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| Nevada                                                                                  91-1918324                            (State or other      jurisdiction of                        (I.R.S.      Employer                            incorporation      or organization)                     Identification      No.)  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Page      No.         |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------|
| FINANCIAL      INFORMATION:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                  |
|  Financial      Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                  |
|  Condensed      Consolidated Balance Sheets at September 30, 2007 (unaudited) and December      31, 2007 (audited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   F-1       |
|  Condensed      Consolidated Statement of Operations for the Three Months Ended September      30, 2007 and 2006, for the Nine Months Ended September 30, 2007 and 2006      and for the Period From Inception, May 25, 2004      (Unaudited)......................................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |    F-2 |
|  Consolidated      Statements of Cash Flows for the Nine Months Ended September 30, 2007 and      2006 and for the Period From Inception, May 25, 2004      (Unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   F-3       |
|  Condensed      Consolidated Statement of Shareholders’      Equity/(Deficit)................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  F-4             |
|  Notes      to Consolidated Financial Statements      (Unaudited)                                                                                                                                   |  F-5             |

----

| CONDENSED      CONSOLIDATED BALANCE SHEET                                                                                                            |   |                                |       |   |                                |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|------------|--------|-------------------------------------|--------|
|                                                                                                                                                 |   |                                |       |   |                                |   |
|                                                                                                                                                 |   |                                | 09.30.2007 |   |                                |   | 12.31.2006 |   |
|                                                                                                                                                 |   | USD                                 |       |   | USD                                 |   |
|                                                                                                                                                 |   | (As      restated,see      Note 12) |       |   | (As      restated,see      Note 12) |   |
| ASSETS                                                                                                                                               |   |                                |       |   |                                |   |   |   |
| Cash      and cash equivalents                                                                                                                       |   |                                | 10,201,883 |   |                                |   | 1,090,098 |   |
| Other      current assets                                                                                                                            |   |                                | 220,651    |   |                                |   | 48,683 |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
| Total      current assets                                                                                                                            |   |                                | 10,422,534 |   |                                |   | 1,138,781 |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
| Tangible      fixed assets                                                                                                                           |   |                                | 70,307     |   |                                |   | 3,998 |   |
| Investment      in associate                                                                                                                         |   |                                | 200,002    |   |                                |   | 238,304 |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
| Total      non-current assets                                                                                                                        |   |                                | 270,309    |   |                                |   | 242,302 |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
| TOTAL      ASSETS                                                                                                                                    |   |                                | 10,692,843 |   |                                |   | 1,381,083 |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
| LIABILITIES      AND SHAREHOLDERS' EQUITY                                                                                                            |   |                                |       |   |                                |   |   |   |
| Bank      overdraft                                                                                                                                  |   |                                | 39,328     |   |                                |   | 19,003 |   |
| Deferred      consideration for interest in CJSC South Petroleum                                                                                     |   |                                | 109,560    |   |                                |   | 193,003 |   |
| Accounts      payable                                                                                                                                |   |                                | 86,295     |   |                                |   | 70,918 |   |
| Accrued      expenses                                                                                                                                |   |                                | 204,703    |   |                                |   | 167,664 |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
| Total      current liabilities                                                                                                                       |   |                                | 439,886    |   |                                |   | 450,588 |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
| Loan      owed to a major shareholder                                                                                                                |   |                                | 37,758     |   |                                |   | 409,920 |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
| Total      non-current liabilities                                                                                                                   |   |                                | 37,758     |   |                                |   | 409,920 |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
| TOTAL      LIABILITIES                                                                                                                               |   |                                | 477,644    |   |                                |   | 860,508 |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
| Common      stock (300,000,000 shares authorized, USD 0.001 par value, 112,156,488 and      80,000,000 shares, respectively, issued and outstanding) |   |                                | 112,156    |   |                                |   | 80,000 |   |
| Additional      paid-in capital                                                                                                                      |   |                                | 19,883,970 |   |                                |   | 1,466,071 |   |
| Foreign      currency translation reserve                                                                                                            |   |                                | 53,576     |   |                                |   | 53,464 |   |
| Deficit      accumulated during the development stage                                                                                                |   |                                | (9,834,503 | )      |                                |   | (1,078,960 | ) |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
| Total      shareholders' equity                                                                                                                      |   |                                | 10,215,199 |   |                                |   | 520,575 |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
|                                                                                                                                                 |   |                                |       |   |                                |   |   |   |
| TOTAL      LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                      |   |                                | 10,692,843 |   |                                |   | 1,381,083 |   |

