Nido has one of the largest acreage positions in the Philippine oil and gas sector. All exploration assets are located in the offshore NW Palawan Basin, considered the Philippines' premier producing basin.

The Company's footprint in the NW Palawan Basin covers approximately 30,000 sq km of contiguous high quality acreage with water depths ranging from less than 100m to in excess of 2,000m. This provides Nido with an envious acreage position with substantial running room in which to explore a diverse range of plays across a range of water depths. Much of the NW Palawan basin remains lightly explored despite the numerous oil and gas discoveries made in the shallow water areas of the basin, including Nido's recent oil discoveries at Yakal-1 and Tindalo-1, and the single giant Malampaya gas field in Service Contract (SC) 38, operated by Shell Philippines Exploration. The deeper water areas provide Nido with superb leverage to large, high impact exploration targets with multi hundred million barrel potential. If successful, any one of these would have a transformational impact upon the Company.

Since 2007, Nido has invested heavily in the acquisition of modern 2D and 3D seismic data which has delivered an extensive Prospect and Lead Inventory of over 90 defined opportunities. 2008 was a watershed year for the Company with the drilling of two successful exploration wells at Yakal-1 and Tindalo-1 (SC 54A) in the Company's first foray as an offshore operator. Final Investment Decision for Tindalo-1 oil field development was approved in December 2009.

Following completion of the SC 58 deepwater sea-bed coring project and interpretation of the SC 63 Kawayan 3D seismic survey during 2010, the Company plans to implement an initial five well exploration drilling program across its NW Palawan acreage commencing in early 2011.

The drilling program will test high potential value prospects located in SC 54B (Gindara), deepwater block SC 58 (Balyena or Butanding), SC 63 (Aboabo-2 and Kalapato) and SC 54A (Lawaan). The Company commenced pre-planning activities for the drilling program during 2010 including the purchase of some of the long- lead items required for the multi-well program.

Nido was awarded 100% interest in Service Contract 54 (SC 54) on 5 August 2005. The block surrounds SC 14A, which contains the Nido oil fields, and is adjacent to SC 6B. Nido holds participating interests in these blocks of 22.49% and 7.81%, respectively. The block lies immediately on trend with the giant Malampaya field with 2.7 tcf of gas.

In May 2006, Yilgarn Petroleum Philippines Pty Ltd, a wholly owned subsidiary of Kairiki Energy Ltd, farmed into the block for a 40% participating interest.

In 2007 and 2008, the SC 54 Joint Venture acquired the 850 sq km Abukay 3D seismic survey located over the northern, deeper water sector of the block. Full PSDM processing of the 3D volume was completed in 2009. This data set has defined the current Prospect and Lead Inventory for the deeper water area of the block. The shallow water area of SC 54 is covered by a multi-client 3D seismic survey, licensed by Nido in 2004. This data set has defined the shallow water Prospect and Lead Inventory which is primarily focused on the productive Nido Limestone pinnacle reef play.

Following the drilling of the Yakal-1 and Tindalo-1 exploration wells in 2008, the SC 54 Joint Venture agreed to partition the block into two areas: SC 54A (shallow waters, less than120m water depths), and SC 54B (deep waters, less than120m water depths). SC 54A is focused on the rapid commercialisation of the Tindalo and Yakal oil fields and the exploitation of numerous similar Nido reef plays via a broader area development strategy. SC 54B is focused on high impact exploration activity.

Joint Venture Partners: Kairiki Energy Ltd 30.1%; Trafigura Ventures III (BV) 15.0% ;TG World (BV1) Corporation 12.5%
Area 862 sq km

Activity in this block is focused on the immediate development of the Tindalo oil field. The development concept is a low capital cost solution, comprising a single well completion linked to production facilities located on the Aquamarine Driller jack up rig. Oil offtake will be through a dynamically positioned Floating Storage and Offtake Vessel (FSO). The benefit of this solution is its mobility and re-usability allowing the Joint Venture to relocate the facility over subsequent exploration discoveries following the end of the Tindalo field life. This flexibility is a key element of the Company's area development strategy.

First oil is scheduled in the first half of 2010 with an initial plateau rate expected at between 7,000 and 15,000 bopd. Most likely recoverable oil volumes are estimated at 5.1 million barrels.

The block contains in excess of 20 undrilled Nido pinnacle reef plays, which offer further, low risk exploration drilling targets in the near term. The block also contains undeveloped oil in the Nido 1X-1 well which straddles the SC 54A and SC 14B licence boundary. Nido has a participating interest in both blocks.

