----

| x | ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|---|------------------------------------------------------------------------------------------------|

|  ̈ | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|----------------------------------------------------------------------------------------------------|

|                                                                    |                                          |
|-------------------------------------------------------------------------|-----------------------------------------------|
| Delaware                                                                | 20-2902156                                    |
| (State      or Other Jurisdiction ofIncorporation      or Organization) | (I.R.S.      EmployerIdentification      No.) |
|                                                                    |                                          |
| 16217      North May AvenueEdmond, OK                                   | 73013                                         |
| (Address      of Registrant’s Principal Executive Offices)        | (Zip      Code)                               |

| Securities      Registered Pursuant to Section 12(b) of the Act: |
|------------------------------------------------------------------|
| Title      of Each Class                                         |   | Name      of Each Exchange on Which Registered |
| Common      Stock $0.01 Par Value per Share                      |   | The      Nasdaq Stock Market LLC |
| Securities      Registered Pursuant to Section 12(g) of the Act: |
| None                                                             |

|                                           |                                                        |                                                                 |                                                                     |
|------------------------------------------------|-------------------------------------------------------------|----------------------------------------------------------------------|--------------------------------------------------------------------------|
| Large      Accelerated Filer   ̈ | Accelerated      Filer  x     | Non-Accelerated      Filer   ̈     | Smaller      Reporting Company   ̈     |

----

----

----

| Item      15. Exhibits, Financial Statements Schedules: |                            |
|---------------------------------------------------------|---------------------------------|
|                                                    |                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    | 1      | Financial      Statements |   |
|                                                    |                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |                            | See      Index to Consolidated Financial Statements on page 29 of the Company's      Form 10-K filed with the Securities and Exchange Commission on March 16,      2009. |   |
|                                                    |                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |                            | Consolidated      Financial Statements of Challenger Limited: |            Page No. |
|                                                    |                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |                            |   | Independent      Auditors Report | 9 |
|                                                    |                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |                            |   | Consolidated      Balance Sheets as of December 31, 2008 and 2007 | 10 |
|                                                    |                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |                            |   | Consolidated      Statement of Operations for the year ended December 31, 2008 and      2007 | 11 |
|                                                    |                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |                            |   | Consolidated      Statements of Stockholders' Equity for the years ended December 31, 2007      and 2008 | 12 |
|                                                    |                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |                            |   | Consolidated      Statements of Cash Flows for the years ended December 31, 2008 and      2007 | 13 |
|                                                    |                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    | 2      | Financial      Statement Schedules |   |
|                                                    |                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |                            | See      Notes to Consolidated Financial Statements on page 35 of the Company's      Form 10-K filed with the Securities and Exchange Commission on March 16,      2009. |   |
|                                                    |                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |                            | See      Notes to the Consolidated Financial Statements of Challenger Limited on      page 14 of this Form 10-K/A. |   |
|                                                    |                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    | 3      | Exhibits |   |
|                                                    |                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |                            | The      following exhibits are filed as part of this report or, where indicated,      were previously filed and are hereby incorporated by      reference. |   |

----

|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|--------|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   | Exhibit      No. | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | 2.1              | Merger      Agreement, dated as of August 11, 2005, by and among Bronco Drilling      Holdings, L.L.C, Bronco Drilling Company, L.L.C. and Bronco Drilling      Company, Inc. (incorporated by reference to Exhibit 2.1 to the      Registration Statement on Form S-1, File No. 333-128861, filed by the      Company with the SEC on October 6, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | 2.2              | Agreement      and Plan of Merger by and among the Company, BDC Acquisition Company,      Eagle Well Service, Inc. (“Eagle”), and the stockholders of Eagle dated as      of January 9, 2007 (incorporated by reference to Exhibit 2.1 to the      Company’s Current Report on Form 8-K, File No. 000-51571, filed by the      Company with the SEC on January 16, 2007).                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | 2.3              | Agreement      and Plan of Merger, dated as of January 23, 2008, by and among      Allis-Chalmers Energy, Inc., Bronco Drilling Company, Inc. and Elway      Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 to the Current      Report on Form 8-K, File No. 000-51471, filed by the Company with the SEC      on January 24, 2008).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | 2.4              | First      Amendment, dated as of June 1, 2008, to Agreement and Plan of Merger by      and among Allis-Chalmers Energy, Inc., Bronco Drilling Company, Inc. and      Elway Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 to the      Current Report on Form 8-K, File No. 000-51471, filed by the Company with      the SEC on June 2, 2008).                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | 3.1              | Amended      and Restated Certificate of Incorporation of the Company, dated August 11,      2005 (incorporated by reference to Exhibit 2.1 to the Registration      Statement on Form S-1, File No. 333-128861, filed by the Company with the      SEC on October 6, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | 3.2              | Bylaws      of the Company (incorporated by reference to Exhibit 3.2 to Amendment No.      1 to the Registration Statement on Form S-1, File No. 333-125405, filed by      the Company with the SEC on July 14, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | 4.1              | Form      of Common Stock certificate (incorporated by reference to Exhibit 4.1 to      Amendment No. 2 to the Registration Statement on Form S-1, File No.      333-125405, filed by the Company with the SEC on August 2,      2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | 10.1             | Shareholders’      Agreement relating to Challenger Limited dated January 4, 2008      (incorporated by reference to Exhibit 10.1 to the Current Report on Form      8-K, File No. 000-51471, filed by the Company with the SEC on January 9,      2008).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | 10.2             | Drilling      Rigs Purchase and Sale Agreement by and between Bronco Drilling Company,      Inc., Hays Trucking, Inc., and Challenger Limited dated January 4, 2008      (incorporated by reference to Exhibit 10.2 to the Current Report on Form      8-K, File No. 000-51471, filed by the Company with the SEC on January 9,      2008).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | 10.3             | Promissory      Note and Security Agreement by Challenger Limited dated January 4, 2008      (incorporated by reference to Exhibit 10.3 to the Current Report on Form      8-K, File No. 000-51471, filed by the Company with the SEC on January 9,      2008).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | +10.4            | Mutual      Termination and Release Agreement, dated August 8, 2008, by and among      Allis-Chalmers Energy, Inc., Bronco Drilling Company, Inc., and Elway      Merger Sub, LLC (incorporated by reference to Exhibit 10.1 to the Current      Report on Form 8-K, File No. 000-51471, filed by the Company with the SEC      on August 8, 2008).                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | 10.5             | Amended      and Restated Credit Agreement, dated as of September 29, 2008, among      Bronco Drilling Company, Inc., as Borrower, certain subsidiaries thereof,      as Guarantors, the lenders from time to time party thereto, as Lenders,      Fortis Bank SA/NV, New York Branch, as Administrative Agent, Joint Lead      Arranger and Sole Bookrunner, The Royal Bank of Scotland plc, as Joint      Lead Arranger and Co-Syndication Agent, the Prudential Insurance Company      of America, as Co-Syndication Agent, and The CIT Group/Business Credit,      Inc. and Caterpillar Finance Services Corporation, as Co-Documentation      Agents (incorporated by reference to Exhibit 10.1 to the Current Report on      Form 8-K, File No. 000-51471, filed by the Company with the SEC on      September 29, 2008). |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | +10.6            | Seperation      Agreement, dated effective as of September 10, 2008, by and between the      Company and Larry Bartlett.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | +10.7            | Form      of Director and Officer Indemnification Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | +10.8            | Bronco      Drilling Company, Inc. 2006 Stock Incentive Plan (incorporated by      reference to Appendix B to the Company’s Proxy Statement, filed by the      Company with the SEC on April 28, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | +10.9            | Form      of Restricted Stock Award Agreement (incorporated by reference to Exhibit      10.2 to the Company’s Current Report on Form 8-K, File No. 000-51571,      filed by the Company with the SEC on June 15, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | +10.10           | Form      of Stock Option Agreement (incorporated by reference to Exhibit 10.3 to      the Company’s Current Report on Form 8-K, File No. 000-51571, filed by the      Company with the SEC on June 15, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | +10.11           | Employment      Agreement, dated effective as of August 8, 2006, by and between the      Company and Zachary M. Graves (incorporated by reference to Exhibit 10.5      to the Company’s Quarterly Report on Form 10-Q, filed by the Company with      the Sec on August 10, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | +10.12           | Amendment      to Employment Agreement, dated as of August 2, 2007, by and between the      Company and Zachary M. Graves (incorporated by reference to Exhibit 10.4      to the Company’s Quarterly Report on Form 10-Q, filed by the Company with      the Sec on August 3, 2007).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | +10.13           | Employment      Agreement, dated effective as of August 8, 2006, by and between the      Company and Mark Dubberstein(incorporated by reference to Exhibit 10.6 to      the Company’s Quarterly Report on Form 10-Q, filed by the Company with the      Sec on August 10, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | +10.14           | Amendment      to Employment Agreement, dated as of August 2, 2007, by and between the      Company and Mark Dubberstein (incorporated by reference to Exhibit 10.5 to      the Company’s Quarterly Report on Form 10-Q, filed by the Company with the      Sec on August 3, 2007).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | +10.15           | Employment      Agreement, dated effective as of August 2, 2007, by and between the      Company and Larry Bartlett (incorporated by reference to Exhibit 10.1 to      the Company’s Quarterly Report on Form 10-Q, filed by the Company with the      Sec on August 3, 2007).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | +10.16           | Employment      Agreement, dated effective as of August 2, 2007, by and between the      Company and Steven Starke (incorporated by reference to Exhibit 10.2 to      the Company’s Quarterly Report on Form 10-Q, filed by the Company with the      Sec on August 3, 2007).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | *21.1            | List      of the Company’s Subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | *23.1            | Consent      of Grant Thornton LLP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | **23.2           | Consent      of PricewaterhouseCoopers LLP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | *24.1            | Power      of Attorney (included on signature page).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | *31.1            | Certification      of Chief Executive Officer of Bronco Drilling Company, Inc. pursuant to      Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as      amended.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | **31.1(a)        | Certification      of Chief Executive Officer of Bronco Drilling Company, Inc. pursuant to      Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as      amended.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | *31.2            | Certification      of Chief Financial Officer of Bronco Drilling Company, Inc. pursuant to      Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as      amended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | **31.2(a)        | Certification      of Chief Financial Officer of Bronco Drilling Company, Inc. pursuant to      Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as      amended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|   | *32.1     | Certification      of Chief Executive Officer of Bronco Drilling Company, Inc. pursuant to      Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as      amended, and Section 1350 of Chapter 63 of Title 18 of the United States      Code. |
|--------|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |      |                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | **32.1(a) | Certification      of Chief Executive Officer of Bronco Drilling Company, Inc. pursuant to      Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as      amended, and Section 1350 of Chapter 63 of Title 18 of the United States      Code. |
|   |      |                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | *32.2     | Certification      of Chief Financial Officer of Bronco Drilling Company, Inc. pursuant to      Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as      amended, and Section 1350 of Chapter 63 of Title 18 of the United States      Code. |
|   |      |                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | **32.2(a) | Certification      of Chief Financial Officer of Bronco Drilling Company, Inc. pursuant to      Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as      amended, and Section 1350 of Chapter 63 of Title 18 of the United States      Code. |
|   |      |                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | +         | Management      contract, compensatory plan or arrangement                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|   | *         | Previously      filed with the Company’s Annual Report on Form 10-K for the year ended      December 31, 2008, filed on March 16, 2009                                                                                                                 |   |   |   |
|   | **        | Filed      herewith.                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                     |                          |                                                                                                    |
|--------------------------|-------------------------------|---------------------------------------------------------------------------------------------------------|
|                     | BRONCO DRILLING COMPANY, INC. |
|                     |                          |                                                                                                    |
| Date:      June 30, 2009 | By:                           |  /S/    D. FRANK      HARRISON         |
|                     |                          | D.      Frank HarrisonChief      Executive Officer                                                      |

