UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 20F

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

                  For the fiscal year ended December 31, 2000.

                         Commission file number 0-29344

                            INDO-PACIFIC ENERGY LTD.
             (Exact name of Registrant as specified in its charter)

                             Yukon Territory, Canada
                 (Jurisdiction of incorporation or organization)

                             284 Karori Road, Karori
                                   Wellington
                                New Zealand, 6003
         (Address of Principal Executive Offices, including Postal Code)

                Registrant's telephone number:     (644) 476-2717

           Securities registered pursuant to Section 12(b) of the Act:

                                      None
                                (Title of class)


           Securities registered pursuant to Section 12(g) of the Act:

                                  Common Shares
                                (Title of class)

  Securities for which there is a reporting obligation pursuant to Section 15(d)
                                   of the Act.

                                      None
                                (Title of class)

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of close of the period covered by the annual report:

                            32,446,622 Common Shares

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes     [X]     No     [ ]

Indicate by check mark which financial statement item the registrant has elected
to follow.

Item 17     [X]     Item 18     [ ]

                                   The Index to the Exhibits is found at Page 88

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
               Glossary of Terms                                               3
Part I
     Item 1    Identity of Directors, Senior Management and Advisers           7
     Item 2    Offer Statistics and Expected Timetable                         7
     Item 3    Key Information                                                 7
     Item 4    Information on the Company                                     13
     Item 5    Operating and Financial Review and Prospects                   30
     Item 6    Directors, Senior Management and Employees                     34
     Item 7    Major Shareholders and Related Party Transactions              40
     Item 8    Financial Information                                          43
     Item 9    The Offer and Listing                                          43
     Item 10   Additional Information                                         45
     Item 11   Quantitative and Qualitative Disclosures About Market Risk-    47
     Item 12   Description of Securities other than Equity Securities         47

Part II

     Item 13   Defaults, Dividend Arrearages and Delinquencies                48
     Item 14   Material Modification to the Rights of Security Holders
               and Use of Proceeds                                            48
     Item 15   Reserved                                                       48
     Item 16   Reserved                                                       48

Part III

     Item 17   Financial Statements                                           48

Signature                                                                     49

     Item 18   Financial Statements (Not Used)                                88
     Item 19   Exhibits                                                       88


<PAGE>
Page 3

GLOSSARY OF TERMS
-----------------

The following terms as defined here are used throughout this filing:

INDO or Company or Registrant refers to Indo-Pacific Energy Ltd., a corporation
organized and registered under the laws of Yukon, Canada, and includes the
company and its subsidiaries.

Anticline is a geologic structure in which the sedimentary strata are folded to
form an arch or dome.

Appraisal Well is a well drilled after an existing discovery well to determine
the extent of the resources of the field.

Basin is a segment of the crust of the Earth in which thick layers of sediments
have accumulated over a long period of time.

Bbl or Barrel is one stock tank barrel, of 42 U.S. gallons liquid volume, used
herein in reference to crude oil or other liquid hydrocarbons.

Boe refers to one barrel of oil equivalent using the ratio of one barrel of
crude oil, condensate or natural gas liquids to 6 Mcf of natural gas, unless
defined otherwise.

Boepd is one barrel of oil equivalent per day

Bopd Barrels of oil per day.

Condensate refers to hydrocarbons associated with natural gas which are liquid
under surface conditions but gaseous in the reservoir before extraction.

Depletion is the reduction in petroleum reserves due to production.

Development refers to the phase in which a proven oil or gas field is brought
into production by drilling and completing production wells and the wells, in
most cases, are connected to the petroleum gathering system.

Discovery is the location by drilling of a well of an accumulation of gas,
condensate or oil reserves, the size of which may be estimated but not precisely
quantified and which may or may not be commercially economic, depending on a
number of factors.

Dry Hole is a well drilled without finding commercially economic quantities of
hydrocarbons.

Exploration Well is a well drilled in a prospect without knowledge of the
underlying sedimentary rock or the contents of the underlying rock.

Farm In or Farm Out refers to a common form of agreement between or among
petroleum companies where the holder of the petroleum interest agrees to assign
all or part of an interest in the ownership to another party that is willing to
fund agreed exploration activities which may be more or less than the
proportionate interest assigned to such other party.

Fault is a fracture in a rock or rock formation along which there has been an
observable amount of displacement.

Field is an area that is producing, or has been proven to be capable of
producing, hydrocarbons.

Formation is a reference to a group of rocks of the same age extending over a
substantial area of a basin.

Frontier Exploration is exploration in an area that has seen little previous
exploration but offers the potential for the discovery of large reserves of
hydrocarbons.

<PAGE>
Page 4

GAAP Generally accepted accounting principles.

Geology is the science relating to the history and development of the Earth.

Hydrocarbon is the general term for oil, gas, condensate and other petroleum
products.

Lead is an inferred geological feature or structural pattern which on further
investigation may be upgraded to a prospect.

Mbbls One thousand barrels of crude oil or other liquid hydrocarbons.

Mboe One thousand BOEs.

Mcf One thousand cubic feet of natural gas.

Mcfd One thousand cubic feet of natural gas per day

MMcf One million cubic feet of natural gas.

Participating Interest or Working Interest is an equity interest, as compared to
a royalty interest, in an oil and gas property whereby the participating
interest holder pays its proportionate or agreed percentage share of development
and operating costs and receives its proportionate share of the proceeds of
hydrocarbon sales after deduction of royalties due on gross income.

Pay Zone is the stratum or strata of sedimentary rock in which oil or gas is
found.

Permit or License is an area that is granted for a prescribed period of time for
exploration, development or production under specific contractual or legislative
conditions.

Pipeline is a system of interconnected pipes that gather and transport
hydrocarbons from a well or field to a processing plant or to a facility that is
built to take the hydrocarbons for further transport, such as a gas liquefaction
plant.

Play is a combination of geologic features that have the potential for the
accumulation of hydrocarbons.

Prospect is a potential hydrocarbon trap which has been confirmed by geological
and geophysical studies to warrant the drilling of an exploration well.

Proved Developed Reserves are Proved Reserves that can be expected to be
recovered through existing wells with existing equipment and operating methods.

Proved Reserves are the estimated quantities of crude oil, natural gas and
natural gas liquids which geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions.

Proved Undeveloped Reserves are Proved Reserves that are expected to be
recovered from new wells on undrilled acreage or from existing wells where a
relatively major expenditure is required for recompletion.

Reservoir is a porous and permeable sedimentary rock formation containing
adequate pore space in the rock to provide storage space for oil, gas or water.

Royalty is the entitlement to a stated or determinable percentage of the
proceeds received from the sale of hydrocarbons calculated as prescribed in
applicable legislation or in the agreement reserving the royalty to the owner of
the royalty.

<PAGE>
Page 5

Seal is an impervious sedimentary rock formation overlying a reservoir that
prevents the further migration of hydrocarbons.

Seep is the natural flow of oil or gas to the Earth's surface from a formation
or through cracks and faults indicating that a formation containing hydrocarbons
may be located somewhere nearby.

Seismic refers to a geophysical technique using low frequency sound waves to
determine the subsurface structure of sedimentary rocks.

Show is the detectable presence of hydrocarbons during the drilling of a well.

Source Rock is sedimentary rock, usually fine-grained shale rich in organic
matter, the geologic conditions, including conditions of temperature, pressure
and time, and history of which is favorable for the formation of hydrocarbons.

Top Seal is a rock formation through which hydrocarbons cannot move which lies
above a trap and below which hydrocarbons accumulate to form a pool.

Trap is a geological structure in which hydrocarbons build up to form an oil,
condensate or gas field.


Other Expressions

Metric and Imperial Units - Conversion from metric units into imperial
equivalents is as follows:

Metric Units          Imperial Units

hectare (ha)          2.471 acres

meter (m)             3.281 feet

kilometer (km)        0.621 miles (3,281 feet)

Name of Era           Name of Period   Number of Years Before Present (Millions)

Quaternary            Holocene          0 to 0.4
                      Pleistocene       0.4 to 1.8

Tertiary              Pliocene          1.8 to 5.0
                      Miocene           5.0 to 24
                      Oligocene         24 to 38
                      Eocene            38 to 56
                      Paleocene         56 to 60
Mesozoic              Cretaceous        60 to 140
                      Jurassic          140 to 200
                      Triassic          200 to 250

Paleozoic             Permian           250 to 290
                      Carboniferous     290 to 365
                      Devonian          365 to 405
                      Silurian          405 to 425
                      Ordovician        425 to 500
                      Cambrian          500 to 570

Precambrian           Precambrian       > 570

<PAGE>
Page 6

PRESENTATION OF INFORMATION

Indo-Pacific Energy Ltd. (the "Company") conducts its operations directly and
through subsidiaries. The term "INDO" as used herein refers, unless the context
otherwise requires, to the Company and its consolidated subsidiaries. Unless
otherwise specified, all dollar amounts described herein are in United States
currency. All references to daily production are before royalty, unless stated
otherwise.


FORWARD LOOKING STATEMENTS

This Report contains forward looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward looking
statements are not guarantees of INDO's future operational or financial
performance and are subject to risks and uncertainties. Certain statements in
this Report constitute forward looking statements. When used in this Annual
Report, the words estimate", "intend", "expect", "anticipate" and similar
expressions are intended to identify forward-looking statements. Readers are
cautioned not to place undue reliance on these statements, which speak only as
of the date of this Annual Report. These statements are subject to risks and
uncertainties that could cause results to differ materially from those
contemplated in such forward-looking statements. Such risks and uncertainties
include, but are not limited to, those identified under the subheading "Risk
Factors" in Item 3 hereof.

Actual operational and financial results may differ materially from INDO's
expectations contained in the forward looking statements as a result of various
factors, many of which are beyond the control of the Company. These factors
include, but are not limited to, unforeseen changes in the rate of production
from INDO's oil and gas fields, changes in the price of crude oil and natural
gas, adverse technical factors associated with exploration, development, product
or transportation of INDO's crude oil and natural gas reserves, changes or
disruptions in the political or fiscal regimes in INDO's areas of activity,
changes in Canadian or USA tax, energy or other laws or regulations, changes in
significant capital expenditures, delays in production starting up due to an
industry shortage of skilled  manpower, equipment or materials, and cost of
inflation.


<PAGE>
Page 7

PART I
------

ITEM 1.     IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable

ITEM 2.     OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable


ITEM 3.     KEY INFORMATION

A.     Selected financial data

The selected historical financial information presented in the table below for
each of the years ended December 31, 2000, 1999, 1998, 1997 and 1996, is derived
from the audited consolidated financial statements of INDO. The audited
financial statements of INDO for the years ended December 31, 2000, 1999 and
1998 are included in this Filing.  The selected historical financial information
for the years ended December 31, 1997 and 1996 presented in the table below are
derived from audited financial statements of INDO that are not included in this
Filing. The selected financial information presented below should be read in
conjunction with INDO's consolidated financial statements and the notes thereto
(Item 17) and the Operating and Financial Review and Prospects (Item 5)
elsewhere in this Filing.

The selected consolidated financial data has been prepared in accordance with
Canadian Generally Accepted Accounting Principles ("Canadian GAAP"). The
consolidated financial statements included in Item 17 in this filing are also
prepared under Canadian GAAP. Included within these financial consolidated
statements in Note 15 is a reconciliation between Canadian and US GAAP which
differ only in respect of profit after tax and shareholders equity.

                INDO-PACIFIC ENERGY LTD. AND SUBSIDIARY COMPANIES
         SELECTED FINANCIAL DATA AS OF AND FOR THE YEARS ENDED AS SHOWN
                       (IN US$000'S EXCEPT PER SHARE DATA)

--------------------------------------------------------------------------------
                         Selected Income Statement Data
                    Amounts in accordance with Canadian GAAP
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                          Year                Year                Year                Year                Year
                                          Ended               Ended               Ended               Ended               Ended
                                        December 31         December 31         December 31         December 31         December 31
                                          2000                1999                1998                1997                1996
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>               <C>                 <C>                 <C>                 <C>
Oil and gas revenue net of royalties   $        476      $        315        $        234        $         488       $         163
Other income                                    224               359                 451                  382                 263
Operating expenses                              (59)              (66)               (140)                (112)                (38)
General and administrative expenses            (744)             (541)               (693)                (950)               (443)
Depletion and depreciation                     (112)             (104)                (96)                 (98)                (98)
Property write-downs                         (2,726)             (983)               (765)                (162)                (38)
Other Items                                      70              (161)               -                    -                   -
Income (loss) before income taxes            (2,871)           (1,181)             (1,009)                (452)               (191)
Income taxes                                   -                 -                   -                    -                   -
Income (loss) for the year             $     (2,871)     $     (1,181)       $     (1,009)        $       (452)      $        (191)
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) per share                $      (0.09)     $      (0.04)       $      (0.04)        $      (0.02)      $       (0.01)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends declared per share           $       -         $       -           $       -            $       -          $        -
-----------------------------------------------------------------------------------------------------------------------------------

Amounts in accordance with US GAAP
Income (loss) for the year             $     (3,186)     $     (1,173)       $       (880)        $       (738)      $        (885)
Comprehensive income / (loss)          $     (3,256)     $     (2,665)       $        595         $       (651)      $        (885)
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) per share                $      (0.10)     $      (0.04)       $      (0.03)        $      (0.03)      $       (0.03)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>
Page 8

                INDO-PACIFIC ENERGY LTD. AND SUBSIDIARY COMPANIES
         SELECTED FINANCIAL DATA AS OF AND FOR THE YEARS ENDED AS SHOWN
                       (IN US$000'S EXCEPT PER SHARE DATA)

                       SELECTED BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                            Amounts in accordance with Canadian GAAP
-----------------------------------------------------------------------------------------------------------------------------------
                                           As at             As at             As at             As at             As at
                                        December 31       December 31       December 31       December 31       December 31
                                           2000              1999              1998              1997              1996
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                <C>               <C>               <C>               <C>
Working capital                          3,061             6,131             8,578            10,740             9,510
-----------------------------------------------------------------------------------------------------------------------------------
Current Assets                           3,226             6,409             8,735            10,785             9,597
Investments                               -                  670               250              -                 -
Oil and gas properties                   6,636             3,656             2,820             1,930             1,114
Property & Equipment                       125               144               134               115                35
Total assets                             9,987            10,879            11,939            12,830            10,746
-----------------------------------------------------------------------------------------------------------------------------------
Long-term debt                            -                 -                 -                 -                 -
Share Capital                           19,478            17,386            17,386            17,379            14,802
Accumulated deficit                     (9,656)           (6,785)           (5,604)           (4,595)           (4,143)
-----------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity                     9,822            10,601            11,782            12,784            10,659
-----------------------------------------------------------------------------------------------------------------------------------

Amounts in accordance with US GAAP
-----------------------------------------------------------------------------------------------------------------------------------
Current Assets                           3,226             6,409             9,047            10,873             9,597
Oil and gas properties                   6,636             3,656             2,820             1,930              1,114
Total assets                             9,987            10,949            13,501            12,918             10,746
-----------------------------------------------------------------------------------------------------------------------------------
Share Capital                           20,653            18,246            18,254            18,376             15,513
Accumulated deficit                    (10,831)           (7,645)           (6,472)           (5,592)            (4,854)
Comprehensive Income Adjustment           -                   70             1,562                88               -
-----------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity                     9,822            10,671            13,344            12,872             10,659
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Exchange Rates

The Registrant's financial statements, as provided under Items 8 and 17 are
presented in US$ - the host country currency. However, years prior to 1998 were
presented in Canadian dollars, so for comparison the Canadian exchange rates are
provided. Rates of exchange are obtained from the Bank of Canada and believed by
the Registrant to approximate closely the rates certified for customs purposes
by the Federal Reserve Bank in New York.

At the close of business on June 15, 2001 the buying rate was: US$1.00:
Cdn$1.5243, and on December 29, 2000, the last business day for year 2000, the
buying rate for Canadian dollars was US$1.00: Cdn$1.4995.

The following table sets out the buying rate for Canadian dollars for the last 6
months:

<TABLE>
<CAPTION>
                  May 2001        Apr 2001        Mar 2001        Feb 2001        Jan 2001        Dec 2000
<S>                 <C>             <C>             <C>             <C>             <C>             <C>
Month End           1.5384          1.5366          1.5763          1.5361          1.4989          1.4995
Average             1.5415          1.5575          1.5585          1.5218          1.5032          1.5224
High [1]            1.5542          1.5825          1.5795          1.5422          1.5175          1.5480
Low [1]             1.5271          1.5345          1.5364          1.4901          1.4905          1.4946
</TABLE>

[1]  The high and low buying rate figures are selected from daily high and low
     figures.

     The following table sets out the buying rate for Canadian dollars for the
     last 5 financial years:

             2000         1999          1998         1997         1996
Year End     1.4995       1.4433        1.5333       1.4305       1.3706
Average      1.4852       1.4868        1.4831       1.3844       1.3636
High [1]     1.5583       1.5287        1.5795       1.4393       1.3855
Low [1]      1.4353       1.4433        1.4082       1.3365       1.3295

[1]  The high and low buying rate figures are selected from daily high and low
     figures.

<PAGE>
Page 9

B.     Capitalisation and indebtedness

Not applicable

C.     Reasons for the offer and use of proceeds

Not applicable

D.     Risk Factors
The common shares of the Registrant must be considered a speculative investment
due to a number of significant risk factors. Purchasers of the Registrant's
common shares should consider the following:

1.     Reliance on Expertise of Certain Persons
       The Registrant is dependent on the management by its president, David
       Bennett, and, in the acquisition, exploration and development of
       petroleum properties, on the advice and project management skills of
       various consulting geologists, geophysicists and engineers retained by
       the Registrant from time to time.  The current president of the
       Registrant is experienced in the acquisition, exploration and development
       of petroleum properties in New Zealand and other Asian countries,
       particularly Papua New Guinea and Australia. Should the current president
       leave the Registrant, the Registrant may have difficulty in immediately
       finding a person of comparable experience to manage the business of the
       Registrant.  The Registrant does not currently maintain key person
       insurance on the president or any other employee.

2.     Limited Financial Resources and Lack of Sufficient Capital
       The Registrant's auditors for the 2000 fiscal year have expressed
       substantial doubt as to the Registrant's ability to continue to meet
       future commitments.  The Registrant has limited financial resources and
       may not be able to raise sufficient funds to sustain, continue or expand
       its business. Currently the Registrant does not have sufficient capital
       to satisfy the required capital expenditures for the 2001 fiscal year in
       order to maintain the Registrant's interests in all of its permits.
       Should the Registrant fail to raise additional capital, or fail to enter
       into agreement with third parties to fund permit obligations, or fail to
       renegotiate such obligations, the Registrant may be unable to carry out
       its plan of operations and may be forced to abandon some of its permit
       interests (See Risk Factor #16). The Registrant currently has limited
       revenues and relies on farmout of expenditure to third parties, and
       issuance of common shares to raise funds to finance the business of the
       Registrant. In order to satisfy the required capital expenditures for the
       upcoming fiscal year to maintain the Registrant's interests in its
       permits, the Registrant will either have to raise additional capital
       through the issuance of common shares, or enter into agreements with
       third parties to fund permit obligations, or renegotiate such
       obligations.  There is no assurance that market conditions will
       continue to permit the Registrant to raise funds if required, or that
       the Registrant will be able to enter into agreement with third parties to
       fund permit obligations, or be able to renegotiate such obligations.  Due
       to the above uncertainties the auditors' report expressed substantial
       doubt about the Registrant's ability to continue to meet future
       commitments.

3.     Competition with Other Companies
       Other companies are in competition with the Registrant. The Registrant
       must compete with such companies in bidding for the acquisition of
       petroleum interests from various state authorities, in purchasing or
       leasing equipment necessary to explore for, develop and produce
       hydrocarbons and in obtaining the services of personnel in the
       exploration for, and development and production of, hydrocarbons.

4.     Failure to Locate Commercial Quantities of Hydrocarbons and Geological
       Risks
       There is no assurance that commercial quantities of hydrocarbons will be
       discovered. Geological conditions are variable and of limited
       predictability. Even if production is commenced from a well or field,
       production will inevitably decline over the course of time, reducing the
       operating profitability of the enterprise and eventually causing its
       termination.

<PAGE>
Page 10

5.     Fluctuation of Oil and Gas Prices
       Prices for oil and gas will fluctuate depending on international demand,
       production and other factors which cannot be foreseen by the Registrant.
       Oil is a global commodity, which has seen major fluctuations in value
       over the last 30 years, such fluctuations occurring in a rapid and
       unpredictable manner. In early 1999, the average price of oil dropped to
       near $10/barrel, while during year 2000 the price was maintained above
       $20/barrel. The long run average price through the last 20 years has,
       however, been in the $18-20/barrel range. Most forecasting agencies are
       now placing the long run price for the coming decade in the $20-28/barrel
       range. There is no foreseeable shortage of oil reserves, but short term
       shortages in production capacity and infrastructure, tanker capacity and
       political factors, can and do cause price rises. These in turn trigger
       responses to enable supply to meet demand (and vice versa), which
       counteract such price rises over a time scale of a year or so. Therefore,
       the longer that prices remain elevated, the more likely it becomes that
       prices will eventually fall below the long run price. A decline in price
       may render a discovery uneconomic. Production, if any, from the
       Registrant's offshore and PNG properties would take some years to develop
       and all production will be sold under financial conditions that cannot be
       determined.

