**TECHNICAL
REPORT**
 **BY**
 **DR.
NIMR ARAB**
 
 **EVALUATION
SURVEY OF THE**
 **STRESSFIELD
DETECTOR TECHNOLOGY**
 **CONDUCTED
IN SYRIA DURING 2004**
 
 
 **September
18, 2004**
 
 
   **CERTIFICATE
OF QUALIFICATIONS**
 **AND
INDEPENDENCE OF DR. NIMR ARAB**
 
 
 ►
    BSC
      Honors in Geology and MSC in Applied Geophysics from Birmingham
      University
 
 ►
    PHD
      in Applied Geophysics from Leicester University in the
  U.K.
 
 ►
    30
      years of experience in the petroleum and natural gas industry with a
      specialization in exploration processes and
technology
 
 ►
    Executive
      positions with the Syrian Petroleum Company in Syria and with the Ministry
      of Petroleum and Mineral Resources in Saudi
Arabia
 
 ►
    Previous
      Exploration Manager for Shell Syria (until September,
  2003)
 
 ►
    Member
      of various Syrian and international institutes and technical
      societies
 
 ►
    Currently
      an independent consultant in the oil and gas
sector
 
 
 Dr.
Arab has been retained by NXT to review the results of a survey conducted
utilizing stress field detection technology in Syria during 2004.
 
 
 
 
 */s/
Dr. Nimr Arab*
 Dr.
Nimr Arab
 
  
  **TABLE
OF CONTENTS**
 
 
 **1.
      Conclusions and Recommendations**
    **4****2.
      Purpose of Study**
    **8****2.1
      Background**
    **8****2.2
      SFD Technology**
    **9****2.3
      Company Overview**
    **15****3.
      Scope and Procedures**
    **16****3.1
      Why was Syria chosen over other testing
    environments?**
    **16****3.2
      Blind Test**
    **16****3.3
      Test Flight Parameters**
    **17****3.4
      SFD Interpretation Process**
    **18****3.5
      Presentation of analysis to Syrian Petroleum Company and the Syrian
      Ministry of Petroleum and Mineral Resources**
    **19****4.
      Verification**
    **21****4.1
      Syrian Petroleum Company Evaluation Process**
    **21****4.2
      Syrian Petroleum Company Committee Conclusion**
    **22****5.
      Discussion of Results**
    **24****5.1.
      What parameters are the tools designed to
    identify?**
    **24****5.2.
      What is the accuracy of the tool and analysis?**
    **24****5.3.
      How does this compare to previous tests conducted by
      NXT?**
    **25****5.4.
      What are the limitations of the tool?**
    **25****5.5.
      How could interpretation and testing procedures be
      enhanced?**
    **25****5.6.
      SFD survey and analysis compared with seismic
    surveys**
    **26****5.7.
      Observed timing of the survey and follow-up
    analysis**
    **26****6.
      Recommendations and Applications**
    **27****Appendix
      I: Testing Environment****Appendix
      II: Map of SFD Anomalies****Appendix
      III: Prospect Areas and Potential Areas Maps****Appendix
      IV: Syrian Evaluation Map of NXT Prospect Areas****Appendix
      V: SPC Report****Appendix
      VI: SPC Map of Known Structures****Appendix
      VII: SFD Signal Example****Appendix
      VIII: Valentine Report**
  3
  **1.**
    **CONCLUSIONS
      AND RECOMMENDATIONS**
 
 The
survey conducted with Stress Field Detection (“SFD”) technology in Syria during
2004 confirms the application of the technology as a wide area reconnaissance
tool that can be applied to focus conventional exploration
activities.
 
 *The
SFD technology can be applied to high grade prospects that can be confirmed with
conventional exploration techniques, including seismic, significantly increasing
the success of exploration while materially reducing both time and
costs.*
 
 SFD
sensors are airborne exploration tools that employ a unique technology at a low
cost to measure stress regime distributions associated with tectonic events. The
tools can identify subsurface structures that have a high likelihood of bearing
hydrocarbons over a wide range of geological environments and depths, focusing
and reducing the time and expense associated with conventional
exploration.
 
 NXT
conducted a 5,800 km (3,635 miles) blind survey test over an area comprising
61,000 km 2 (23,835 miles 2 )
encompassing one third of the area of Syria. The survey data was acquired over a
period of six days and was closely controlled by the Syrian air force personnel.
The Syrian Petroleum Company (“SPC”) established the SFD flight parameters and
survey grid. Using SFD interpretation protocols developed in North America, NXT
evaluated the resulting data without any access to geological or production
information. NXT had no opportunity to modify or calibrate interpretation
protocols developed in North America and NXT was not permitted to retrace flight
patterns or to cross anomalies from several directions other than when anomalies
occurred at the intersection of survey lines in the preset grid.
 
 NXT
      identified and submitted 17 “Prospect Areas” which are significant
      anomalies crossed by more than one grid line, and contain structure(s)
      with high potential for hydrocarbon accumulation. NXT’s Prospect Areas
      correctly identified 12 known drilled areas, 11 of which are cumulatively
      producing over 200,000 boepd and one of which is not presently economic.
      Three known but undrilled seismic anomalies were also identified as
      Prospect Areas, along with two Prospect Areas in unexplored regions that
      were recommended by NXT for future exploration. NXT also submitted tables
      identifying individual structures to SPC. By letter dated May
      11th,
      2004, SPC advised NXT that the survey had successfully identified 108
      known structures crossed by the grid and had missed 29, a success rate of
      79%. NXT has flown, acquired, processed and interpreted all SFD data and
      submitted all reports, maps and tables within 32 days to the Syrian
      Petroleum Company and the Ministry of Petroleum and Mineral Resources of
      Syria.
 
 4
 The
survey results are summarized below:
 
 
 Individual Structures
    Prospect Areas137
    17l
    108 successful
    l
    12 drilledl
    29 misses
    
    l
    11 producingl
    1 uneconomic3 known seismic anomalies2 unknown and
unexplored
 
 NXT
chose Syria to establish that the technology was applicable in younger, less
explored geological sequences that characterize many of the world’s major basins
and to demonstrate that NXT can perform a wide area survey and effectively
analyze data addressing logistics and regulatory issues in an international
environment.
 
 The
Syrian test culminates a period of 12 years of development of the SFD technology
by inventor George Liszicasz and by NXT. Previous tests conducted in Canada and
the U.S. strongly indicated the potential of the SFD technology but no survey of
similar scope has been performed previously; over a wide area where geological
data could be correlated to known production and results without prior access to
any geological or geophysical data.
 
 Several
general observations can be made with respect to the application of the SFD
technology:
 
 ►
    The
      SFD sensors were observed to respond to both structural and stratigraphic
      traps in both compressive and expansive environments for reservoirs at a
      range of depths associated with the Syrian sedimentary
    basin.
 
 ►
    The
      SFD sensors can be applied to high grade prospects which can be confirmed
      with conventional exploration techniques, including seismic, significantly
      increasing the success of exploration while materially reducing both time
      and cost.
 