----

| CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS         |                                                                                                                             |
|--------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|
|                                                         |                                                                                                                             |   |   |   |   |   |   |   | Period      from |   |
|                                                         |                       For the three months ended |   |                               For the nine months ended |   | 05.25.2004 |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   | (Inception)      to |   |
|                                                         | 09.30.2007                                                                                                                       |   | 09.30.2006 |   | 09.30.2007 |   | 09.30.2006 |   | 09.30.2007 |   |
|                                                         | USD(As      restated,see      Note 12)                                                                                           |   | USD |   | USD(As      restated,see      Note 12) |   | USD |   | USD(As      restated,see      Note 12) |   |
| OPERATING      REVENUES                                      |                                                                                                                             |   |   |   |   |   |   |   |   |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
| Other      revenues                                          |                     -        |   |                     - |   |                     - |   |                    - |   |           115,148 |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
| Total      revenues                                          |                     -        |   |                     - |   |                     - |   |                    - |   |           115,148 |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
| OPERATING      EXPENSES                                      |                                                                                                                             |   |   |   |   |   |   |   |   |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
| Personnel      costs                                         |       (2,012,860)                                                                                  |   |            (40,687) |   |       (3,709,079) |   |        (133,342) |   |       (4,046,488) |   |
| Exploration      costs                                       |          (105,651)                                                                  |   |            (17,803) |   |          (151,552) |   |          (95,767) |   |          (310,024) |   |
| Depreciation                                                 |              (4,210)                                            |   |              (3,973) |   |              (8,018) |   |          (11,045) |   |            (39,017) |   |
| Consulting      fees                                         |          (492,434)                                                                  |   |          (231,951) |   |          (914,635) |   |        (694,150) |   |       (3,245,859) |   |
| Administrative      costs                                    |          (714,948)                                                                  |   |          (251,476) |   |       (4,104,720) |   |        (690,077) |   |       (6,220,571) |   |
| Total      operating expenses                                |       (3,330,103)                                                                                  |   |          (545,890) |   |       (8,888,004) |   |     (1,624,381) |   |     (13,861,959) |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
| Gain      from sale of investment                            |                     -        |   |                     - |   |                     - |   |                    - |   | 3,864,197 |   |
| Loss      from sale of investment                            |                     -        |   |                     - |   |                 (900) |   |                    - |   |                 (900) |   |
| OPERATING      LOSS                                          |     (3,330,103)                                                                                              |   |        (545,890) |   |       (8,888,904) |   |   (1,624,381) |   |     (9,883,514) |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
| NON-OPERATING      INCOME / (EXPENSE)                        |                                                                                                                             |   |   |   |   |   |   |   |   |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
| Exchange      differences                                    |               8,825                                        |   |             16,809 |   |            (18,195) |   |           43,184 |   |            (41,085) |   |
| Interest      income                                         |             97,622                                                   |   |               3,982 |   |           199,259 |   |           12,641 |   |           245,469 |   |
| Interest      expense                                        |            (3,950)                                                        |   |            (2,474) |   |              (8,725) |   |          (7,872) |   |            (76,677) |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
| Loss      before taxes and equity in net income of associate |       (3,227,606)                                                                                  |   |          (527,573) |   |       (8,716,565) |   |     (1,576,428) |   |     (9,755,807) |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
| Taxes                                                        |               (352)                                        |   |                  275 |   |                 (676) |   |               (79) |   |              (1,524) |   |
| Equity      in net income of associate                       | (18,169)                                                                                                                    |   | - |   |                     (38,302) |   | - |   |           (62,825) |   |
| Minority      interest in net income                         |                    -              |   |                    - |   |                    - |   |                   - |   |              (18,700) |   |
| Net      loss                                                |       (3,246,127)                                                                                  |   |          (527,298) |   |       (8,755,543) |   |     (1,576,507) |   |     (9,838,856) |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
|                                                         |                                                                                                                             |   |   |   |   |   |   |   |   |   |
| Weighted      average number of outstanding shares           |    111,878,422                                                                                                    |   |    100,110,400 |   |    107,416,090 |   |   100,110,400 |   |    101,735,214 |   |
| Basic      and diluted loss per share                        |            (0.03)                                                         |   |            (0.01) |   |            (0.08) |   |          (0.02) |   |            (0.10) |   |