       This fluctuation in prices can be seen from the following table of the
       average monthly prices received by the Registrant for Ngatoro oil in the
       last 2 years.

             Month     Oil Price (US$/bbl)     Month     Oil Price (US$/bbl)
             Jan-99         $  8.79            Jan-00         $ 21.85
             Feb-99         $  7.88            Feb-00         $ 23.59
             Mar-99         $  9.61            Mar-00         $ 24.51
             Apr-99         $ 12.55            Apr-00         $ 23.07
             May-99         $ 13.14            May-00         $ 26.24
             Jun-99         $ 13.25            Jun-00         $ 28.93
             Jul-99         $ 15.87            Jul-00         $ 28.98
             Aug-99         $ 17.87            Aug-00         $ 29.74
             Sep-99         $ 20.03            Sep-00         $ 32.54
             Oct-99         $ 20.14            Oct-00         $ 30.56
             Nov-99         $ 20.47            Nov-00         $ 30.49
             Dec-99         $ 20.59            Dec-00         $ 25.23

6.     Governmental Laws and Local Conditions
       There is no assurance that governmental regulation will not vary,
       including regulations relating to prices, royalties, allowable
       production, environmental matters, import and export of hydrocarbons
       and protection of water resources and agricultural lands. The Registrant
       is subject to foreign governmental regulations that relate directly and
       indirectly to its operations including title to the petroleum interests
       acquired by the Registrant, production, marketing and sale of
       hydrocarbons, taxation, environmental matters, restriction on the
       withdrawal of capital from a country in which the Registrant is operating
       and other factors. There is no assurance that the laws relating to the
       ownership of petroleum interests and the operation of the business of the
       Registrant in the jurisdictions in which it currently operates will not
       change in a manner that may materially and adversely affect the business
       of the Registrant. There is no assurance that the laws of any
       jurisdiction in which the Registrant carries on business may not change
       in a manner that materially and adversely affects the business of the
       Registrant.

7.     Aboriginal Claims
       Claims of aboriginal peoples in Australia, New Zealand and Papua New
       Guinea may adversely affect the rights or operations of the Registrant.

              * The Registrant has Permits in the Timor Sea (AC/P 19, AC/P 26
                and AC/P 31), an area governed by Australian Law.

              * The Registrant has a Permit in the Zone Of Cooperation between
                Australia and East Timor (ZOCA) (ZOCA 96-16) an area which is
                governed by both The Republic of East Timor and Australia.
                Currently the Royalty regime in the ZOCA is being re-negotiated
                by the United Nations on behalf of the Republic of East Timor,
                and Australia. The Registrant has no control over the outcome of
                these negotiations in the ZOCA regarding the royalty/revenue or
                tax take by The Republic of East Timor.

<PAGE>
Page 11

              * The Registrant has Permits in Papua New Guinea (PPL 215, PPL
                192, PPL 157, PRL4, PRL 5, APPL 228) which are subject to the
                rule of the democratic government of the nation of Papua New
                Guinea.

              * The Registrant has Permits in New Zealand (PEP's 38256, 38328,
                38330, 38332, 38716, 38720, 38723, 38736 and PMP 38148) where
                the government has a right to either a 5% Ad Valorum Royalty or
                20% accounting profits tax.

8.     Environmental Risks
       The Registrant is subject to laws and regulations that control the
       discharge of materials into the environment, require removal and cleanup
       in certain circumstances, require the proper handling and disposal of
       waste materials or otherwise relate to the protection of the environment.
       The Registrant believes that it has conducted its business in substantial
       compliance with all applicable environmental laws and regulations.

9.     Possible Lack of or Inadequacy of Insurance
       The Registrant maintains insurance against certain public liability,
       operational and environmental risks, but there is no assurance that an
       event causing loss will be covered by such insurance, that such insurance
       will continue to be available to, or carried by, the Registrant or, if
       available and carried, that such insurance will be adequate to cover the
       Registrant's liability.

10.    No Assurance of Earnings
       The Registrant currently has one oil and gas producing property, with two
       separate producing pools, which, until December 31, 2000, did not
       generate enough revenue to meet the Registrant's expenses. The Registrant
       has a limited history of earnings and there is no assurance that the
       business of the Registrant will be profitable. As at the end of the
       Registrant's last fiscal year ended December 31, 2000, the Registrant had
       an accumulated deficit of $9,656,106.  Subsequent to the year-end, the
       Registrant made a discovery at Goldie-1, which will provide significantly
       greater revenues than previously, but this may not be sufficient to
       offset the previously accumulated deficit. The Registrant cannot
       guarantee that it will continue generating revenues in the future. A
       failure to generate revenues will likely cause the Registrant to
       eventually go out of business.

11.    No Assurance of Dividends
       Even if the business of the Registrant is profitable, there is no
       assurance the board of directors will declare dividends on common shares.
       The Registrant has not paid dividends at any time in its history to date
       and there is no assurance that the Registrant will pay a dividend at any
       time in the future.

12.    Effect of Taxation of Dividends on Shareholders
       The register of members of the Registrant discloses that the majority of
       the shares of the Registrant are held of record by persons resident in
       the United States of America. If the Registrant should declare a
       dividend, a withholding tax of five percent is payable in Canada on
       payment of a dividend to a corporate resident of the United States of
       America holding more than ten per cent of the shares of the Registrant
       and 15% to all other residents of the United States. This may have a
       negative effect on those shareholders' returns from dividends, and
       possibly impact the price received for their shares.

13.    Marketing of Petroleum Products
       The availability of products sold, or to be sold, by the Registrant may
       be restricted or rendered unavailable due to factors beyond the control
       of the Registrant, such as change in laws in the jurisdictions in which
       the properties of the Registrant are located, changes in the source of
       supply in foreign countries, prohibition on use due to testing and
       licencing requirements and in certain areas of the world civil disorder
       or governmental confiscation without compensation.

14.    Effect of Different Currencies for Revenue and Expenses
       The Registrant holds its cash reserves and receives the majority of its
       revenues in US dollars, but incurs the majority of its expenses and its
       petroleum property expenditures in Australian and New Zealand dollars.
       Subsequent to the reporting date, the value of both the Australian and
       New Zealand currencies has depreciated against the value of the US
       currency to the benefit of the Registrant during that period.  An

<PAGE>
Page 12

       increase in value of either of the New Zealand and Australian dollar
       versus the US dollar would have a detrimental effect to the Registrant as
       the Registrant's expenses incurred would, in turn, increase in US
       dollars.

15.    Inadequacy of Public Market
       As of August 21, 2000 the Registrant's common shares were de-listed from
       trading on the OTCBB as the Registrant had outstanding comments on its
       initial 1934 Exchange Act registration statement from the Securities and
       Exchange Commission ("SEC"). In order to be re-listed on the OTCBB, the
       Registrant was required to achieve a "no comment" status with the SEC.
       As at December 31, 2000, there was no organized market within which the
       Registrant's common shares could be traded. Subsequently, on April 16,
       2001 the Registrant reached a "no comment" status with the SEC, and was
       re-listed on the OTCBB on May 23, 2001. The Registrant is required to
       hereafter maintain its status as a "reporting" issuer under the
       Securities Exchange Act of 1934 (the "34 Act"), in order to be traded by
       broker-dealers regulated by the National Association of Securities
       Dealers ("NASD"). There can be no assurance that a stable market for the
       Registrant's common shares will be maintained. If the Registrant fails to
       remain current in its filings with the SEC, the Registrant may be de-
       listed again and the Registrant's shareholders may not be able to sell
       their shares in the public market within the United States. There can be
       no assurance that the Registrant will remain eligible for listing on the
       OTCBB.

16.    Consequences of Failure to Satisfy Prescribed Permit or License Terms
       and Conditions
       In all cases, the terms and conditions of the permit or license granting
       the right to the Registrant, or the party from which the Registrant
       acquired, the right to explore for, and develop, hydrocarbons prescribe a
       work program and the date or dates before which such work program must be
       done. Varying circumstances, including the financial resources available
       to the Registrant and reliance on third party operators of permits and
       licenses, or circumstances beyond the control or influence of the
       Registrant may result in the failure to satisfy the terms and conditions
       of a permit or license and result in the complete loss of the interest in
       the permit or license without compensation to the Registrant. Such terms
       and conditions may be renegotiated with applicable regulatory
       authorities, but there is no assurance that if a term or condition of a
       license or permit that is required to be satisfied has not been met, that
       such term or condition will be renegotiated with the applicable
       authority.

17.    Dilution
       The Registrant's Articles of Incorporation authorize the issuance of
       100,000,000 shares of common stock. The Registrant's Board of Directors
       has the power to issue any or all of such shares that are not yet issued
       without stockholder approval. The Registrant's Board of Directors will
       likely issue some or all of such shares to acquire further capital in
       order to carry out its intended operations or expand its current
       operations, or to provide additional financing in the future. The
       issuance of any such shares may result in a reduction of the book value
       or market price of the outstanding shares of the Registrant's common
       shares. If the Registrant does issue any such additional shares, such
       issuance also will cause a reduction in the proportionate ownership and
       voting power of all other shareholders. Further, any such issuance may
       result in a change of control of the Registrant.

18.    No Title Insurance
       The Registrant does not maintain title insurance over its permits.

19.    Dealings With Associated Companies
       The Registrant has acquired interests in some petroleum properties with,
       or from, or transferred interests to, other companies or their respective
       subsidiaries, being Trans-Orient Petroleum Ltd., Durum Cons. Energy
       Corp., Gondwana Energy Ltd. and AMG Oil Ltd., which have common or
       connected management, and the same principal shareholder. The percentage
       participation of the Registrant and another associated company in a
       property is determined by the boards of directors of each such company in
       accordance with the best business judgment of the board based on the
       assessment of the relative requirements and abilities of the companies to
       participate and applicable law. Persons who are not willing to rely on
       the exercise of judgment by the respective boards of directors in
       determining the participation in properties should not consider an
       investment in the shares of the Registrant or of other associated
       companies. See ITEM 4D.- PROPERTY, PLANT and EQUIPMENT, ITEM 6 -
       DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES AND ITEM 7 - MAJOR
       SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.

<PAGE>
Page 13

ITEM 4.     INFORMATION ON THE COMPANY

A.  History and Development of the Company

1. The Registrant's legal and commercial name is: Indo-Pacific Energy Ltd.

2. The Registrant was incorporated on July 31, 1979 under the name Pryme Energy
Resources Ltd. under the Company Act (British Columbia, Canada), and has
operated continuously since that time. The Registrant is currently operating,
under the above name - Indo-Pacific Energy Ltd.

3. The Registrant is domiciled in the Yukon in Canada.
     Its registered office is:
       Suite 200 Financial Plaza
       204 Lambert Street
       Whitehorse, YT
       Y1A 3T2
       CANADA

     Its principal offices are:
       Indo-Pacific House
       284 Karori Road
       Karori, Wellington
       NEW ZEALAND
       Telephone Number: (644) 476-2717

4. Important Events / Company History

The Registrant was incorporated on July 31, 1979 under the name Pryme Energy
Resources Ltd. under the Company Act (British Columbia, Canada). On March 21,
1980 the Registrant became a reporting or distributing company in British
Columbia with the issuance of a receipt for its initial prospectus offering. The
business of the Registrant was not successful and the Registrant was
reorganized. On August 23, 1985 the name was changed to Newjay Resources Ltd.
and a consolidation of its common shares on a 2.5 old for one new basis
occurred. The business of the Registrant was the exploration for hydrocarbons in
Alberta, California and Texas. The business of the Registrant was not successful
and the Registrant was again reorganized. The Registrant applied to be, and was
deemed, inactive by the Vancouver Stock Exchange on February 26, 1993 and
subsequently completed a reorganization satisfactory to the Vancouver Stock
Exchange and was removed from inactive status on April 25, 1994. On August 25,
1993 the name of the Registrant was changed to Consolidated Newjay Resources
Ltd. and a consolidation of its common shares on a 3.5 old for one new basis
occurred. The Registrant did not commence any business after these events until
1996.

In April 1995, control of the Registrant was acquired by Mr. Alex Guidi, who has
been a member of the board of directors and the principal shareholder of the
Registrant. On May 9, 1995 the name of the Registrant was changed to its current
name. A subdivision of its common shares on a one and a half new for one old
basis occurred on April 15, 1996 and a further subdivision of its common shares
on a two new for one old basis on May 31, 1996 occurred. The Registrant began to
acquire its current petroleum properties in 1996.

The common shares of the Registrant commenced trading in January, 1996 on the
Bulletin Board operated by the National Association of Securities Dealers,
Inc.(the "Bulletin Board") and traded under the symbol "INDX". Trading in the
common shares of the Registrant was halted by the Vancouver Stock Exchange on
September 12, 1996 and the Registrant voluntarily delisted from the Vancouver
Stock Exchange on September 13, 1996.

On September 25, 1997, the Registrant was continued from being a corporation
subsisting under the Company Act (British Columbia) to a corporation subsisting
under the Business Corporations Act (Yukon). The Registrant maintains its head
office and exploration office in Wellington, New Zealand.

From 1996 to 2000, the Registrant acquired interests in petroleum exploration
licences and permits in New Zealand, Australia and Papua New Guinea. The
Registrant also acquired the outstanding shares of Ngatoro Energy Limited
[formerly, Minora Energy (New Zealand) Limited] and entered into an agreement
with China National Oil and Gas Exploration and Development Corporation for a
Technical Study Agreement  in the Nanling and Wuwei basins, Anhui province,
China. The exploration of certain of the petroleum interests commenced in 1996.
The Registrant continues to acquire and explore petroleum interests.

<PAGE>
Page 14

On January 31, 2000 the Registrant announced that it had entered into a letter
of intent to acquire all the exploration permit interests of Trans-Orient
Petroleum Ltd.  The Agreement was formally closed on March 29, 2000 and ratified
by the shareholders of Trans-Orient Petroleum Ltd at a General Meeting held on
May 23, 2000.

 On August 21, 2000 the National Association of Securities Dealers (the "NASD")
removed the Registrant's Common Shares from trading on the NASD Over-the-Counter
Electronic Bulletin Board (the "OTCBB") because the Registrant did not meet NASD
eligibility rule 6530(b)(1). From August 20, 2000 until May 23, 2001, the
Registrant's Common Shares did not trade on an organized market. Following
confirmation, on April 16, 2001, from the SEC of the Registrant achieving a "no
comment" status, the Registrant's shares were re-listed on the OTCBB under the
symbol INDXF, on May 23, 2001.


5 & 6. Principal Capital Expenditures

During the last 3 fiscal years the Registrant has made several significant
expenditures on its oil and gas properties in the normal course of operations,
having participated in the drilling of 10 wells in that time.  The significant
expenditures on the properties are detailed in ITEM 4D.- PROPERTY, PLANT and
EQUIPMENT.  In addition to these expenditures in the normal course of
operations, in fiscal 2000 the Registrant purchased all the properties held by
Trans-Orient Petroleum Ltd. in a significant transaction which is summarized
below.

Summary of the Material Conditions of the Asset Purchase from Trans-Orient
Petroleum Ltd.

The terms of the Agreement between the Registrant and Trans-Orient Petroleum
Ltd. provided that the Registrant:

*      received a range of non-producing exploration assets ("the Assets"), from
       Trans-Orient Petroleum Ltd. The value placed upon the Assets by the
       Registrant and Trans-Orient Petroleum Ltd. was $4,097,360. The Registrant
       assumed the rights and obligations attached to those Assets as at
       December 31, 1999.

*      in return for the above assets, Trans-Orient Petroleum Ltd. received:
       1) forgiveness of outstanding loans ($1,042,928) by the Registrant to
          Trans-Orient Petroleum Ltd.,
       2) transfer at deemed market value of shares held by the Registrant to
          Trans-Orient Petroleum Ltd:
          i)    1,800,000 shares of AMG Oil Ltd. to Trans-Orient Petroleum Ltd.
                at a deemed value of $720,000;
          ii)   600,000 shares of Gondwana Energy, Ltd. to Trans-Orient
                Petroleum Ltd. at a deemed value of $20,000;
          iii)  517,020 shares of Trans-Orient Petroleum Ltd. to Trans-Orient
                Petroleum Ltd. for cancellation.
       3) issuance of  4,184,224 units in the Registrant to Trans-Orient
          Petroleum Ltd., at a deemed value of $0.50 per unit. Each Unit
          consists of one common share and one "A" Warrant. Each "A" Warrant
          will entitle the holder to purchase one additional common share of the
          Registrant in consideration for $0.50 per common share exercisable up
          to March 29, 2001 and thereafter for $0.75 per common share up to
          March 29, 2002.  Upon the exercise of the "A" Warrants by Trans-Orient
          Petroleum Ltd., and subject to a commercial discovery having occurred
          on the Assets or the Subsidiary's Assets, the Registrant shall issue
          to Trans-Orient Petroleum Ltd. one "B" Warrant for each "A" Warrant
          exercised.  The "B" Warrants shall be exercisable at a price of $1.50
          for a period of one year from the date of issue of the "B" Warrants,
          and
       4) grant to Trans-Orient Petroleum Ltd. of a range of gross over-riding
          royalties on the transferred assets, as detailed in the table below,
          and;
       5) granting the right for Trans-Orient Petroleum Ltd. to participate in
          up to 25% of any Equity Financing made by the Registrant up until
          December 31, 2001, provided that such right is not in contradiction to
          any condition of a third party arms-length Equity Financing.

The acquisition of the Assets means that the Registrant now has the right to
produce petroleum in the relevant permit areas (once a discovery has been made)
and it must comply with the work commitments attached to the permits.

<PAGE>
Page 15

The Assets purchased by the Registrant consisted of the following interests:

 Permit Description     Location     Participating Interest    Gross Over-riding
                                                                   Royalty
New Zealand
PEP 38328            East Coast Basin           22.5%              2% (1)
PEP 38332            East Coast Basin           20%                2%
PEP 38335            East Coast Basin           15%                2%
PEP 38339            East Coast Basin           50%                2%
PEP 38720            Taranaki Basin             50%                2%
PEP 38723            Taranaki Basin             40%                2%
PEP 38256            Taranaki Basin             35%                2%

Australia and ZOCA (Zone of Cooperation, Area A; between Australia & United
Nations)
ZOCA 96-16           Timor Sea                  10%                1%
AC/P 26              Timor Sea                  35%                1%

Papua New Guinea
PPL 192              Papuan Basin - Foreland    20%                1%
PPL 157              Papuan Basin - Foreland     7.5%              1%
PPL 215              Papuan Basin - Foreland    40%                1%
PPL 213               Papuan Basin - Highlands   5%                1%

Note: (1) For a pool of a one-kilometre radius around the Whakatu-1 well in PEP
38328, the royalty is 5%.

None of these assets acquired from Trans-Orient were producing assets.

The Registrant had, prior to the acquisition, already owned a partial interest
in a majority of the permits acquired, and was, therefore, familiar from a
technical and operational point of view, with the exploration merits of these
interests.


7. Public Takeovers

The Registrant is not aware of any planned takeover of its shares by third
parties, nor is the Registrant planning any takeover of another company.


B.  Business Overview

1.     Nature of Operations

The Registrant is an oil and gas exploration and production company incorporated
in Canada, and based in Wellington New Zealand, with interests in the
Austral-Pacific region in hydrocarbon properties described in Item 4.D. The
Registrant is involved in the exploration for commercial quantities of
hydrocarbons and, to a lesser extent, the development and production of
hydrocarbons. It is likely the Registrant's activity in development and
production of hydrocarbons will increase following the Registrant's commercial
discovery at Goldie-1 in March 2001. Total production revenue for the year ended
December 31, 2000 was $475,646. The majority of the Registrant's properties are
in the exploration stage.  The Registrant's focus is on the acquisition,
exploration and development of properties in the Austral- Pacific region.

The Registrant sells oil and gas from producing properties in which it holds an
interest.  For the last 3 years, the Registrant's only producing property has
been the PMP 38148 "Ngatoro" Mining Permit in Taranaki, New Zealand, with
production being from the Ngatoro oil field.  However currently it has two
producing pools within the property, with the "Goldie-1" pool being a separate
accumulation, in the above Mining Permit.

<PAGE>
Page 16

2.     Principal Markets

The Registrant sells all of its oil and gas production to a single company -
Energy Exploration NZ Limited (now a subsidiary of Shell Petroleum NZ Ltd.).
The oil is sold into the Australasian market covering the New Zealand refinery
and the east coast of Australia.  The gas is sold into the New Zealand
reticulation system.

3.     Seasonality of Company's business

The Registrant's business is generally not seasonal, being solely reliant on
international oil prices and local gas prices in New Zealand.  Gas prices do not
vary under the current sales contracts, whilst oil prices vary in line with
international prices, for which there have been, in past years, seasonal highs
in the summer months (for the "US driving season") and in the winter months (for
the northern hemisphere heating oil season).