 ►
    The
      high degree of correlation between the SFD results and the known
      structures and producing fields within Syria was very encouraging because
      the testing was conducted in less than optimal
  conditions:
 
 ♦
    The
      survey grid was proscribed by SPC. Although the grid was clearly designed
      to fly over certain areas known to have production capability by SPC, the
      grid did not follow the procedures which would normally be set by NXT.
      Ordinarily, the SFD signals would be evaluated during the survey allowing
      NXT to design additional survey lines from different directions over
      Potential Areas. Signal development can also occur when the survey tool
      passes in close proximity of a structure. Although, these incidents are
      highly valuable, they were not taken into consideration by SPC, only
      direct hits were accepted. Altering the grid pattern in time would remove
      these uncertainties.
 
 5
 ♦
    The
      data was analyzed without reference to any geological or geophysical data.
      The lead interpreter, Mr. Liszicasz, was provided only with a signal and a
      time scale with which to make his interpretation. Ordinarily, results
      would be checked and calibrated against known geological and geophysical
      parameters.
 
 ♦
    There
      was no opportunity to calibrate the SFD against known geological features
      in Syria. The interpretation protocols used in Syria had been developed in
      North America. Accurate protocols are particularly important in detecting
      more subtle anomalies associated with stratigraphic rather than structural
      features. The protocols nonetheless demonstrated a high
      correlation.
 
 ►
    The
      SFD tool can be used very effectively in conjunction with conventional
      exploration techniques. When used as a wide area reconnaissance tool, the
      SFD will point to those areas with the highest prospective potential. Only
      anomalies which are confirmed with several SFD lines can be ranked as
      Prospect Areas. Following the SFD survey, a conventional seismic program
      would be conducted upon those Prospect Areas which would anchor a further
      drilling and development program. In this way, the uncertainty associated
      with exploration of a vast acreage can be reduced. As a result, the
      conventional exploration can be conducted on a much smaller area where the
      economics can be better understood and controlled.
 
 ►
    The
      SFD tool clearly identifies structural development. It can show both
      structural and stratigraphic features and can indicate the presence of
      reservoir fluids although it does not distinguish between gas, oil and
      water. The full potential of the SFD tool could not be evaluated in the
      Syrian test as a result of the continuing confidentiality of much of the
      production and reservoir information held by SPC. The identification of
      the major producing structures was nonetheless a very significant
      accomplishment.
 
 6
 ►
    With
      respect to depth of structures, the SFD tool can indicate whether one
      structure is deeper in comparison to another one. It has been observed
      that certain SFD sensors appear to respond to structures at different
      depths, although the SFD sensors do not have the ability to resolve the
      actual depth of the geological structures. Further seismic is, however,
      required to define these features.
 
 In
      conclusion, the speed and accuracy with which the SFD tool identified
      Prospect Areas resulted in what should become an entirely new method of
      exploring frontier areas for hydrocarbon deposits. Currently, there is no
      other available technology that the author is aware of that is capable of
      surveying comparably large areas and generating high quality prospects
      within the timeframe offered by the SFD
technology.
 
 Ninety-two
      percent (11 of 12) of the Prospect Areas identified by the SFD tool had
      been drilled and tested by SPC and contained fields currently producing
      over 200,000 boepd. Five additional Prospect Areas identified by the SFD
      tool contained two new structural discoveries and three other structures
      confirmed by seismic but not yet drilled.
 
 Comparative
      results indicated that the SFD technology has the ability to identify
      individual subsurface structures as defined by seismic. The survey grid
      designed by SPC crossed 137 individual structures of various sizes and
      quality during the 5,800 km (3,625 miles) test. The degree of accuracy in
      Syria for all SFD structural anomalies was found to be 79% (108 of
      137).
 
 7
 
 **2.**
    **PURPOSE
      OF STUDY**
 
 The
purpose of this Technical Report is to evaluate the performance of the SFD
technology as a wide area reconnaissance tool in a variety of geological
environments based upon the results of a blind evaluation survey conducted in
Syria in March, 2004.
 
 2.1
    Background
 
 NXT
      chose Syria for the conduct of an independent test to establish that the
      technology was applicable in younger, less explored geological sequences
      that characterize many of the world’s basins (See Appendix I: Testing
      Environment) and to demonstrate that NXT can perform a wide area survey
      and effectively analyze data addressing logistics and regulatory issues
      and in an international environment. Mr. George Liszicasz, the CEO and
      founder of NXT, made a number of technical presentations at the Oil &
      Gas Symposium held in Damascus, Syria in December, 2002 that emphasized
      the speed and accuracy of the SFD technology in aiding the identification
      of new hydrocarbon accumulations. The Ministry of Petroleum and Mineral
      Resources of the Syrian Arab Republic and SPC (the Syrian national oil
      company) expressed an interest in evaluating whether the SFD technology
      could be utilized in accelerating the discovery and development of Syria’s
      declining hydrocarbon resources. In particular, the Syrian Energy
      Minister, His Excellency, Dr. Ibrahim Haddad, who holds a PhD in nuclear
      physics, expressed an interest in considering the application of the
      technology.
 
 NXT
      signed an agreement on February 18th,
      2004 with SPC and the Ministry of Petroleum to conduct a blind airborne
      SFD technology evaluation survey at the expense of NXT. The survey grid
      was proscribed by SPC.
 
 The
      timeline of the survey, the evaluation of results and the subsequent
      exchange of information is as follows:
 
 ►
    March
      20th- survey grid approved by SPC and given to
NXT;
 
 ►
    March
      23rd- 28th- SFD survey;
 
 ►
    April
      1st- NXT presents the results of the survey to
SPC;
 
 ►
    April
      4th- NXT submits an initial survey report to
SPC;
 
 ►
    April
      26th- NXT provided a detailed survey report to SPC. This included revised
      Prospect Areas, Potential Areas, tables and revised structural anomaly
      tables. See Appendix III for maps representing the Prospect and Potential
      Areas;
 
 8
 ►
    May
      10th- SPC provided NXT a known structure map. See Appendix
  VI;
 
 ►
    May
      10th- SPC provided NXT a map showing SFD anomalies at the same scale and with
      the same coordinate system as the structure map in Appendix VI. See
      Appendix II;
 
 ►
    May
      10th- SPC provided NXT the SPC committee meeting minutes describing the SPC
      test conclusions. See Appendix V;
 
 ►
    May
      11th- SPC provided an updated anomaly evaluation table entitled “Structure
      Comparison with SFD technology Anomalies”. See Appendix V. This
      information was released as per approval dated May 11th,
      2004 of His Excellency the Minister of Petroleum and Mineral Resources to
      permit NXT to gain access to data from SPC related to the SFD
      survey;
 
 ►
    July
      - SPC provided NXT a map evaluating the prospect areas with respect to
      known producing fields and other geological information. See Appendix
      IV;
 
 The
      conclusions reached in this report are based upon an analysis of the
      information described above and additional data specific to the SFD
      technology provided by NXT.
 
 2.2
    SFD
      Technology
 
 While
      the author is a Professional Geophysicist, the analysis presented in this
      section is based substantially upon discussions with NXT and empirical
      observations of data obtained from SFD sensors relative to geological and
      geophysical data held by SPC. The author has not attempted to conduct a
      detailed analysis of the principals underlying the technology. Additional
      information regarding the technology is available directly from
      NXT.
 