----

|            | CONDENSED      CONSOLIDATED CASH FLOW STATEMENT                                     |                                                                                                                           |
|--------------------------------|-------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------|
|                           |                                                                                | For      the nine months ended                                                                                                 |   | Period      from |
|                           |                                                                                |                                                                                                                           |   |   |   | 05.25.2004 |
|                           |                                                                                |                                                                                                                           |   |   |   | (Inception)      to |
|                           |                                                                                | 09.30.2007                                                                                                                     |   | 09.30.2006 |   | 09.30.2007 |
|                           |                                                                                | USD(As      restated,see      Note 12)                                                                                         |   | USD |   | USD(As      restated,see      Note 12) |
|                           | OPERATING      ACTIVITIES                                                           |                                                                                                                           |   |   |   |   |
|                           |                                                                                |                                                                                                                           |   |   |   |   |
|                           | Net      loss for the period                                                        |       (8,755,543)                                                                                |   |       (1,576,507) |   |     (9,838,856) |
|                           |                                                                                |                                                                                                                           |   |   |   |   |
|                           | To      reconcile net loss to net cash used  in operating      activities |                                                                                                                           |   |   |   |   |
|                           |                                                                                |                                                                                                                           |   |   |   |   |
|                           | Minority      interest in net income                                                | -                                                                                                                              |   | - |   | 18,700 |
|                           | Gain      from sale of investment                                                   |                     -      |   |                     - |   |       (3,864,197) |
|                           | Loss      from sale of investment                                                   |                  900                      |   |                     - |   |                  900 |
|                           | Equity      in net income of associate                                              |                     38,302 |   |                     - |   |          62,825 |
|                           | Depreciation                                                                        |               8,018                                      |   |             11,045 |   |             39,017 |
|                           | Exchange      differences                                                           |             18,195                                                 |   |            (43,184) |   |             41,085 |
|                           | Decrease      / (increase) in receivables                                           |          (166,775)                                                                |   |             54,470 |   |          (215,457) |
|                           | (Decrease)      / increase in accounts payables                                     |          (411,385)                                                                |   |            (56,302) |   |          (340,467) |
|                           | (Decrease)      / increase in accrued expenses                                      |             30,848                                                 |   |            (36,464) |   |           193,204 |
|                           | Stock-based      compensation                                                       |        5,578,623                                                                            |   |                     - |   |        5,578,623 |
|                           |                                                                                |                                                                                                                           |   |   |   |   |
|                           | Cash      outflow from operating activities                                         |       (3,658,817)                                                                                |   |       (1,646,942) |   |       (8,324,623) |
|                           | INVESTING      ACTIVITIES                                                           |                                                                                                                           |   |   |   |   |
|                           | Purchase      of tangible fixed assets and computer software                        |            (74,043)                                                     |   |                     - |   |          (188,366) |
|                           | Sale      of tangible fixed assets and computer software                            |                     -      |   |               4,589 |   |             79,326 |
|                           | Proceeds      from sale of investment                                               |                     -      |   |                     - |   |        4,000,000 |
|                           | Acquisition      of investment in associate                                         |                     -      |   |                     - |   |            (67,747) |
|                           |                                                                                |                                                                                                                           |   |   |   |   |
|                           | Cash      inflow (outflow) from investing activities                                |            (74,043)                                                     |   |               4,589 |   |        3,823,213 |
|                           | FINANCING      ACTIVITIES                                                           |                                                                                                                           |   |   |   |   |
|                           | Contribution      share capital founders                                            |                     -      |   |                     - |   |             80,019 |
|                           | Issuance      of units                                                              |      13,208,055                                                                                       |   |                     - |   |      13,208,055 |
|                           | Cash      arising on recapitalization                                               |               6,510                                      |   |                     - |   |               6,510 |
|                           | Major      shareholder loan repaid                                                  |          (372,162)                                                                |   |                     - |   |       (3,348,074) |
|                           | Major      shareholder loan raised                                                  |                     -      |   |        1,017,760 |   |        4,653,720 |
|                           | Related      company loan raised / (repaid)                                         |                     -      |   |          (179,210) |   |                     - |
|                           | Increase      in bank overdraft                                                     |             20,325                                                 |   |                     - |   |             39,328 |
|                           |                                                                                |                                                                                                                           |   |   |   |   |
|                           | Cash      flows from financing activities                                           |      12,862,728                                                                                       |   |           838,550 |   |      14,639,558 |
|                           |                                                                                |                                                                                                                           |   |   |   |   |
|                           |                                                                                |                                                                                                                           |   |   |   |   |
|                           | Net      change in cash and cash equivalents                                        |        9,129,868                                                                            |   |          (803,803) |   |      10,138,148 |
|                           |                                                                                |                                                                                                                           |   |   |   |   |
|                           | Cash      and cash equivalents at the beginning of the period                       |        1,090,098                                                                            |   |        1,551,938 |   |  - |
|                           | Currency      translation effect on cash and cash equivalents                       |            (18,083)                                                     |   |          (107,646) |   |             63,735 |
|                           |                                                                                |                                                                                                                           |   |   |   |   |
|                           | Cash      and cash equivalents at the end of the period                             |      10,201,883                                                                                       |   |           640,489 |   |      10,201,883 |