----

| Schedule      III  Financial Statements and Notes for Challenger      Limited |                                              |
|-----------------------------------------------------------------------------------------|---------------------------------------------------|
|                                                                                    |                                              |   |   |   |   |   |
| Challenger      Limited                                                                 |
| Financial      Statements                                                               |
| For      the Year Ended December 31, 2008                                               |
|                                                                                    |                                              |   |   |   |   |   |   |   |
|                                                                                    |                                              |   |   |   |   |   |   |   |
| Contents                                                                                |                                              |
|                                                                                    |                                              |
| Independent      Auditor's Report                                                       | 9         |
| Balance      Sheets                                                                     | 10                                           |
| Statements      of Income                                                               | 11                                           |
| Statements      of Changes in Equity                                                    | 12                                                |
| Statements      of Cash Flows                                                           | 13                                           |
| Notes      to the Financial Statements                                                  | 14                                           |

----

----

| Balance      Sheets - At 31 December 2008                                                                     |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |
|---------------------------------------------------------------------------------------------------------------|--------|-------------|--------|--------|--------|-------------|-------------|--------|--------|------------|------------|--------|--------|-------------|-------------|
|                                                                                                          |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |
| (all      amounts in US Dollars)                                                                              |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |
|                                                                                                          |   |        |   |   | Parent |        |        | Group  |   |
|                                                                                                          |   | Note        |   |   | 2008   |        |        | 2007   |   |       | 2008       |   |   | 2007        |        |
| Assets                                                                                                        |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |
| Non-current      Assets                                                                                       |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |
| Property,      plant and equipment                                                                            |   |  5     |   |   |   | 152,425,129 |        |   |   | 49,410,844 |       |   |   | 152,425,129 |        |   |   | 49,410,844 |   |
| Investment      in subsidiary                                                                                 |   |  6     |   |   |   | 397,569     |        |   |   | 397,569    |       |   |   | -           |        |   |   | - |   |
| Total      Non-current Assets                                                                                 |   |        |   |   |   |        | 152,822,698 |   |   |       | 49,808,413 |   |   |        | 152,425,129 |   |   |   | 49,410,844 |   |
|                                                                                                          |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
| Current      Assets                                                                                           |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
| Inventories                                                                                                   |   |  7     |   |   |   | 6,956,849   |        |   |   | 12,874,676 |       |   |   | 6,956,849   |        |   |   | 12,874,676 |   |
| Receivables      and prepayments                                                                              |   |  8     |   |   |   | 40,518,272  |        |   |   | 18,887,780 |       |   |   | 40,518,272  |        |   |   | 18,887,780 |   |
| Due      from related parties                                                                                 |   |  16    |   |   |   | 519,044     |        |   |   | 140,136    |       |   |   | 519,044     |        |   |   | 140,136 |   |
| Cash      and cash equivalents                                                                                |   |  9     |   |   |   | 2,842,761   |        |   |   | 2,752,885  |       |   |   | 2,842,879   |        |   |   | 2,753,003 |   |
| Total      Current Assets                                                                                     |   |        |   |   |   |        | 50,836,926  |   |   |       | 34,655,477 |   |   |        | 50,837,044  |   |   |   | 34,655,595 |   |
| Total      Assets                                                                                             |   |        |   |   |   |        | 203,659,624 |   |   |       | 84,463,890 |   |   |        | 203,262,173 |   |   |   | 84,066,439 |   |
|                                                                                                          |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
| Equity      and Liabilities                                                                                   |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
| Equity                                                                                                        |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
| Capital                                                                                                       |   |  11    |   |   |   | 64,957,265  |        |   |   | 50,000,000 |       |   |   | 64,957,265  |        |   |   | 50,000,000 |   |
| Additional      paid in capital                                                                               |   |  11    |   |   |   | 70,795,653  |        |   |   | 15,000,000 |       |   |   | 70,795,653  |        |   |   | 15,000,000 |   |
| Revaluation      reserve                                                                                      |   |  10    |   |   |   | 15,414,422  |        |   |   | 1,403,983  |       |   |   | 15,414,422  |        |   |   | 1,403,983 |   |
| Retained      earnings                                                                                        |   |        |   |   |   |        | 9,240,432   |   |   |       | 2,317,787  |   |   |        | 9,240,432   |   |   |   | 2,314,787 |   |
| Total      Equity                                                                                             |   |        |   |   |   |        | 160,407,772 |   |   |       | 68,721,770 |   |   |        | 160,407,772 |   |   |   | 68,721,770 |   |
|                                                                                                          |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
| Labilities                                                                                                    |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
| Non-current      Liabilities                                                                                  |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
| Long-term      debt                                                                                           |   |  13    |   |   |   | 4,545,190   |        |   |   | 738,499    |       |   |   | 4,545,190   |        |   |   | 738,499 |   |
| Total      Non-current Liabilities                                                                            |   |        |   |   |   |        | 4,545,190   |   |   |       | 738,499    |   |   |        | 4,545,190   |   |   |   | 738,499 |   |
|                                                                                                          |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
| Current      Liabilities                                                                                      |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
| Borrowings                                                                                                    |   |  13,14 |   |   |   | 13,554,645  |        |   |   | 2,676,000  |       |   |   | 13,554,645  |        |   |   | 2,676,000 |   |
| Trade      and other payables                                                                                 |   |  12    |   |   |   | 14,060,820  |        |   |   | 7,016,164  |       |   |   | 14,060,820  |        |   |   | 7,016,164 |   |
| Current      tax liabilities                                                                                  |   |  15    |   |   |   | 4,062,411   |        |   |   | 2,869,643  |       |   |   | 4,062,411   |        |   |   | 2,869,643 |   |
| Provisions                                                                                                    |   |        |   |   |   |        | 491,280     |   |   |       | -          |   |   |        | 491,280     |   |   |   | - |   |
| Dividends      and redemption payable                                                                         |   |        |   |   |   |        | 3,078,302   |   |   |       | 2,044,363  |   |   |        | 3,078,302   |   |   |   | 2,044,363 |   |
| Due      to related parties                                                                                   |   |  16    |   |   |   | 3,459,204   |        |   |   | 397,451    |       |   |   | 3,061,753   |        |   |   | - |   |
| Total      Current Liabilities                                                                                |   |        |   |   |   |        | 38,706,662  |   |   |       | 15,003,621 |   |   |        | 38,309,211  |   |   |   | 14,606,170 |   |
| Total      Liabilities                                                                                        |   |        |   |   |   |        | 43,251,852  |   |   |       | 15,742,120 |   |   |        | 42,854,401  |   |   |   | 15,344,669 |   |
| Total      Equity and Liabilities                                                                             |   |        |   |   |   |        | 203,659,624 |   |   |       | 84,463,890 |   |   |        | 203,262,173 |   |   |   | 84,066,439 |   |
|                                                                                                          |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
| The      accompanying notes on pages 14 to 24 form and integral part of these      financial statements. |   |        |   |   |   |
|                                                                                                          |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
| Authorized      on behalf of Management                                                                       |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
|                                                                                                          |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
|                                                                                                          |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
|                                                                                                          |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
| Mr.      Hatem Fakhr                                                                                          |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
|                                                                                                          |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
| 31      January 2009                                                                                          |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |
| Independent      auditor's report attached                                                                    |   |        |   |   |   |        |        |   |   |       |       |   |   |        |        |   |   |   |   |   |