 **Summary**
 
 The
SFD sensor is a passive transducer that responds to stress fields associated
with significant subsurface tectonic events which are, in turn, associated with
trapping mechanisms for oil and natural gas and the presence of fluids (oil,
natural gas or water) in those traps. The exact nature of the energy field that
the sensor responds to, and referred to as Stress Induced Energy field is under
study and not well understood. According to the inventor, George Liszicasz, this
naturally occurring energy field is inherently linked to matter, particularly
crystalline structures that are subjected to geomechanical stresses. The SFD
sensors respond to energy gradients developed as a result of the redistribution
of stress regimes in the subsurface. Although, the origin of the stress induced
energy field has been theorized as being due to materials under stress, the
exact mechanism of the generation and detection of this energy field is not well
understood and largely unexplained in the literature. The author has, however,
observed that there is a substantial body of empirical evidence arising from
both the Syrian test and prior survey activities in Canada and the U.S. that
shows a strong correlation between the observed response of the SFD sensors with
the development of both structural and stratigraphic traps.
  9
 
 The
      following is a summary of some of the key elements of the development and
      status of the SFD technology:
 
 ►
    The
      SFD phenomenon was discovered as a result of experimentation and
      observation.
 
 ►
    There
      is a sound basis in the literature for the recognition of stress fields
      due to force regimes that are associated with geological
      events.
 
 ►
    The
      SFD shows a measurable multiple sensor response to the presence of faults.
      Literature has numerous references to the significant development of
      stress fields in all stages of fault
development.
 
 ►
    George
      Liszicasz and NXT have maintained the confidentiality of the design of the
      SFD to preserve the competitive advantage of the company. No patents have
      been sought in respect of the SFD because the technology remains in the
      early stage of development and there is a possibility that future
      modifications could be made to the concepts and sensors that would not be
      subject to the patent restrictions, thereby also nullifying NXT’s
      competitive advantage.
 
 **SFD
Development History**
 
 The
observations that led to the development of the SFD technology originally
occurred more than 10 years ago. George Liszicasz was conducting experiments
with respect to the property of certain materials when he observed a phenomenon
with respect to crystalline structures that he could not explain. Mr. Liszicasz
theorized that the change in the electronic transport capability of the material
was related to certain dynamic events in the environment which he later
characterized as stress events. Mr. Liszicasz tested this hypothesis through the
development of successive generations of the sensor and concluded that it was
responding to the redistribution of stress regimes in the subsurface primarily
caused by tectonic events. Examples of physical contrast of material properties
between the deposit and its surroundings in the subsurface are the difference in
magnetic susceptibility, sound wave reflections, density difference, or the
redistribution of stresses. With the SFD technology it is possible to measure a
stress gradient. Mr. Liszicasz arrived at this conclusion after conducting
numerous SFD tests against known major geological events such as faulting and
obtaining measurable responses over significant hydrocarbon traps.
 
 10
 Seeing
a commercial application of the SFD technology, Mr. Liszicasz focused research
and development in relation to increasingly reliable sensor that would respond
to oil and gas trapping mechanisms with a higher degree of certainty. At the
same time, Mr. Liszicasz commenced development of a theoretical base for the
phenomenon which he was observing. He theorized the existence of stress energy
fields associated with tectonic stress regimes surrounding petroleum and natural
gas accumulations and other geological events. It took a number of years to
identify certain key processes taking place in the sensor and develop a remote
sensing capability suitable for hydrocarbon exploration. In 1997, he moved the
sensor system from a ground based vehicle into an airplane.
 
 Today,
under the direction of Mr. Liszicasz, a number of individual SFD sensors have
been developed in cooperation with highly trained scientists and technical
personnel of NXT. This new generation of sensors was designed and fabricated to
respond to different geological events. One type of sensor appears to respond to
reservoir development while another responds to deeper structural changes
occurring in the basin. The fundamental design principle for these sensors is
the measurement of stress energy field gradients associated with geological
events. The latest array consists of four to six sensors and the combination of
the signal responses has now enabled a far more detailed interpretation of the
underlying geological events. See appendix VII for an example of the SFD
signals.
 
 **The
Existence of Stress Fields in the Literature**
 
 The
existence of stresses associated with geological events is well documented in
the literature
 
 Rocks
are subject to natural stresses called in-situ stresses. Knowledge of the
in-situ stress field is very important in many problems dealing with rocks in
petroleum engineering as well as in geology and geophysics. The last 30 years
have seen a major advance in our knowledge of in-situ stresses. A large body of
data on the state of stress in the near surface of the Earth's crust (upper
4-5kms of the crust) is now available. New theories have been proposed regarding
their origin and various techniques have been developed to measure in-situ
stresses.
 
 The
magnitude and orientation of in-situ stresses are not directly measurable.
Stress is traditionally determined through stress- in-situ
measurements in rocks and usually involves very small displacements in three
dimensions. The objective is to determine the principal strain directions and to
infer the orientation of the in-situ principal stress.
 
 11
 Forces
are exerted on the rock through certain orientations and are resisted by stress
within the rock. The force is defined by a first order tensor (the three
components of the force vector) whereas stress, a mathematical entity, is
expressed using a second order tensor (the nine components of the stress
tensor). In-situ stress analysis requires a scrutiny of all available data types:
borehole images, drilling records, acoustic anisotropy, well and laboratory
measurements, and geologic information.
 
 Stress
and strain are examples of field tensors whereas tensors which measure crystal
properties, such as magnetic susceptibility, are matter tensors. Matter tensors
must conform to crystal symmetry whereas stress is not a crystal property but is
akin to a force impressed on the crystal. Both field and matter tensors have
similar special forms.
 
 The
measurement of strain has obvious applications in earthquake detection and
observations associated with major tectonic events. Much has been written on
this subject and considerable work has gone into developing a world stress map
(WSM) to facilitate analysis and prediction. WSM has arisen through a
cooperation of various research institutes and oil and geothermal
companies.
 
 A
study of stress regimes associated with oil and gas reservoirs has also had
important implications, particularly in respect of geomechanics related to the
design of efficient secondary recovery mechanisms. As an example, in situ
reservoir stresses control the initiation, re-opening and propagation pressures
and direction of induced hydraulic fractures. Therefore, knowledge of in situ
stress orientation and magnitude is important when establishing the well pattern
and spacing for waterflood that seeks high injection rates with high sweep
efficiency. In another example, a high degree correlation has been found between
critically stressed faults and hydraulic conductivity in a variety of wells
drilled to mid-crustal depths.
 
 Methods
have been developed to compute in situ stresses in anisotropic rock deformation
in hydrocarbon bearing structures and to predict reservoir fracturing and
fracture properties as a function of material properties, structural position
and tectonic stress. It is interesting to note that models indicate that the
presence of shale layers lead to mechanical decoupling of the structural
deformation of the shallower sediments and the underlying sediments and
basement. Models can also show the impact upon stress regimes through faults
which divide a structure into compartments with different levels of pressure,
stress and rock failure. It has been postulated that these models can assist
classic interpretation of seismic and well bore data.
 
 12
 There
are a wide number of examples available in the literature where the study of
stress regimes has had important applications in specific
environments:
 
 ►
    Measurements
      have been conducted over a 25-year period of stress data for Australia’s
      major eastern sedimentary basins (Sydney and Bowen basins) which have had
      recent applications in coal seam methane
exploration.
 