----

| CONDENSED      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY /  (DEFICIT) |
|-----------------------------------------------------------------------------|
|                                                                        |   |   |   |   |   |   |   |
|  SHAREHOLDERS'      EQUITY / (DEFICIT)                                 |  Number      of Shares |  Share      Capital |  Additional      paid-in capital |  Deficit      accumulated during the development stage  (As      restated,see      Note 12) | Accumulated      Other Compre-hensive Income (Loss) (As      restated,see      Note 12) |  Total      share-holders' equity / (deficit) |  Compre-hensive      Income (Loss) (As      restated,see      Note 12) |
|                                                                        |   |   |   |   |   |   |   |
| Balance      May 25, 2004                                                   |                     - |                     - |                     - |                     - |                     - |                     - |                     - |
| Contribution      share capital from founders                               |     80,000,000 |            80,000 |                   19 |                     - |                     - |            80,019 |                     - |
| Currency      translation adjustment                                        |                     - |                     - |                     - |                     - |          (77,082) |          (77,082) |          (77,082) |
| Net      loss for the period                                                |                     - |                     - |                     - |        (601,032) |                     - |        (601,032) |        (601,032) |
| Balance      December 31, 2004                                              |     80,000,000 |            80,000 |                   19 |        (601,032) |          (77,082) |        (598,095) |        (678,114) |
|                                                                        |   |   |   |   |   |   |   |
|                                                                        |   |   |   |   |   |   |   |
| Balance      January 1, 2005                                                |     80,000,000 |            80,000 |                   19 |        (601,032) |          (77,082) |        (598,095) |   |
| Currency      translation adjustment                                        |                     - |                     - |                     - |   |          218,699 |          218,699 |          218,699 |
| Net      loss for the year                                                  |                     - |                     - |                     - |     (1,993,932) |                     - |     (1,993,932) |     (1,993,932) |
| Balance      December 31, 2005                                              |     80,000,000 |            80,000 |                   19 |     (2,594,964) |          141,617 |     (2,373,328) |     (1,775,233) |
|                                                                        |   |   |   |   |   |   |   |
|                                                                        |   |   |   |   |   |   |   |
| Balance      January 1, 2006                                                |     80,000,000 |            80,000 |                   19 |     (2,594,964) |          141,617 |     (2,373,328) |   |
| Forgiveness      of debt by major shareholder                               |                     - |                     - |       1,466,052 |                     - |                     - |       1,466,052 |                     - |
| Currency      translation adjustment                                        |                     - |                     - |                     - |                     - |          (88,153) |          (88,153) |          (88,153) |
| Net      income for the year                                                |                     - |                     - |                     - |          1,516,004 |                     - | 1,516,004 | 1,516,004 |
| Balance      December 31, 2006                                              |     80,000,000 |            80,000 |       1,466,071 | (1,078,960) |            53,464 | 520,575 | 1,427,851 |
|                                                                        |   |   |   |   |   |   |   |
|                                                                        |   |   |   |   |   |   |   |
| Balance      January 1, 2007                                                |     80,000,000 |            80,000 |       1,466,071 | (1,078,960) |            53,464 | 520,575 |   |
| Recapitalization      transaction (Note 1)                                  |     20,110,400 |            20,110 |        (356,732) |                     - |                     - |        (336,622) |                     - |
| Stock-based      compensation                                               |          880,000 |                 880 |       3,911,077 |                     - |                     - |       3,911,957 |                     - |
| Private      placement of Units, issued for cash                            |     10,330,152 |            10,330 |       9,675,667 |                     - |                     - |       9,685,997 |                     - |
| Currency      translation adjustment                                        |                     - |                     - |                     - |                     - |                 138 |                 138 |                 138 |
| Net      loss for the period                                                |                     - |                     - |                     - | (5,509,416) |                     - | (5,509,416) | (5,509,416) |
| Balance      June 30, 2007                                                  |   111,320,552 |          111,320 |     14,696,083 | (6,588,376) |            53,602 | 8,272,629 | (5,509,278) |
|                                                                        |   |   |   |   |   |   |   |
|                                                                        |   |   |   |   |   |   |   |
| Balance      July 1, 2007                                                   |   111,320,552 |          111,320 |     14,696,083 | (6,588,376) |            53,602 | 8,272,629 |   |
| Stock-based      compensation                                               |                     - |                     - |       1,666,666 |                     - |                     - |       1,666,666 |                     - |
| Private      placement of Units (Note 2)                                    |            10,709 |                   11 |                 (11) |                     - |                     - |                     - |                     - |
| Private      placement of Units, issued for cash                            |          825,227 |                 825 |       3,521,232 |                     - |                     - |       3,522,057 |                     - |
| Currency      translation adjustment                                        |                     - |                     - |                     - |                     - |                 (26) |                 (26) |                 (26) |
| Net      loss for the period                                                |                     - |                     - |                     - | (3,246,127) |                     - | (3,246,127) | (3,246,127) |
| Balance      September 30, 2007                                             |   112,156,488 |          112,156 |     19,883,970 | (9,834,503) |            53,576 | 10,215,199 | (3,246,153) |