----

| Statements      of Income - For the year ended 31 December 2008                                               |   |     |   |   |   |        |       |    |   |        |
|---------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|--------|-------------|------------|--------------|--------|-------------|
|                                                                                                          |   |     |   |   |   |        |       |         |   |        |   |   |   |   |   |
| (all      amounts in US Dollars)                                                                              |   |     |   |   |   |        |       |         |   |        |   |   |   |   |   |
|                                                                                                          |   |     |   |   | Parent |        |       | Group        |   |
|                                                                                                          |   | Note     |   |   | 2008   |        |       | 2007         |   |        | 2008 |   |   | 2007 |   |
|                                                                                                          |   |     |   |   |   |        |       |         |   |        |   |   |   |   |   |
| Operating      revenue                                                                                        |   |     |   |   |   | 73,071,917  |       |         |   | 46,043,831  |   |   |   | 73,071,917 |   |   |   | 46,043,831 |   |
| Operating      costs                                                                                          |   |     |   |   |   | (52,442,089 | )          |         |   | (34,309,267 | ) |   |   | (52,442,089 | ) |   |   | (34,309,267 | ) |
| Gross      profit                                                                                             |   |     |   |   |   | 20,629,828  |       |         |   | 11,734,564  |   |   |   | 20,629,828 |   |   |   | 11,734,564 |   |
|                                                                                                          |   |     |   |   |   |        |       |         |   |        |   |   |   |   |   |   |   |   |   |
|                                                                                                          |   |     |   |   |   |        |       |         |   |        |   |   |   |   |   |   |   |   |   |
| Other      income                                                                                             |   |  18 |   |   |   | 2,446,433   |       |         |   | 19,005      |   |   |   | 2,446,433 |   |   |   | 19,005 |   |
| Other      expense                                                                                            |   |  19 |   |   |   | (2,361,280  | )          |         |   | -           |   |   |   | (2,361,280 | ) |   |   | - |   |
| General      and administrative expenses                                                                      |   |  17 |   |   |   | (9,775,827  | )          |         |   | (8,021,383  | ) |   |   | (9,775,827 | ) |   |   | (8,021,383 | ) |
| Operating      profit                                                                                         |   |     |   |   |   |        | 10,939,154 |         |   |        | 3,732,186 |   |   |   | 10,939,154 |   |   |   | 3,732,186 |   |
|                                                                                                          |   |     |   |   |   |        |       |         |   |        |   |   |   |   |   |   |   |   |   |   |
|                                                                                                          |   |     |   |   |   |        |       |         |   |        |   |   |   |   |   |   |   |   |   |   |
| Finance      income                                                                                           |   |  21 |   |   |   | 46,015      |       |         |   | 751,224     |   |   |   | 46,015 |   |   |   | 751,224 |   |
| Finance      cost                                                                                             |   |  20 |   |   |   | (673,397    | )          |         |   | (559,662    | ) |   |   | (673,397 | ) |   |   | (559,662 | ) |
| Profit      before income tax                                                                                 |   |     |   |   |   |        | 10,311,772 |         |   |        | 3,923,748 |   |   |   | 10,311,772 |   |   |   | 3,923,748 |   |
|                                                                                                          |   |     |   |   |   |        |       |         |   |        |   |   |   |   |   |   |   |   |   |   |
|                                                                                                          |   |     |   |   |   |        |       |         |   |        |   |   |   |   |   |   |   |   |   |   |
| Income      tax expense                                                                                       |   |  23 |   |   |   | (3,389,127  | )          |         |   | (2,307,594  | ) |   |   | (3,389,127 | ) |   |   | (2,307,594 | ) |
| Profit      for the year                                                                                      |   |     |   |   |   |        | 6,922,645  |         |   |        | 1,616,154 |   |   |   | 6,922,645 |   |   |   | 1,616,154 |   |
|                                                                                                          |   |     |   |   |   |        |       |         |   |        |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes on pages 14 to 24 form and integral part of these      financial statements. |   |     |   |   |   |

----

| Statement      of Changes in Equity - For the year ended 31 December 2008                                     |   |               |       |   |                 |   |       |        |   |   |       |   |   |
|---------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|--------|----------------------|--------|------------|-------------|--------|--------|------------|--------|--------|
|                                                                                                          |   |               |       |   |                 |   |       |        |   |   |       |   |   |   |   |
| (all      amounts in US Dollars)                                                                              |   |               |       |   |                 |   |       |        |   |   |       |   |   |   |   |
|                                                                                                          |   |               |       |   | Additional      Paid |   |       | Revaluation |   |   | Retained   |   |   |   |   |
|                                                                                                          |   | Share      Capital |       |   | in      Capital      |   |       | Reserve     |   |   | Earnings   |   |   | Total |   |
|                                                                                                          |   |               |       |   |                 |   |       |        |   |   |       |   |   |   |   |
| At      1 January 2007                                                                                        |   |               | 42,500,000 |   |                 |   | 7,500,000  |        |   |   | 1,403,983  |   |   |   | 701,633 |   |   |   | 52,105,616 |   |
| Profit      for the period                                                                                    |   |               | -          |   |                 |   | -          |        |   |   | -          |   |   |   | 1,616,154 |   |   |   | 1,616,154 |   |
| Total                                                                                                         |   |               | 42,500,000 |   |                 |   | 7,500,000  |        |   |   | 1,403,983  |   |   |   | 2,317,787 |   |   |   | 53,721,770 |   |
| Increase      in capital                                                                                      |   |               | 7,500,000  |   |                 |   | 7,500,000  |        |   |   | -          |   |   |   | - |   |   |   | 15,000,000 |   |
| At      31 December 2007                                                                                      |   |               | 50,000,000 |   |                 |   | 15,000,000 |        |   |   | 1,403,983  |   |   |   | 2,317,787 |   |   |   | 68,721,770 |   |
|                                                                                                          |   |               |       |   |                 |   |       |        |   |   |       |   |   |   |   |   |   |   |   |   |
| At      January 1, 2008                                                                                       |   |               | 50,000,000 |   |                 |   | 15,000,000 |        |   |   | 1,403,983  |   |   |   | 2,317,787 |   |   |   | 68,721,770 |   |
| Revaluation      reserve                                                                                      |   |               | -          |   |                 |   | -          |        |   |   | 14,010,439 |   |   |   | - |   |   |   | 14,010,439 |   |
| Profit      for the year                                                                                      |   |               | -          |   |                 |   | -          |        |   |   | -          |   |   |   | 6,922,645 |   |   |   | 6,922,645 |   |
| Total                                                                                                         |   |               | 50,000,000 |   |                 |   | 15,000,000 |        |   |   | 15,414,422 |   |   |   | 9,240,432 |   |   |   | 89,654,854 |   |
| Redemption      of ordinary shares                                                                            |   |               | (1,282,051 | )      |                 |   | (3,717,949 | )           |   |   | -          |   |   |   | - |   |   |   | (5,000,000 | ) |
| Increase      in capital                                                                                      |   |               | 16,239,316 |   |                 |   | 59,513,602 |        |   |   | -          |   |   |   | - |   |   |   | 75,752,918 |   |
| Net      increase in capital                                                                                  |   |               | 14,957,265 |   |                 |   | 55,795,653 |        |   |   | -          |   |   |   | - |   |   |   | 70,752,918 |   |
| At      31 December 2008                                                                                      |   |               | 64,957,265 |   |                 |   | 70,795,653 |        |   |   | 15,414,422 |   |   |   | 9,240,432 |   |   |   | 160,407,772 |   |
|                                                                                                          |   |               |       |   |                 |   |       |        |   |   |       |   |   |   |   |   |   |   |   |   |
| The      accompanying notes on pages 14 to 24 form and integral part of these      financial statements. |   |               |       |   |                 |   |       |        |   |   |       |   |   |