 ►
    Chevron
      Petroleum Technology Co. has developed a significant body of data
      inferring formation mechanical properties acoustically through the use of
      seismic 2-D and 3-D data sets to characterize geomechnical attributes
      between wells. Earth stress modeling impacts upon engineering
      applications, including well bore stability, sand prediction and fracture
      stimulation design.
 
 ►
    Hydrocarbon
      exploration offshore Norway has demonstrated that leakage of reservoirs is
      a frequent reason for traps being partially or totally void of
      hydrocarbons. In these cases, the reservoirs have previously been
      hydrocarbon filled, but later events have led to escape of the trapped
      hydrocarbons which is believed to be induced by changes in absolute and
      effective rock stresses. The explorationist’s challenge is to give the
      required probabilities and volumes consistent with (a) the concepts of
      stress evolution in the area of interest over geologic time and (b) with
      the current belief of how the stress changes influence trapping
      capacity.
 
 ►
    World
      stress map compilation of 1992 contained only approximately 100 reliable
      stress indicators for the Australian continent. These indicators have been
      considerably enhanced through the Australian stress map. Amongst other
      applications, researchers with the Department of Geology and Geophysics at
      the University of Adelaide have been involved in assessing structural
      permeability (focusing of fluid flow along structural elements) in
      hydrocarbons and ground water reservoirs and seals. For example, tight gas
      exploration in the Cooper Basin aims to intersect reservoir zones with
      enhanced structural permeability, whereas exploration in the Timor Sea
      where seal integrity is a problem aims to avoid seals breach due to
      enhanced structural permeability.
 
 ►
    Research
      has shown that fractures are extremely common in the upper crust and are
      known to exert a significant control on fluid flow. The extent to which
      the fractures are exploited is dependent on the conductivity of the
      fracture network which is a function of fracture length, orientation and
      density. The magnitude of the fluid pressure relative to the stress field
      establishes the range of orientations of fractures that fluids are able to
      exploit and the mechanism of fluid flow.
 
 13
 ►
    In
      research prepared by Mobil Technology Company from Dallas, Texas, it is
      observed that understanding and correctly anticipating the local state of
      strain is important in hydrocarbon exploration, drilling and producing.
      Understanding full architecture, drilling and highly strained rocks,
      modeling fractured reservoirs, predicting potential hydraulically
      conducted fault geometries in designing successful secondary and tertiary
      recovery projects are all dependent on correctly anticipating the local
      tectonic style and horizontal shortening
direction.
 
 ►
    Most
      important may be research done by the Department of Geophysics at Stanford
      University which notes that there is empirical evidence from both the
      North Sea and the Gulf of Mexico indicating an apparently causal
      relationship between effective stress and hydrocarbon accumulations.
      Studies have been conducted to investigate dynamic mechanisms which may
      limit hydrocarbon column heights and control leakage in hydrocarbon
      reservoirs in both regions.
 
 **Theoretical
Basis**
 
 The
existence of stresses associated with geological events is well documented in
the literature however there is essentially no data on the ability to measure
stress fields directly or remotely. There is some suggestion in the literature
that more detailed analysis of acoustic data associated with seismic may
indicate stress anomalies and there is some other discussion in the literature
that stress on crystalline structures can affect their electromagnetic
properties. Neither of these concepts has been developed for oil and gas
exploration.
 
 The
fields which are being measured by the SFD appear to be something new. To
distinguish these fields from conventional energy fields and their measurement,
the SFD sensors have been subjected to nuclear radiation, electromagnetic
radiation, magnetic interference, static electric fields and inertial and
gravitational acceleration. The sensor’s response has been insensitive to these
energy forms, indicating that the sensors are responding to some other energy
phenomenon.
 
 While
we consider with interest the possible theoretical underpinnings of the SFD
technology, this report focuses primarily on the substantial body of empirical
evidence which shows that the relationship exists and it can be further
developed and refined in time to provide a valuable tool for the exploration of
hydrocarbons.
 
 14
 
 **SFD
Response**
 
 The
evidence supporting the existence of stress gradients in the subsurface is well
established. The difference between the conventional measurement techniques and
the SFD method is that the former is a direct in situ measurement of strains to
calculate stress and the later measures the stress gradient remotely. The
sensors respond as they pass over various stress regimes and the character of
the signal response is indicative of specific geological events, such as the
presence of faults and fractures and an indication of the presence of fluids in
reservoirs. I have personally witnessed SFD signal responses related to known
faults in the basins of Syria.
 
 The
interpretation of the SFD signals is based on pattern recognition and NXT has
developed templates to qualify signal anomalies. In a SFD survey only a two
dimensional line is surveyed and it is necessary to conduct the survey in a grid
pattern to identify and confirm the strongest signal responses associated with
structure and reservoir development. During the SFD survey the grid pattern can
be modified to re-confirm and rank Prospect Areas which have a high potential
for petroleum and natural gas development.
 
 The
author has also observed sensor responses related to both structural and
stratigraphic traps. However, the stratigraphic traps are more subtle in
character and require the development of templates which are compared against
other similar features.
 
 In
order for the SFD to respond to changes in stress, it must itself be in
motion.
 
 
 2.3
    Company
      Overview
 
 NXT
      is a Canadian company headquartered in Calgary, Alberta that holds the
      exclusive right to employ SFD technology to evaluate petroleum and natural
      gas potential. NXT has been conducting SFD exploration surveys and tests
      in North America for in excess of 8 years in conjunction with the research
      and development of the technology and of the detector tool
      itself.
 
 NXT
      is a publicly traded company in the NASDAQ OTC Bulletin Board under the
      symbol “ENXTF” and the Frankfurt Stock Exchange under the symbol
      “EFW”.
 
 
 15
 
 **3.**
    **SCOPE
      AND PROCEDURES USED IN THIS
STUDY**
 
 3.1
    Why
      was Syria chosen over other testing
environments?
 
 The
      primary goal of NXT in Syria was to demonstrate the capabilities of the
      new exploration technology and to gain worldwide recognition for SFD
      technology. NXT believes that the SFD technology is best utilized as a
      reconnaissance tool in underdeveloped and under-explored areas to permit
      conventional activities to be focused.
 
 The
      company’s objective, as expressed to me, is to attract the interest of
      governments that desire to accelerate their existing oil and gas programs
      or to develop their untapped resources. In addition, NXT intends to work
      with other oil and gas companies that hold large under-explored concession
      blocks to conduct SFD surveys (“Contract Work for Fee”) or in the form of
      equity participation (“Joint Venture
Partnership”).
 
 In
      general, the SFD technology is suitable for exploring large unexplored
      tracts of land for hydrocarbons. These environments would include northern
      Canada, offshore areas, the Middle East and Africa. NXT has done testing
      in North America (see Appendix VIII) and carried out offshore exploration
      in the Port-Aux-Port area of Newfoundland, Canada in conjunction with
      PanCanadian Petroleum (now EnCana) and Encal Energy (now Calpine) that
      demonstrated the ability for the SFD tool to operate in areas overlaid by
      significant water depths.
 
 In
      addition to the success of the North American testing, NXT identified it
      as a priority to verify the effectiveness of the technology in the Middle
      East and in Africa. Syria was chosen primarily because of its
      representative geology and the interest of the Minister of Petroleum in
      entertaining new technologies and in supporting the
  test.
 