4.     Raw materials

The Registrant does not have a reliance on raw materials, as it operates in an
extractive industry.

5.     Marketing channels

As the Registrant's oil and gas are sold under single contracts, different
marketing channels are not  currently required.

6.     Patents or licences

The Registrant does not have a reliance on any significant patents or licences,
apart from the use of certain software programs.

7.     Company's competitive position

The Registrant competes with other companies in bidding for the acquisition of
petroleum interests from various state authorities, and in exploring and
producing oil and gas in the Australasian region.  However, the Company does
have a competitive position in being the holder of the largest acreage in
onshore licences in New Zealand and in the position of several of its key
properties in New Zealand, Australia and Papua New Guinea.

8.     Material effects of government regulations

The Registrant is subject to government regulation of the oil and gas properties
it holds and in the operations it conducts on those properties.  The effects of
those regulations are detailed in ITEM 4D.- PROPERTY, PLANT and EQUIPMENT.


C.  Organizational Structure

The Registrant is the publicly listed parent company of a group of companies.
The Registrant's operations are conducted through its 100% wholly owned
subsidiaries, as described below:


<PAGE>
Page 17

Company:                       Country of Incorporation   Ownership/Voting Power
--------                       ------------------------   ----------------------

PARENT:
Indo-Pacific Energy Ltd.               Canada

SUBSIDIARIES:
Source Rock Holdings Limited           New Zealand                100%
Indo-Pacific Energy (NZ) Limited       New Zealand                100%
Ngatoro Energy Limited                 New Zealand                100%
PEP 38716 Limited                      New Zealand                100%
Indo-Pacific Energy (PNG) Ltd.         Papua New Guinea           100%
Indo-Pacific Energy (Aust) Pty. Ltd.   Australia                  100%
Trans-Orient Petroleum (Aust) Pty Ltd  Australia                  100%
ZOCA 96-16 Pty Ltd                     Australia                  100%
Trans-Orient Petroleum (PNG) Ltd       Papua New Guinea           100%

Note: all companies are owned 100% and the Registrant has 100% of the voting
power.

Unless the context indicates otherwise, the "Registrant" will refer to
Indo-Pacific Energy Ltd. and its subsidiaries.


D.  Property, plant and equipment

The Registrant's major operations and principal activities are in the oil and
gas exploration and production business. The Company has operated in four
countries over the past three years: New Zealand, Australia, China and Papua New
Guinea.  Apart from Petroleum Properties, the Registrant has only minor office
assets held for the purpose of operating the business.

Petroleum Properties in New Zealand, Australia and Papua New Guinea

The Registrant holds a number of government issued permits in the jurisdictions
of Australia, New Zealand and Papua New Guinea, which authorize prospecting and
exploration for hydrocarbons. These are listed on page 18.

General

*     Except for PMP 38148, which is a Production Mining Permit in New Zealand,
      the properties of the Registrant are exploration Permits or Licences and
      have no proven hydrocarbon reserves.

*     Exploration Permits or Licenses have work obligations described below.

*     At the date of this Form 20F, the Registrant has no encumbrances, liens or
      mortgages on the properties, except:

      (a)  for the royalties payable from oil & gas production achieved on the
           assets acquired from Trans-Orient Petroleum Ltd., as detailed in the
           summary of the Purchase from Trans-Orient Petroleum Ltd. above.

      (b)  a right of participation exists in favor of Lonman Pty Ltd
           ("Lonman"), and applies over the Registrant's interest in AC/P 19 and
           AC/P 26. Lonman may, prior to the first well or farm-in to the first
           well, exercise an option to acquire 5% of the Registrant's interest
           by repayment of past costs and contribution pro-rata to ongoing
           costs. Alternatively, if a farmout at a premium is made to a third
           party prior to the first well, Lonman shall be granted a Carried to
           Production equity amounting to 5% of the free carried equity of the
           Original Parties in such farmout. Lonman will be required to repay
           all past costs associated with this equity out of its share of
           production revenue.

For definitions of technical terms used in the description of properties, see
the Glossary of Terms on page 3.

<PAGE>
Page 18

The following properties which are discussed in this ITEM 4.D, with interests as
at June 20, 2001:

Property          Location                                Working Interest
Developed
PMP 38148         Taranaki Basin, New Zealand               5.0%
 (Goldie Sole Risk Area in PMP 38148)                     100.0%    [1]

Undeveloped
New Zealand
PEP 38256         Canterbury Basin, New Zealand            20.0%    [1]
PEP 38328         East Coast Basin, New Zealand            62.5%    [1]
PEP 38330         East Coast Basin, New Zealand            39.28%   [1]
PEP 38332         East Coast Basin, New Zealand            62.5%    [1]
PEP 38335         East Coast Basin, New Zealand            25.0%
PEP 38716         Taranaki Basin, New Zealand              23.8%
PEP 38720         Taranaki Basin, New Zealand             100.0%    [1]
PEP 38723         Taranaki Basin, New Zealand              36.0%    [1]
PEP 38736         Taranaki Basin, New Zealand             100.0%
Australia
AC/P19            Offshore Timor Sea, Australia           100.0%    [1] [2]
AC/P31            Offshore Timor Sea, Australia           100.0%    [1] [2]
AC/P26            Offshore Bonaparte Basin, Timor Sea      50.0%    [2]
ZOCA 96-16        The Timor Gap Zone of Cooperation        10%
Papua New Guinea
PPL 192           Onshore Papua New Guinea Foreland        60.0%    [1]
PPL 215           Onshore Papua New Guinea Foreland        80.0%    [1]
PPL 157           Onshore Papua New Guinea Foreland         7.5%
PRL 4&5           Onshore Papua New Guinea Foreland         7.5%
APPL 228          Onshore Papua New Guinea                 10%      [2]

[1] Operated by the Registrant. See Item 7.B - Related Transactions
[2] Increase in equity interest subject to completion of compliance paperwork,
    currently in process with relevant government agencies.

New Zealand

Unless otherwise indicated, petroleum exploration permits granted in New Zealand
provide for the exclusive right to explore for petroleum for an initial term of
five years, renewable for a further five years over one-half of the original
area.  The participants are allowed to exceed the committed work programs for
the permits or apply for extensions or reductions of such work programs for any
particular year. Any production permits granted will be for a term of up to 40
years from the date of issue.  The New Zealand government has reserved a royalty
of the greater of 5% of net sales revenue or 20% of accounting profits from the
sale of petroleum products. No performance bond is required, but in the event
that the permit holder(s) do not satisfy the regulatory agency that they have
met the performance obligations of the committed work program (or such variation
as may have been agreed with the regulatory agency), the government has the
power to cancel the permit.

Developed
New Zealand, Onshore Taranaki Basin, North Island

The Taranaki Basin is located on the west coast of the North Island. The
sediments in the Taranaki Basin range in age from Late Cretaceous to the
Quaternary and encompass a depth of some 25,000 feet with complex structure and
geology. Compression across the eastern portion of the Basin during the early
Miocene period created a thrusted fold belt up to ten miles wide, which contains
the McKee, Tariki, Ahuroa and Waihapa-Ngaere fields. Further west in the onshore
region are the fault bounded Kapuni, Ngatoro and Kaimiro fields. All these
fields are currently in production.

Petroleum Mining Permit PMP 38148 (5.0%)

Effective September 1, 1996 the Registrant bought the outstanding shares of
Minora Energy (New Zealand) Limited for AUS$575,000 (US$348,790). The name of
the company was changed to Ngatoro Energy Limited. Ngatoro Energy Limited owns a
five percent participating interest and revenue interest in Petroleum Mining
Permit 38148 ("PMP 38148").

<PAGE>
Page 19

The permit area is 9,400 acres. The permit expires on December 23, 2010.
Production is from turbidite sandstones of the Mount Messenger Formation at
depths of 1,500 metres to 2,000 metres. The other participants are New Zealand
Oil & Gas Ltd. (35.43%) and Shell Petroleum NZ Ltd. (59.57%). New Zealand Oil &
Gas Ltd. is the operator. Revenues from the permit are subject to the Crown's
right of a royalty of the greater of five per cent of net sales revenue from the
sale of petroleum products or 20% of accounting profits, whichever is the
greater in any one year.

The permit has produced from the Ngatoro oil field since 1992, with average
production rates being approximately 900-1,200 bopd (Company share 45-60 bopd)
for the last three years.  The Ngatoro oil field has seven producing oil wells
and one producing gas well.  Production averaged approximately 860 bopd of oil
plus 3.0 MMscfd of gas (Company share 43 bopd and 0.15 MM scfd) during May 2001.
A recent "minifrac" workover to one well, Ngatoro-7 increased production by 300
to 400 bopd (Company share 15 to 20 bopd) from the beginning of June 2001.
Further enhancements through similar minifracs to at least two other wells
(Ngatoro-1 and Ngatoro-6) might provide similar improvements in production, and
a waterflood project to improve ultimate recovery from the field, is under
consideration by the joint venture, following an independent assessment of its
potential by Schlumberger-Hilditch consultancy. This independent assessment
identified that the proposed water flood project could add an estimated 500,000
bbl (Company share 25,000 bbl) to currently estimated remaining reserves of
approximately 1,000,000 bbl (Company share 50,000 bbl).

The Goldie-1 well was drilled by the Registrant at its sole risk, in the
northwest of the permit area, during February/March 2001, and was completed as
an oil producer. By beginning of June 2001 the well had produced approximately
50,000 barrels of oil, at an average rate of approximately 650 barrels per day.
The oil is a light sweet crude, which is transported to the oil tank farm at the
nearby port of New Plymouth and sold at a world parity price. Under the sole
risk operation, the Company receives 100 per cent of the revenues from the
discovery pool, and will continue to do so for some years, until a sole risk
premium which is a multiplier of the well cost is recovered from net
revenues.Volumetric estimation of the likely extent of the pool, based on 3D
seismic data, the Goldie-1 well intersection and by comparison with the
immediately adjacent Ngatoro oil field, which has produced from very similar
sandstones for a number of years, presently places the potential recovery from
the Goldie pool in the range 650,000-1,200,000 barrels of oil. After the first 6
months of production from Goldie-1 is completed, a pressure buildup test will be
performed to enable material balance reserves estimation to be made. The well is
currently producing at approximately 650 bopd of oil and 0.6 MMscfd of
associated gas.

The Registrant is currently considering options for future development of the
Goldie oil field. It is likely a second well will be drilled further southwest
in the pool later in the 2001 year, which, if successful, might increase
accessible oil  recovery by 300,000 to 500,000 bbl and increase rates of field
production to over 1,000 bopd of oil.  Equipment on the site is currently hired,
but the Registrant is considering options for site facilities, which would
reduce ongoing production costs and enable possible sale of gas.  The Registrant
would probably attempt to time any such development to coincide with a reservoir
pressure test after 6 months production.

For work planned to be done before December 31, 2001 on PMP 38148 and its
estimated cost see ITEM 5.B Liquidity and Capital Resources.

Oil and gas reserves information for the Registrant's last three fiscal years:

Summary of Oil and Gas Sales, Net of Royalties, by Country

--------------------------------------------------------------------------------
                           Year Ended          Year Ended          Year Ended
                       December 31, 2000   December 31, 1999   December 31, 1998
--------------------------------------------------------------------------------
Revenues:
--------------------------------------------------------------------------------
New Zealand (Ngatoro)
--------------------------------------------------------------------------------
   Sales revenue            $  475,646        $  314,698         $  234,168
   Less Royalties              (23,962)          (15,248)           (10,269)
                            ----------        ----------         ----------
   Sales net of royalty        451,684           299,450            223,899
--------------------------------------------------------------------------------
Australia                         -                 -                  -
--------------------------------------------------------------------------------
Papua New Guinea                  -                 -                  -
--------------------------------------------------------------------------------
Revenue net of royalty         451,684           299,450            223,899
--------------------------------------------------------------------------------

<PAGE>
Page 20

--------------------------------------------------------------------------------
                           Year Ended          Year Ended          Year Ended
                       December 31, 2000   December 31, 1999   December 31, 1998
--------------------------------------------------------------------------------
                        Oil &    Natural    Oil &    Natural    Oil &    Natural
                      Liquids      Gas    Liquids      Gas    Liquids      Gas
                      (Bbls)     (MMcf)   (Bbls)     (MMcf)   (Bbls)     (MMcf)
--------------------------------------------------------------------------------
Sales:
--------------------------------------------------------------------------------
New Zealand (Ngatoro)  17,089     49.3     19,786     38.6     20,629     27.7
--------------------------------------------------------------------------------
Australia                -        -          -        -          -        -
--------------------------------------------------------------------------------
Papua New Guinea         -        -          -        -          -        -
--------------------------------------------------------------------------------

Reserves

The reserves quoted for the Ngatoro oil field are from the field Operator's
estimated reserves, which are supplied annually to the New Zealand Ministry of
Economic Development (formerly the Ministry of Commerce).  The field Operator is
an independent company: New Zealand Oil & Gas Limited, which employs its own
independent petroleum engineering experts.  The Registrant also contracted
Johnston Consulting of Wellington, New Zealand, independent petroleum
engineering consultant, to evaluate the Company's New Zealand reserves at
December 31, 2000 and December 31, 1999 and at April 30, 2001, following the
Goldie-1 discovery. The main difference between the reported Reserves at
December 31, 2000, 1999 and 1998, is simply due to production in the intervening
interval.

--------------------------------------------------------------------------------
                          Reserves, Working Interest Before Royalties
               -----------------------------------------------------------------
        As at:        December 31, 2000   December 31, 1999   December 31, 1998
                        Oil &    Natural    Oil &    Natural    Oil &    Natural
                      Liquids      Gas    Liquids      Gas    Liquids      Gas
                     (MBbls)     (MMcf)   (MBbls)    (MMcf)   (MBbls)    (MMcf)
--------------------------------------------------------------------------------
Proven
 New Zealand:
   Ngatoro             53.7       152       70.4      30        90.0      130

   Australia           -                    -        -                    -
   Papua New Guinea    -                    -        -                    -
--------------------------------------------------------------------------------
Total proven           53.7       152       70.4      30        90.0      130
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                            US$'000            US$'000             US$'000
--------------------------------------------------------------------------------
Standard Measure Value
of Reserves:
New Zealand:
   Revenue                   1,317              1,646              1,222
   Less future production
    and development costs     (443)              (573)              (645)
--------------------------------------------------------------------------------
Net Revenue                    874              1,073                577
Less Taxes                    -                  -                  -
--------------------------------------------------------------------------------
Net income                     874              1,073                577
Less 10% discount             (161)              (202)              (117)
--------------------------------------------------------------------------------
Net Standard Measure           713                871                460
--------------------------------------------------------------------------------

All reserves quoted are proved developed reserves, as they are from producing
formations in the producing wells.

All reserves for New Zealand permits are quoted before royalties, according to
reserves published by the Ministry for Economic Development in New Zealand. As
royalties payable to the New Zealand government are calculated on an annual
basis as the greater of 5% of net sales revenue or 20% of accounting profits
from the sale of petroleum products, the amount (and percentage) of royalty
attributable to the reserves is unable to be calculated, and therefore reserves
are quoted before royalties.

<PAGE>
Page 21

The undiscounted future net cash flow from proved producing oil and natural gas
reserves is largely based on information provided by in-house reserve
calculations. A discount factor of 10% was applied to estimated future cash
flows to compute the estimated present value of proved oil and natural gas
reserves. This valuation procedure does not necessarily result in an estimate of
the fair market value of the Company's oil and natural gas properties.  There
has been no provision for income taxes, as the Company has resource and other
unused tax pools to offset future taxable income. The standardized measure of
future cash flows from production has been calculated solely on the Registrant's
5% interest in the producing Ngatoro oil field, as this is the only interest the
Company holds in a proven oil property, as at December 31, 2000. The
standardized measure calculation for the property, at December 31, 2000, was
$713,000, as compared to the Net Book Value of $349,752.

Undeveloped

New Zealand, Onshore Canterbury Basin, South Island

Petroleum Exploration Permit 38256 (20%)

The Canterbury Basin is located both onshore and offshore in the area
surrounding Christchurch, on the east coast of the South Island. The total area
of the onshore and offshore Canterbury Basin is about twelve million acres with
the 2.76 million acre  PEP 38256 covering approximately half of the onshore
area. The sediments in the Canterbury Basin range in age from Early Cretaceous
to Quaternary. The participants in this permit are the Registrant, Orion
Exploration Limited, AMG Oil Ltd., Magellan Petroleum Australia Ltd. and Durum
Energy Cons. Ltd.

PEP 38256 was granted on August 25, 1997 to the Registrant and to Trans-Orient
Petroleum Ltd.

The Registrant and Trans-Orient Petroleum Ltd. by agreement dated June 25, 1998
optioned up to 80% of the permit to AMG Oil Ltd. In August 1998 AMG Oil Ltd.
earned 30% of the permit by paying the cost of a 120-mile seismic survey. To
earn an additional 50%, AMG was required to elect before December 4, 1998 to pay
the cost of any additional seismic required to define two drilling prospects and
to pay the dry hole costs of drilling two wells to a maximum of about
US$2,100,000. The option agreement was modified by three subsequent agreements
dated December 3, 1998, October 26, 1999 and February 23, 2000 which extended
the period of time in which the AMG must exercise its option to acquire up to a
further 50% interest in the 38256 permit area to June 16, 2000. Additionally,
the February 23, 2000 amendment also required AMG  to fund all expenditure for
an agreed further program of seismic work. In June 2000 AMG Oil Ltd. exercised
its option to acquire the further 50 % and thereby acquired a total 80 %
interest in the permit area by funding all the costs associated with the
drilling of two exploration wells on the PEP 38256 permit. After exercising the
option AMG Oil Ltd. proceeded to pay for the costs of the drilling from a
combination of its own cash resources and by further farmouts of its 80% to
Orion Exploration Limited, Durum Energy Cons. Ltd. and Magellan Petroleum (NZ)
Ltd. The resulting interests in the Permit being finalized as  Registrant 20%;
AMG Oil Ltd 52.5%; Durum Cons Energy Corp 10%; Magellan Petroleum (NZ) Ltd 7.5%;
Orion Exploration Ltd 10%.

The Ealing-1 exploration well was drilled during October/November 2000, and
reached a TD of 5565 feet. The main objective sandstones were encountered near
the predicted depth and were well developed, but there was no evidence for
commercial hydrocarbons, and the well was plugged and abandoned. By drilling the
Ealing-1 well, the participants completed all work required for the first 3
years under the permit conditions.

The Arcadia-1 well was drilled to a TD of 4,852 feet during November in the
northern part of PEP 38256 to test a large "pop-up" structure , but was also
plugged and abandoned without evidence of commercial hydrocarbons.

50% of the permit area was relinquished, per government compliance requirements,
in September 2000. The permit is in good standing with respect to its current
work commitments.

For work planned to be done before December 31, 2001 on PEP 38256 and its
estimated cost, see ITEM 5.B Liquidity and Capital Resources.

<PAGE>
Page 22

New Zealand, East Coast Basin, North Island

Petroleum Exploration Permit PEP 38328 (62.5%)

The participants in the permit are the Registrant (62.5%) and Origin Energy
Resources (NZ) Limited (37.5%). The Registrant is the operator. The permit area
is 785,000 acres (1,226 square miles). The permit was granted on July 1, 1996.

The conditions of the first year of the permit were satisfied by drilling the
Kereru-1 well in 1996 which recorded some gas shows, but was plugged and
abandoned without testing.

Through the subsequent acquisition of nearly 200 miles of new seismic,
reprocessing of over 200 miles of existing seismic and the completion of a
variety of geological studies, a number of exploration leads and prospects were
identified. During 1999 the Registrant and its partner concentrated their
exploration efforts on three prospects: the Napier, Whakatu and Mai Mai by
collecting a further 25 miles of new seismic data over these areas. The
Whakatu-1 well was drilled during January and February 2000 to test a large
anticlinal structure located near the city of Hastings. The well was drilled to
a total depth of 4800 feet; and although there were some hydrocarbon indications
during drilling, electric logging of the well did not reveal any reservoir zones
worthy of flow testing, and was, therefore, plugged and abandoned in early
February.

The drilling of the Whakatu-1 well fulfilled all permit obligations to June
2001.

For work planned to be done before December 31, 2001 on PEP 38328 and its
estimated cost see ITEM 5.B Liquidity and Capital Resources.

Petroleum Exploration Permit PEP 38330 (39.28%)

PEP 38330 was granted on July 1, 1996. The Registrant is the operator. The
permit area is 1,077,000 acres. The participants have fulfilled all work
requirements of the permit to July 1, 2000, which has included acquisition of 60
miles of new seismic data. On March 12, 1999, the participants in the permit
were granted a Certificate of Change of Conditions by the New Zealand
government. This moved the requirement to commit to drill a well to the end of
year four (July 1, 2000) rather than the end of year three (July 1, 1999). This
well was then required to be drilled in year five (2001) of the permit.
Approximately 28 miles of new seismic were acquired during January 2000 over the
Waingaromia, Kanakanaia, Arataha and Kowhai lead areas. This seismic was funded
by Origin Energy Resources (NZ) Ltd. at their sole cost, in order to earn a
17.5% equity in the permit. A further small seismic survey was conducted
subsequently, in which the Company earned an additional 2.5% from Mosaic Oil NL
and Continental Oil Ltd by funding their part of the costs.  In December 2000
Mosaic Oil NL and Continental Oil Ltd assigned their interests at no cost to the
other parties such that the other participants are Origin Energy Resources (NZ)
Ltd (22.5%) and Pan Continental Oil and Gas NL (formerly Moondance Energy Ltd)
(38.22%).