----

| Statement      of Cash Flows - For the year ended 31 December 2008                                       |   |    |   |   |   |       |        |   |   |       |
|---------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|------------|-------------|--------|--------|------------|
|                                                                                                          |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |
| (all      amounts in US Dollars)                                                                              |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |
|                                                                                                          |   |    |   |   | Parent |       |        | Group  |   |
|                                                                                                          |   | Note    |   |   | 2008   |       |        | 2007   |   |       | 2008 |   |   | 2007 |   |
|                                                                                                          |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |
| Cash      flows from operating activities                                                                     |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |
| Profit      for the year                                                                                      |   |    |   |   |   | 6,922,645  |        |   |   | 1,616,154  |   |   |   | 6,922,645 |   |   |   | 1,616,154 |   |
| Adjustments      for:                                                                                         |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |   |   |   |   |
| Interest      expenses                                                                                        |   |    |   |   |   | 320,173    |        |   |   | 559,662    |   |   |   | 320,173 |   |   |   | 559,662 |   |
| Income      tax expense                                                                                       |   |    |   |   |   | 3,389,127  |        |   |   | 2,307,594  |   |   |   | 3,389,127 |   |   |   | 2,307,594 |   |
| Interest      income                                                                                          |   |    |   |   |   | (46,015    | )           |   |   | (151,962   | ) |   |   | (46,015 | ) |   |   | (151,962 | ) |
| Depreciation                                                                                                  |   |  5 |   |   |   | 13,288,407 |        |   |   | 10,167,086 |   |   |   | 13,288,407 |   |   |   | 10,167,086 |   |
| Projects      under construction write off                                                                    |   |    |   |   |   |       | 1,870,000   |   |   |       | - |   |   |   | 1,870,000 |   |   |   | -  |   |
| Provisions                                                                                                    |   |    |   |   |   |       | 491,280     |   |   |       | - |   |   |   | 491,280 |   |   |   | -  |   |
| Cash      generated from operating activities                                                                 |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |   |   |   |   |   |
| before      changes in working capital                                                                        |   |    |   |   |   |       | 26,235,617  |   |   |       | 14,498,534 |   |   |   | 26,235,617 |   |   |   | 14,498,534 |   |
|                                                                                                          |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Changes      in working capital:                                                                              |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Receivables      and prepayments                                                                              |   |    |   |   |   |       | (21,630,492 | )      |   |       | (3,048,439 | ) |   |   | (21,630,492 | ) |   |   | (3,048,439 | ) |
| Inventories                                                                                                   |   |    |   |   |   |       | 5,917,827   |   |   |       | (9,475,566 | ) |   |   | 5,917,827 |   |   |   | (9,475,566 | ) |
| Trade      and other payables                                                                                 |   |    |   |   |   |       | 7,044,656   |   |   |       | 1,014,134 |   |   |   | 7,044,656 |   |   |   | 1,014,134 |   |
| Due      from related parties                                                                                 |   |    |   |   |   |       | (378,908    | )      |   |       | (140,136 | ) |   |   | (378,908 | ) |   |   | (140,136 | ) |
| Due      to related parties                                                                                   |   |    |   |   |   |       | 3,061,753   |   |   |       | (896,498 | ) |   |   | 3,061,753 |   |   |   | (896,498 | ) |
| Cash      generated from Operations                                                                           |   |    |   |   |   |       | 20,250,453  |   |   |       | 1,952,029 |   |   |   | 20,250,453 |   |   |   | 1,952,029 |   |
|                                                                                                          |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Interest      expense paid                                                                                    |   |    |   |   |   |       | (320,173    | )      |   |       | (559,662 | ) |   |   | (320,173 | ) |   |   | (559,662 | ) |
| Income      tax paid                                                                                          |   |    |   |   |   |       | (2,196,359  | )      |   |       | (2,142,583 | ) |   |   | (2,196,359 | ) |   |   | (2,142,583 | ) |
| Net      cash (used in) generated from operating                                                              |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |   |   |   |   |   |
| activities                                                                                                    |   |    |   |   |   |       | 17,733,921  |   |   |       | (750,216 | ) |   |   | 17,733,921 |   |   |   | (750,216 | ) |
|                                                                                                          |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities                                                                     |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Purchase      of property, plant and equipment                                                                |   |    |   |   |   |       | (21,000,878 | )      |   |       | (7,545,776 | ) |   |   | (21,000,878 | ) |   |   | (7,545,776 | ) |
| Interest      income received                                                                                 |   |    |   |   |   |       | 46,015      |   |   |       | 151,962 |   |   |   | 46,015 |   |   |   | 151,962 |   |
| Net      cash used in investing activities                                                                    |   |    |   |   |   |       | (20,954,863 | )      |   |       | (7,393,814 | ) |   |   | (20,954,863 | ) |   |   | (7,393,814 | ) |
|                                                                                                          |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities                                                                     |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from borrowings and long-term debt                                                              |   |    |   |   |   |       | 5,000,000   |   |   |       | (5,000,000 | ) |   |   | 5,000,000 |   |   |   | (5,000,000 | ) |
| Payment      of long-term debt                                                                                |   |    |   |   |   |       | (2,723,120  | )      |   |       | (249,875 | ) |   |   | (2,723,120 | ) |   |   | (249,875 | ) |
| Redemption      paid during the current year                                                                  |   |    |   |   |   |       | (3,966,062  | )      |   |       | - |   |   |   | (3,966,062 | ) |   |   | - |   |
| Cash      proceeds from issuance of shares                                                                    |   |    |   |   |   |       | 5,000,000   |   |   |       | 15,000,000 |   |   |   | 5,000,000 |   |   |   | 15,000,000 |   |
| Net      cash generated from financing activities                                                             |   |    |   |   |   |       | 3,310,818   |   |   |       | 9,750,125 |   |   |   | 3,310,818 |   |   |   | 9,750,125 |   |
|                                                                                                          |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Net      increase in cash and cash equivalents                                                                |   |    |   |   |   |       | 89,876      |   |   |       | 1,606,095 |   |   |   | 89,876 |   |   |   | 1,606,095 |   |
| Cash      and cash equivalents at beginning of the year                                                       |   |    |   |   |   |       | 2,752,885   |   |   |       | 1,146,790 |   |   |   | 2,753,003 |   |   |   | 1,146,908 |   |
| Cash      and cash equivalents at end of the year                                                             |   |  9 |   |   |   | 2,842,761  |        |   |   | 2,752,885  |   |   |   | 2,842,879 |   |   |   | 2,753,003 |   |
|                                                                                                          |   |    |   |   |   |       |        |   |   |       |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes on pages 14 to 24 form and integral part of these      financial statements. |   |    |   |   |   |       |        |   |   |

----

| 1.   | General      information |
|----------------|--------------------------|

| 2.   | Summary      of Significant accounting policies |
|----------------|-------------------------------------------------|

| A.   | Basis      of preparation |
|----------------|---------------------------|

| ·   | IFRIC      14, ‘IAS 19-The limit on a defined benefit asset, minimum funding      requirements and their interaction’, this  standard. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | IFRIC      11, ‘IFRS 2-Group and treasury share transactions’, provides guidance on      whether share-based transactions involving treasury shares or involving      group entities. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | IFRS      8, ‘Operating segments”, was early adopted in 2008.  IFRS 8      replaces IAS 14, ‘Segment reporting’, and aligns segment reporting with      the requirements of the US standard SFAS 131, ‘Disclosures about segments      of an enterprise and related. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | IFRIC      12, ‘Service concession arrangements’ ;and |
|--------------------|-------------------------------------------------------------------|

| ·   | IFRIC      13, ‘Customer loyalty program |
|--------------------|------------------------------------------------|

| ·   | IAS      23 (Amendment), ‘Borrowing costs’ |
|--------------------|--------------------------------------------------------|

| ·   | IAS      1 (Revised), ‘Presentation of  financial    statements’ |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | IFRS      2 (Amendment), ‘Share-basedpayment’ |
|--------------------|-----------------------------------------------------------|

| ·   | IAS      32 (Amendment), ‘Financial instruments:  Presentation’, and IAS      1 (Amendment), ‘Presentation of financial statements’–‘Puttable financial      instruments and obligations arising on  liquidation’ |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | IFRS      1(Amendment), ‘First time adoption of IFRS’ , and IAS 27 ‘Consolidated and      separate financial statements |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | IFRS      3 (Revised), ‘Businesscombinations’ |
|--------------------|-----------------------------------------------------------|

| ·   | IFRS      5 (Amendment), ‘Non-current assets held-for-sale and discontinued      operations’ |
|--------------------|----------------------------------------------------------------------------------------------------------|

| ·   | IAS      28 (Amendment), ‘Investments in associates’ (and consequential amendments      to IAS 32, ‘Financial Instruments:  Presentation’, and IFRS 7,      ‘Financialinstruments:  Disclosures’) |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | IAS      36 (Amendment), ‘Impairment ofassets’ |
|--------------------|------------------------------------------------------------|

| ·   | IAS      38 (Amendment), ‘Intangible assets’ |
|--------------------|----------------------------------------------------------|

| ·   | IAS      19 (Amendment), ‘Employee benefits’ |
|--------------------|----------------------------------------------------------|

| ·   | IAS      39 (Amendment), ‘Financial instruments:  Recognition and      measurements’ |
|--------------------|------------------------------------------------------------------------------------------------------------|

| B.   | Consolidation |
|----------------|---------------|

----

| C.   | Foreign      currency translation |
|----------------|-----------------------------------|

| D.   | Property,      plant and equipment |
|----------------|------------------------------------|

| Buildings                                     |    20      Years |
|-----------------------------------------------|---------------------------------|
| Rigs      and camps                           | 2-10      Years                 |
| Trucks                                        |   3-8      Years      |
| Motor      vehicles                           |   3-8      Years      |
| Furniture,      fixtures and office equipment |   3-8      Years      |
| Computers      and software                   |   3-8      Years      |

| E.   | Impairment      of non-financial assets |
|----------------|-----------------------------------------|

| F.   | Financial      Assets |
|----------------|-----------------------|

| G.   | Inventories |
|----------------|-------------|

----

| H.   | Trade      receivables |
|----------------|------------------------|

| I.   | Cash      and cash equivalents |
|----------------|--------------------------------|

| J.   | Capital |
|----------------|---------|

| K.   | Borrowings |
|----------------|------------|

| L.   | Current      and deferred income taxes |
|----------------|----------------------------------------|

| M.   | Provisions |
|----------------|------------|

| N.   | Trade      payables |
|----------------|---------------------|

| O.   | Revenue      recognition |
|----------------|--------------------------|

| iii)   | Dividend      income |
|------------------|----------------------|

| P.   | Leases |
|----------------|--------|

| Q.   | Dividend      distribution |
|----------------|----------------------------|

| R.   | Comparative      figures |
|----------------|--------------------------|

| 3.   | Financial      risk management |
|----------------|--------------------------------|