 3.2
    Blind
      Test
 
 NXT
      proposed a blind test survey to clearly demonstrate the ability for the
      SFD tool to identify Prospect Areas and geological structures on
      unexplored lands without recourse to geological or geophysical data. SPC
      agreed to design a survey flight grid and provided the start and end line
      coordinates to NXT. The Syrian Air Force approved the survey grid and
      provided two air force personnel to accompany the aircraft during the
      survey flights. Prior to the commencement of the survey, NXT and SPC
      agreed on the order of lines to fly on each day. NXT considered only the
      range of the Piagio Avanti aircraft and the refueling stop location of
      either Damascus or Aleppo in the line segment flight
  order.
 
 16
 A
      total of six consecutive days were allocated by the air force to complete
      the survey. At the end of day four it was evident that the original 15
      survey line segments would be completed early and SPC decided to add four
      additional survey segments to be completed on day six. Two days of data
      acquired lacked the quality of signal response for interpretation. The
      worst of the two was re-flown. NXT recommends that all flights of poor
      quality data be re-flown but test parameters did not permit this to
      occur.
 
 The
      survey grid was entirely designed by SPC and NXT was not allowed to change
      the grid in any way. SPC designed the grid to fly over known structures
      that were previously confirmed by seismic but not disclosed to NXT. The
      timing of the test was determined by the Syrian air force and no variance
      was permitted due to security concerns.
 
 3.3
    Test
      Flight Parameters
 
 This
      test was the first airborne survey conducted in Syria by private aircraft
      operating outside controlled airspace. The survey started on March
      23rd,
      2004 and continued for six consecutive days until March 28th,
      2004. The original test design was to comprise a maximum of 12 flights
      with an initial length of 4,000 km of survey lines in an area covering
      approximately 61,000 km2.
      Ultimately, a survey of 5,800 km of useable data was conducted which did
      encompass the 61,000 km2original design area.
 
 The
      survey parameters were as follows:
 
 ►
    A
      Piaggio Avanti P-180, twin-engine turbo propeller was used in the survey
      with an average ground speed of 320 kph (other planes can be adapted to
      the SFD survey). The Piaggio Avanti offers an appropriate speed and
      elevation with a minimum vibration which may impact the SFD
      sensors.
 
 ►
    Four
      SFD sensors were deployed in the aircraft and were calibrated on the
      ground and not interfered with during the course of each
      survey.
 
 ►
    Average
      altitude above mean ground level was 300
metres.
 
 ►
    Survey
      was conducted over desert and mountainous
areas.
 
 ►
    Two
      flights per day.
 
 ►
    12,500
      km total flight distance.
 
 ►
    Damascus
      and Aleppo were used as operations centres.
 
 17
 ►
    Final
      length of useable SFD data was 5,800 line kilometers over 61,000
      km2.
 
 3.4
    SFD
      Interpretive Process
 
 The
      processed SFD data was displayed in the form of four signals corresponding
      to each sensor on a time scale. NXT had no opportunity to correlate the
      signal and time scale to any known surface geological features or any
      information which could have been obtained from any other source in
      respect of the existing petroleum operations within Syria.
 
 The
      author personally observed the interpretive process that was conducted
      primarily by George Liszicasz, the President of NXT. That process was
      based solely upon an interpretation of the signal development of all four
      sensors operating together.
 
 The
      SFD system for ranking SFD anomalies using a 6-step ranking scale P, P+,
      P1, P1+, P2 and P2+. “P” represents the lowest level of potentiality and
      “P2+” represents the highest level of potential. (See Appendix II for
      maps.) For the purposes of reporting to SPC, NXT grouped the above SFD
      anomalies into three broader categories:
 
 ►
    Category
      1 SFD anomalies exhibit signal responses that are related to well
      developed structural traps and indicate strong potential hydrocarbon
      reservoir development.*Category
      1 SFD anomalies were compared by SPC to seismic and geological
      data.*The anomalies of this category were:
 
 i.
    P1+
 ii.
    P2
 iii.
    P2+
 
 ►
    Category
      2 anomalies show signal response related to geological structures.*Category
      2 SFD anomalies were not compared to seismic. They were only compared to
      SPC geological maps.*The anomalies of this category were:
 
 i.
    P
 ii.
    P+
 iii.
    P1
 
 ►
    Category
      3 includes all other significant SFD point anomalies. According to NXT’s
      definition, point anomalies are significant geological events that occur
      at a certain location in the subsurface geology. They include faulting,
      fracturing, local geological change (“GCH”). Regional geological change
      (“New-Geo”) and reservoir development (“Res-Dev”). These anomalous events
      may have short-term or long-term effects.*None
      of the Category 3 anomalies were evaluated by SPC due to the sheer
      magnitude and detail of the data set provided to SPC.*However,
      this category of anomaly is extremely important from a geological and
      geophysical standpoint because it serves as a pointer to directing
      exploration activities in highly diversified geological domains. The
      author has reviewed with SPC staff a number of the geological domain
      changes indicated by the SFD as New-Geo and found the SFD results very
      encouraging. A strong case can be made for continuing this comparison work
      as it could benefit Syria in areas where less geological data is
      available.
 
 18
 Upon
      completion of all the data review and the categorization of SFD anomalies
      in regard to the above mentioned system, each Potential Area is further
      reviewed and either classified as a prospect area or discarded. A Prospect
      Area contains structures with potential reservoir development and is
      recommended for immediate exploration and
development.
 
 In
      accordance with NXT’s standard protocols, a Prospect Area would then be a
      candidate for a focused 2D or 3D seismic program to confirm the SFD
      analysis and to fully delineate the prospects. The horizontal resolution
      of the SFD tool is reliable with respect to the indication of the
      beginning and ends of structural development and used to correlate with
      seismic data. The vertical resolution of the SFD tool rates structures as
      deep, medium depth and shallow; therefore seismic is required to determine
      potential formation depth. The seismic data will confirm interpretation,
      identify closure, determine formation depths and be used to select
      drilling locations.
 
 See
      Appendix III for the maps of the Prospect Areas identified as a result of
      the Syrian survey.
 
 3.5
    Presentation
      of Analysis to Syrian Petroleum Company and the Syrian Ministry of
      Petroleum and Mineral Resources
 
 On
      April 1st,
      2004, NXT presented their findings to selected members of SPC and other
      distinguished members of the government. The objective of the presentation
      was the following:
 
 1.
    provide
      real time examples of the SFD signals and demonstrate how SFD is used in
      the identification of structures, Prospect Areas and other geological
      events;
 
 19
 2.
    demonstrate
      to SPC and the Ministry the speed and accuracy of the SFD surveys;
      and
 
 3.
    provide
      a detailed explanation of the SFD sensors’
capabilities.
 
 SPC
      requested a demonstration of the SFD interpretation and selection process.
      NXT selected line #17, a north-south line (250 km) flown on March
      28th,
      2004, for a demonstration that consisted of displaying four SFD sensor
      signals on one screen and the corresponding map of all SFD anomalies on
      another screen. SPC also selected line #9, an east-west line (300 km)
      flown on March 23rd,
      2004, to independently confirm the results of the previous
      demonstration.
 