Nido is currently in the process of maturing its area development strategy and has commenced this activity by reprocessing a swath of 3D seismic data over the greater Tindalo/Yakal/Nido 1X-1 trend.

Joint Venture partner: Kairiki Energy Ltd (40%)

SC 54B has been a key area of exploration focus following the acquisition of the 845 sq km Abukay 3D seismic in 2007 and 2008. Following final Post Stack Depth Migrated (PSDM) processing in 2009, Nido completed the interpretation of the 3D seismic data that identified the large Gindara Prospect and a number of smaller satellite structures.

The Gindara Prospect has mean unrisked oil in place volumes of 1 billion barrels within three play types - the Nido limestone, Miocene clastics and deeper Mesozoic plays. Gindara is drill-ready and is the highest ranked prospect in the Nido Prospect and Lead inventory. The well is planned to be drilled as part of the exploration drilling program commencing in 2011. The block contains three existing exploration wells, all of which encountered hydrocarbon shows but were sub-optimally located due to the relatively poor quality vintage 2D seismic data on which these wells were drilled. The work completed by Nido based on modern PSDM 3D seismic has demonstrated that significant upside potential exists within the northern sector of the block.

Joint Venture Partner: PNOC-EC 50%
Area: 13, 487 sq km

Service Contract 58 (SC 58) is a large deepwater block of approximately 13,440 sq km that lies immediately outboard of the giant Malampaya gas field. No wells have been drilled in the block to date. Water depths are in excess of 1,000 metres over most of the block.

In July 2006, Nido farmed into SC 58 for a 50% participating interest. As part of the Farm-in agreement, the Company and assumed operatorship of the block and is responsible for all exploration activities and costs up to and including the drilling of the first exploration well in order to earn a 50% participating interest in the block. The block is currently in Sub-Phase 3, which continues through to 11 January 2012 following an 18-month extension to the Sub-Phase approved by the Philippine Department of Energy (DOE).

In 2006 and 2007 Nido implemented an aggressive seismic acquisition campaign, acquiring 3,184 km 2D seismic in 2007 followed by 661 sq km of focused 3D seismic over four large high graded deepwater leads. Interpretation of the seismic data has confirmed the presence of an extensive deepwater play fairway comprising Oligocene-Miocene Nido limestone platform and reefal plays and Miocene trubidites. Nido has matured an extensive Prospect and Lead inventory for the block, dominated by five large prospects: Balyena, Balyena East, Butanding, Butanding West and Dorado.

The main activity during 2010 was the acquisition of a multi-beam and deepwater seabed coring program, which was completed in April 2010. The survey will be used to help decide the final drilling sequence in the block. Currently, the Balyena Prospect is the expected first well to be drilled and forms part of the five well drilling program planned to commence in 2011.

Joint Venture Partner: PNOC-EC 50%
Area: 10,671 sq km

Service Contract 63 (SC 63) was awarded to Nido and PNOC-EC in November 2006. The block covers an offshore area of 10,560 sq km and is contiguous to the southern portions of SC 58 and SC 54B. The blocks are on trend and share similar geology with the prolific hydrocarbon province offshore Sabah, Malaysia to the southwest. In addition, the block contains a gas discovery at the Aboabo A1-X well (Phillips Petroleum Ltd, 1981) located in the southern sector of the block, reported to have flowed gas at an estimated rate of 50 million cubic feet per day on test.

The existing exploration wells have all been drilled on the shallow shelfal regions of the block, many of them encountering hydrocarbon shows. The majority of the wells were drilled on very poor quality vintage 2D seismic resulting in numerous failures due to wells being drilled off-structure. In many ways, Nido regards the block as essentially lightly explored but the gas discovery at Aboabo A1-X indicates that the upside of the block has yet to be realised.

In 2007, the Joint Venture acquired the 3,255 km 2D East Sabina seismic survey thus prioritising the southern sector of the block for coverage by 3D seismic. In October 2009, the Joint Venture acquired the 754 sq km Kawayan 3D seismic survey, covering the area around the Aboabo A1-X discovery. Processing of this survey will continue through to mid 2010.

The block is currently in Sub-Phase 2, recently extended by the Philippine Department of Energy by 18 months in order to allow additional time to process and interpret the Kawayan 3D seismic survey, mature the Prospect and Lead inventory and select the first exploration wells to be drilled in the block.