----

| 3.1   | Financial      risk factors |
|-----------------|-----------------------------|

| (a)   | Market      risk |
|-----------------|------------------|

|   | i) | Foreign      exchange risk |
|--------|----|----------------------------|

|   | ii) | Cash      flow and fair value interest raterisk |
|--------|-----|-------------------------------------------------|

| (b)   | Credit      risk |
|-----------------|------------------|

| (c)   | Liquidity      risk |
|-----------------|---------------------|

| At      31 December 2008:           |   |                  |       |   |                       |   |
|-------------------------------------|--------|-----------------------|------------|--------|----------------------------|--------|
|                                |   | Less      than 1 year |       |   | Between      1 and 2 years |   |
|                                |   |                  |       |   |                       |   |
| Borrowings                          |   |                  | 17,408,456 |   |                       |   | 691,379 |   |
| Trade      and other payables       |   |                  | 14,060,820 |   |                       |   | - |   |
| Due      to related parties         |   |                  | 3,459,204  |   |                       |   | 435,069 |   |
| Commitment      (letters of credit) |   |                  | 2,700,000  |   |                       |   | - |   |
|                                |   |                  |       |   |                       |   |   |   |
| At      31December 2007:            |   |                  |       |   |                       |   |   |   |
|                                |   | Less      than 1 year |       |   | Between      1 and 2 years |   |
|                                |   |                  |       |   |                       |   |   |   |
| Borrowings                          |   |                  | 2,676,000  |   |                       |   | 937,797 |   |
| Trade      and other payables       |   |                  | 7,016,164  |   |                       |   | - |   |
| Due      to related parties         |   |                  | 397,451    |   |                       |   | - |   |
| Commitment      (letters of credit) |   |                  | 805,410    |   |                       |   | - |   |

| 3.2   | Capital      risk management |
|-----------------|------------------------------|

----

|                                                              |   | Parent |        |   | Group  |   |
|-------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
|                                                              |   | 2008   |        |   | 2007   |   |   | 2008 |   |   | 2007 |   |
| Total      borrowings and trade payable and other credit balances |   |   |        |   |   |   |   |   |   |   |   |   |
| Trade      payable and other credit balances                      |   |   | 14,060,820  |   |   |   | 7,621,370 |   |   |   | 14,060,820 |   |   |   | 7,621,370 |   |
| Due      to related parties                                       |   |   | 3,459,204   |   |   |   | 397,451 |   |   |   | 3,061,753 |   |   |   | - |   |
| Borrowings                                                        |   |   | 18,099,835  |   |   |   | 3,414,499 |   |   |   | 18,099,835 |   |   |   | 3,414,499 |   |
| Total      borrowings                                             |   |   | 35,619,859  |   |   |   | 11,433,320 |   |   |   | 35,222,408 |   |   |   | 11,035,869 |   |
| Less:      cash and cash equivalents                              |   |   | 2,842,761   |   |   |   | 2,752,885 |   |   |   | 2,842,879 |   |   |   | 2,753,003 |   |
| Net      debt                                                     |   |   | 32,777,098  |   |   |   | 8,680,435 |   |   |   | 32,379,529 |   |   |   | 8,282,866 |   |
| Total      equity                                                 |   |   | 160,407,772 |   |   |   | 68,721,770 |   |   |   | 160,407,772 |   |   |   | 68,721,770 |   |
| Total      capital                                                |   |   | 193,184,870 |   |   |   | 77,402,205 |   |   |   | 192,787,301 |   |   |   | 77,004,636 |   |
|                                                              |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gearing      ratio                                                |   |   | 17          | %      |   |   | 11 | % |   |   | 17 | % |   |   | 11 | % |

| 3.3   | Fair      value Estimation |
|-----------------|----------------------------|

| 4.   | Critical      estimates and judgments |
|----------------|---------------------------------------|

| 3.4   | Critical      accounting estimates andassumptions |
|-----------------|---------------------------------------------------|

| a.   | Income      taxes |
|----------------|-------------------|

| 3.5   | Critical      judgments in applying the entity’s accounting  policies |
|-----------------|-----------------------------------------------------------------------------|

| 3.6   | Property,      plant and equipment – useful life |
|-----------------|--------------------------------------------------------|

----

| 5.   | Property,      plant and equipment |
|----------------|------------------------------------|

|                                                    |   | Buildings |    |   | Rigs*  |   |        | Auxiliary      Equipment |   |   | Trucks      |   |   | Motor      Vehicles |       |   | Camps  |   |       | Furniture,      Fixturesand      Office Equipment |   |   | ComputersandSoftware |   |   | Projects      under construction |       |   | Total  |   |
|---------------------------------------------------------|--------|-----------|---------|--------|--------|--------|-------------|--------------------------|--------|--------|-------------|--------|--------|---------------------|------------|--------|--------|--------|------------|---------------------------------------------------|--------|--------|----------------------|--------|--------|----------------------------------|------------|--------|--------|--------|
| At      1 January 2007                                  |   |      |    |   |   |   |        |                     |   |   |        |   |   |                |       |   |   |   |       |                                              |   |   |                 |   |   |                             |       |   |   |   |
| Revaluation                                             |   |      | 95,000  |   |   |   | 51,682,031  |                     |   |   | 8,317,718   |   |   |                | 6,234,665  |   |   |   | 1,308,305  |                                              |   |   | 7,159,959            |   |   |                             | 1,323,177  |   |   |   | 107,780 |   |   |   | - |   |   |   | 76,228,635 |   |
| Accumulated      depreciation                           |   |      | (23,750 | )      |   |   | (15,492,030 | )                        |   |   | (1,969,846  | )      |   |                | (3,531,635 | )      |   |   | (405,213   | )                                                 |   |   | (2,002,314           | )      |   |                             | (726,641   | )      |   |   | (45,052 | ) |   |   | - |   |   |   | (24,196,481 | ) |
| Net      book amount                                    |   |      | 71,250  |   |   |   | 36,190,001  |                     |   |   | 6,347,872   |   |   |                | 2,703,030  |   |   |   | 903,092    |                                              |   |   | 5,157,645            |   |   |                             | 596,536    |   |   |   | 62,728 |   |   |   | - |   |   |   | 52,032,154 |   |
|                                                    |   |      |    |   |   |   |        |                     |   |   |        |   |   |                |       |   |   |   |       |                                              |   |   |                 |   |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Year      end 31 December 2007                          |   |      |    |   |   |   |        |                     |   |   |        |   |   |                |       |   |   |   |       |                                              |   |   |                 |   |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Opening      net book amount                            |   |      | 71,250  |   |   |   | 36,190,001  |                     |   |   | 6,347,872   |   |   |                | 2,703,030  |   |   |   | 903,092    |                                              |   |   | 5,157,645            |   |   |                             | 596,536    |   |   |   | 62,728 |   |   |   | - |   |   |   | 52,032,154 |   |
| Additions                                               |   |      | -       |   |   |   | 406,950     |                     |   |   | 3,094,126   |   |   |                | 118,240    |   |   |   | 660,595    |                                              |   |   | 581,600              |   |   |                             | 81,383     |   |   |   | 253,172 |   |   |   | 2,349,710 |   |   |   | 7,545,776 |   |
| Transfers                                               |   |      | -       |   |   |   | 1,392,744   |                     |   |   | -           |   |   |                | -          |   |   |   | -          |                                              |   |   | -                    |   |   |                             | -          |   |   |   | - |   |   |   | (1,392,744 | ) |   |   | - |   |
| Depreciation      charges                               |   |      | (4,750  | )      |   |   | (5,908,216  | )                        |   |   | (1,401,904  | )      |   |                | (905,886   | )      |   |   | (352,443   | )                                                 |   |   | (1,361,517           | )      |   |                             | (201,495   | )      |   |   | (30,875 | ) |   |   | - |   |   |   | (10,167,086 | ) |
| Closing      Net book amount                            |   |      | 66,500  |   |   |   | 32,081,479  |                     |   |   | 8,040,094   |   |   |                | 1,915,384  |   |   |   | 1,211,244  |                                              |   |   | 4,377,728            |   |   |                             | 476,424    |   |   |   | 285,025 |   |   |   | 956,966 |   |   |   | 49,410,844 |   |
|                                                    |   |      |    |   |   |   |        |                     |   |   |        |   |   |                |       |   |   |   |       |                                              |   |   |                 |   |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| At      31 Decemeber 2007                               |   |      |    |   |   |   |        |                     |   |   |        |   |   |                |       |   |   |   |       |                                              |   |   |                 |   |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revaluation                                             |   |      | 95,000  |   |   |   | 53,481,725  |                     |   |   | 11,411,844  |   |   |                | 6,352,905  |   |   |   | 1,968,900  |                                              |   |   | 7,741,559            |   |   |                             | 1,404,560  |   |   |   | 360,952 |   |   |   | 956,966 |   |   |   | 83,774,411 |   |
| Accumulated      depreciation                           |   |      | (28,500 | )      |   |   | (21,400,246 | )                        |   |   | (3,371,750  | )      |   |                | (4,437,521 | )      |   |   | (757,656   | )                                                 |   |   | (3,363,831           | )      |   |                             | (928,136   | )      |   |   | (75,927 | ) |   |   | - |   |   |   | (34,363,567 | ) |
| Net      book amount                                    |   |      | 66,500  |   |   |   | 32,081,479  |                     |   |   | 8,040,094   |   |   |                | 1,915,384  |   |   |   | 1,211,244  |                                              |   |   | 4,377,728            |   |   |                             | 476,424    |   |   |   | 285,025 |   |   |   | 956,966 |   |   |   | 49,410,844 |   |
|                                                    |   |      |    |   |   |   |        |                     |   |   |        |   |   |                |       |   |   |   |       |                                              |   |   |                 |   |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Year      ended 31 December 2008                        |   |      |    |   |   |   |        |                     |   |   |        |   |   |                |       |   |   |   |       |                                              |   |   |                 |   |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Opening      net book amount                            |   |      | 66,500  |   |   |   | 32,081,479  |                     |   |   | 8,040,094   |   |   |                | 1,915,384  |   |   |   | 1,211,244  |                                              |   |   | 4,377,728            |   |   |                             | 476,424    |   |   |   | 285,025 |   |   |   | 956,966 |   |   |   | 49,410,844 |   |
| Additions                                               |   |      | -       |   |   |   | 7,901,852   |                     |   |   | 605,974     |   |   |                | 96,034     |   |   |   | 909,998    |                                              |   |   | 2,839,100            |   |   |                             | 145,837    |   |   |   | 128,441 |   |   |   | 88,296,895 |   |   |   | 100,924,131 |   |
| Transfers                                               |   |      | -       |   |   |   | 69,071,114  |                     |   |   | -           |   |   |                | -          |   |   |   | -          |                                              |   |   | -                    |   |   |                             | -          |   |   |   | - |   |   |   | (69,071,114 | ) |   |   | - |   |
| Effects      of revaluation                             |   |      | -       |   |   |   | 39,581,987  |                     |   |   | (12,017,818 | )      |   |                | -          |   |   |   | -          |                                              |   |   | (1,055,416           | )      |   |                             | -          |   |   |   | - |   |   |   | (4,156,930 | ) |   |   | 22,351,823 |   |
| Write      off                                          |   |      | -       |   |   |   | -           |                     |   |   | -           |   |   |                | -          |   |   |   | -          |                                              |   |   | -                    |   |   |                             | -          |   |   |   | - |   |   |   | (1,870,000 | ) |   |   | (1,870,000 | ) |
| Depreciation      charges                               |   |      | (4,750  | )      |   |   | (9,562,508  | )                        |   |   | (803,614    | )      |   |                | (920,371   | )      |   |   | (438,437   | )                                                 |   |   | (1,287,729           | )      |   |                             | (208,183   | )      |   |   | (62,815 | ) |   |   | - |   |   |   | (13,288,407 | ) |
| Effects      of revaluation on accumulated depreciation |   |      | -       |   |   |   | (9,800,985  | )                        |   |   | 4,175,364   |   |   |                | -          |   |   |   | -          |                                              |   |   | 522,359              |   |   |                             | -          |   |   |   | - |   |   |   | - |   |   |   | (5,103,262 | ) |
| Closing      Net book amount                            |   |      | 61,750  |   |   |   | 129,272,939 |                     |   |   | -           |   |   |                | 1,091,047  |   |   |   | 1,682,805  |                                              |   |   | 5,396,042            |   |   |                             | 414,078    |   |   |   | 350,651 |   |   |   | 14,155,817 |   |   |   | 152,425,129 |   |
|                                                    |   |      |    |   |   |   |        |                     |   |   |        |   |   |                |       |   |   |   |       |                                              |   |   |                 |   |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| At      31 December 2008                                |   |      |    |   |   |   |        |                     |   |   |        |   |   |                |       |   |   |   |       |                                              |   |   |                 |   |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revaluation                                             |   |      | 95,000  |   |   |   | 170,036,678 |                     |   |   | -           |   |   |                | 6,448,939  |   |   |   | 2,878,898  |                                              |   |   | 9,525,243            |   |   |                             | 1,550,397  |   |   |   | 489,393 |   |   |   | 14,155,817 |   |   |   | 205,180,365 |   |
| Accumulated      depreciation                           |   |      | (33,250 | )      |   |   | (40,763,739 | )                        |   |   | -           |   |   |                | (5,357,892 | )      |   |   | (1,196,093 | )                                                 |   |   | (4,129,201           | )      |   |                             | (1,136,319 | )      |   |   | (138,742 | ) |   |   | - |   |   |   | (52,755,236 | ) |
| Closing      Net book amount                            |   |      | 61,750  |   |   |   | 129,272,939 |                     |   |   | -           |   |   |                | 1,091,047  |   |   |   | 1,682,805  |                                              |   |   | 5,396,042            |   |   |                             | 414,078    |   |   |   | 350,651 |   |   |   | 14,155,817 |   |   |   | 152,425,129 |   |