 NXT
      provided results to SPC in a comprehensive report dated April
      4th,
      2004. The report included ten chapters and six appendices. The coordinates
      of the SFD anomalies were provided to SPC in an Excel spreadsheet.*The
      coordinates of all interpreted SFD results were converted from WGS84 to
      unique internally used Lambert coordinates by SPC to prepare the maps of
      the SFD anomalies for comparison to the known geology and geophysics. By
      preventing NXT from having knowledge of the exact area coverage, it
      nullified the value of any data that could have been available in the
      public domain.*The report included tables that outlined the anomalies that were found on
      each flight line. It also included tables that defined the “Prospect
      Areas” and the “Potential Areas”.
 
 At
      the request of SPC, the April 4th,
      2004 report was amended on April 26th,
      2004 to reflect the size of Category 1 Prospects and to re-evaluate
      Prospect and Potential Areas. The April 26thamended report contained 17 Prospect Areas and 25 Potential
      Areas.
 
 
 **Provision
      of Information from Syrian
Government**
 
 Under
      the project agreement, SPC undertook to compare the NXT interpretation of
      the SFD survey with data and information known only to SPC. The internal
      SPC data included seismic survey data and geological maps derived from
      regional surveys and well information. The primary comparison method was
      through the map prepared by SPC included in Appendix VI showing the
      location and outline of all known geological structures defined by seismic
      in the area surveyed. These structures were a combination of producing,
      drilled and non-producing and not drilled.*As
      part of the agreement none of this information was provided to NXT until
      the survey results were submitted to
SPC.*
 
 Following
      the official SPC reports, the author worked with SPC personnel to acquire
      additional information about the Prospect Areas and Potential Areas,
      drilling activity in the defined structures and known production in these
      areas. The attached map in Appendix IV was created by SPC personnel and
      given to the author in July, 2004 as part of written permission given by
      H.E. the Minister to NXT.
 
 
 20
 
 **4.**
    **VERIFICATION**
 
 4.1
    Syrian
      Petroleum Company Evaluation Process
 
 The
      SPC Technical Committee comprised of technical personnel of the SPC
      Exploration Department studied the findings presented by NXT and compared
      them to SPC data. In addition, SPC used isochrones maps and seismic
      sections in the correlation process available in the area surveyed.
      Appendix IV shows the map of SFD anomalies coinciding with the known
      structures.
 
 The
      SFD evaluation was conducted to determine whether the SFD technology is
      capable of identifying structures and qualifying reservoirs. In addition,
      SPC wanted to assess the ability of the SFD tool and determine if the
      technology offers a competitive edge.
 
 To
      evaluate the accuracy of SFD technology with respect to its ability of
      identifying subsurface structures, SPC has prepared a structural map with
      an overlay of the SFD structures. The SPC Technical Committee minutes were
      released to NXT in April, 2004 and the minutes were amended on May
      11th,
      2004 under a table titled “Structural Comparison with SFD technology
      Anomalies”. The SFD successfully identified 108 of the 137 SPC structures
      crossed - a 79% accuracy. (See attached SPC report in Appendix
      V.)
 
 The
      SFD has also identified an additional 151 structures, most of which lie
      outside the area covered by seismic
surveys.
 
 The
      following results were stipulated for Category 1
  anomalies:
 
 1.
    P2+
      anomalies. Sixteen were identified. Twelve of these coincided with
      previously discovered and drilled structures. The other four anomalies
      were correlated to depressions between features. This corresponds to a 75%
      success ratio.
 
 The
      author studied 16 P2+ SFD anomalies. In the author’s opinion, three of the
      four depression structures are of great importance since they occur in the
      immediate vicinity of producing fields and since SFD is a wide area
      exploration tool, eventually all three fields would have been discovered
      based upon conducting focused seismic. In addition, it is noted that the
      definition of these structures as they appear on SPC maps represent the
      boundary of the structures with respect to certain depth and, therefore,
      might not be the accurate definition of all the structures. This point
      should have been taken into consideration during the review
      process.
 
 21
 The
      fourth P2+ SFD anomaly corresponds to a significant gravity anomaly
      situated near a river where seismic has not yet been
      conducted.
 
 2.
    P2
      anomalies. Twenty-one were identified. Twelve of them have coincided with
      discovered structures, seven anomalies were outside the structures and the
      last two anomalies have coincided with undrilled and discovered
      structures. This gives a success ratio of 66%. Again, a number of these
      seven P2 structures were not direct hits, but were in the immediate
      vicinity of the existing structures.
 
 3.
    P1+
      anomalies. Nine anomalies were identified. Four of them coincide with
      drilled and producing structures, one is within undrilled structure and
      the other four are outside structures. This gives a success ratio of 55%.
      Again, a number of these four P1+ structures were not direct hits but they
      were in the immediate vicinity of the existing structures. A very focused
      small seismic program would have located all
four.
 
 The
      Category 2 anomalies do not carry the same weight as Category 1 and also
      seismic lines were not available to the evaluation
    committee.
 
 Taking
      all the statistics into consideration, one can reach the conclusion that
      the number of points presented by NXT is 77 positive anomalies coinciding
      with discovered structures for Category 1. What is even more significant
      from a test point of view is that 28 are within drilled structures and 49
      are within undrilled structures.
 
 
 
 
 4.2
    The
      Syrian Petroleum Company Committee
Conclusion
 
 *“From
      the foregoing analysis the Committee has concluded that this technology
      would benefit in directing the seismic work in areas where seismic surreys
      are not available.”*
 
 SPC
      attached a table entitled “Structure Comparison with SFD technology
      Anomalies” on May 11th,
      2004 to the Committee minutes. See Appendix V. This table compared the SPC
      map of geological structures with SFD anomalies from the NXT amended
      report.
 
 The
      Committee conclusion is a positive statement by itself and has relied only
      on evaluating part of the final results. Due to time constraints, the
      review process has only considered the location of the discovered anomaly
      and was not able to evaluate other parameters. The author strongly
      believes that the final statement could have been more correct if the
      Committee had taken the following valid points into
      consideration:
 
 22
 1.
    The
      review process has not considered the exact coincidence of the Prospect
      Areas with the known producing fields. Examples are in the large anomaly
      over the large field of Omar in the Euphrates Graben (which is producing
      120,000 boepd) and the Sukhneh filed in the Palmyride Mountain
      chain.
 
 2.
    The
      review process considered the peak part of the anomalies and has not
      considered other information which was marked on the final maps like: GCH,
      STR, NEWGEO, etc.
 
 3.
    Subsequent
      work by SPC has reviewed and evaluated Prospect Areas, which is of vital
      importance in the exploration process.
 
 The
      SFD technology identified 17 Prospect Areas of which, according to SPC, 12
      were drilled and tested. See Appendix III.
 
 a.
    11
      of the 12 drilled Prospect Areas contained producing fields currently
      producing over 200,000 boepd;
 b.
    1
      Prospect Area was drilled and abandoned;
and
 c.
    5
      additional Prospect Areas identified by SFD were either new structural
      discoveries or structures confirmed by seismic but not yet
      drilled.
 
