to allow high speed connection (ie. fibre optic). For consistent, stable connection to international office, satellite is the most viable option but very expensive

Service companies, supply bases:

Some availability of international companies, but limited competition

With regards to local companies:

There is a general lack of awareness to approved & certified companies.

Only a limited number have experience of E&P, so they can be more expensive than sourcing a company from abroad

OUR EXPERIENCES – SOCIAL, EQUIPMENT AND TRAINING EXPENDITURE

Each PSC contains “Social, Equipment and Training” expenditure obligations

Ongoing discussions with DGH regarding allocation of funds, particularly social – clear preference of oil companies to fund activities (1) directly rather than pay to Government and (2) in area of operations

To-date, Rialto has constructed two schools in its area of activities, but we could have done and do more – proposed restoration works to local orphanage and provision of medical equipment to local hospital not yet approved, so funds remain unspent.

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SUMMARY

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Cote d’Ivoire remains under-exploited but future looks bright

The relevant authorities understand the Energy Industry and consequently relations are largely constructive and focused on results

There are and will continue to be daily frustrations, but we at Rialto are excited by the opportunities and are proud to be active operators in the region