| * Rigs      comprise of the followings: |   |                    |       |   |                      |   |       |      |   |   |       |   |   |                  |       |   |                        |   |    |
|----------------------------------------------|--------|-------------------------|------------|--------|---------------------------|--------|------------|-----------|--------|--------|------------|--------|--------|-----------------------|------------|--------|-----------------------------|--------|---------|
|                                         |   |                    |       |   |                      |   |       |      |   |   |       |   |   |                  |       |   |                        |   |    |   |   |
|                                         |   | Drilling      equipment |       |   | Electrical      equipment |   |       | Mudsystem |   |   | Powerplant |   |   | Safety      equipment |       |   | Well      control equipment |   |    | Total |   |
| Rig #7                                  |   |                    | 940,893    |   |                      |   | 92,530     |      |   |   | 101,250    |   |   |                  | 93,955     |   |                        |   | 3,800   |   |   |   | 147,600 |   |   |   | 1,380,028 |   |
| Rig      #10                                 |   |                    | 577,909    |   |                      |   | -          |      |   |   | 82,350     |   |   |                  | 84,750     |   |                        |   | 2,813   |   |   |   | 281,250 |   |   |   | 1,029,072 |   |
| Rig      #14                                 |   |                    | 3,408,298  |   |                      |   | 1,087,560  |      |   |   | 1,374,375  |   |   |                  | 1,465,850  |   |                        |   | 98,152  |   |   |   | 381,188 |   |   |   | 7,815,423 |   |
| Rig      #19                                 |   |                    | 5,216,144  |   |                      |   | 475,000    |      |   |   | 1,954,625  |   |   |                  | 1,521,900  |   |                        |   | 30,469  |   |   |   | 736,060 |   |   |   | 9,934,198 |   |
| Rig      #20                                 |   |                    | 868,559    |   |                      |   | 67,500     |      |   |   | 110,625    |   |   |                  | 170,156    |   |                        |   | 3,244   |   |   |   | 603,250 |   |   |   | 1,823,334 |   |
| Rig      #23                                 |   |                    | 830,474    |   |                      |   | 84,375     |      |   |   | 393,300    |   |   |                  | 434,063    |   |                        |   | 5,556   |   |   |   | 50,400 |   |   |   | 1,798,168 |   |
| Rig      #26                                 |   |                    | 8,694,793  |   |                      |   | 1,565,410  |      |   |   | 3,022,775  |   |   |                  | 1,107,510  |   |                        |   | 196,460 |   |   |   | 1,882,663 |   |   |   | 16,469,611 |   |
| Rig      #27                                 |   |                    | 4,062,302  |   |                      |   | 1,188,464  |      |   |   | 1,827,766  |   |   |                  | 998,250    |   |                        |   | 91,279  |   |   |   | 624,891 |   |   |   | 8,792,952 |   |
| Rig      #28                                 |   |                    | 3,582,500  |   |                      |   | 590,900    |      |   |   | 1,246,875  |   |   |                  | 944,395    |   |                        |   | 65,626  |   |   |   | 753,797 |   |   |   | 7,184,093 |   |
| Rig      #29                                 |   |                    | 1,437,954  |   |                      |   | 37,050     |      |   |   | 140,625    |   |   |                  | 186,438    |   |                        |   | 2,108   |   |   |   | 554,800 |   |   |   | 2,358,975 |   |
| Rig      #31                                 |   |                    | 650,185    |   |                      |   | 36,990     |      |   |   | 71,550     |   |   |                  | 72,540     |   |                        |   | 8,064   |   |   |   | 221,850 |   |   |   | 1,061,179 |   |
| Rig      #32                                 |   |                    | 583,484    |   |                      |   | 46,080     |      |   |   | 75,150     |   |   |                  | 90,281     |   |                        |   | 13,856  |   |   |   | 225,000 |   |   |   | 1,033,851 |   |
| Rig      #34                                 |   |                    | 242,693    |   |                      |   | -          |      |   |   | -          |   |   |                  | 29,790     |   |                        |   | -       |   |   |   | - |   |   |   | 272,483 |   |
| Rig      #36                                 |   |                    | 12,887,103 |   |                      |   | 1,887,508  |      |   |   | 3,963,178  |   |   |                  | 1,522,072  |   |                        |   | 21,632  |   |   |   | 1,337,825 |   |   |   | 21,619,318 |   |
| Rig      #37                                 |   |                    | 12,218,578 |   |                      |   | 1,897,567  |      |   |   | 3,813,554  |   |   |                  | 1,766,100  |   |                        |   | 100,701 |   |   |   | 1,730,042 |   |   |   | 21,526,542 |   |
| Rig      #38                                 |   |                    | 12,589,563 |   |                      |   | 2,292,643  |      |   |   | 4,090,716  |   |   |                  | 1,774,800  |   |                        |   | 87,000  |   |   |   | 1,813,177 |   |   |   | 22,647,899 |   |
| Rig      #41                                 |   |                    | 472,592    |   |                      |   | 15,615     |      |   |   | 128,578    |   |   |                  | 95,156     |   |                        |   | 3,984   |   |   |   | 140,625 |   |   |   | 856,550 |   |
| Rig      #95                                 |   |                    | 1,046,713  |   |                      |   | 35,000     |      |   |   | 233,900    |   |   |                  | 195,650    |   |                        |   | 8,000   |   |   |   | 150,000 |   |   |   | 1,669,263 |   |
| Total                                        |   |                    | 70,310,737 |   |                      |   | 11,400,192 |      |   |   | 22,631,192 |   |   |                  | 12,553,656 |   |                        |   | 742,744 |   |   |   | 11,634,418 |   |   |   | 129,272,939 |   |