 
 23
 
 **5.**
    **DISCUSSION
      OF RESULTS**
 
 5.1
    What
      parameters are the tools designed to
identify?
 
 The
      SFD technology is an airborne remote sensing system detecting a natural
      energy field related to changes in subsurface geological structures. SFD
      technology provides information on geological changes along the horizontal
      plane. The low vertical resolution of SFD technology is compensated by
      subsequent limited seismic work to verify structure and define exact
      depth. The SFD technology is not a direct hydrocarbon indicator. The tool
      may detect the presence of reservoir development, but it does not
      distinguish between gas, oil and water.
 
 Advantages
      of SFD surveying:
 
 1.
    all
      terrain environment; onshore and offshore;
 2.
    non-intrusive,
      environmentally friendly method;
 3.
    wide
      area exploration capacity;
 4.
    identifies
      geological structures;
 5.
    identifies
      potential reservoirs in subsurface
structures;
 6.
    focuses
      the exploration program;
 7.
    creates
      an inventory of high quality prospects;
 8.
    significantly
      shortens time to prospect identification;
 9.
    low
      finding cost;
 10.
    fast
      mobilization.
 
 The
      SFD technology evaluation survey in Syria verified all of the above,
      except surveying in offshore terrains.
 
 5.2
    What
      is the accuracy of the tool and
analysis?
 
 In
      a report dated April 26th,
      2004, NXT recommended 17 Prospect Areas totaling 2,900 km2and 25 Potential Areas. Each of the Prospect Areas was compared to SPC
      data with the following results:
 
 ►
    11
      Prospect Areas are producing at a total of approximately 200,000
      bopd;
 ►
    1
      Prospect Area was known structure, but dry;
 ►
    2
      Prospect Areas were known structures, but not yet
  drilled;
 ►
    1
      Prospect Area was a new structure not known to
SPC;
 ►
    2
      structures SPC did not provide information.
 
 **Therefore,
      11 of 12 Prospect Areas, or 92%, that have been drilled are
      producing.**
 
 24
 Evaluation
      of the Potential Areas would require more SFD data and, therefore, cannot
      be commented on.
 
 5.3
    How
      does this compare with previous tests conducted by
  NXT?
 
 The
      test results are very comparable to the test results obtained from prior
      surveys. Refer to the Valentine Report in Appendix VIII. Key comparisons
      are as follows:
 
 1.
    The
      92% correlation rate between Prospect Areas and producing fields is
      similar to the 91% and 95% rates found in the Valentine
      Report.
 
 2.
    The
      time required to acquire 5,800 km of SFD data compared favourably to
      surveys conducted in North America.
 
 3.
    NXT
      was able to survey for 46% of total flying time. This is lower than North
      American performance, but still within the range of acceptable operational
      performance. The location of fuel was a key performance
      factor.
 
 4.
    The
      ability to acquire, process and interpret 180 km per day meets our North
      American performance objectives.
 
 5.4
    What
      are limitations of tool?
 
 SFD
      cannot give any vertical resolution of the prospect areas and, therefore,
      a focused seismic program is required before drilling decisions can be
      made.
 
 The
      effectiveness of the SFD tool is reduced during some flights due to the
      saturation of the sensors. As each individual flight progresses, the
      sensors react to the underlying geological structures. If these structures
      are significant, they can cause the saturation of individual sensors in
      certain operating modes causing the saturated sensor to become less
      responsive for the rest of the flight. This occurred on flight lines 12
      and 8. The occurrence of this phenomenon is not completely predictable
      and, therefore, the author recommends that all flights in which one or
      more sensors become saturated are re-flown (also from the opposite
      direction) and that multiple sets of sensor arrays should be deployed on
      each flight to reduce the likelihood that all sensors of a particular type
      are saturated at the same time.
 
 5.5
    How
      could interpretation and testing procedures be
    enhanced?
 
 The
      flight plans for the Syrian test were created by SPC and not optimized for
      SFD. Future SFD programs should be conducted on a grid pattern spacing
      that would maximize the likelihood of flying over anomalies. This would
      also increase the efficiency of flight operations. The final result of the
      SFD survey was the creation of Prospect Areas. The results should be
      integrated with all geological information to create an appropriate
      seismic program. The integration of the Prospect Areas with geological
      information and the results of the focused seismic program will create a
      high value end product.
 
 25
 NXT
      presently has a limitation on its capacity to process and interpret data.
      NXT has limited interpretation resources. NXT should create a program to
      train additional personnel to enhance its capacity. NXT should also look
      at computer modeling in an effort to increase processing and
      interpretation efficiency and capacity.
 
 5.6
    SFD
      survey and analysis compared with seismic
surveys
 
 A
      typical seismic crew can survey from 6 to 10 km per day. A SFD crew can
      survey approximately 1,000 km per day. For comparable areas, processing
      and interpretation of seismic data takes years versus months for SFD data.
      Therefore, SFD is a much more effective wide exploration tool. Once the
      Prospect Areas are defined, a focused seismic program is required to
      determine closure, depth and drilling
locations.
 
 5.7
    Observed
      timing of the survey and follow-up
analysis
 
 The
      SFD test conducted in Syria required the
following:
 
 ►
    6
      days of flight surveys covering 5,800 km;
 ►
    12
      days of processing and interpretation to provide the April 4threport. It should be noted that NXT personnel worked very long hours to
      achieve this. Under normal circumstances, the processing and
      interpretation would have taken 32 days;
 ►
    20
      additional days of processing and interpretation to create the April
      26thamendment, which showed a marked improvement over the April 4thresults.
 
 
 
 26
 
 **6.**
    **RECOMMENDATIONS
      AND APPLICATIONS**
 
 1.
    SFD
      surveys should be flown in a grid pattern to maximize the number of
      intersections of two flight lines. The results of the Syrian test show
      that 17 of 18 known structures that were located at flight line
      intersections were found by the SFD survey. The total flight line
      intersections were over 50.
 
 2.
    As
      the ranking of the SFD anomalies decreases, the accuracy and coincidence
      rate with known structures and reservoirs also decreases. Forty-one
      Category 1 anomalies occurred above known structures, of which 34 have
      been drilled.
 
 3.
    The
      ability of the SFD technology in identifying other geological features
      named “Point Anomalies”, such as faulting, fracturing or a change in the
      geological domain, were not fully evaluated by SPC due to time
      constraints. The author’s preliminary study of the available geological
      data in Syria in this respect indicates that the SFD does display a high
      degree of accuracy in identifying these features. This aspect needs to be
      studied further through a joint SPC/NXT technical
team.
 
 4.
    Based
      on the map provided by SPC, the “Prospect Areas” and “Potential Areas”
      identified by NXT were in excellent agreement with known geology and
      production.
 
 5.
    SFD
      should be used as an initial discovery tool to reduce the time, cost and
      risk of exploration. This would be followed up by a focused seismic
      program.
 
 6.
    Existing
      height, speed and type of aircraft produced exceptional results and
      therefore should not be changed.
 
 7.
    A
      grid pattern is the most efficient flight pattern. NXT should re-fly
      Potential Areas to determine if they should be upgraded to Prospect
      Areas.
 
 8.
    Sensor
      saturation occurs on some flights, requiring the flight to be re-done. NXT
      should employ multiple sensor sets on each flight to reduce this
      risk.
 
 9.
    NXT
      has a very limited processing and interpretation capacity and should
      evaluate alternatives to increase this
capacity.
 