Due to difficult weather conditions the permit participants have sought a
further permit variation which will allow the Waingaromia-2 well to be drilled
prior to February 2002. This permit variation has been granted.  The well will
be located near the old Waingaromia-1 well, which was drilled to a depth of 1350
ft in the late 1800's and reportedly produced oil for a time before the rig
burned down. The Waingaromia-2 well will be drilled to a depth of 1700 ft to
intersect the oil sands reportedly encountered in the original well, and to test
deeper sands not reached at that time.

For work planned to be done before December 31, 2001 on PEP 38330 and its
estimated cost see ITEM 5.B Liquidity and Capital Resources.


<PAGE>
Page 23

Petroleum Exploration Permit PEP 38332 (62.5%)

PEP 38332 was granted on June 24, 1997. The other participant is Origin Energy
Resources (NZ) Limited. (37.5%). The Registrant is the operator. The permit area
is situated immediately south of PEP 38328 and is 999,700 acres in area.

Through the past acquisition of 110 miles of new seismic, reprocessing of over
100 miles of existing seismic and the completion of a variety of geological
studies, a number of exploration leads and prospects have been identified. A
further four mile seismic line was acquired over Speedy in January 2000, and
confirmed a closed structure, which was drilled in July 2000.  Speedy-1 reached
a maximum depth of 2,874 feet and encountered some hydrocarbon indications
during drilling. The well was plugged and suspended due to difficult drilling
conditions, and the Joint Venture is considering whether to bring a rig back to
the site at some future date, to deepen the well.

The Registrant and the other participant have completed the work program
required for the first three years and have submitted an ongoing work program to
the government for the remaining two years of the initial permit term.

For work planned to be done before December 31, 2001 on PEP 38332 and its
estimated cost, see ITEM 5.B Liquidity and Capital Resources.

Petroleum Exploration Permit PEP 38335 (25.0%)

Petroleum Exploration Permit PEP 38335 was granted on November 29. The
participants are Westech Energy New Zealand (27.5%), Orion Exploration Ltd
(27.5%), Everest Energy Inc. (5.0%), Sun Resources NL (7.50%), Pancontinental
Oil and Gas NL (7.50%) and the Registrant (25.0%). Westech Energy NZ Ltd. is the
operator.

The Registrant and its partners acquired fourteen miles of new seismic in
January 2000, over the Waitaria and Kaiponi structures. The Waitaria-2 well was
drilled adjacent to the Waitaria-1 site in February 2001. Although electric
logging confirmed an extended interval of interbedded sandstones and mudstones
from 4,500 to 7,000 feet, an open hole flow test failed to produce any gas and
the well was plugged and abandoned in early March 2001.

PEP 38335 is in good standing with respect to its current work commitments.

For work planned to be done before December 31, 2001 on PEP 38335 and its
estimated cost see ITEM 5.B Liquidity and Capital Resources.

Petroleum Exploration Permit PEP 38339, Clarence Basin, Marlborough (100%)

PEP 38339 was granted on November 26, 1998 to the Registrant. The permit area
encompasses onshore portions of the South Island and offshore portions of Cook
Strait lying between the North and South Islands.  The Registrant is the
operator.  Following initial geotechnical studies and a seismic acquisition
program, this permit was relinquished in December 2000.


New Zealand, Onshore Taranaki Basin, North Island

Petroleum Exploration Permit PEP 38716 (23.8%)

PEP 38716 was granted on January 30, 1996. The present participants are the
Registrant (23.8%), Marabella Enterprises Ltd. (29.6%), Euro-Pacific Energy Pty.
Ltd. (6.6%), Australia Worldwide Exploration NL (25.0%), Antrim Energy Ltd.
(7.5%) and Swift Energy New Zealand Limited (7.5%).

PEP 38716 is situated in the eastern margin of the onshore Taranaki Basin and
covers an area of approximately 67,000 acres. It is located adjacent to the
Waihapa-Ngaere oil and gas field, and the gathering station for the
Waihapa-Ngaere oil and gas field is located within two miles of the boundary of

<PAGE>
Page 24

PEP 38716. Previous exploration of PEP 38716 has included several hundred miles
of seismic and several wells, all of which had oil shows.

The Huinga-1 well was drilled during March-May 1999 to a total depth of 13,000
feet, but was plugged and suspended  in order to allow a reassessment of the
prospect, given that the geology drilled was somewhat different to that
expected.

The Oru Prospect is considered to be a secondary target within the permit area.
The Waihapa-8 well, drilled on the very edge of the Oru structure, and flow
tested oil from the target sandstones at rates in excess of 750 barrels per day.
Oru Prospect is a potential future drilling target. Several other leads are
identified.

The Joint Venture has evaluated seismic and geologic data relevant to the Huinga
Deep Prospect, and is currently considering options to deepen the Huinga-1 well
to intersect Tariki sands in a trap situation similar to that in the Rimu oil
discovery, in a third party permit along trend to the south.

For work planned to be done before December 31, 2001 on PEP 38716 and its
estimated cost see ITEM 5.B Liquidity and Capital Resources.

Petroleum Exploration Permit PEP 38720 (100%)

PEP 38720 was granted on September 2, 1996. The permit is approximately 6,322
acres in area. The Clematis-1 well was spudded in early December 1999 to test
the shallow potential of the Waitoriki prospect, and reached its Target Depth of
5900 feet on December 20, 1999. Following a review of electric logs from the
well, the decision was made to plug and abandon the well, as it was not
considered that any zones would flow hydrocarbons at commercially viable rates.
At some later date, it is planned to re-enter and deepen the well to test the
structure's major gas potential in the deeper play zones to 13,000-foot depth.

3D seismic covering approximately 7 sq km in the southern part of the permit was
purchased, in an agreement which also provided an equivalent amount of 3D in the
immediately adjacent lands outside the permit area. The Windsor gas discovery,
which was made during the year by a third party in the adjacent permit,
highlighted the potential of this area, as also did the Company's own Goldie oil
discovery, immediately along trend to southwest of this permit.

The permit is in good standing with regard to work commitments.

For work planned to be done before December 31, 2001 on PEP 38720 and its
estimated cost, see ITEM 5.B Liquidity and Capital Resources.

Petroleum Exploration Permit PEP 38723 (36%)

PEP 38723 was granted on October 30, 1997. The other present participants in
this permit are Texas Petroleum Investment Company (NZ) Ltd ('TPIC') (55.0%) and
Gondwana Energy Ltd  (9.0%). The Registrant is the operator. The permit is
19,783 acres in area.

An agreement was entered into with Texas exploration company TPIC in mid 2000,
whereby TPIC agreed to fund the cost of drilling the Ratapiko-1 well and will
fund a second well yet to be defined within the permit area, in order to earn a
total 55% equity in the permit. Following this agreement, the Company's equity
in the permit area reduced to 36%.

The Ratapiko-1 well was drilled in January 2001. The well was fully funded by
TPIC. Good quality and thickness reservoir sandstones were intersected at the
main target objective near 4,000 foot depth, but contained no indications of
oil. Several gas charged sandstone intervals were encountered between 2,600 and
3,000 feet, but were deemed to be uneconomic, and the well was plugged and
abandoned.  This well met the permit obligation to drill a well during the first
3 years of the permit term, and the permit is in good standing.

For work planned to be done before December 31, 2001 on PEP 38723 and its
estimated cost, see ITEM 5.B Liquidity and Capital Resources.

<PAGE>
Page 25

Petroleum Prospecting License PEP 38736 (100%)

The Registrant has a 100% participating interest in Petroleum Exploration Permit
38736 ("PEP 38736") which was granted on July 14, 1999.

An infill seismic survey over the Kahili Prospect was acquired during May 2000.
These data were incorporated into the existing seismic data base and the Kahili
Prospect was remapped. A drilling location was defined on the prospect, and  the
access and site was prepared in early-mid 2001. A well to 2900m is planned to
test Kahili  in late 2001. The drilling of this well will satisfy the permit
requirement to drill a well prior to July 14, 2002. Additional parties will be
sought to assist in funding this well. PEP 38736 is presently in good standing
with respect to its work commitments.

For work planned to be done before December 31, 2001 on PEP 38736 and its
estimated cost, see ITEM 5.B Liquidity and Capital Resources.


AUSTRALIA

Offshore exploration permits granted in Australia provide for the exclusive
right to explore for petroleum for an initial term of six years, renewable for
an unlimited number of five-year terms over one-half of the remaining area at
each renewal.  The participants are allowed to exceed the committed work
programs for the permits and to apply for extensions or reductions of such work
programs for any particular year.  Any production permits granted will be for a
term of 21 years from the date of issue, renewable for a further 21 years.  In
addition to general Australian taxation provisions, most offshore permits,
including all of the Company's Australian permits, are subject to Petroleum
Resource Rent Taxation at the rate of 40% on a project's net income after
deduction of allowable project and exploration expenditures, with undeducted
exploration expenditures compounded forward at the Long-Term Bank Rate ("LTBR")
plus 15% and project expenditures at LTBR plus 5%. No performance bond is
required, but in the event that the permit holder(s) do not satisfy the
regulatory agency that they have met the performance obligations of the
committed work program (or such variation as may have been agreed with the
regulatory agency), the government has the power to cancel the permit.

Offshore Petroleum Exploration Permit Ashmore Cartier AC/P19 (100% -[2]), Timor
Sea

AC/P 19 was granted to the Registrant (65%)and Mosaic Oil NL (35%), commencing
30 May 1997. In May 2001, the Registrant agreed to accept Mosaic Oil's interest
on its withdrawal from the permit, and will henceforward hold 100% of the permit
interest, upon completion of transfer formalities.

AC/P19 is approximately 364,500 acres in area, located across the southern
Ashmore Platform and Cartier Trough area in the Timor Sea. The Registrants
acquired the Corvus 2D seismic data in 1998, which detailed the Ursa Prospect as
a potential Plover Sands trap, mapped as covering an area of up to 3,000 acres.
The Ursa Prospect's expected main reservoirs, Middle Jurassic Plover Formation
sandstones and Upper Triassic Nome sandstones, are predicted to be both sourced
and sealed by organic-rich Oxfordian/Kimmeridgian syn-rift shales and mudstones
of the Lower Vulcan Formation. These sands are a proven high quality producer at
Jabiru and other nearby fields.

By an agreement dated August 12, 1997 the participants granted an option to earn
an interest to Lonman Pty. Ltd. which is 5% of the free carried equity obtained
in farmout of the first well in the permit, unless previously converted to a 5%
participating interest.  Upon commencement of production, there shall be
reimbursement of past costs related to the carried interest payable out of 50%
of attributable, net production revenue.

Non-proprietary 3D seismic covering an area of 50 sq km was purchased during
2000, and the existing grid of 2D seismic data over the Ursa prospect was PSDM
reprocessed and remapped to better define this structure.

Further seismic acquisition over Ursa is being considered prior to a drilling
decision, and a request for a permit variation has been lodged with the
regulatory authority to allow seismic acquisition to replace the drilling of a
well during Year Five of the permit, with the well placed in Year Six. This
variation application is presently under consideration by the regulatory agency.
If not approved, the well must be drilled during permit year five, else the
permit must be relinquished.

For work planned to be done before December 31, 2001 on AC/P19 and its estimated
cost, see ITEM 5.B Liquidity and Capital Resources.

<PAGE>
Page 26

Petroleum Permit Area AC/P31 (100% -[2])

AC/P 31 was granted to the Registrant (65%) and Mosaic Oil NL (35%), commencing
September 12, 1999. In May 2001, the Registrant agreed to accept Mosaic Oil's
interest on its withdrawal from the permit, and will henceforward hold 100% of
the permit interest, upon completion of transfer formalities. The permit covers
18,000 acres, and is being explored in conjunction with the adjacent, larger
AC/P 19.

Relevant seismic data has been purchased, and the permit is presently in good
standing.
For work planned to be done before December 31, 2001 on AC/P 31 and its
estimated cost, see ITEM 5.B Liquidity and Capital Resources.

Permit AC/P26, Offshore Bonaparte Basin, (50% -[2])

Permit AC/P26 was granted under the Petroleum (Submerged Lands) Act 1967 on
February 25, 1997 to the Registrant (35.0%), West Oil N.L. (30.0%) and Mosaic
Oil N.L. (35.0%). Mosaic Oil N. L. was the operator, but in early 2001 the
Registrant and West Oil NL agreed to accept Mosaic Oil's interest on its
withdrawal from the permit such that Registrant's interest will be 50% on
completion of transfer formalities.

The permit covers 101,250 acres, situated about 120 miles offshore from the
Western Australia coastline and is administered by the state government of the
Northern Territory, Australia. A permit variation has been granted which
provides for the acquisition of 2D seismic and the drilling of a well during the
current permit year.

By an agreement dated May 5, 1998 the participants granted an option to earn an
interest to Lonman Pty. Ltd. which is 5% of the free carried equity obtained in
farmout of the first well in the permit, unless previously converted to an
equivalent participating interest.  Upon commencement of production, there shall
be reimbursement of past costs related to the carried interest payable out of
50% of attributable net production revenue.

Several prospects have been defined by 2D and 3D seismic, including the Rossini
and Anson West structures. Further 2D seismic over the Rossini Prospect is to be
acquired in mid 2001, prior to drilling either Rossini or Anson West prospect to
fulfill the modified permit obligation to drill an exploration well by February
2002.  Participants to assist in funding this exploration well are being sought.

The permit is presently in good standing with respect to the revised work
commitments.

For work planned to be done before December 31, 2001 on AC/P26 and its estimated
cost, see ITEM 5.B Liquidity and Capital Resources.

Timor Gap Zone of Cooperation

Zone of Cooperation Area A Block 96-16, Australia and Indonesia (10%)

The participants in this permit are Phillips Petroleum (66%), Norwest Energy NL
(14%), West Oil NL (10%), and the Registrant (10%).

The Timor Gap Zone of Cooperation was established in 1989 by treaty between
Indonesia and Australia in settlement of a dispute between the two countries
during the 1980's regarding the boundary between their respective economic
zones, which had halted all exploration of this prospective area. ZOCA 96-16
lies within Area A of the Zone of Cooperation, which is now jointly administered
by Australia and the United Nations (on behalf of the Republic of East Timor).

ZOCA 96-16 is subject to an annual contract service fee of US$125,000 and a
production sharing agreement with the Australia-United Nations Joint Authority.
For the first five years of production, the Joint Authority is entitled to 50%
to 70% of the initial 10% of gross production, and of the initial 20% of gross
production for each year thereafter.  Any excess production, after deduction of
allowable operating costs and investment credits of 127% of exploration

<PAGE>
Page 27

expenditures, is shared with the Joint Authority at rates of 50% to 70%.  In
addition, any taxable income from the area is also subject to a combined tax
regime, with an effective corporate tax rate of 42%. The production sharing
agreement has a stated term of 30 years, but if no petroleum has been located in
commercial quantities before November 14, 2002 the participants may by notice
extend the term over the remaining area to November 14, 2006. If no petroleum
has been discovered in commercial quantities by this date, the contract will
terminate. Before November 14, 2002 the participants are required to relinquish
a further 25% of the difference between the area granted in the production
sharing contract less any area allocated to a commercial discovery. In the event
that the permit holder(s) do not satisfy the regulatory agency that they have
met the performance obligations of the committed work program (or such variation
as may have been agreed with the regulatory agency), the Joint Authority has the
power to cancel the permit, and to require payment of any outstanding portion of
the annual service fee remaining to be paid to the end of the 6 year permit
term.

Phillips Petroleum Ltd funded the Coleraine-1 exploration well in the permit
during November 2000, at no cost to the Registrant, under the terms of a farm-in
agreement. The Registrant's equity in the permit became 10%, following Phillips
entry and assumption of permit operatorship.

Coleraine-1 was plugged and abandoned at a depth of 11,375 feet. The well
intersected Flamingo and Elang formation sandstones below 11,000 feet, but
electric logging demonstrated that these sandstones had poor reservoir quality.
Fracture porosity higher in the well also appeared to be charged with
hydrocarbons, but was considered to have insufficient ability to sustain
economically viable flow rates to be worthy of testing. This well fulfilled the
Year Five well obligation, and the permit is presently in good standing with
respect to its work commitments. Subsequent permit review work has focused on
prospects identified in the eastern part of the permit area.

For work planned to be done before December 31, 2001 on ZOCA 96-16 and its
estimated cost, see ITEM 5.B Liquidity and Capital Resources.


PAPUA NEW GUINEA

Petroleum Prospecting Licenses in Papua New Guinea are granted for a standard
6-year term, on the basis of an acceptable program of work. In the event that
the permit holder(s) do not satisfy the regulatory agency that they have met the
performance obligations of the committed work program (or such variation as may
have been agreed with the regulatory agency), the government has the power to
cancel the permit, and to require forfeiture of a license bond of between Kina
50,000 to Kina 100,000 (3 Kina = approx $1). A Petroleum Prospecting License
awards the exclusive right to explore for petroleum for an initial six year
term, extendable for a further five year term over 50% of the original area, and
the exclusive right to enter into a production agreement upon a discovery. A
production agreement provides the right to produce any oil and gas discovered
for a period of up to 30 years from discovery, subject to a maximum 22.5%
participating interest that can be acquired by the Government of Papua New
Guinea, which includes a two per cent participating interest that can be
acquired by local landowners.

Petroleum Prospecting Licence PPL 192 (60%)

PPL 192 was granted in on January 28, 1997 to the Registrant (60%, license
operator), Durum Cons. Energy Corp. (20%) and Mosaic Oil Niugini Pty. Ltd.
(20%).

PPL 192 comprises some 1,200,000 acres located in the foreland of the Papuan
Basin, immediately south of the Highlands fold belt. The area is covered by
forests and is relatively flat and sparsely populated, and due to the lack of
roads,  the principal mode of transport is the Strickland River.

The license holders have acquired the Kamu seismic survey, and reprocessed and
analyzed existing seismic data, in fulfillment of the work obligations for the
first three years of the license. Following application to the PNG Department of
Mines & Energy for a license variation the first well in the license term is now
required to be drilled by January 28, 2002. The license holders are, therefore,
presently in good standing with respect to the license work commitments.

AVO and Fluid Replacement studies have high-graded the Douglas prospect as a
drilling target, and the drill site has been inspected and surveyed as the first

<PAGE>
Page 28

step in logistics planning for the well, scheduled to be drilled in late 2001.
Under the approved, modified terms of the license, the well is to be drilled by
end January 2002. Participants to assist in funding this well are now being
sought.

For work planned to be done before December 31, 2001 on PPL 192 and its
estimated cost, see ITEM 5.B Liquidity and Capital Resources.

Petroleum Prospecting Licence PPL 215 (80%)

PPL 215 was awarded in May 1999 to the Registrant (80%, license operator) and
Mosaic Oil Niugini Pty Ltd (20%). The PPL 215 license covers approximately
600,000 acres situated in the Papuan Basin Foreland, and adjoins the
Registrant's PPL 192 permit.

The seismic program conducted in PPL 192 during fiscal 1999 included the
acquisition of 18 miles of seismic in PPL 215, to evaluate the Aiema Lead area.
This seismic work counts towards partial fulfillment of the Year Three seismic
obligation.  Discussions are in progress with the government on a variation to
the work programme obligations.

For work planned to be done before December 31, 2001 on PPL 215 and its
estimated cost, see ITEM 5.B Liquidity and Capital Resources.

Petroleum Prospecting License 157 (7.5%) and PRL 4 (7.5%) and PRL 5 (7.5%)

The participants in the license are Santos Ltd. (35.25%, operator), Omega Oil
N.L. (15%), Carnarvon Petroleum N.L. (15%), Bligh Oil & Minerals N.L. (7.25%),
the Registrant (7.5%) and SPI Ltd. (20%).

PPL 157 was granted on June 2, 1993 for an initial term of six years.  During
the initial license term, the Elevala-1 and Ketu-1 wells were drilled as
gas-condensate discoveries. The Registrant acquired a 7.5% interest in the
second term license by contributing 10% of the cost of the Stanley-1 well, which
was drilled in early 1999 to a depth of 10,600 feet, and discovered hydrocarbons
in the Toro Sandstone.

On February 15, 2000, Papua New Guinea's Minister for Petroleum & Energy granted
to the Company and its joint venture partners a Petroleum Retention License
(PRL5) for an initial 5 year term over an area of approximately 190,000 acres
incorporating the potential extent of the Ketu-1 and Elevala-1 gas-condensate
discoveries; and on September 1, 2000 awarded PRL4 for a 5 year term over an
area of approximately 85,000 acres incorporating the potential extent of the
Stanley-1 gas-condensate discovery. These areas are excised from the original
area of PPL 157. Application was made to relinquish the remaining area of PPL
157 in early 2001, and ministerial approval to surrender this license is
awaited.