----

----

|  Average      Rates | January      1, 2007 to September 30, 2007 |  2006 |  2005 |
|--------------------------|--------------------------------------------|------------|------------|
|                     | TJS                                        | CHF        | CHF        |
| USD                      | 3.4355                                     | 1.2536     | 1.2458     |
|                     |                                       |       |       |
| Balance      Sheet       |                                       |       |       |
| Period      End Rates    |  September      30, 2007              |  2006 |  2005 |
|                     | TJS                                        | CHF        | CHF        |
| USD                      | 3.4445                                     | 1.2198     | 1.3179     |

----

|  2007                                    | Office      Equipment and Furniture |  Vehicles | Leasehold      Improvements |  Total    |
|-----------------------------------------------|-------------------------------------|----------------|-----------------------------|----------------|
|                                          | USD                                 | USD            | USD                         | USD            |
| Cost      at January 1                        | 5,436                               | -              | -                           | 5,346          |
| Recapitalization      Transaction (Note 1)    |  3,407                         |  -        |  -                     |  3,407    |
| Additions                                     | 21,043                              | 53,000         | -                           | 74,043         |
| Cost      at September 30                     | 29,886                              | 53,000         | -                           | 82,886         |
|                                          |                                |           | -                           |           |
| Accumulated      Depreciation at January 1    |  (1,438)                       |  -        |  -                     |  (1,438)  |
| Recapitalization      Transaction (Note 1)    |  (3,123)                       |  -        |  -                     |  (3,123)  |
| Depreciation                                  | (2,018)                             | (6,000)        | -                           | (8,018)        |
| Accumulated      Depreciation at September 30 |  (6,579)                       |  (6,000)  |  -                     |  (12,579) |
|                                          |                                |           |                        |           |
| Net      Book Value                           | 23,307                              | 47,000         | -                           | 70,307         |

----

| Current      assets                    | 101,202        |
|----------------------------------------|----------------|
| Non-current      assets                | 66,237         |
| Current      liabilities               | 4,300          |
| Non-current      liabilities           | 244,520        |
| Gross      revenues                    | 0              |
| Gross      profit                      | 0              |
| Income      from continuing operations |  -153,209 |
| Net      income                        | -153,209       |

| Board      of Directors                                                                         |                                       |                                       |
|-------------------------------------------------------------------------------------------------|--------------------------------------------|--------------------------------------------|
|                                                                                            | January      1, 2007 to September 30, 2007 | January      1, 2006 to September 30, 2006 |
|                                                                                            | USD                                        | USD                                        |
| Payments      to a director for office rent                                                     | 72,273                                     | 71,455                                     |
| Payments      to related companies controlled by directors forrendered      consulting services |  -                                    |  291,071                              |
|                                                                                            |                                       |                                       |
|                                                                                            | September      30, 2007                    | September      30, 2006                    |
|                                                                                            | USD                                        | USD                                        |
| Loan      from a director                                                                       | 37,758                                     | 6,001,639                                  |
| Loan      from a related company controlled by a director                                       | -                                          | 76,947                                     |

----

|                          | September      30, 2007 | December      31, 2006 |
|-------------------------------|-------------------------|------------------------|
|                          | USD                     | USD                    |
| Within      1 year            | 42,639                  | 9,948                  |
| Between      2 and 5 years    | 91,437                  | 4,972                  |
| After      5 years            | 0                       | 0                      |
| Total      future commitments | 134,076                 | 14,920                 |

----

----

----

| -   | excellent      network in the CIS and Balkancountries, |
|---------------|--------------------------------------------------------|

| -   | increase      of value through exploration of known  structures, |
|---------------|------------------------------------------------------------------|

| -   | exploration      of new structures identified by previous geological research,      and |
|---------------|-----------------------------------------------------------------------------------------|

| -   | modern      geological knowledge and new concepts implemented to existing seismic and      well data base. |
|---------------|------------------------------------------------------------------------------------------------------------|

----

|   Blocks | Entitlement Interest      (%) |  Area(KM2) |  Date of    Award |   Expiry |   RenewalDate |   Expiry     |
|--------------------|-------------------------------|-----------------|------------------------|--------------------|-------------------------|------------------------|
| Nanay              | 25                            | 999             | July 9,2004            | July 9,2006        | June 14,    2006        | December 31,      2008 |
| Naushkent          | 25                            |            | July 9,2004            | July 9,2006        | June 14,    2006        | December 31,      2008 |
| Soh                | 25                            |            | April 29,    2004      | April 29,    2006  | April 29,    2006       | April 29,    2010      |
| Tuzluk             | 25                            |            | April 29,    2004      | April 29,    2006  | April 29,    2006       | April 29,    2010      |
| W Soh              | 25                            |            | April 29,    2004      | April 29,    2006  | April 29,    2006       | April 29,    2010      |