----

| 6.   | Investment      in subsidiary |
|----------------|-------------------------------|

| 7.   | Inventories |
|----------------|-------------|

|                                                                                      |   | 2008   |      |   | 2007   |   |
|-------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Spare      parts                                                                          |   |   | 6,956,849 |   |   |   | 7,156,365 |   |
| Goods      in transit                                                                     |   |   | -         |   |   |   | 5,718,311 |   |
|               Total |   |   | 6,956,849 |   |   |   | 12,874,676 |   |

| 8.   | Receivables      and prepayments |
|----------------|----------------------------------|

|                                                                                      |   | 2008   |       |   | 2007   |   |
|-------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Trade      receivables                                                                    |   |   | 23,068,411 |   |   |   | 10,520,792 |   |
| Accrued      revenues                                                                     |   |   | 7,708,700  |   |   |   | 4,503,431 |   |
| Prepaid      tax stamp                                                                    |   |   | 1,733,796  |   |   |   | 1,266,288 |   |
| Other      debit balances                                                                 |   |   | 1,281,380  |   |   |   | 1,027,481 |   |
| Cash      margin on letter of credit                                                      |   |   | -          |   |   |   | 801,151 |   |
| Advance      payments                                                                     |   |   | 6,619,372  |   |   |   | 562,024 |   |
| Refundable      deposits                                                                  |   |   | 106,613    |   |   |   | 106,613 |   |
| Cash      margin on letter of guarantee                                                   |   |   | -          |   |   |   | 100,000 |   |
|               Total |   |   | 40,518,272 |   |   |   | 18,887,780 |   |

|                                                                                      |   | 2008   |       |   | 2007   |   |
|-------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Up      to 6 months                                                                       |   |   | 19,354,041 |   |   |   | 8,717,271 |   |
| 6      to 18 months                                                                       |   |   | 3,714,370  |   |   |   | 1,803,521 |   |
|               Total |   |   | 23,068,411 |   |   |   | 10,520,792 |   |

| 9.   | Cash      and cash equivalents |
|----------------|--------------------------------|

| 10.   | Revaluation      reserve |
|-----------------|--------------------------|

| 11.   | Capital |
|-----------------|---------|

|                                                           |   | 2008   |        |   | 2007   |   |
|----------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Authorized      capital 70,000,000 ordinary shares of          |   |   |        |   |   |   |
| one      US Dollar each                                        |   |   | 70,000,000  |   |   |   | 70,000,000 |   |
|                                                           |   |   |        |   |   |   |   |   |
| Issued      capital 2008: 64,957,265 (2007: 50,000,000 shares) |   |   | 64,957,265  |   |   |   | 50,000,000 |   |
| Additional      paid up capital                                |   |   | 70,795,653  |   |   |   | 15,000,000 |   |
|                                                           |   |   | 135,752,918 |   |   |   | 65,000,000 |   |

|                                          |   | Challenger      Group Limited |       |   | MENA      Oil Drilling Company |   |       | Venture      CapitalBank |   |   | Bronco      MENA Investment |   |   | Total  |       |
|-----------------------------------------------|--------|-------------------------------|------------|--------|--------------------------------|--------|------------|--------------------------|--------|--------|-----------------------------|--------|--------|--------|------------|
| Issued      shares at par value one US Dollar |   |                          | 33,670,000 |   |                           |   | 15,000,000 |                     |   |   | 1,330,000                   |   |   |   | -          |   |   |   | 50,000,000 |   |
| Redemption                                    |   |                          | (863,334   | )      |                           |   | (384,615   | )                        |   |   | (34,102                     | )      |   |   | -          |   |   |   | (1,282,051 | ) |
| Issuance      of new shares                   |   |                          | -          |   |                           |   | -          |                     |   |   | -                           |   |   |   | 16,239,316 |   |   |   | 16,239,316 |   |
| Number      of shares at 31 December 2008     |   |                          | 32,806,666 |   |                           |   | 14,615,385 |                     |   |   | 1,295,898                   |   |   |   | 16,239,316 |   |   |   | 64,957,265 |   |
|                                          |   |                          |       |   |                           |   |       |                     |   |   |                        |   |   |   |       |   |   |   |   |   |
| Ownership      percentage                     |   |                          | 50.50      | %      |                           |   | 22.50      | %                        |   |   | 2                           | %      |   |   | 25         | % |   |   | 100 | % |

----

| 12.   | Trade      and other payables |
|-----------------|-------------------------------|

|                                                                                      |   | 2008   |       |   | 2007   |   |
|-------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Trade      payables                                                                       |   |   | 6,928,716  |   |   |   | 4,913,795 |   |
| Other      credit balances                                                                |   |   | 4,927,380  |   |   |   | 1,554,933 |   |
| Accrued      expenses                                                                     |   |   | 2,204,724  |   |   |   | 121,596 |   |
| Notes      payable                                                                        |   |   | -          |   |   |   | 425,840 |   |
|               Total |   |   | 14,060,820 |   |   |   | 7,016,164 |   |

| 13.   | Long-term      debt |
|-----------------|---------------------|

|                                                                                                                                  |   | 2008   |       |   | 2007   |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Non-current                                                                                                                           |   |   |       |   |   |   |
| Noreen      Overseas Limited (Note 16)                                                                                                |   |   | -          |   |   |   | 235,245 |   |
| Artworld      Financial Corporation (Note 16)                                                                                         |   |   | -          |   |   |   | 503,254 |   |
| Bronco      Drilling Company, Inc. (Note 16)                                                                                          |   |   | 4,545,190  |   |   |   | - |   |
|               Total      non current portion of long-term debts |   |   | 4,545,190  |   |   |   | 738,499 |   |
| Current                                                                                                                               |   |   |       |   |   |   |   |   |
| Noreen      Overseas Limited (Note 16)                                                                                                |   |   | 221,286    |   |   |   | 883,200 |   |
| Artworld      Financial Corporation (Note 16)                                                                                         |   |   | 470,093    |   |   |   | 1,792,800 |   |
| Hayes      Trucking Inc. (Note 16)                                                                                                    |   |   | 1,040,000  |   |   |   | - |   |
| Hassan      Tatanaki (Note 16)                                                                                                        |   |   | 5,000,000  |   |   |   | - |   |
| Bronco      Drilling Company, Inc. (Note 16)                                                                                          |   |   | 6,823,266  |   |   |   | - |   |
|               Total      current portion of long-term debts     |   |   | 13,554,645 |   |   |   | 2,676,000 |   |
| Total      long-term debt                                                                                                             |   |   | 18,099,835 |   |   |   | 3,414,499 |   |

| i) | Loan      from Noreen Overseas Limited |
|----|----------------------------------------|

| ii) | Loan      from Artworld Financial Corporation |
|-----|-----------------------------------------------|

| iii) | Loan      from Hassan Tatanaki (one of the owners of Challenger Group Limited      “Shareholder”) |
|------|---------------------------------------------------------------------------------------------------------------|

| iv) | Finance      from Bronco Drilling Company and Hayes Trucking  Inc. |
|-----|--------------------------------------------------------------------|

| a.   | Bronco      Drilling Company Inc. is to be made through 12 consecutive equal quarterly      installments of US $909,038, in addition to an amount of US $460,000 that      should have been paid within 75 days subsequent to the closing date of      this agreement. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Hayes      should have been paid by US $750,000 within 30 days subsequent to the      closing date of the agreement and an amount of US $290,000 within 75 days      subsequent to the closing date of theagreement. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                |   | 2008   |      |   | 2007   |   |
|-------------------------------------|--------|--------|-----------|--------|--------|--------|
| Non-current      parties            |   |   |      |   |   |   |
| Due      to Bronco (due after 2009) |   |   | 4,545,190 |   |   |   | - |   |
|                                |   |   | 4,545,190 |   |   |   | - |   |
|                                |   |   |      |   |   |   |   |   |
| Current      parties                |   |   |      |   |   |   |   |   |
| Due      to Bronco (due in 2009)    |   |   | 6,823,266 |   |   |   | - |   |
| Due      to Hayes (due in 2009)     |   |   | 1,040,000 |   |   |   | - |   |
|                                |   |   | 7,863,266 |   |   |   | - |   |

| v) | Long-term      debt fair values |
|----|---------------------------------|