Petroleum Prospecting License 213 (5%) and PPL 228 (10%)

The participants in the permit are Santos Ltd. (35%, operator), Woodside
Petroleum Ltd. (25%), First Australian Resources N.L. (8.25%), Bligh Oil &
Minerals N.L. (7.5%), Highland Petroleum Pty Ltd (5.63%), Lakes Oil N.L. (5%),
Victoria Petroleum N.L. (4.08%), Farpuri Ltd (2.5%), the Registrant (5%) and
TPEX Exploration (PNG) Pty Ltd. (2.04%). PPL 213 was granted over an area of
approximately 900,000 acres on February 11, 1999 for an initial term of six
years.

The Tumuli-1 well was drilled in April / May 1999 to test a large compressional
fold anticline, but was plugged and abandoned at a depth of 6,600 feet without
reaching its target, due to difficult drilling conditions.

Tumuli-1satisified the license first year work obligation, and after review of
all other exploration possibilities in the licence, the joint venture parties
elected not to continue exploration of PPL 213 and to collectively withdraw from
the license at the end of Year Two.

The Minister of Petroleum has now approved the surrender of this license, and
surrender formalities are in progress. However, the Registrant is a party to a
joint venture including most of the original PPL213 participants, which in May

<PAGE>
Page 29

2001 was offered a new licence (PPL 228) comprising part of the western area of
the former PPL 213 and certain adjacent acreage which is considered to have
ongoing exploration potential.  The Registrant will hold a 10% equity in PPL
228, Santos Nuigini Exploration Ltd will be license operator, and the other
participants are Barracuda Ltd, Victoria Exploration (PNG) Ltd, Highland
Petroleum Ltd, First Australian Resources (PNG) Ltd and Bligh PNG Ltd.

CHINA

Technical Study Area, Nanling and Wuwei Basins, Anhui Province, China (50%)

The Production Sharing Contract entered into by the Registrant and its joint
venture partner, Moondance Energy Ltd., with Sinopec (China Petrochemical
Corporation) formally expired in 1999, and the joint venture no longer has an
interest in these areas.


Environmental Regulation in New Zealand, Australia and PNG

New Zealand

In New Zealand, on land and in waters within twelve miles of the coast, the
Resource Management Act 1991 controls users of natural and physical resources,
including petroleum explorers, with a view to managing resource usage in ways
that will not compromise future utilization. The Resource Management Act 1991
places the emphasis on assessment of the effect the proposed activity will, or
might, have on the environment with a view to promoting sustainable management.
Under the Resource Management Act 1991, most of the responsibility for managing
resources and their use is given to local authorities. Regional and district
councils must produce and continuously update planning schemes for their
jurisdictions which establish procedures and standards for assessing and
approving environmental standards in accordance with the Resource Management
Act.

Australia

In Australia, for permit areas lying further offshore than three miles from the
coast, the federal Commonwealth is involved in pollution control through a
number of government departments. Federal and state government departments and
commissions administer pollution control laws. These entities enforce a variety
of statutes and regulations relating to air, water and noise pollution. There is
an increasingly significant emphasis on pollution control and breaches of
legislation attract severe penalties.

Papua New Guinea

In Papua New Guinea, the Environmental Planning Act, the Environmental
Contaminants Act, the Water Resources Act and the Conservation Areas Act are the
four main statutes relating to environmental regulation of the exploration for,
and development and production of, hydrocarbons.

The Environmental Planning Act requires the preparation of an environmental plan
and prescribes the procedures for submitting, and obtaining the approval for, a
prospecting development license. The Environmental Contaminants Act regulates
the prevention and control of environmental contamination and provides for other
aspects of environmental protection. The Water Resources Act regulates water use
in all of Papua New Guinea. For the use of water in the exploration for, or
development and production of, hydrocarbons, a permit is required under this
statute. The Conservation Areas Act regulates preservation of the environment
and of natural cultural sites and areas. If the exploration for, or development
and production of, hydrocarbons is to occur in such a site or area, a permit is
required under this statute from the Minister of the Environment.


<PAGE>
Page 30

ITEM 5.     OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis is management's opinion of INDO's
historical financial and operating results and should be read in conjunction
with the audited consolidated financial statements of the Company (See ITEM 17)
for the years ended December 31, 2000, 1999, and 1998, together with the notes
related thereto.  The financial statements have been prepared in accordance with
Canadian GAAP, and a reconciliation to US GAAP is provided in Note 15 to the
financial statements, under Item 17. All dollar values are expressed in U.S.
dollars, unless otherwise stated. All references to daily production are before
royalty, unless stated otherwise.


A.  Operating Results

Summary

The Registrant is in the exploration and evaluation stage on nearly all its oil
and gas properties and hence, to December 31, 2000, has not yet achieved
profitability or break even cash flow. The Registrant has experienced losses in
each fiscal period reported on, but expects to report a net profit for the
upcoming fiscal year. Total losses incurred from incorporation to December 31,
2000 were $9,656,106. The level of future operations is limited by the
availability of capital resources, the sources of which are not predictable. The
sales value of any oil and gas produced and sold by the Registrant will be
largely dependent on factors beyond the Registrant's control such as the market
value of the hydrocarbons produced.

1. Sales and Operating Revenues

Except for the Registrant's interest in Petroleum Mining Permit ("PMP") 38148,
the Registrant's petroleum permits are in the exploration stage and do not
generate any production revenues. The Registrant holds a 5% participating
interest and revenue interest in PMP 38148 located in the Taranaki Basin, North
Island, New Zealand. The Registrant receives 5% of the total revenues from oil
and gas production from the Ngatoro oil field and, from March 2001, 100% of the
revenues from the Goldie oil field in PMP 38148.

The Registrant's share of production revenue from oil and gas sales from PMP
38148 was $475,646 for the year ended December 31, 2000, $314,698 for the year
ending December 31, 1999 and $234,168 for the year ended December 31, 1998. The
increase for the year was due to a rise of US$11.77 in the average crude oil
selling price from US$15.29 per barrel of oil to US$27.06 per barrel over the
comparable period, partially offset by a fall in production volume from 19,786
barrels to 17,089 barrels.

Production costs and royalties were $59,373 for the year ended December 31,
2000, $65,846 for the year ended December 31, 1999 and $140,050 for the year
ended December 31, 1998. With depletion costs of $112,332 for 2000, $104,475 for
1999 and $95,779 for 1998 the net income from production was therefore $303,941
in 2000, compared to $144,377 in 1999 and a loss of $(1,661) in 1998.
Production costs have essentially remained the same for 2000 as for 1999, whilst
depletion recognized is in accordance with production over the period.

Interest Income and Total Revenues

The Registrant's revenue from interest on cash and deposits held was $224,549
for the year ended December 31, 2000, $358,911 for the year ending December 31,
1999 and $450,597 for the year ended December 31, 1998, providing total revenues
of $700,195 for the year ended December 31, 2000, $673,609 for the year ended
December 31, 1999 and $684,765 for the year ended December 31, 1998.  The
interest revenue has decreased during the last two years as the cash on deposit
has decreased, being invested in petroleum properties.

Costs and Expenses

General and administrative expenses for the year ended December 31, 2000 were
$743,600. For the year ended December 31, 1999 the general and administrative
expenses were $540,622 and for the year ended December 31, 1998 were $692,480.
Differences in administrative expenses have mainly been due to exchange
variations recognized in each year.  $2,725,925 was written off against oil and
gas properties for the year ended December 31, 2000, as compared to $983,168 in
the year ended December 31, 1999 and $765,144 in the year ended December 31,
1998. The amounts written off on Oil and Gas Properties for the year were mainly
due to the negative results in three wells: Whakatu-1 in PEP 38328, Speedy-1 in
PEP 38332 and Coleraine-1 in ZOCA 96-16, resulting in a diminution in value in
those permits; and also the write-down of PPL 157 from exchange value to the
previous carrying value in Trans-Orient Petroleum Ltd.'s accounts, due to the
application of the ceiling test to that property.

<PAGE>
Page 31

Operating (losses) were $(2,941,035) for the year ended December 31, 2000,
$(1,020,502) for the year ending December 31, 1999 and $(1,008,688) for the year
ended December 31, 1998.  The current year 2000 loss is significantly greater
than the previous years due to the amount written off on Oil and Gas properties
for the year.

Interest Expense

The Registrant finances its business primarily from the issuance of common
shares and to a lesser extent from the receipt of petroleum revenues from its
interest in the Ngatoro oil field, New Zealand. The Registrant has not effected
any borrowing and has consequently not incurred any interest expense.

Acquisition, Exploration and Development Expenditure

In the year ended December 31, 2000 the Registrant incurred expenditures in the
acquisition, exploration and development of petroleum interests of $1,701,808,
in addition to the purchase price for the Assets acquired from Trans-Orient of
$4,097,360. The amount incurred in the acquisition, exploration and development
of petroleum interests for the year ended December 31, 1999 was $1,923,921. The
amount incurred in the acquisition, exploration and development of petroleum
interests for the year ended December 31, 1998 was $1,901,030.


2. Inflation

The Registrant operates in New Zealand, Australia and Papua New Guinea, where
inflation for the Registrant's operational costs is at low levels - i.e. in the
2-5% range.

3. Foreign Currency Fluctuations

The Registrant holds its cash reserves and receives the majority of its revenues
in US dollars, but incurs the majority of its expenses and its petroleum
property expenditures in Australian and New Zealand dollars. Subsequent to the
reporting date, the value of both the Australian and New Zealand currencies has
depreciated against the value of the US currency to the benefit of the
Registrant during that period.  An increase in value of either of the New
Zealand and Australian dollar versus the US dollar would have a detrimental
effect to the Registrant, as the Registrant's expenses incurred would, in turn,
increase in US dollars.  Conversely a decrease in either of the New Zealand and
Australian dollars decreases the expenses in US dollars. The Registrant does not
currently hedge its exposure to currency rate changes, although it may choose to
selectively hedge exposure to foreign currency exchange rate risk.  The
Registrant, however, has no policies relating to the foregoing.

4. Government regimes

The Registrant is subject to foreign governmental regulations that relate
directly and indirectly to its operations including title to the petroleum
interests acquired by the Registrant, production, marketing and sale of
hydrocarbons, taxation, environmental matters, restriction on the withdrawal of
capital from a country in which the Registrant is operating and other factors.
There is no assurance that the laws relating to the ownership of petroleum
interests and the operation of the business of the Registrant in the
jurisdictions in which it currently operates will not change in a manner that
may materially and adversely affect the business of the Registrant. There is no
assurance that the laws of any jurisdiction in which the Registrant carries on
business may not change in a manner that materially and adversely affects the
business of the Registrant.

B.  Liquidity and Capital Resources

1. Liquidity

As of December 31, 2000 the Registrant had $3,061,007 in working capital as
compared with $6,130,997 as of December 31, 1999 and $8,890,218 as of December
31, 1998.

For the upcoming fiscal year, as at December 31, 2000, the Registrant did not
have sufficient capital to satisfy all the capital expenditures which are
necessary to satisfy the prescribed work commitments contained within the
Registrant permit license grants and joint venture agreements (see below). In

<PAGE>
Page 32

the event that the Registrant does not farm-out major capital expenditures or
renegotiate or reschedule commitments, the required permit expenditures for the
upcoming fiscal year will, if fully committed to, exhaust the Registrant's
current working capital with the result that the Registrant will not have
sufficient working capital to continue its operations without further infusions
of capital. The production revenue and interest income, which the Registrant
currently receives from the Ngatoro and Goldie oil fields, covers the
Registrant's operating expenses and provides a significant net income
(approximately $450,000 to $500,000 per month) from April 2001. As such these
revenues will improve the Registrant's anticipated deficiency in working
capital.  However, in order to satisfy the required capital expenditures for the
upcoming fiscal year, the Registrant will need to raise additional capital from
outside sources, or to farm-out capital expenditures, or to reschedule
commitments. The Registrant relies on its ability to raise additional capital
through the issuance of common shares, which has a dilutive effect on the
Registrant's shareholders. It is uncertain whether the Registrant will be able
to secure outside sources of capital in an amount that is sufficient for it to
continue with its current operations on its permits.

The Registrant's current plan is to endeavor to enter into farm out arrangements
with third parties to reduce its capital exposure on exploration drilling
programs and is investigating the possibility of raising additional capital in
Australia (subject, of course, to meeting all regulatory requirements in all
applicable jurisdictions) to meet future capital commitments in fiscal 2001 and
beyond.  The Registrant may also reschedule commitments and/or withdraw and/or
dispose of some or all of its permit interests in order to reduce the capital
requirements attributable to the Registrant.

Subsequent to the reporting date, the Registrant has met all permit commitments,
either by direct funding or by farm-out of parts of its permit interests to
third parties. Accordingly, the Registrant's working capital has only reduced to
approximately $2.5 million at the end of May 2001, and the Registrant
anticipates production revenues will provide around $400,000 each month after
operating expenses.

2. Capital Resources

For a description of the Registrant's material capital commitments for the
upcoming fiscal year see below. The Registrant has no other anticipated capital
expenditures of a material amount.

The Registrant's capital resources have been comprised primarily of private
investors, including members of management, who are either existing contacts of
the Registrant's management or who come to the attention of the Registrant
through personal and business contacts, financial institutions and other
intermediaries. Conventional bank financing of exploration projects is generally
unavailable to resource companies, which are in the exploration stage, in the
absence of significant producing properties that can be used as collateral. The
Registrant's producing property (PMP 38148) has been of too small a scale to be
used for such purpose, and the Registrant does not intend that it be used for
such purpose.  The Registrant's access to capital is always dependent upon
general financial market conditions, especially those which pertain to venture
capital situations such as oil and gas exploration companies. The Registrant has
no agreements with management, investors, shareholders or anyone else respecting
additional financing at this time, but is investigating the possibility of
raising additional capital in Australia. Due to the speculative nature of the
Registrant's business and its lack of revenue generating assets, potential
investors are generally limited to those willing to accept a high degree of
risk. Therefore the number of outside sources of capital for the Registrant are
somewhat limited. Other than the foregoing, there are no other trends in the
nature of its capital resources which could be considered predictable.

3. Capital Commitments

Plan of Operations

The Registrant is required to carry out the following significant work
obligation projects by the following date:

Anticipated Total Work Obligation Before December 31, 2001
(As at 31 December 2000)


<PAGE>
Page 33

<TABLE>
<CAPTION>
Property           Description of Work                                 (US$)                      Source of funds
<S>                <C>                                           <C>            <C>
Developed
PMP 38148 (TB)     No work commitments                                  NIL

Undeveloped
PEP 38330 (ECB)    Drill Waingaromia-2 well & studies               150,000             Funded by Working capital
PEP 38335 (ECB)    Drill Waitaria-2 well                            440,000             Funded by Working capital
PEP 38723 (TB)     Drill Ratapiko-1 well                            555,000                     Funded by Farmout
AC/P19 (TS)        Seismic data acquisition/review                   50,000             Funded by Working capital
AC/P31 (TS)        Seismic reprocessing                              25,000             Funded by Working capital
AC/P26 (TS)        Drill 1 well (carried through cost)            1,445,000      Deferral until funded by farmout
ZOCA 96-16 (TS)    Administration & geological studies               15,000             Funded by Working capital
PPL 192 (PBF)      Drill 1 well                                   3,000,000      Deferral until funded by farmout
                                                                 ------------------------------------------------
Total Work Obligation Commitments                                $5,680,000
</TABLE>

ECB/ = East Coast Basin, NZ; TB/ = Taranaki Basin, NZ; TS/ = Timor Sea; PBF/ =
Papuan Basin Foreland

In addition to the above required work programs the Registrant is planning to
carry out the following significant projects during fiscal 2001:

Anticipated Planned Work Before December 31, 2001
(As at 31 December 2000)

<TABLE>
<CAPTION>
Property           Description of Work                                 (US$)                      Source of funds
<S>                <C>                                           <C>          <C>
Developed
PMP 38148 (TB)     Goldie-1 Drill, Complete and Test                850,000                       Working Capital
                   (Goldie-1 100% share)                                      and repaid from oil and gas revenue
                   BS-780 well Drill, Complete and Test              50,000           Ngatoro oil and gas revenue
                   (BS-780 5% share)

Undeveloped
PEP 38332 (ECB)    Administration & geological studies               60,000             Funded by Working capital
PEP 38716 (TB)     Huinga-1 well deepening                          290,000               To be funded by Farmout
PEP 38736 (TB)     Drill Kahili-1 well                            1,000,000               To be funded by Farmout
                                                                 ------------------------------------------------
Total Planned Program                                            $2,250,000
</TABLE>

[1] ECB/ = East Coast Basin, NZ; TB/ = Taranaki Basin, NZ; CB/ = Canterbury
Basin, NZ; TS/ = Timor Sea; PBF/ = Papuan Basin Foreland; PBH/ = Papuan Basin
Highlands

The projects completed to date from the above programs were: the drilling of the
Waitaria-2 well (funded from working capital), Ratapiko-1 (fully funded by
farm-out) and the Goldie-1 well which was funded from working capital, but has
already repaid its cost from production revenues.  In addition to the above
significant expenditures the Registrant anticipates various minor expenditures
on technical review studies in all of its properties, which will total
approximately $250,000 to $300,000 for fiscal 2001, and will be funded from
working capital.

Apart from those major projects, which are indicated as being funded by way of
farmout, the Registrant will fund the remainder of the projects from working
capital and production revenues.  For the 5 months to May 31, 2001, this has
been successfully achieved and the Registrant has replenished working capital
from revenues from production from the Goldie discovery.  It is anticipated
these revenues will continue to build working capital for the remainder of
fiscal 2001, as well funding the smaller projects yet to be completed.  For the
major projects listed above the Registrant intends to fund the majority of the
expenditure through farmouts to other Exploration companies and will continue to
investigate the possibility of raising additional capital in Australia.  Should

<PAGE>
Page 34

such funding not become available as appropriate the Registrant intends to seek
deferral of projects until such time as funding is available.  If funding by
farmout or capital raising is not achieved and deferral is not possible, the
Registrant would then be required to relinquish certain properties, with
substantial obligations which are listed in the Total Work Obligations above.

C.  Research and development, patents and licenses

Not applicable

D.  Trend Information

Significant trend information since the latest financial year:

The most important trend for the Registrant is production and sales of oil.
Subsequent to the latest financial year ended 31 December 2000, the Registrant
drilled a successful exploration well in PMP 38148, in February/March 2001. This
has increased the Registrant's share of oil production and sales from
approximately 45-50 barrels of oil per day to approximately 700 barrels of per
day. Trends which are also important are oil prices and exchange rates, as the
revenue is subject to international prices and the Registrant's costs are mainly
in NZ$, so the NZ$ / US$ exchange rate is important.

Oil production and sales, prices and exchange rates for the months subsequent to
December 31, 2000:

--------------------------------------------------------------------------------
Month         Production       Sales      Oil price      Revenue      Exchange
                 (bbl)         (bbl)      (US$/bbl)     (US$'000)     (NZ$/US$)
--------------------------------------------------------------------------------
January          1,462         1,466         23.53         34.5         0.4414
--------------------------------------------------------------------------------
February         1,304         1,293         25.32         32.7         0.4326
--------------------------------------------------------------------------------
March           12,295        12,295         24.67        300.2         0.4094
--------------------------------------------------------------------------------
April           19,460        19,300         25.52        492.5         0.4117
--------------------------------------------------------------------------------
May             21,650        21,615         26.39        570.5         0.4172
--------------------------------------------------------------------------------


ITEM 6.     DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.  Directors and senior management

The names, municipality of residence, age and position held of the directors and
senior management of the Registrant are as follows:

Name                      Residence      Age     Position Held

Dr. David Bennett [1]     Wellington,     55     President, Chief Executive
                          New Zealand            Officer and Director

Ronald Bertuzzi [1][2]    Vancouver,      63     Director
                          B.C., Canada

Alex P. Guidi [3]         Vancouver,      41     Director
                          B.C., Canada

Brad J. Holland [1]       Saudi Arabia    43     Director

David McDonald            Vancouver,      69     Chairman of the Board and
                          B.C., Canada           Director

Bernhard Zinkhofer [4]    Vancouver,      46     Director
                          B.C., Canada

Jeanette Watson           Wellington,     37     Secretary
                          New Zealand

Jenni Lean                Wellington,     50     Corporate Affairs Manager
                          New Zealand

<PAGE>
Page 35

[1] Member of audit committee.

[2] Appointed on March 31, 1998.