----

| -   | The      project team in Adelaide, Australia has been primarily engaged in      technical review work to define the prospects and leads in preparation for      the seismic program was initiated in the third quarter of      2007. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | Consolidation      of the seismic database has been undertaken with data acquired in Bishkek      transferred to the database in Adelaide. Reprocessing of Soviet era      seismic data and digitizing of well logs has  continued. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | The      office in Bishkek has been involved in general office administration and      management, acquiring new staff and building relationships with industry      and government. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On-going database assembly      with: |
|--------------------|---------------------------------------|

| o   | digitization of well wire line log      data |
|---------------|----------------------------------------------|

| o   | rectification of      maps |
|---------------|----------------------------|

| o   | integration of the topographic map      data into digital form |
|---------------|----------------------------------------------------------------|

| o   | well locations into Santos mapping      package (dbmap) |
|---------------|---------------------------------------------------------|

| o   | collation of incremental oil and      gas field information |
|---------------|-------------------------------------------------------------|

| o   | capture of relevant information      from Soviet reports |
|---------------|----------------------------------------------------------|

| o   | wire line log and seismic data      loaded into geoframe master interpretation  project |
|---------------|-----------------------------------------------------------------------------------------|

| o   | formation tops data assembled and      ready to be bulk loaded into dbmap mapping  package |
|---------------|--------------------------------------------------------------------------------------------|

| ·   | Seismic reprocessing project is      complete. Total of 447 km reprocessed data was loaded to workstation. |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | Scanning seismic project by SNG is      completed. Total of 699km scanned data was loaded to      workstation. |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | Geophysical interpretation of      digital seismic isproceeding. |
|--------------------|------------------------------------------------------------------|

| ·   | Visits to offices of      Saratovneftegeofizika in Saratov, Russia for quality control of and input      to seismic reprocessing. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|

|  ·   | A layout for the new acquisition      was prepared and submitted to  Saratovneftegeofizica. |
|--------------------------|---------------------------------------------------------------------------------------------|

| ·   | All original hardcopy seismic is      currently being scanned in Australia by contractor New Wave to provide a      further dataset, which is being utilized as a final quality check      against the reprocessed and SNGscanning. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Saratovneftegeofizika and      Kyrgyzgeofizika have been mobilized to the Tuzluk area for the      commencement of the Tuzluk-Sulukta 2D acquisition program. Parameter      testing commence on Monday, 1st  October. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Legal and commercial and technical      support is being provided to advance the facilitation of seismic      acquisition across the border into Tajikistan in the Tuzluk area (long      offset data acquisition required for suitable imaging of sub-thrust      structural leads). |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Seismic interpretation and      preliminary mapping in each of the Tuzluk, Soh, West Soh, Nuashkent and      Nanai permits in progress. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Mapping has been incorporated into      plans for proposed new seismic acquisition, with minor adjustments being      made to the location of lines in the 2D acquisition      grid. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Field work was conducted during      2007 with the followingobjectives: |
|--------------------|-------------------------------------------------------------------------|

| o   | Sampling of prime candidate      Palaeogene source rocks in Batkenregion, |
|---------------|---------------------------------------------------------------------------|

| o   | Surface geology reviewed along      seismic lines to aid subsurface structural  interpretation and      lead generation preliminary to new seismic acquisition in      Tuzluk, |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Report of field activities      completed, and |
|---------------|------------------------------------------------|

| o   | Geochemical Analysis / Oil to      Source Correlation of newly acquired Palaeogene source samples      undertaken. |
|---------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | Planning in progress to conduct      field work in the Tuzlukarea. |
|--------------------|--------------------------------------------------------------------|

| ·   | Field GPS quality control of well      head locations (ongoing). |
|--------------------|------------------------------------------------------------------|

| ·   | Petrography and geochemical      analysis of rock samplesinitiated. |
|--------------------|---------------------------------------------------------------------|

| ·   | Revision of seismic and structural      model interpretations based on field observations of surface      geology. |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | Integration of well velocity data      and wireline log data into seismic interpretation      project. |
|--------------------|--------------------------------------------------------------------------------------------------------|

| ·   | Internal review of prospects and      leads, updated risks and reserves in prospect    database. |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | Geological well to well      correlations (ongoing). |
|--------------------|------------------------------------------------------|

| ·   | Acquisition of SPOT imagery data      completed. |
|--------------------|--------------------------------------------------|

| ·   | Reservoir summary maps based on      fields data. |
|--------------------|---------------------------------------------------|