----

|                       |   | 2008   |      |   | 2007   |   |
|----------------------------|--------|--------|-----------|--------|--------|--------|
|                       |   |   |      |   |   |   |
| Between      2 and 3 years |   |   | 4,545,190 |   |   |   | 738,499 |   |
|                       |   |   | 4,545,190 |   |   |   | 738,499 |   |

| 14.   | Borrowings |
|-----------------|------------|

|                                                                                      |   | 2008   |       |   | 2007   |   |
|-------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                                                      |   |   |       |   |   |   |
| Current      portion of long-term debt (Note 13)                                          |   |   | 13,554,645 |   |   |   | 2,676,000 |   |
|               Total |   |   | 13,554,645 |   |   |   | 2,676,000 |   |

| 15.   | Current      tax liabilities |
|-----------------|------------------------------|

|                                                                                      |   | 2008   |       |   | 2007   |   |
|-------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                                                      |   |   |       |   |   |   |
| Balance      at 1 January                                                                 |   |   | 2,869,643  |   |   |   | 2,704,632 |   |
| Current      income tax expense (Note 23)                                                 |   |   | 3,389,127  |   |   |   | 2,307,594 |   |
| Payments      to Tax Authority                                                            |   |   | (2,196,359 | )      |   |   | (2,142,583 | ) |
|               Total |   |   | 4,062,411  |   |   |   | 2,869,643 |   |

| 16.   | Related      party transactions |
|-----------------|---------------------------------|

| 1.   | Entities      owned by Challenger Group L.L.C. or by it’s ultimate  owners |
|----------------|----------------------------------------------------------------------------------|

| 2.   | Challenger      Saudi Arabia (subsidiary) |
|----------------|-------------------------------------------|

| 3.   | Venture      Capital Bank (shareholder) |
|----------------|-----------------------------------------|

| 4.   | MENA      Drilling Company (shareholder) |
|----------------|------------------------------------------|

| 5.   | Bronco      MENA Investment (shareholder) and its  subsidiaries. |
|----------------|------------------------------------------------------------------|

| i) | Due      from related parties |
|----|-------------------------------|

|                                                                                      |   | Company |    |   | Group  |   |
|-------------------------------------------------------------------------------------------|--------|---------|---------|--------|--------|--------|
|                                                                                      |   | 2008    |    |   | 2007   |   |   | 2008 |   |   | 2007 |   |
|                                                                                      |   |    |    |   |   |   |   |   |   |   |   |   |
| Sogedico      Company                                                                     |   |    | 519,044 |   |   |   | 140,136 |   |   |   | 509,595 |   |   |   | 140,136 |   |
|               Total |   |    | 519,044 |   |   |   | 140,136 |   |   |   | 509,595 |   |   |   | 140,136 |   |

| ii) | Due      to related parties |
|-----|-----------------------------|

|                                                                                      |   | Company |      |   | Group  |   |
|-------------------------------------------------------------------------------------------|--------|---------|-----------|--------|--------|--------|
|                                                                                      |   | 2008    |      |   | 2007   |   |   | 2008 |   |   | 2007 |   |
|                                                                                      |   |    |      |   |   |   |   |   |   |   |   |   |
| Bronco      Mena Investment                                                               |   |    | 2,874,253 |   |   |   | - |   |   |   | 2,874,253 |   |   |   | - |   |
| Venture      Capital Bank                                                                 |   |    | 187,500   |   |   |   | - |   |   |   | 187,500 |   |   |   | - |   |
| Challenger      Saudi Arabia Ltd.                                                         |   |    | 397,451   |   |   |   | 397,451 |   |   |   | - |   |   |   | - |   |
|               Total |   |    | 3,459,204 |   |   |   | 397,451 |   |   |   | 3,061,753 |   |   |   | - |   |

----

| iii) | Directors’      remuneration |
|------|------------------------------------|

| iv) | Loans      from related parties |
|-----|---------------------------------|

|                                                                                      |   | Company |       |   | Group  |   |
|-------------------------------------------------------------------------------------------|--------|---------|------------|--------|--------|--------|
|                                                                                      |   | 2008    |       |   | 2007   |   |   | 2008 |   |   | 2007 |   |
|                                                                                      |   |    |       |   |   |   |   |   |   |   |   |   |
| Loan      from Bronco Drilling CompanyInc.      (Note 13)                                 |   |    | 12,408,456 |   |   |   | - |   |   |   | 12,408,456 |   |   |   | - |   |
|                                                                                      |   |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loan      from Hassan Tatanaki (Note 13)                                                  |   |    | 5,000,000  |   |   |   | - |   |   |   | 5,000,000 |   |   |   | - |   |
|                                                                                      |   |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loan      from Artworld Financial Corporation (Note 13)                                   |   |    | 470,093    |   |   |   | 2,296,054 |   |   |   | 470,093 |   |   |   | 2,296,054 |   |
|                                                                                      |   |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loan      from Noreen Overseas Limited (Note 13)                                          |   |    | 221,286    |   |   |   | 1,118,445 |   |   |   | 221,286 |   |   |   | 1,118,445 |   |
|               Total |   |    | 18,099,835 |   |   |   | 3,414,499 |   |   |   | 18,099,835 |   |   |   | 3,414,499 |   |

| v) | The      Company signed a rent contract for the Head Office premises with      Challenger Investments, which is fully owned by Mr. Hassan      Tatanaki.  The contract was signed reflecting the period in      which the Company had occupied the premises starting 1 October 2000 and      subjected to 7% annual increase.  The total rent expense for the      period amounted to US $64,380 and the monthly rent charge amounted to LE      28,971, equivalent to US $5,365.  In addition, the Company      signed another two contracts with Challenger Investments, one for the      expansion of the Head Office premises rented which is subject to the same      annual increase and the other contract for Tripoli      Building.  The total rent expenses regarding the rented area      during the current period amounts to US $38,533 and US      $250,000.  The monthly rent charge amounts to LE 17,340 and LD      25,000, equivalent to US $3,211 and US$20,833. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| vi) | The      Company signed a contract with Venture Capital Bank – Bahrain to provide      management consultation services with an annual fee amounting to US      $150,000.  Venture Capital Bank – Bahrain has a significant      influence over the decisions of MENA Oil Drilling Company, a shareholder      of the Company. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| vii) | During      the current period the Company entered into agreement with Bronco Drilling      Company, Inc (shareholder) and Hays Trucking Inc. (a wholly owned      subsidiary by Bronco Drilling Company, Inc), the aggregate purchase price      for the property in US $13,408,456, of which US $11,368,456 and US      $2,040,000 is for rigs and auxiliary (support) equipment      respectively. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17.   | General      and administrative expenses |
|-----------------|------------------------------------------|

|                    |   | 2008   |      |   | 2007   |   |
|-------------------------|--------|--------|-----------|--------|--------|--------|
|                    |   |   |      |   |   |   |
| Salaries      and wages |   |   | 3,763,139 |   |   |   | 1,364,596 |   |
| Rent                    |   |   | 738,535   |   |   |   | 499,385 |   |
| Insurance      expenses |   |   | 132,767   |   |   |   | 224,607 |   |
| Depreciation            |   |   | 73,268    |   |   |   | 68,569 |   |
| Management      fees    |   |   | 900,000   |   |   |   | 1,815,000 |   |

| 18.   | Other      Income |
|-----------------|-------------------|

|                                                                                      |   | 2008   |      |   | 2007   |   |
|-------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                                                      |   |   |      |   |   |   |
| Other      income                                                                         |   |   | 137,252   |   |   |   | 19,005 |   |
| Refund      from insurance company                                                        |   |   | 2,309,181 |   |   |   | - |   |
|               Total |   |   | 2,446,433 |   |   |   | 19,005 |   |

| 19.   | Other      expense |
|-----------------|--------------------|

|                                                                                      |   | 2008   |      |   | 2007   |   |
|-------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                                                      |   |   |      |   |   |   |
| Other      provisions                                                                     |   |   | 491,280   |   |   |   | - |   |
| Write      off for projects under construction                                            |   |   | 1,870,000 |   |   |   | - |   |
|               Total |   |   | 2,361,280 |   |   |   | - |   |

| 20.   | Finance      cost |
|-----------------|-------------------|

|                                                                                      |   | 2008   |    |   | 2007   |   |
|-------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                                                      |   |   |    |   |   |   |
| Interest      expense                                                                     |   |   | 320,173 |   |   |   | 599,662 |   |
| Net      foreign exchange loss on financing activity                                      |   |   | 353,224 |   |   |   | - |   |
|               Total |   |   | 673,397 |   |   |   | 599,662 |   |

| 21.   | Finance      income |
|-----------------|---------------------|

|                                                                                      |   | 2008   |   |   | 2007   |   |
|-------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                                      |   |   |   |   |   |   |
| Interest      income                                                                      |   |   | 46,015 |   |   |   | 151,962 |   |
| Net      foreign exchange gain on financing activity                                      |   |   | -      |   |   |   | 599,262 |   |
|               Total |   |   | 46,015 |   |   |   | 751,224 |   |

----

| 22.   | Staff      costs |
|-----------------|------------------|

|                                                                                      |   | 2008   |       |   | 2007   |   |
|-------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                                                      |   |   |       |   |   |   |
| Operating      costs                                                                      |   |   | 8,297,876  |   |   |   | 2,679,144 |   |
| General      and administrative expenses                                                  |   |   | 3,763,139  |   |   |   | 1,364,596 |   |
|               Total |   |   | 12,061,015 |   |   |   | 4,043,740 |   |

| 23.   | Income      tax |
|-----------------|-----------------|

|                                                                                      |   | 2008   |      |   | 2007   |   |
|-------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                                                      |   |   |      |   |   |   |
| Prior      years tax adjustment                                                           |   |   | -         |   |   |   | 318,266 |   |
| Current      tax                                                                          |   |   | 3,389,127 |   |   |   | 1,989,328 |   |
|               Total |   |   | 3,389,127 |   |   |   | 2,307,594 |   |

|                                                                                     |   | 2008   |       |   | 2007   |   |
|------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                                                     |   |   |       |   |   |   |
| Profit      before tax                                                                   |   |   | 10,664,514 |   |   |   | 3,923,748 |   |
|                                                                                     |   |   |       |   |   |   |   |   |
| Tax      calculated at the domestic tax rate applicable in the respective      countries |   |   | 3,484,783  |   |   |   | 855,406 |   |
| Tax      effect of expenses not subject to tax                                           |   |   | 1,632,725  |   |   |   | 1,133,922 |   |
| Tax      effect of revenue not subject to tax                                            |   |   | (1,728,381 | )      |   |   | - |   |
| Prior      year adjustments                                                              |   |   | -          |   |   |   | 318,266 |   |
| Tax      charge                                                                          |   |   | 3,389,127  |   |   |   | 2,307,594 |   |

| 24.   | Contingencies      and commitments |
|-----------------|------------------------------------|

| 25.   | Taxation |
|-----------------|----------|

| 26.   | Subsequent      event |
|-----------------|-----------------------|