Development Projects

Development Projects Summary:

The Madagascar Oil blocks contain two field areas that have been the subject of extensive investigation over the years
The Tsimiroro Field in Block 3104 is projected to be a conventional steam flood development that will recover 70% of the original-oil-in-place. Work in 2011 is planned to further define the resource and installation is underway to begin operation of a steam flood pilot in late 2012. Key events for Tsimiroro include:

Identification of most likely P50 cases of 965 million barrels Contingent Original-Oil-in-Place and 708 million barrels Prospective-Oil-in-Place. A high estimate of 5.5 billion barrels was assessed for the two categories (source: NSAI CPR).

A successful 2008 cyclic steam test which produced up to 150 bopd per well and over 2,000 bbls total of 14o API oil from 3 wells.

The 2010 CPR Contingent oil development estimate of 87,500 bopd production and a valuation for P50 NPV10 of US$1.1 billion at $70 Brent (source: NSAI CPR).

The P50 level adjusted for increased value to $80/bbl Brent generates:

NPV10 of $1.5 billion based on the Contingent Resources.

NPV10 of $3.5 billion based on the Contingent and Prospective Resources volumes.

(Source: NSAI CPR: First figure based $70/bbl Brent in CPR. Second figure adjusted to $80/bbl Brent price per MOIL)

The Bemolanga Field in Block 3102 has been studied extensively, by several companies over the years, and work has accelerated since Madagascar Oil took over the block in 2005 and Total joined as Joint Venture partner in 2008. This recent work has concluded the following:

The JV drilled 160 core wells that demonstrated approximately 1.2 billion barrels of bitumen total and 470 million barrels MOIL share of resource classified as Contingent Petroleum-initially-in-Place.

The mining project economics utilizing hot water extraction techniques performed well, but is sub-economic at current prices and does not justify pilot plant construction at the present time. The government has agreed to postpone the mining project and the PSC obligationto construct a $100 million bitumen extraction pilot project has been cancelled.

The government has approved a revised work plan to shift work toinvestigation of deeper light oil or gas plays on the block.

A $10 million carry of MOIL costs by Total remains, which should fund the Madagascar Oil share until at least mid-2012.