| ·   | Field and well summaries in and      adjacent to the southern permit areas are  on-going. |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | Technical evaluation      (cross-sections and mapping) and support for the relinquishment of the      Arkyt permit has been conducted through the  quarter. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Multiple core samples from the      Palaeozoic, Palaeogene and Neogene were taken from selected well locations      for maturation studies (conducted by Alan Cook at Keiraville Konsultants      in Australia) and visual kerogen assessments (Santos in-house      evaluation). This work is being utilized to      constrain thermal and burial history modeling being conducted along the      southern flank of the basin. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Regional Basin modeling - regional      migration studies areongoing. |
|--------------------|-----------------------------------------------------------------------|

| ·   | A number of prospects and lead      areas have been re-defined and a number of preliminary prospect evaluation      updates have been made. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | General license administration and      reporting continued during thequarter. |
|--------------------|--------------------------------------------------------------------------------|

| ·   | Digitizing of electric logs and      maps continued during theperiod. |
|--------------------|-----------------------------------------------------------------------|

| ·   | Assisted in finalization of the      seismic and seismic supervision  contracts. |
|--------------------|----------------------------------------------------------------------------------|

| ·   | Undertook a review of available      drilling equipment and contractors in the Kyrgyzstan area and supported      preliminary investigations into national requirements for a drilling      operation. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Facilitated the mobilization of      the SNG seismic crew toKyrgyzstan. |
|--------------------|-------------------------------------------------------------------------|

| ·   | Field geology work program in the      Tuzluk/Soh/Nanai/Arkit area during August/September 2006 has been      incorporated into geological studies being carried out in the Adelaide      Office |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Planning for field work in the      Tuzluk/Soh/Nanai/Arkit area. |
|--------------------|------------------------------------------------------------------|

| ·   | Continued to build in-country      relationships with industry and  government |
|--------------------|--------------------------------------------------------------------------------|

----

----

| Block D & E: Minimum Work and      Financial Program for the Exploration Period |        |
|-------------------------------------------------------------------------------------|-------------|
|                                                                                |        |   |   |   |   |   |
| First      Phase                                                                    |        |
|                                                                                |        |   |   |   |   |   |
| Duration                                                                            |        |   | 3 Years |   |   |   |
|                                                                                |        |   |   |   |   |   |
| WorkProgram                                                                         |        | Minimum      Expenditure |   |   |
|                                                                                |        |   |   |   |   |   |
| 1.  Geological and      Geophysical                                       | $400,000    |   |   |   |
|                                                                                |        |   |   |   |   |   |
| 2.  Seismic Reprocessing      (200 km)                                    | $150,000    |   |   |   |
|                                                                                |        |   |   |   |   |   |
| 3.  Seismic Acquisition      (300 km (2D))                                | $2,500,000  |   |   |   |
| or                                                                                  |        |   |   |   |
| 3.  1 Exploration Well      (3000 m)                                      | $6,000,000  |   |   |   |
|                                                                                |        |   |   |   |   |   |
| Total      Commitment                                                               |        | $3,050,000/$6,550,000 |   |   |
|                                                                                |        |   |   |   |   |   |
| Second      Phase                                                                   |        |
|                                                                                |        |   |   |   |   |   |
| Duration                                                                            |        |   | 2 Years (extension option of one      year) |   |
|                                                                                |        |   |   |   |   |   |
| WorkProgram                                                                         |        | Minimum      Expenditure |   |   |
|                                                                                |        |   |   |   |   |   |
| 1.  Geological and      Geophysical                                       | $300,000    |   |   |   |
|                                                                                |        |   |   |   |   |   |
| 2.  1 Exploration Well      (3000 m)                                      | $6,000,000  |   |   |   |
|                                                                                |        |   |   |   |   |   |
| Total      Commitment                                                               |        | $6,300,000 |   |   |
|                                                                                |        |   |   |   |   |   |
| Third      Phase                                                                    |        |
|                                                                                |        |   |   |   |   |   |
| Duration                                                                            |        |   | 2 Years (if extension option      exercised in Second Phase, reduced by length of      extension) |
|                                                                                |        |   |   |   |   |   |
| WorkProgram                                                                         |        | Minimum      Expenditure |   |   |
|                                                                                |        |   |   |   |   |   |
| 1.  Geological and      Geophysical                                       | $300,000    |   |   |   |
|                                                                                |        |   |   |   |   |   |
| 2.  1 Exploration Well      (3000 m)                                      | $6,000,000  |   |   |   |
|                                                                                |        |   |   |   |   |   |
| Total      Commitment                                                               |        | $6,300,000 |   |   |
|                                                                                |        |   |   |   |   |   |
| Total Phase 1 – 3      Commitment                                             | $15,650,000 |   |   |   |