[3] Not re-elected at AGM on June 4, 2001

[4] Appointed February 20, 2001

Dr. David Bennett
Dr. Bennett has been a member of the board of directors and an officer since
October 1996, being appointed as Chief Executive Officer on October 30, 1996.
Dr. Bennett received a Bachelor of Arts (Natural Sciences) from Cambridge
University in 1968 and a Master of Science in Exploration Geophysics from the
University of Leeds in 1969. In 1973, Dr. Bennett received his doctorate in
Geophysics from the Australian National University and from 1973 to 1975
conducted post-doctoral research at the University of Texas (Dallas). From 1975
to 1977, Dr. Bennett was a post-doctoral fellow and lecturer at the University
of Wellington, New Zealand. From 1977 to 1982, Dr. Bennett was employed by the
Department of Scientific and Industrial Research, Government of New Zealand and
from 1982 to 1994 was employed as geophysicist, exploration manager and finally
general manager by New Zealand Oil and Gas Ltd. Dr. Bennett was an independent
consultant from 1994 to 1996 when he joined the Registrant and other associated
companies. Dr. Bennett has been the president and a member of the board
directors of the Registrant since October 1996. Since November 1996, Dr. Bennett
has been a member of the board of directors, and since April 1997 the president,
of Trans-Orient Petroleum Ltd. In 2000, Dr. Bennett resigned the position of
President of Trans-Orient Petroleum Ltd, although he remains a member of the
board of directors of that company. He has also since April 1997, been a member
of the board of directors of Durum Cons. Energy Corp. and since June 25, 1998 a
member of the board of directors of AMG Oil Ltd.  Dr. Bennett spends
approximately 95% of his total work time on behalf of the Registrant.  Dr
Bennett's spouse: Ms Jenni Lean is also employed by the Company as Corporate
Affairs Manager.

Mr. David R. McDonald (Non-Executive Chairman)
Mr McDonald has been a member of the board of directors and the Non Executive
Chairman since February 20, 2000.  Since his retirement from a long career of 43
years in the Oil Exploration and Production industry in 1995, Mr McDonald has
stayed abreast of the industry with Directorships in Oil Companies that have
involved him in Italy, Colombia and since 1999 with Indo Pacific Energy Limited.
This follows a successful 13 year career in Canada, where he was a key member of
the Burmah Oil team (BOCAL) that operated and made the initial large discoveries
on Australia's N.W Shelf, rising from Chief Geophysicist in 1965 through
Exploration Manager and thence to General Manager Exploration and Production
when the interests were sold to BHP & Shell in 1976.  Joining Hudbay Oil, the
company that eventually became part of Lasmo in 1977, he held positions of
Managing Director the Lasmo Companies in Australia for 13 years; Director of New
Ventures Lasmo Plc. London (1 year); and Managing Director of the Lasmo
Companies in Italy, Rome (3 years).  He has been honored with a Distinguished
Membership in 1981 by the Petroleum Exploration Society of Australia (PESA).  He
is also a recipient of an Honorary Life Membership in 1990 and a Reg Sprigg Gold
Medal in 1998 from the Australian Petroleum Production and Exploration
Association (APPEA).

Mr. Ronald Bertuzzi
Mr. Bertuzzi was a member of the board of directors from October 2, 1992 to
October 30, 1996 and was appointed on March 31, 1998 to fill the vacancy
resulting from the passing of Mr. John Holland. Mr. Bertuzzi received a Bachelor
of Arts from the University of British Columbia in 1965 and has worked in the
medical sales and product development industries since that time. Mr. Bertuzzi
is a member of the board of directors of several companies, including AMG Oil
Ltd., of which he is president, and Gondwana Energy, Ltd., of which he is a
member of the Board of Directors.

Mr. Alex Guidi
Mr. Alex Guidi has been a member of the board of directors and an officer since
October 1996. Mr. Guidi has organized and financed five oil and gas companies
including the Registrant. The other four companies are Walking Stick Oil and Gas
Ltd., Trans-Orient Petroleum Ltd, AMG Oil Ltd. and Durum Energy Cons. Ltd. Mr.
Guidi has been chairman of the board and a member of the board of directors of
the Registrant since October, 1996, until February 2000, when Mr. McDonald
replaced him as chairman, and in June 2001 Mr. Guidi did not seek re-election to
the board. From July 1988 to December 1995, Mr. Guidi was a member of the board
of directors of Trans-Orient Petroleum Ltd. and was elected a member of the
board of directors on January 28, 1998 and chairman on April 22, 1998. From
December 1990 to May 1996, Mr. Guidi was a member of the board of directors of
Durum Cons. Energy Corp. and was president from August 1992 to May 1996. From
August 6, 1997 Mr. Guidi has been a member of the board of directors of AMG Oil
Ltd.

<PAGE>
Page 36

Mr. Brad Holland
Mr. Brad Holland was a member of the board of directors from May 1996 to
February 1997, an officer from February 1997 to October 15, 1997 and was
appointed a member of the board on October 15, 1997. Mr. Holland received a
Bachelor of Science in Chemical Engineering from the University of Alberta in
1979. Mr. Holland was initially employed for two years by John Holland
Consultants Ltd. in property valuation, production management, evaluation and
financing for production acquisition. From 1982 to 1988, Mr. Holland was
employed by Canadian Western Natural Gas, a natural gas utility. From 1988 to
1992, Mr. Holland was employed as a senior project engineer with Nova Corp.
where he was responsible for the design and construction of large diameter
pipeline projects. Since 1992, Mr. Holland has been employed by ARAMCO in Saudi
Arabia in the construction of pipelines.

Mr. Bernhard J. Zinkhofer
Mr. Zinkhofer was appointed to the board of directors on February 20, 2001. Mr
Zinkhofer, age 46, was educated at the universities of Calgary (B.Comm-1977) and
Victoria (LL.B-1983) and is qualified as a Chartered Accountant (1980) and as a
lawyer (1984).  He has practised law as a partner the Canadian law firm of Lang
Michener in their Vancouver, British Columbia office since 1991. Mr Zinkhofer
also serves as a director of several public and private corporations including
two which are associated with Indo-Pacific Energy Ltd. by virtue of intercompany
shareholdings or common shareholders namely Trans-Orient Petroleum Ltd and Durum
Energy Corp.

Ms Jeanette Watson
Ms Watson was appointed as Corporate Secretary on November 16, 2000.  Ms Watson
attended Victoria University of Wellington, gaining a B.Sc. (Geology) in 1983
and an LLB in 1986, and is qualified as a lawyer (1987).  She has practised
commercial and corporate law as an associate (from 1986 to 1989) and then as a
senior associate (from 1992 to 2000) at Rudd Watts & Stone, at their Wellington
office and in the United Kingdom, at Slaughter and May (from 1989 to 1991).

Ms Jenni Lean
Ms Lean has a BSc and MBA from Victoria University in Wellington. She has
experience as a computer programmer at the Australian National University in
Canberra, teaching mathematics and science in Wellington and has worked in the
strategic planning division at New Zealand's government science research body
(DSIR). She has been Executive Officer for New Zealand's rural consultants body
(NZSFM) and an integral part of a forestry trading group (NZFE) in New Zealand.
Since 1995 she has been involved with Indo-Pacific Energy Ltd. as part of the
senior management team and also as Corporate Affairs Manager.  Ms Lean is the
spouse of Dr Bennett, the Chief Executive Officer.

Events Subsequent to December 31, 2000

On February 20, 2001 Mr. Bernhard Zinkhofer was appointed to the board of
directors.  Mr. Alex Guidi did not put himself forward for re-election, and was
therefore not reappointed at the Registrant's Annual and Special General Meeting
("AGM") on June 4, 2001.

Indemnification of Directors and Officers

The Registrant has taken out liability insurance to cover Directors and Officers
in the performance of their duties.

To date, no agreements to contractually provide indemnities have been executed
or delivered.

B.  Compensation

The following table sets forth the aggregate compensation paid by the Company
for services rendered during the last full financial year indicated:


<PAGE>
Page 37

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Common Shares
  Name and                        Compensation                      Securities Under Option (1)(2)                  Owned
Position with               Salary            Other            Number of       Exercise      Expiry                            %
  Company                   (US$)             (US$)             Options          Price        Date         Number            Owned
-----------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>               <C>                <C>               <C>        <C>           <C>               <C>
Dr David Bennett
   President, Chief      $81,075           $Nil [1]           1,500,000         $0.50 [2]  Jul 6,          203,000          0.6%
   Executive Officer,                                         1,000,000         $0.60 [3]  2005
   Director

David McDonald
   Chairman, Director    $   Nil           $Nil                 200,000         $0.50 [2]  Jul 6,              Nil          Nil
                                                                                           2005

Ronald Bertuzzi
   Director              $   Nil           $Nil                 200,000         $0.50 [2]  Jul 6,            1,790           -
                                                                                           2005

Alex P. Guidi
   Director              $   Nil           $Nil               1,000,000         $0.50 [2]  Jul 6,        5,824,076         17.9%
                                                              1,000,000         $0.60 [3]  2005

Brad J. Holland
   Director              $   Nil           $Nil                 200,000         $0.50 [2]  Jul 6,             Nil           Nil
                                                                                           2005


Bernhard Zinkhofer
   Director              $   Nil           $Nil                 300,000         $0.50 [4]  Mar 26,            Nil           Nil
                                                                                           2006

Jeanette Watson
   Corporate             $   Nil           $Nil                  40,000         $0.50 [4]  Mar 26,            Nil           Nil
   Secretary                                                                               2006

Jenni Lean
   Corporate Affairs     $43,248           $Nil [1]             120,000         $0.50 [2]  Jul 6,             Nil           Nil
                                                                                           2005
</TABLE>

[1] David Bennett and Jenni Lean, via the DJ and JM Bennett Family Trust, own
the building in which the Registrant's New Zealand office is located. During the
year the Registrant paid $23,439 in office rental costs for the use of the
building.

[2] Stock Options granted on July 6, 2000 vest over a period of 42 months
exercisable at a price of $0.50

[3] Stock Options granted on July 6, 2000 exercisable at a price of $0.60

[4] Stock Options granted on March 26, 2001 vest over a period of 42 months
exercisable at a price of $0.50


<PAGE>
Page 38

Compensation of Directors

It has been the past policy of the board of directors not to receive an annual
salary for their services solely as a director. Rather, the directors have been
compensated through stock awards and option grants, except for directors who
also serve as executive officers of the Registrant and hence also receive
compensation. This is outlined in the above "SUMMARY COMPENSATION TABLE".
The following options lapsed during fiscal 2000, without exercise:
<TABLE>
<CAPTION>
<S>               <C>
David Bennett     200,000 options exercisable at a price of $2.50 expired on October 30, 2000
Alex Guidi        500,000 options exercisable at a price of $2.50 expired on October 30, 2000
Brad Holland      300,000 options exercisable at a price of $2.50 expired on May 13, 2000
</TABLE>

There were no directors' or senior officers' options exercised in the years
ended December 31, 2000 and 1999.

Options Granted During the Year

On July 6, 2000 the Registrant granted new options to its directors and officers
in the following manner:

Name          Shares Underlying the Option   Exercise Price   Expiry Date
David Bennett           1,500,000               $.50        July 6, 2005(1)
David Bennett           1,000,000               $.60        July 6, 2005 (2)
Alex Guidi              1,000,000               $.50        July 6, 2005(1)
Alex Guidi              1,000,000               $.60        July 6, 2005(2)
David McDonald            200,000               $.50        July 6, 2005(3)
Ronald Bertuzzi           200,000               $.50        July 6, 2005(1)
Brad Holland              200,000               $.50        July 6, 2005(1)
Bernhard Zinkhofer        300,000               $.50        March 26, 2006(1)(4)
Jeanette Watson            40,000               $.50        March 26, 2006(1)(4)
Jenni Lean                120,000               $.50        July 6, 2005(1)

(1)  These options are subject to vesting provision in which 25% vests 6 months
     after the granting date while a further 12.5% vests every 6 months
     thereafter.

(2)  These options vest immediately on granting.

(3)  On April 19, 2001 the Board removed the vesting provisions on the options
     granted to Mr David McDonald, amending them to non-vesting options
     exercisable at a price of $0.50/share, expiring on July 6, 2005.

(4)  The Board granted the options to Bernie Zinkhofer and Jeanette Watson on
     March 26, 2001.

C.  Board practices

1.  Term of office

    All directors have a term of office expiring at the next annual general
    meeting of the Registrant to be scheduled in June 2001 unless re-elected or
    unless a director's office is earlier vacated in accordance with the by-laws
    of the Registrant or the provisions of the Business Corporations Act
    (Yukon). All officers have a term of office lasting until their removal or
    replacement by the board of directors.

    Name                                        Period served in position

    Dr. David Bennett [1]                              5 years
    Ronald Bertuzzi [1]                                5 years
    Alex P. Guidi                                      5 years
    Brad J. Holland [1]                                5 years
    David McDonald                                     1 year
    Bernhard Zinkhofer                                 4 months
    Jeanette Watson                                    8 months
    Jenni Lean                                         5 years

<PAGE>
Page 39

     [1]     Member of the Audit Committee


2.  Directors' service contracts

    No director has a contract which provides for any benefits upon termination
    of his/her service.

3.  Audit and remuneration committees

    List of Audit Committee members
         Dr. David Bennett
         Ronald Bertuzzi
         Brad J. Holland

D.  Employees

Employees and Consultants

As of December 31, 2000, the Registrant employs six people full time in its
Wellington New Zealand office. The persons employed in the Wellington office are
the president / chief executive officer and five persons occupied with technical
support, company and joint venture accounting, financial reporting, office
management and New Zealand, Australian and PNG corporate affairs.  In addition
another three people are employed on a part time basis to assist in
administrative support.

In addition to the foregoing, the Registrant also receives technical services
from a number of exploration consultants.

E.  Share Ownership

The following schedule sets forth the Common Stock ownership of each director,
individual, and all officers and directors of the Registrant as a group known by
the Registrant to be the beneficial owner of Common Stock. All ownership shown
is of record and reflects beneficial ownership as of June 11, 2001.

Name and address             Number of Shares   Position                Percent
of owner                     of Class

David Bennett                1,765,500          President, CEO          5.2% (1)
Karori, Wellington                              and Director
New Zealand

Ronald Bertuzzi                 76,790          Director                0.2% (2)
Vancouver, BC
Canada

Alex Guidi                   7,693,076          Director               22.4% (3)
Vancouver, BC
Canada

Brad Holland                    75,000          Director                0.2% (4)
Dhahran,
Saudi Arabia

David McDonald                 200,000          Chairman and Director   0.6% (4)
Vancouver, BC
Canada

Bernhard Zinkhofer                 Nil          Director                0.0% (4)
Vancouver, BC
Canada

<PAGE>
Page 40

Jeanette Watson                    Nil          Secretary               0.0% (4)
Wellington
New Zealand

Jenni Lean                      48,000          Corporate Affairs       0.1% (5)
Wellington                                      Manager
New Zealand


ALL OFFICERS AND
DIRECTORS AS A
GROUP (7 persons)            9,858,366                                 27.2%

(1)  Of the 1,765,500 common shares reported to be beneficially owned, 200,000
     are held in a family trust in which Dr. Bennett is a one of the
     beneficiaries.  3,000 common shares are owned by Jenni Lean, and 1,562,500
     relate to the number of underlying common shares which may be acquired
     within 60 days through the exercise of options held by Dr. Bennett.

(2)  Of the 76,790 common shares reported to be beneficially owned, 75,000 are
     attributable to the number of common shares which may be acquired within 60
     days through the exercise of options held by Mr. Bertuzzi.

(3)  Of the 7,693,076 common shares reported to be beneficially owned, 1,869,000
     are attributable to the number of common shares which may be acquired
     within 60 days through the exercise of options and warrants held by Mr.
     Guidi.

(4)  These reflect the number of common shares, which may be acquired within 60
     days under a stock option.

(5)  Of the 48,000 common shares reported to be beneficially owned, 45,000 are
     attributable to the number of common shares which may be acquired within 60
     days through the exercise of options held Ms Lean.


ITEM 7.     MAJOR SHAREHOLDERS AND RELATED TRANSACTIONS

A.  Major shareholders

1. Beneficial Holders of More Than Five Percent of Outstanding Shares

The following schedule sets forth the Common Stock ownership of each person
known by the Registrant to be the beneficial owner of five percent or more of
the Registrant's Common Stock. All ownership shown is of record and reflects
beneficial ownership as of June 11, 2001.

(a)     Security Held by Certain Beneficial Owners

Name and address                        Number of            Percent
of owner                                Shares               of Class

Trans-Orient Petroleum Ltd.             8,368,448 (1)          22.8% (1)
Vancouver, BC
Canada


<PAGE>
Page 41

(b)     Security Held by Management

Name and address               Number of         Percent          Position
of owner                       Shares            of Class

Alex Guidi                    7,693,076 (2)      22.4% (2)        Director
Vancouver, BC
Canada

David Bennett                 1,765,500 (3)       5.2% (3)        President, CEO
Wellington                                                        and Director
New Zealand

(1)   As part of the purchase price paid to Trans-Orient Petroleum Ltd. for its
      assets, the Registrant issued, on March 29, 2000, 4,184,224 "A" Warrants.
      Each "A" Warrant entitles Trans-Orient Petroleum Ltd. to purchase one
      additional common share of the Registrant in consideration for $0.50 per
      common share, exercisable up to the end of business on March 29, 2001 and
      thereafter for $0.75 per common share up to the close of business on March
      29, 2002.  Upon the exercise of the "A" Warrants by Trans-Orient Petroleum
      Ltd. and subject to a commercial discovery having occurred on the permits,
      the Registrant will issue to Trans-Orient Petroleum Ltd. one "B" Warrant
      for each "A" Warrant exercised. The "B" Warrants are exercisable at a
      price of $1.50 for a period of one year from the date of issue of the "B"
      Warrants. Of the 8,368,448 common shares reported to be beneficially
      owned, 4,184,224 are the number of common shares which may be acquired
      within 60 days through the exercise of the "A" warrants issued.

(2)   Of the 7,693,076 common shares reported to be beneficially owned,
      1,869,000 are attributable to the number of common shares which may be
      acquired within 60 days through the exercise of options and warrants held
      by Mr. Guidi.

(3)   Of the 1,765,500 common shares reported to be beneficially owned, 200,000
      are held in a family trust in which Dr. Bennett is a one of the
      beneficiaries.  3,000 common shares are owned by Jenni Lean, and 1,562,500
      relate to underlying common shares which are the subject of an option held
      by Dr. Bennett which can be exercised within 60 days.

2. Host country shareholders

     The portion and numbers of shareholders in the host country are as follows:
     Proportion of shareholders          59.56%
     Number of shareholders              1,107
     Number of shares held               19,326,830

3. Controlling shareholders

     None

4. Arrangements affecting shareholdings

There are no known arrangements, which would significantly affect the control of
the major shareholder, apart from the effect of the warrants available to
Trans-Orient Petroleum Ltd and Alex Guidi and the options available to Alex
Guidi and David Bennett.

B.  Related party transactions

The following are reported as Related Party Transactions. The nature of the
transaction, the affiliate(s) who had an interest in the transaction and the
nature of the interest are included in the description of each of the
transactions:

(a)   On January 31, 2000 the Registrant announced that it had entered into a
      letter of intent to acquire all the assets of Trans-Orient Petroleum Ltd.
      The Agreement was formally closed on March 29, 2000 and ratified by the
      shareholders of Trans-Orient Petroleum Ltd at a General Meeting held on
      May 23, 2000, while the effective date of the Agreement is January 1,
      2000.

<PAGE>
Page 42

      The value placed upon the Assets by the Registrant and Trans-Orient
      Petroleum Ltd. was $4,097,360 less an intercompany loan from the
      Registrant to Trans-Orient Petroleum Ltd. in the amount of $1,042,928,
      resulting in a net consideration payable by the Registrant to Trans-Orient
      Petroleum Ltd. of $3,054,432. See ITEM 4A. History and Development of the
      Company for a description of the assets acquired.

      As at January 31, 2000, Mr. Guidi was the chairman, a member of the board
      of directors and principal shareholder of Trans-Orient Petroleum Ltd.
      owning 15,501,400 common shares of Trans-Orient Petroleum Ltd. which
      represented 38.63% of Trans-Orient Petroleum Ltd.'s outstanding common
      shares. Mr. Guidi also owned options and warrants to acquire up to a
      further 6,000,000 common shares of Trans-Orient Petroleum Ltd. Dr. David
      Bennett was the president, director and a shareholder of Trans-Orient
      Petroleum Ltd. beneficially owning 200,000 common shares in Trans-Orient
      Petroleum Ltd. which represented 0.50% of Trans-Orient Petroleum Ltd.'s
      outstanding common shares. Additionally, Mr. Bennett beneficially owned
      warrants and options to acquire up to 1,225,000 common shares of Trans
      Orient Petroleum Ltd. The common shares, warrants and options attributable
      to Dr. Bennett are held in a family trust of which Dr. Bennett is one of
      the beneficiaries. Dr. Bennett's spouse, Jenni Lean, also owned 28,000
      common shares in Trans-Orient Petroleum Ltd. Mr. Ron Bertuzzi owned
      946,886 common shares of Trans-Orient Petroleum Ltd., which represented
      2.36% of shares outstanding. Mr. Brad Holland owned 1,565,500 common
      shares in Trans-Orient Petroleum Ltd., which represents 3.90% of shares
      outstanding. Additionally, Mr. Holland owned warrants to acquire 2,000,000
      common shares of Trans-Orient Petroleum Ltd. In order to evaluate whether
      the transaction was fair amongst the Registrant and Trans-Orient Petroleum
      Ltd. the Registrant commissioned a fairness report by Evans & Evans Inc.
      Evans & Evans analyzed the terms of the proposed transactions and
      determined that the terms were supported by the valuation of the assets
      being exchanged. At the meeting of directors held on March 17, 2000 in
      which the resolution was passed to enter into the formal Agreement of
      Purchase and Sale of Assets, Mr. Alex Guidi and Dr. Dave Bennett declared
      their interest in the matter and abstained from voting. The remaining
      director in attendance at the meeting, David MacDonald, approved the
      resolution.