 10.
    SFD
      is an extremely valuable tool and should not be priced based on cost. NXT
      needs to determine pricing based on this
value.
 
 27
 11.
    The
      manufacturing process for sensors should be
reviewed.
 
 12.
    The
      SFD survey technology can be used in compressive and expansive
      environments, for reservoirs in both carbonate and sandstone for onshore
      exploration of hydrocarbons at all current economic depths. Offshore
      environments have not been adequately tested and the author recommends
      that this be done in the future.
 
 
 28
 
 **Appendix
I: Testing Environment**
 
 **1.1**
    **The
      Tectonic/ Geologic terrains of the test
area:**
 
 
 Syria
is close to the leading edge of a continent / continent collision where the
Arabian Plate is converging on Eurasia in roughly north-northwesterly direction.
This collision is manifested in the active transform and convergent plate
boundaries that are currently proximal to Syria, and have been so for most of
the Phanerozoic. The events of these boundaries have largely controlled the
Paleozoic and particularly Mesozoic- Cenozoic tectonic in Syria. (Figure 1 shows
the location of the study area in relation to Arabian Plate).
 
 The
test area covers approximately 61,000 square kilometers of the Syrian
territories, which makes approximtely 33% of the Syria. There are 3 main
different geological terrains covering the SFD surveyed area.
 
 1.
    The
      central part of the area covers the eastern part of the Palmyrides
      mountain chain, which is a series of anticline structures, which have been
      affected severely by faulting. The main rocks are of Mesozoic age and the
      section has several hydrocarbon reservoirs.
 
 Palmyride
Area.
 
 During
most of the Phanerozoic the Palmyride zone was a sedimentary depocentre. The SW
Palmyrides have been controlled by NW- dipping late Paleozoic and Mesozoic
listric normal faults that were structurally inverted in the Neogene. A
significant part of the thickening in the Palmyride Trough can be related to
broad subsidence rather than extensional faulting particularly during the
Triassic. In the Jurassic and Late Cretaceous normal faulting dominated. Since
Late Cretaceous, the Palmyrides have been subjected to episodic compression
leading to folding and to the currently observed topographic
uplift.
 
 Source
rocks in the Palmyrides have generally been buried to greater depths relative to
sources elsewhere in Syria and this zone largely gas and condensate bearing.
Most of the gas is found in the Triassic carbonate section. Traps have been
created in late Paleozoic- Mesozoic fault blocks and in folds created during
structural inversion and shortening.
 
 
 2.
    The
      eastern part of the survey area falls within the Euphrates Graben, which
      is an important tectonic structure displaying both the extensional and
      compressional features. The graben hosts the most significant light
      hydrocarbon reservoirs in Syria and has been in production for about 20
      years.
 
 29
 The
Euphrates Graben is a fault-bounded failed rift and forms part of Euphrates
Fault System that extends from the Iraqi border in the southeast to the Turkish
border in the northwest. The lack of the widespread inversion limits the
topographic expression of the Euphrates Fault System.
 
 3.
    The
      southern part of the survey area forms part of what is called the Southern
      Syrian Platform, which is characterized by relatively simple uplift
      structure and with thin Mesozoic cover overlying thick Paleozoic rocks.
      The region forms the NE- trending paleogeographic high on the northern
      margin of the Rutbah Uplift in Syria. This is a major structure which
      extends to Iraq and Jordan.
 
 **1.2**
    **Oil
      Habitat in the Surveyed Area:**
 
 The
Euphrates Graben harbors the most important hydrocarbon plays in Syria. The bulk
of the production is from the Lower Cretaceous Rutbah sandstone. This is a high
porosity fluviodeltaic sandstone with well-maintained permeability that was
deposited during the Neocomian transgression in eastern Syria. The Triassic
Mulussa F sandstone is also a very important reservoir. Both charge and seal are
provided by the Upper Cretaceous marly limestone of the Shiranish formation and
the Rmah chert and Arak marl formations.
 
 Paleozoic
reservoir rocks in Syria could include Permian-Carboniferous and Ordovician
sandstones that are present at various depths over most of the region. Paleozoic
discoveries sourced and sealed Tanf formation in the Euphrates Graben confirms
the viability. The presence of suitably timed structural traps and sealing
lithologies could be the main controls on the play.
 
 
 **1.3**
    **Production
      comparables to other Middle Eastern
countries**
 
 Syria’s
oil production of 535,000 bbls/day is small compared to other Middle Eastern
countries. 2002 production numbers for other countries are as
follows:
 ·
    Saudi
      Arabia 8.4 million bbls/day
 ·
    Iran
      3.7 million bbls/day
 ·
    UAE
      2.25 million bbls/day
 ·
    Kuwait
      2.1 million bbls/day
 ·
    Libya
      1.4 million bbls/day
 ·
    Iraq
      0.5 million bbls/day (due to sanctions)
 
 
 30
 
 
 
 31
 **Appendix
III: Prospect Areas and Potential Area Maps**
 
 This
appendix contains Maps defining Prospect Areas and Potential Areas that were
created by NXT and submitted to NXT.
 
 The
map titled “NXT Report Prospect Areas” and dated April 4, 2004 was created from
the data contained in the report submitted by NXT to SPC on April 4, 2004. This
map defines the Prospect Areas.
 
 The
map titled “NXT Report Potential Areas” and dated April 4, 2004 was created from
the data contained in the report submitted by NXT to SPC on April 4, 2004. This
map defines the Potential Areas.
 
 The
map titled “NXT Report Amendment Prospect Areas” and dated April 4, 2004 was
created from the data contained in the amendment submitted by NXT to SPC on
April 26, 2004. This map defines the Prospect Areas.
 
 The
map titled “NXT Report Amendment Potential Areas” and dated April 26, 2004 was
created from the data contained in the amendment submitted by NXT to SPC on
April 26, 2004. This map defines the Prospect Areas.
 
 
 The
22 days between the NXT report and the amendment for Prospect Areas and
Potential Areas was used to ensure that all 26 Prospect Areas initially
identified met all the criteria established by NXT. The NXT interpretation
determined that 12 Prospect Areas from the NXT report did not completely meet
the criteria and therefore were downgraded or removed. It also determined that 3
Potential Areas would be upgraded to Prospect Areas leaving a total of 17
Prospect Areas in the amended report.
 
 A
similar process was completed for the original 20 Potential Areas resulting in 3
Potential Areas being upgraded to Prospect Areas, 6 Prospect Areas being
downgraded to Potential Areas, 6 Potential Areas being removed and 9 Potential
Areas being added leaving a total of 25 Potential Areas.
  32
  
 
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 42
 **Appendix
VII: SFD Signal Example**
 
  
 
 | ----
regional ----------|---------- local ------------------------|------- regional
-----------------
 
 
 The
above example of signal response from four SFD sensors illustrates the contrast
in subsurface stress development. On the left and right sides of the image the
four sensors are responding to the regional stress development of the
sedimentary basin. Near the center of the image the four sensors change their
response to indicate a change in the stress field gradient. We now have a
contrast between the regional stress regime and a particular local stress
regime.
 
 NXT
has developed empirical templates to identify these local responses to stress
field gradient changes as significant structures with the potential for
reservoir development.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 43
 
 **Appendix
VIII: Valentine Report**
 
 
 
 **Under
Separate Cover**
 44