----

| Block D & E: Minimum Work and      Financial Program for the Exploration Period |        |
|-------------------------------------------------------------------------------------|-------------|
|                                                                                |        |   |   |   |   |   |
| First      Phase                                                                    |        |
|                                                                                |        |   |   |   |   |   |
| Duration                                                                            |        |   | 3 Years |   |   |   |
|                                                                                |        |   |   |   |   |   |
| WorkProgram                                                                         |        | Minimum      Expenditure |   |   |
|                                                                                |        |   |   |   |   |   |
| 1.  Geological and      Geophysical                                       | $400,000    |   |   |   |
|                                                                                |        |   |   |   |   |   |
| 2.  Seismic Reprocessing      (200 km)                                    | $150,000    |   |   |   |
|                                                                                |        |   |   |   |   |   |
| 3.  Seismic Acquisition      (300 km (2D))                                | $2,500,000  |   |   |   |
| or                                                                                  |        |   |   |   |
| 3.  1 Exploration Well      (3000 m)                                      | $6,000,000  |   |   |   |
|                                                                                |        |   |   |   |   |   |
| Total      Commitment                                                               |        | $3,050,000/$6,550,000 |   |   |
|                                                                                |        |   |   |   |   |   |
| Second      Phase                                                                   |        |
|                                                                                |        |   |   |   |   |   |
| Duration                                                                            |        |   | 2 Years (extension option of one      year) |   |
|                                                                                |        |   |   |   |   |   |
| WorkProgram                                                                         |        | Minimum      Expenditure |   |   |
|                                                                                |        |   |   |   |   |   |
| 1.  Geological and      Geophysical                                       | $300,000    |   |   |   |
|                                                                                |        |   |   |   |   |   |
| 2.  1 Exploration Well      (3000 m)                                      | $6,000,000  |   |   |   |
|                                                                                |        |   |   |   |   |   |
| Total      Commitment                                                               |        | $6,300,000 |   |   |
|                                                                                |        |   |   |   |   |   |
| Third      Phase                                                                    |        |
|                                                                                |        |   |   |   |   |   |
| Duration                                                                            |        |   | 2 Years (if extension option      exercised in Second Phase, reduced by length of      extension) |
|                                                                                |        |   |   |   |   |   |
| WorkProgram                                                                         |        | Minimum      Expenditure |   |   |
|                                                                                |        |   |   |   |   |   |
| 1.  Geological and      Geophysical                                       | $300,000    |   |   |   |
|                                                                                |        |   |   |   |   |   |
| 2.  1 Exploration Well      (3000 m)                                      | $6,000,000  |   |   |   |
|                                                                                |        |   |   |   |   |   |
| Total      Commitment                                                               |        | $6,300,000 |   |   |
|                                                                                |        |   |   |   |   |   |
| Total Phase 1 – 3      Commitment                                             | $15,650,000 |   |   |   |

----

| -   | Setup      of DWM offices in Albania. This included renting, refurbishing and      furnishing office space for 12 people in Tirana, hiring three geologists,      one accountant and one representative in charge of all issues to do with      the Albanian authority. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | Geological      work commenced which included |
|---------------|-----------------------------------------------|

| o   | Identification      of detailed areas of interest for geological seismic  work |
|---------------|--------------------------------------------------------------------------------|

| o   | Definition      of seismic lines |
|---------------|----------------------------------|

| o   | Identification      of geological material, in electronic and hardcopy format, from previous      exploration programs, received from different Albanian      archives |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Reprocessing      and analysis of geological explorationmaterial, |
|---------------|-------------------------------------------------------------------|

| o   | Negotiation      and planning of geological consultancy work by a third    party |
|---------------|----------------------------------------------------------------------------------|

| o   | Workshop      presentation of the Albanian project to a third party consultant and      mandate for a volumetric report on the identified    structures |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | Setup      of management processes and planningincluded |
|---------------|---------------------------------------------------------|

| o   | Creation      of a 3-year Master plan for geological work to be  performed |
|---------------|----------------------------------------------------------------------------|

| o   | Clarification      of Milestones |
|---------------|----------------------------------|

| o   | Definition      of roles and responsibilities within the Albanian team and reporting lines      to the Head office |
|---------------|--------------------------------------------------------------------------------------------------------------------|

| o   | Setup      of finance reporting structure |
|---------------|-------------------------------------------|

| -   | Commencement      of the study group regarding the documentation needed to submit a bid for      the Otoway and Tranquilo blocks. This included mainly geological      studies. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | Mandating      Mr. Ernesto Correa on all legal matters in the bidding process. Mr. Correa      has strong legal background in the oilindustry |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| -   | Negotiating      with various partners concerning operatorship in the    project |
|---------------|----------------------------------------------------------------------------------|

----

----

----

----