(b)   At December 31, 1999, Trans-Orient Petroleum Ltd. owed a total of
      $1,062,211 including interest charges of $18,051 to the Registrant as a
      result of accrued joint venture permit expenditures which were paid by the
      Registrant on behalf of joint venture operations in which Trans-Orient
      Petroleum Ltd. was a participant with the Registrant. The majority of this
      amount relates to drilling the Whakutu-1 and Clematis-1 wells. The
      $1,062,211 outstanding was offset against the purchase price paid by the
      Registrant to Trans-Orient Petroleum Ltd. for the purchase of its permit
      interests. (See (a) above for management's interests in the transaction).

(c)   The Registrant and Trans-Orient Petroleum Ltd., by agreement dated June
      25, 1998, optioned up to 80% of the PEP 38256 permit to AMG Oil Ltd. In
      August 1998, AMG Oil Ltd. earned 30% of the permit by paying the cost of a
      120 mile seismic survey. To earn an additional 50%, AMG was required to
      elect before December 4, 1998 to pay the cost of any additional seismic
      required to define two drilling prospects and to pay the dry hole costs of
      drilling two wells to a maximum of about US$2,100,000. The option
      agreement was modified by three subsequent agreements dated December 3,
      1998, October 26, 1999 and February 23, 2000 which extended the period of
      time in which the AMG must exercise its option to acquire up to a further
      50% interest in the 38256 permit area to June 16, 2000. Additionally, the
      February 23, 2000 amendment provided AMG with a choice of committing to:
      ('Option A') to earn an additional 50% in PEP 38256 from the Registrant by
      funding all expenditure including an agreed program of seismic work
      leading up to and including the drilling of two exploration wells.
      Alternatively, AMG may, at its election, earn an additional 35% the
      Registrant in the permit by funding all work leading up to and including
      the drilling of one exploration well ('Option B'). In the event that the
      AMG exercises Option B, it shall acquire a further option ('Option C') to
      earn an additional 15% in the permit by funding all further work up to and
      including a second exploration well on a separate exploration target.
      Option C must be exercised within 30 days of reaching the predetermined
      target depth in the exploration well drilled pursuant to exercise of
      Option B. As at February 23, 2000 Mr. Guidi was the president, a member of

<PAGE>
Page 43

      the board of directors and the principal shareholder of AMG. Oil Ltd.,
      owning 4,477,500 common shares of AMG Oil Ltd., which represented 31.53%
      of AMG Oil Ltd.'s outstanding common shares. Dr. David Bennett was a
      member of AMG Oil Ltd.'s board of directors and beneficially owned 20,000
      common shares in AMG Oil Ltd., which represented 0.14% of AMG Oil Ltd.'s
      outstanding common shares. Mr. Ron Bertuzzi owned 1,103,000 common shares
      of AMG Oil Ltd., which represented 7.77% of shares outstanding. Mr. Brad
      Holland owned 1,173,500 common shares in AMG Oil Ltd. that represents
      8.26% of shares outstanding. The Registrant's management approved the
      amendment of the option agreement, and no steps were taken to
      independently determine the fairness of the transaction.

(d)   On March 17, 1999 the Registrant partially exercised its share purchase
      option in AMG Oil Ltd. and acquired 800,000 common shares at a cost of
      $400,000. As at March 17, 1999, Mr. Guidi was a member of the board of
      directors and the principal shareholder of AMG. Oil Ltd., owning 4,477,500
      common shares of AMG Oil Ltd., which represented 31.53% of AMG Oil Ltd.'s
      outstanding common shares. Dr. David Bennett was the president and a
      member of AMG Oil Ltd.'s board of directors and beneficially owned 20,000
      common shares in AMG Oil Ltd., which represented 0.14% of AMG Oil Ltd.'s
      outstanding common shares. Mr. Ron Bertuzzi owned 1,103,000 common shares
      of AMG Oil Ltd. which represented 7.77% of shares outstanding. Mr. Brad
      Holland owned 1,070,500 common shares in AMG Oil Ltd. that represents
      7.54% of shares outstanding. The Registrant's management approved the
      exercise of the options and no steps were taken to independently determine
      the fairness of the transaction.

(e)   During the year ending December 31, 2000, the Registrant paid $23,439
      (year ended December 31, 1999: $27,177) in office rental fees to the DJ &
      JM Bennett Family Trust, which owns the building in which the Registrant's
      New Zealand office is located.

C.  Interests of experts and counsel

Not applicable

ITEM 8.     FINANCIAL INFORMATION

A.  Consolidated Statements and Other Financial Information

Consolidated financial statements are provided under PART III. Item 17.
FINANCIAL STATEMENTS

There are no material legal proceedings to which the Registrant is subject or
which are anticipated or threatened.

The Company has never paid dividends to shareholders nor is there a policy in
place to do so. All cash flow derived by the Company is re-invested in oil and
gas exploration and development.

B.  Significant Changes

All significant events subsequent to the financial statements have been covered
in Note 14. Subsequent Events in the Financial Statements provided under Item
17.


ITEM 9.     THE OFFER AND LISTING

A.  Offer and Listing Details

Price History of the stock

The shares of the Registrant traded on the Vancouver Stock Exchange ("VSE") in
Vancouver, British Columbia, Canada until September 12, 1996. Beginning in
January, 1996 the shares of the Registrant traded on the OTC Bulletin Board
("OTCBB") under the symbol "INDX".

Summary trading by year, in United States dollars per share, except for the 1996
Low price in Canadian dollars, for the five most recently competed fiscal
periods ending December 31, 2000 up to the date the Registrant's common shares
were de-listed from the OTCBB on August 21 2000:

<PAGE>
Page 44

Year                     High(1)          Low(2)

1996                     10.25        CDN$0.97
1997                      6.562           0.30
1998                      3.563           0.563
1999                      1.281           0.3125
2000                      0.95            0.125

Summary trading by quarter for the two most recently competed fiscal periods
ending December 31, 2000 and additional summary trading by fiscal quarter up to
the date the Registrant's common shares were de-listed from the OTCBB on August
21 2000.

Year and
Quarter                  High(1)          Low(2)

1999
First Quarter             1.281           0.42
Second Quarter            1.25            0.5625
Third Quarter             0.781           0.50
Fourth Quarter            0.656           0.3125

2000
First Quarter             0.905           0.3125
Second Quarter            0.63            0.32
Third Quarter (3)         0.95            0.125
Fourth Quarter (3)        Not traded

2001
First Quarter (3)         Not traded
Second Quarter (4)        0.55            0.40


Summary trading by quarter for the six most recently completed months ending May
31, 2001

Month                    High(1)          Low(2)
December 2000 to          Not traded
April 2001                Not traded
May 2001 (4)              0.55            0.40

(1)  OTCBB quotations may reflect interdealer prices, without retail markup,
     markdown or commission and may not necessarily reflect actual transactions.
(2)  The source for the quotations listed between the first quarter 1999
     until the first quarter 2000 is found at the OTCBB's own website located at
     www.otcbb.com. All quotes thereafter are from the Canada Stockwatch website
     located at www.canada-stockwatch.com.
(3)  quotations are provided until the date the Registrant's shares were de-
     listed from trading on the OTCBB. On August 21,2000 the National
     Association of Securities Dealers (the "NASD") removed the Registrant's
     Common Shares from trading on the OTCBB because the Registrant did not meet
     NASD eligibility rule 6530(b)(1). From August 20, 2000 until May 23, 2001
     the Registrant's Common Shares were not traded on an organized market.
(4)  On April 19, 2001 the Registrant regained eligibility under NASD rule
     6530(b)(1), applied for re-listing on the OTCBB and was re-listed on May
     23, 2001.

As at June 11, 2001 there were 32,446,622 shares outstanding. At June 11, 2001
there were 213 shareholders of record resident in Canada holding 13,105,690
shares and 1,107 shareholders of record resident in the United States holding
19,326,831 shares.


<PAGE>
Page 45

B.  Plan of Distribution

Not applicable


C.  Markets

The authorized capital of the Company consists of 100,000,000 Common Shares
without par value, of which 32,446,622 Common Shares are issued as of June 11,
2001.

The shares of the Registrant traded on the Vancouver Stock Exchange ("VSE") in
Vancouver, British Columbia, Canada until September 12, 1996. Beginning in
January, 1996 the shares of the Registrant traded on the OTC Bulletin Board
("OTCBB") under the symbol "INDX". Summary trading by quarter for the two most
recently competed fiscal periods ending December 31, 1999 and additional summary
trading by fiscal quarter up to the date the Registrant's common shares were
de-listed from the OTCBB on August 21 2000.

The Registrant received clearance from the Securities Commission for reporting
in the United States in April 2001 and applied for re-listing on the OTCBB.  The
Registrant's shares were re-listed on the OTCBB under the symbol INDXF on May
23, 2001.


ITEM 10.     ADDITIONAL INFORMATION

A.  Share Capital

Not applicable

B.  Memorandum and Articles of association

The Articles of Association have been previously filed with Form 10K for the
Year Ended December 31, 1997, dated April 8, 1998.  The relevant provisions have
not changed since that time.

C.  Material contracts

Other than the Agreement to purchase the properties from Trans-Orient Petroleum
Ltd., summarized in ITEM 4A. HISTORY AND DEVELOPMENT OF THE COMPANY, and
contracts entered into in the ordinary course of business, which are summarized
in ITEM 4D.- PROPERTY, PLANT and EQUIPMENT, the Registrant has not entered into
any material contracts in the two years prior to the date hereof which can
reasonably be regarded as presently material to the Company.

All such material contracts, including the Agreement to purchase the properties
from Trans-Orient Petroleum Ltd., have been filed under Form 8K and Form 6K.

D.  Exchange controls

There is no law or governmental decree or regulation in Canada that restricts
the export or import of capital, or affects the remittance of dividends,
interest or other payments to a non-resident holder of common shares of the
Company, other than withholding tax requirements. See "Item 10.E -Taxation" and
"Certain United States Federal Income Tax Consequences".

There is no limitation imposed by Canadian law or by the charter or other
constituent documents of the Company on the right of a non-resident to hold or
vote common shares of the Company, other than as provided in the Investment
Canada Act (Canada) (the "Investment Act"). The following discussion summarizes
the principal features of the Investment Act for a non-resident who proposes to
acquire common shares of the Company. It is general only, it is not a substitute
for independent advice from an investor's own advisor, and it does not
anticipate statutory or regulatory amendments.

The Investment Act generally prohibits implementation of a reviewable investment
by an individual, government or agency thereof, corporation, partnership, trust
or joint venture (each an "entity") that is not a "Canadian" as defined in the
Investment Act (a "non-Canadian"), unless after review the minister responsible

<PAGE>
Page 46

for the Investment Act is satisfied that the investment is likely to be of net
benefit to Canada. An investment in common shares of the Company by a
non-Canadian other than a "WTO Investor" (as defined in the Investment Act and
which term includes entities which are nationals of or are controlled by
nationals of member states of the World Trade Organization) when the Company was
not controlled by a WTO Investor, would be reviewable under the Investment Act
if it was an investment to acquire control of the Company and the value of the
assets of the Company, as determined in accordance with the regulations
promulgated under the Investment Act, was Cdn$5 million or more, or if an order
for review was made by the federal cabinet on the grounds that the investment
related to Canada's cultural heritage or national identity, regardless of the
value of the assets of the Company. An investment in common shares of the
Company by a WTO Investor, or by a non-Canadian when the Company was controlled
by a WTO Investor, would be reviewable under the Investment Act if it was an
investment in 2001 to acquire control of the Company and the value of the assets
of the Company, as determined in accordance with the regulations promulgated
under the Investment Act, exceeds Cdn$209 million. A non-Canadian would acquire
control of the Company for the purposes of the Investment Act through
acquisition of common shares if the non-Canadian acquired a majority of the
common shares of the Company. The acquisition of less than a majority but one
third or more of the common shares of the Company would be presumed to be an
acquisition of control of the Company unless it could be established that, on
the acquisition, the Company was not controlled in fact by the acquirer through
the ownership of common shares.

Certain transactions relating to common shares of the Company would be exempt
from the Investment Act, including

(a)     acquisition of common shares of the Company by a person in the ordinary
        course of that person's business as a trader or dealer in securities,

(b)     acquisition of control of the Company in connection with the realization
        of security granted for a loan or other financial assistance and not for
        a purpose related to the provisions on the Investment Act, and

(c)     acquisition of control of the Company by reason of an amalgamation,
        merger, consolidation or corporate reorganization following which the
        ultimate direct or indirect control in fact of the Company, through the
        ownership of common shares, remained unchanged.

E.  Taxation

The discussion under this heading summarizes the principal Canadian federal
income tax consequences of acquiring, holding and disposing of common shares of
the Company for a shareholder of the Company who is not resident in Canada and
who is resident in the United States. It is based on the current provisions of
the Income Tax Act (Canada) (the "Tax Act") and the regulations thereunder. The
provisions of the Tax Act are subject to income tax treaties to which Canada is
a party, including the Canada-United States Income Tax Convention (1980) (the
"Convention"). This discussion is general only and is not a substitute for
independent advice from a shareholder's own tax advisor. Management of the
Corporation considers that the following discussion fairly describes the
principal and material Canadian federal income tax consequences applicable to
shareholders of the Corporation who are residents of the United States and are
not residents of Canada and do not hold, and are deemed not to hold, shares of
the Corporation in connection with carrying on a business in Canada (a
"non-resident").

Generally, dividends paid by Canadian corporations to non-resident shareholders
are subject to a withholding tax of 25% of the gross amount of such dividends.
However, Article X of the reciprocal tax treaty between Canada and the United
States reduced to 15% the withholding tax on the gross amount of dividends paid
to residents of the United States. The withholding tax rate on the gross amount
of dividends is reduced to 5% of the amount of the gross dividend when a U.S.
corporation owns at least 10% of the voting stock of the Canadian corporation
paying the dividends.

A non-resident who holds shares of the Corporation as capital property will not
be subject to tax on capital gains realized on the disposition of such shares
unless such shares are "taxable Canadian Property" within the meaning of the
Income Tax Act (Canada) and no relief is afforded under any applicable tax
treaty.

The shares of the Corporation would be taxable Canadian property of a
non-resident if at any time during the five year period immediately preceding a

<PAGE>
Page 47

disposition by the non-resident of such shares not less than 25% of the issued
shares of any class of the Corporation belonged (a) to the non-resident, (b) to
a person with whom the non-resident dealt did not deal at arm's length, or (c)
to the non-resident and any person with whom the non-resident did not deal at
arm's length.

The register of members of the Registrant discloses that the majority of the
shares of the Registrant are held of record by persons resident in the United
States of America. If the Registrant should declare a dividend, a withholding
tax of five percent is payable in Canada on payment of a dividend to a corporate
resident of the United States of America holding more than ten per cent of the
shares of the Registrant and 15% to all other residents of the United States.


F.  Dividends and paying agents

Not applicable

G.  Statement by experts

Not applicable

H.  Documents on display

Documents concerning the Company which are referred to in this document may be
inspected at the offices of Indo-Pacific Energy Ltd, at Indo-Pacific House, 284
Karori Road, Karori, Wellington, New Zealand or at the registered office at
Suite 200 Financial Plaza, 204 Lambert Street, White Horse, YT, Y1A 3T2, Canada.
Documents referred to in this document are filed with the US Securities
Commission ("SEC"), and are available for view on the SEC website at:
http//www.sec.gov.

I.  Subsidiary information

A list of subsidiaries of the Company is identified in Note 2 in the notes to
the consolidated financial statements in ITEM 17 and in ITEM 4C. ORGANIZATIONAL
STRUCTURE.


ITEM 11.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required as the Company is a small business issuer, in accordance with
Section 12(b)-2 of the Act.


ITEM 12.     DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

There are no securities in the Registrant other than equity securities, being
Common Stock and Options or Warrants to purchase Common Stock in the Registrant.




<PAGE>
Page 48

PART II
-------


ITEM 13.     DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

A.     There has been no material default in any indebtedness, as the Registrant
       has no debt.

B.     The registrant has never paid nor declared a dividend, so there are no
       arrearages.

ITEM 14.     MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
             PROCEEDS

A raising of capital on the Australian Stock Exchange is being considered, but
the plan is not yet finalised.


ITEM 15.     RESERVED
ITEM 16.     RESERVED




PART III
--------


ITEM 17.     FINANCIAL STATEMENTS.

Financial Statements begin on page 51.

                            INDEX TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------
                                                                         Page
                                                                         ----
--------------------------------------------------------------------------------
Auditors' Report                                                          51
--------------------------------------------------------------------------------
Consolidated Balance Sheets                                               52
--------------------------------------------------------------------------------
Consolidated Statements of Income and Deficit                             53
--------------------------------------------------------------------------------
Consolidated Statements of Cash Flows                                     55
--------------------------------------------------------------------------------
Notes to the Consolidated Financial Statements                            57
--------------------------------------------------------------------------------


The financial statements and Report of the independent Auditors are filed as
part of the Company's Annual Report.

<PAGE>
Page 49

                                    SIGNATURE

Pursuant to the requirements of section 12 of the Securities Exchange Act of
1934, the Registrant hereby certifies that it meets all of the requirements for
filing on Form 20F and that it has duly caused and authorized the undersigned to
sign this annual report on its behalf.

INDO-PACIFIC ENERGY LTD.


Date: June 26, 2001       By:         /s/ David Bennett
                             ___________________________________________________
                          Dr. David Bennett, President & Chief Executive Officer



<PAGE>
Page 50









                             INDO-PACIFIC ENERGY LTD.

                       CONSOLIDATED FINANCIAL STATEMENTS
                      (Expressed in United States Dollars)

                            DECEMBER 31, 2000 AND 1999

<PAGE>
Page 51





                                AUDITORS' REPORT



To the Shareholders of Indo-Pacific Energy Ltd.

We have audited the accompanying consolidated balance sheets of Indo-Pacific
Energy Ltd. as of December 31, 2000 and 1999 and the related consolidated
statements of operations and deficit, changes in stockholders' equity and cash
flows for each of the years in the three year period ended December 31, 2000.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing standards
in Canada and the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, these consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Indo-Pacific
Energy Ltd. as of December 31, 2000 and 1999 and the results of their operations
and cash flows for each of the years in the three year period ended December 31,
2000, in conformity with generally accepted accounting principles in Canada.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern.  As discussed in Note 1 to the financial
statements, there is substantial doubt regarding the ability of the Company to
continue to meet all of its future commitments.  Management's plans in regard to
these matters are also described in Note 1.  The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.



/s/ Sadovnick Telford + Skov

CHARTERED ACCOUNTANTS

Vancouver, British Columbia
Canada
March 23, 2001



<PAGE>
Page 52

================================================================================
INDO-PACIFIC ENERGY LTD.
Consolidated Balance Sheets
(Expressed in United States Dollars)
================================================================================

As at December 31,                                        2000          1999
--------------------------------------------------------------------------------

Assets

Current
Cash and short-term deposits                        $ 2,887,771     $ 4,863,254
Accounts receivable                                     219,837         148,419
Loan receivable from related party (Note 3)                -          1,062,211
Marketable securities (Note 4)                             -            222,319
Due from related parties (Note 8)                        79,838          62,667
Prepaid expenses and deposits (Note 8)                   38,728          50,110
--------------------------------------------------------------------------------
                                                      3,226,174       6,408,980

Investments (Note 5)                                       -            670,000
Property and equipment (Note 6)                         124,835         143,961
Oil and gas properties (Note 7)                       6,636,417       3,656,224
--------------------------------------------------------------------------------

Total Assets                                        $ 9,987,426     $10,879,165
================================================================================

Liabilities

Current
Accounts payable and accrued liabilities            $   165,167     $   277,983
--------------------------------------------------------------------------------

Total Liabilities                                       165,167         277,983
--------------------------------------------------------------------------------

Commitments and Contingencies (Notes 1 and 9)

Stockholders' Equity

Common stock without par value (Note 10);
100,000,000 shares authorized;
Issued and outstanding at December 31,
   2000: 32,446,622 shares and
   1999: 28,262,398 shares                           19,478,365      17,386,253
Accumulated deficit                                  (9,656,106)     (6,785,071)
--------------------------------------------------------------------------------

Total Stockholders' Equity                            9,822,259      10,601,182
--------------------------------------------------------------------------------

Total Liabilities and Stockholders' Equity          $ 9,987,426     $10,879,165
================================================================================

Approved by the Directors:

/s/ David Bennett                            /s/ David McDonald
______________________________               ______________________________
Director                                     Director
         See accompanying notes to the consolidated financial statements

<PAGE>
Page 53

================================================================================
INDO-PACIFIC ENERGY LTD.
Consolidated Statements of Operations and Deficit
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31,           2000          1999         1998
--------------------------------------------------------------------------------

Revenue

Oil and gas sales                    $    475,646   $    314,698   $    234,168
Interest income                           224,549        358,911        450,597
--------------------------------------------------------------------------------

Total revenue                             700,195        673,609        684,765
--------------------------------------------------------------------------------
Expenses

Production costs                           35,411         50,598        129,781
Royalties                                  23,962         15,248         10,269
Depletion                                 112,332        104,475         95,779
Write-off of oil and gas properties     2,725,925        983,168        765,144
General and administrative (Schedule)     743,600        540,622        692,480
--------------------------------------------------------------------------------

Total expenses                          3,641,230      1,694,111      1,693,453
--------------------------------------------------------------------------------

Loss for the year before other items   (2,941,035)    (1,020,502)    (1,008,688)

Other Items

Gain on disposal of investments            70,000           -              -
Write down of marketable securities          -          (160,756)          -
--------------------------------------------------------------------------------

Net loss for the year                  (2,871,035)    (1,181,258)    (1,008,688)

Deficit - Beginning of Year            (6,785,071)    (5,603,813)    (4,595,125)
--------------------------------------------------------------------------------

Deficit - End of year                 $(9,656,106)   $(6,785,071)   $(5,603,813)
================================================================================

Basic and diluted loss per share
  (Note 11)                           $     (0.09)   $     (0.04)   $     (0.04)
================================================================================



See accompanying notes to the consolidated financial statements

<PAGE>
Page 54

================================================================================
INDO-PACIFIC ENERGY LTD.
Consolidated Statements of Changes in Stockholders' Equity
(Expressed in United States Dollars)
================================================================================
<TABLE>
<CAPTION>
For the Years Ended December 31, 2000, 1999, and 1998
----------------------------------------------------------------------------------------------------------------
                                                                                                      Total
                                                Common Stock                Accumulated            Stockholders'
                                    ----------------------------------
                                          Shares           Amount               Deficit                 Equity
                                    ----------------------------------------------------------------------------
<S>                                 <C>            <C>                   <C>                    <C>
Balance at December 31, 1997        28,262,398     $  17,379,737         $ (4,595,125)          $  12,784,612

Common stock issued for private
     placements                      1,406,250             9,774                 -                      9,774
Cancellation of previously issued
     common stock                   (1,406,250)           (3,258)                -                     (3,258)
Net loss during the year                                                   (1,008,688)             (1,008,688)
----------------------------------------------------------------------------------------------------------------

Balance at December 31, 1998        28,262,398     $  17,386,253         $ (5,603,813)          $  11,782,440

Net loss during the year                                                   (1,181,258)             (1,181,258)
----------------------------------------------------------------------------------------------------------------

Balance at December 31, 1999        28,262,398     $  17,386,253         $ (6,785,071)          $  10,601,182

Common stock issued for purchase
  from Trans-Orient Petroleum Ltd    4,184,224         2,092,112                 -                  2,092,112
  (Note 8)
Net loss during the year                                                   (2,871,035)             (2,871,035)
----------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000        32,446,622     $  19,478,365         $ (9,656,106)          $   9,822,259
================================================================================================================
</TABLE>

         See accompanying notes to the consolidated financial statements

<PAGE>
Page 55

================================================================================
INDO-PACIFIC ENERGY LTD.
Consolidated Statements of Cash Flows
(Expressed in United States Dollars)
================================================================================
<TABLE>
<CAPTION>
For the Years Ended December 31,                                     2000          1999         1998
----------------------------------------------------------------------------------------------------------
<S>                                                             <C>            <C>            <C>
Operating Activities

Net loss for the year                                           $ (2,871,035)  $ (1,181,258)  $ (1,008,688)
Adjustments to reconcile net loss to
 cash applied to operating activities:
   Depletion                                                         112,332        104,475         95,779
   Write-off of oil and gas properties                             2,725,925        983,168        765,144
   Amortization                                                       60,575         72,380         53,096
   Gain on disposal of investments                                   (70,000)          -              -
   Write-down of marketable securities                                  -           160,756           -
Changes in non-cash working capital:
   Accounts receivable                                               (71,418)       (46,225)        32,280
   Due from related parties                                          (17,171)       (16,506)       106,212
   Prepaid expenses and deposits                                      11,382        (41,075)           434
   Accounts payable and accrued liabilities                         (112,816)       121,087        111,192
----------------------------------------------------------------------------------------------------------

Net cash provided by (used in) operating activities                 (232,226)       156,802        155,449
----------------------------------------------------------------------------------------------------------

Financing Activity

Common shares issued for cash                                          -              -              6,516
----------------------------------------------------------------------------------------------------------

Net cash provided by financing activity                                -              -              6,516
----------------------------------------------------------------------------------------------------------

Investing Activities

Loan receivable from related party                                     -        (1,062,211)          -
Purchase of marketable securities                                      -              -          (149,565)
Purchase of investments                                                -          (420,000)      (250,000)
Purchase of property and equipment                                  (41,449)       (82,265)       (71,928)
Oil and gas properties, net of recoveries                        (1,701,808)    (1,923,921)    (1,901,030)
Proceeds from sale of license interest                                 -              -           150,000
----------------------------------------------------------------------------------------------------------
Net cash used in investing activities                            (1,743,257)    (3,488,397)    (2,222,523)
----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash during the year                  (1,975,483)    (3,331,595)    (2,060,558)

Cash and short-term deposits -
 Beginning of year                                                4,863,254      8,194,849     10,255,407
----------------------------------------------------------------------------------------------------------
Cash and short-term deposits - End of year                     $  2,887,771   $  4,863,254   $  8,194,849
==========================================================================================================
</TABLE>

         See accompanying notes to the consolidated financial statements

<PAGE>
Page 56

================================================================================
INDO-PACIFIC ENERGY LTD.
Consolidated Statements of Cash Flows
- Supplemental Disclosure of Non-cash Financing and Investing Activities
(Expressed in United States Dollars)
================================================================================
<TABLE>
<CAPTION>
For the Years Ended December 31,                                     2000          1999         1998
----------------------------------------------------------------------------------------------------------
<S>                                                             <C>                    <C>            <C>
Purchase of Oil and Gas Properties from
Trans-Orient Petroleum Limited

Purchase of oil and gas properties                              $ (4,097,360)          -              -
==========================================================================================================

Gross overriding royalties issued                                          1
Marketable securities transferred                                    222,319           -              -
Investments transferred                                              670,000           -              -
Gain on investments transferred                                       70,000
Loan balance forgiven                                              1,062,211           -              -
Foreign exchange translation effect                                  (19,283)          -              -
Common stock issued as consideration for the
  purchase of oil and gas properties                               2,092,112           -              -
----------------------------------------------------------------------------------------------------------
                                                                $  4,097,360           -              -
==========================================================================================================
</TABLE>

================================================================================
INDO-PACIFIC ENERGY LTD.
Consolidated Schedules of General and Administrative Expenses
(Expressed in United States Dollars)
================================================================================
<TABLE>
<CAPTION>
For the Years Ended December 31,                                     2000          1999         1998
----------------------------------------------------------------------------------------------------------
<S>                                                             <C>            <C>            <C>
GENERAL AND ADMINISTRATIVE EXPENSES

Accounting and audit                                            $     44,611   $     46,189   $     43,576
Consulting fees (Note 8)                                              41,213         29,751         44,081
Corporate relations and development                                   95,385         46,775         57,938
Amortization                                                          60,575         72,380         53,096
Filing and transfer agency fees                                       16,997          4,836         11,413
Foreign exchange loss (gain)                                          95,563        (42,886)        14,771
Legal                                                                159,948         50,795        113,101
Office and miscellaneous                                             107,047        110,152        127,988
Printing                                                              40,026         67,243        109,453
Rent (Note 8)                                                         43,481         57,294         70,132
Telephone                                                             27,931         39,823         51,176
Travel and accommodation                                              50,588         52,530         54,470
Wages and benefits                                                   169,741        159,618         64,922
                                                                ------------------------------------------
Gross general and administrative expenses                            953,106        694,500        816,117

Recovery of general and administrative expenses                     (209,506)      (153,878)      (123,637)
                                                                ------------------------------------------
Net general and administrative expenses                         $    743,600   $    540,622   $    692,480
                                                                 =========================================
</TABLE>

         See accompanying notes to the consolidated financial statements

<PAGE>
Page 57

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 1 - NATURE OF OPERATIONS AND CONTINGENCIES

The Company was incorporated under the Company Act (British Columbia) and
continued its jurisdiction of incorporation to the Yukon Territory under the
Business Corporations Act (Yukon).

The Company is primarily engaged in the acquisition, exploration and development
of its oil and gas properties and, with the exception of PMP 38148, has yet to
determine whether its properties contain oil and gas reserves that are
economically recoverable.  The recoverability of the amounts capitalized for oil
and gas properties is dependent upon the completion of exploration work, the
discovery of oil and gas reserves in commercial quantities and the subsequent
development of such reserves.

The Company does not generate sufficient cash flow from operations to fund its
entire exploration and development activities and has therefore relied
principally upon the issuance of securities for financing.  Additionally, the
Company has periodically reduced its exposure in oil and gas properties by
farming out to other participants.  The Company intends to continue relying on
these measures to finance its exploration and development activities to the
extent such measures are available and obtainable under terms acceptable to the
Company. Accordingly, the Company's consolidated financial statements are
presented on a going concern basis.

Refer to Note 9


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a)  Accounting Principles and Use of Estimates

    These financial statements are prepared in conformity with Canadian
    generally accepted accounting principles and requires the Company's
    management to make informed judgements and estimates that affect the
    reported amounts of assets and liabilities and disclosures of contingent
    assets and liabilities at the date of the financial statements and the
    reported amounts of revenues and expenses for the year reported.  Actual
    results could differ from these estimates.

    Material differences between Canadian and United States generally accepted
    accounting principles which affect the Company are referred to in Note 15.

b)  Basis of Consolidation

    These consolidated financial statements include the accounts of Indo-Pacific
    Energy Ltd. and its wholly-owned subsidiaries, Indo Overseas Exploration
    Ltd., Indo-Pacific Energy Pty. Ltd., Indo-Pacific Energy (PNG) Limited,
    Source Rock Holdings Limited, Indo-Pacific Energy (NZ) Limited, Ngatoro
    Energy Limited, PEP 38716 Limited, Trans-Orient Petroleum (Aust) Pty
    Limited, ZOCA 96-16 Pty Limited and Trans-Orient Petroleum (PNG) Limited.
    All significant intercompany balances and transactions have been eliminated
    upon consolidation.

c)  Joint Operations

    The Company's exploration and development activities are conducted jointly
    with other companies and accordingly, these financial statements reflect
    only the Company's proportionate interest in these activities.

<PAGE>
Page 58

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

d)  Translation of Foreign Currencies

    The Company's foreign operations through its subsidiaries are of an
    integrated nature and accordingly, the remeasurement method of foreign
    currency translation is used for conversion into United States dollars.
    Monetary assets and liabilities are translated into United States dollars at
    the rates prevailing on the balance sheet date.  Other assets and
    liabilities are translated into United States dollars at the rates
    prevailing on the transaction dates.  Revenues and expenses arising from
    foreign currency transactions are translated into United States dollars at
    the average rate for the year.  Exchange gains and losses are recorded as
    income or expense in the year in which they occur.

e)  Financial Instruments

    Cash and short-term deposits, accounts receivable, due from related parties,
    accounts payable and accrued liabilities are carried at cost which
    approximates fair value due to the short-term maturity of these instruments.
    Loan receivable from related party is carried at cost, which approximates
    fair value as it bears interest at rates approximating current market rates.
    Marketable securities and investments are carried at fair value.

f)  Cash and Short-Term Deposits

    Cash and short-term deposits include government treasury bills and bankers'
    acceptances with original maturities of three months or less, together with
    accrued interest.

g)  Marketable Securities and Investments

    Marketable securities and investments are recorded at cost and are valued at
    the lower of cost or market value at each balance date.

h)  Property and Equipment

    Property and equipment consist of furniture and office equipment and are
    recorded at cost and amortized over their estimated useful lives on a
    declining-balance basis at annual rates of 10% to 20%.

i)  Oil and Gas Properties

    The Company follows the full cost method of accounting for oil and gas
    operations whereby all costs associated with the acquisition, exploration
    and development of oil and gas reserves are capitalized in cost centers on a
    country-by-country basis. Such costs include property acquisition costs,
    geological and geophysical studies, carrying charges on non-producing
    properties, costs of drilling both productive and non-productive wells, and
    overhead expenses directly related to these activities.


<PAGE>
Page 59

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

i)  Oil and Gas Properties (continued)

    Depletion is calculated for producing properties by using the unit-of-
    production method based on proved reserves, before royalties, as determined
    by management of the Company or independent consultants.  Sales or
    dispositions of oil and gas properties are credited to the respective cost
    centers and a gain or loss is recognized when all properties in a cost
    center have been disposed of, unless such sale or disposition significantly
    alters the relationship between capitalized costs and proved reserves of oil
    and gas attributable to the cost center.  Costs of abandoned oil and gas
    properties are accounted for as adjustments of capitalized costs and written
    off to expense.

    A ceiling test is applied to each cost center by comparing the net
    capitalized costs to the present value of the estimated future net revenues
    from production of proved reserves discounted by 10%, net of the effects of
    future costs to develop and produce the proved reserves, plus the costs of
    unproved properties net of impairment, and less the effects of income taxes.
    Any excess capitalized costs are written off to expense.  The calculation of
    future net revenues is based upon prices, costs and regulations in effect at
    each year end.

    Unproved properties are assessed for impairment on an annual basis by
    applying factors that rely on historical experience.  In general, the
    Company may write-off any unproved property under one or more of the
    following conditions:

    (i)   there are no firm plans for further drilling on the unproved property;
    (ii)  negative results were obtained from studies of the unproved property;
    (iii) negative results were obtained from studies conducted in the vicinity
          of the unproved property; or
    (iv)  the remaining term of the unproved property does not allow sufficient
          time for further studies or drilling.

j)  Income Taxes

    The Company accounts for income taxes under an asset and liability approach
    that requires the recognition of deferred tax assets and liabilities for the
    expected future tax consequences of events that have been recognized in the
    Company's financial statements or tax returns.  In estimating future tax
    consequences, all expected future events other than enactment of changes in
    the tax laws or rates are considered.

NOTE 3 - LOAN RECEIVABLE FROM RELATED PARTY

As at December 31, 2000 the Company was owed Nil (December 31, 1999:$1,062,211)
including interest of Nil (December 31, 1999: $18,051) by Trans-Orient Petroleum
Ltd. ("Trans-Orient") for payments relating to oil and gas exploration on behalf
of Trans-Orient.  This amount was unsecured with no fixed terms of repayment and
accrued interest on a monthly basis at the average three-month bankers'
acceptance rate plus 3%.  The loan was repaid as part of the consideration
provided to Trans-Orient for the transfer of properties detailed in Note 8.

Refer to Note 8

<PAGE>
Page 60

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 4 - MARKETABLE SECURITIES

Marketable securities comprised: Nil shares (December 31, 1999: 517,020 shares)
of Trans-Orient Petroleum Ltd. ("Trans-Orient") acquired at a cost of Nil
(December 31, 1999: $383,075) and recorded at an estimated market value of Nil
(December 31, 1999: $222,319).

The marketable securities were included as part of the consideration provided to
Trans-Orient for the transfer of properties detailed in Note 8.

Refer to Note 8


NOTE 5 - INVESTMENTS

Investments comprised: Nil shares (December 31, 1999: 1,800,000 shares) of AMG
Oil Ltd. ("AMG") acquired at a cost of Nil (December 31, 1999: $650,000) and Nil
shares (December 31, 1999: 600,000 shares) of Gondwana Energy, Ltd. acquired at
a cost of Nil (December 31, 1999: $20,000), recorded at estimated market values
of Nil (December 31, 1999: $720,000) and Nil (December 31, 1999: $20,000),
respectively.

As at December 31, 1999, the Company held an option to purchase a further
200,000 shares of AMG at a price of $0.50 per share expiring on December 31,
2000. The investments (including the options in AMG) were included as part of
the consideration provided to Trans-Orient Petroleum Ltd. for the transfer of
properties detailed in Note 8.

Refer to Note 8


NOTE 6 - PROPERTY AND EQUIPMENT

Property and equipment are comprised as follows:

                                                     2000               1999
                                                  ----------         ----------
Furniture and office equipment                    $  305,317         $  263,868

Accumulated amortization                            (180,482)          (119,907)
                                                  ----------         ----------

                                                  $  124,835         $  143,961
                                                  ==========         ==========

<PAGE>
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================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 7 - OIL AND GAS PROPERTIES

Oil and gas properties are comprised as follows:
<TABLE>
<CAPTION>
                                        Net Book         Acquisition of        Additions/           Depletion/       Net Book
                                        Value at        Properties from       (Recoveries)          Write Downs      Value at
                                       December 31,       Trans-Orient         During the           During the      December 31,
                                          1999           Petroleum Ltd            Year                  Year           2000
                                                            (Note 8)
                                     ----------------------------------------------------------------------------------------------
<S>                                  <C>                <C>                <C>                 <C>                  <C>
Proved:
New Zealand
   PMP 38148 - Ngatoro Oil Field     $      374,417     $         -        $        87,667     $      (112,332)     $       349,752
                                     ----------------------------------------------------------------------------------------------

Total Proved                                374,417               -                 87,667            (112,332)             349,752
                                     ----------------------------------------------------------------------------------------------

Unproved:
New Zealand
   PEP 38256 - Exploration                   46,590             50,153               1,609                -                  98,352
   PEP 38328 - Exploration                  721,729            774,183             408,848          (1,282,740)             622,020
   PEP 38330 - Exploration                  211,179               -                 39,893                -                 251,072
   PEP 38332 - Exploration                  238,412            120,898             477,559            (425,235)             411,634
   PEP 38335 - Exploration                   10,808            118,076              40,352                -                 169,236
   PEP 38339 - Exploration                   39,697             42,568              20,971            (103,236)                -
   PEP 38716 - Exploration                  412,323               -                 43,983                -                 456,306
   PEP 38720 - Exploration                  547,149            554,902              61,568                -               1,163,619
   PEP 38723 - Exploration                   22,427             22,910              45,176                -                  90,513
   PEP 38736 - Exploration                   28,428               -                122,716                -                 151,144
   New licenses                               2,702              3,242               8,130             (14,024)                  50
Australia
   AC/P 19 - Exploration                    290,106               -                105,888                -                 395,994
   AC/P 31 - Exploration                      9,489               -                   -                   -                   9,489
   AC/P 26 - Exploration                       -               144,084              96,867                -                 240,951
   ZOCA 96-16 - Exploration                    -               603,767              (4,822)           (357,509)             241,436
Papua New Guinea
   PPL 192 - Exploration                    528,504            250,506              93,651                -                 872,661
   PPL 215 - Exploration                    172,264            187,548              35,153                -                 394,965
   PPL 157- Exploration                        -             1,224,522              28,522            (535,821)             717,223
   PPL 213 - Exploration                       -                  -                  1,940              (1,940)                -
People's Republic of China
   Nanling-Wuwei Blocks                        -                  -                  5,420              (5,420)                -
Foreign Exchange Translation Effect            -                19,283             (19,283)               -                    -
                                     ----------------------------------------------------------------------------------------------

Total Unproved                            3,281,807          4,116,642           1,614,141          (2,725,925)           6,286,665
                                     ----------------------------------------------------------------------------------------------
                                     $    3,656,224     $    4,116,642     $     1,701,808     $    (2,838,257)     $     6,636,417
                                     ==============================================================================================
</TABLE>

<PAGE>
Page 62

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 7 - OIL AND GAS PROPERTIES (continued)

NEW ZEALAND

Unless otherwise indicated, petroleum exploration permits granted in New Zealand
provide for the exclusive right to explore for petroleum for an initial term of
five years, renewable for a further five years over one-half of the original
area.  The participants can apply for extensions or reductions of the committed
work programs for the permits under certain circumstances.  Any production
permits granted will be for a term of up to 40 years from the date of issue.
The New Zealand government has reserved a royalty of the greater of 5% of net
sales revenue or 20% of accounting profits from the sale of petroleum products.

a)  PMP 38148 Ngatoro Oil Field

    The Company has a 5% participating interest in Petroleum Mining Permit
    38148, which includes seven producing oil and/or gas wells in the Ngatoro
    Oil Field. The New Zealand government has reserved a royalty of the greater
    of 5% of net sales revenue or 20% of accounting profits from the sale of
    petroleum products amounting to $23,962 for the 2000 fiscal year (1999
    fiscal year: $15,248).

    At December 31, 2000, PMP 38148 is in good standing with respect to its work
    commitments and does not require the Company to incur minimum exploration
    expenditures for the 2001 fiscal year.

    Refer to Note 14

b)  PEP 38256

    The Company has a 20% participating interest in, and is the operator of,
    Petroleum Exploration Permit 38256 ("PEP 38256") which was granted on August
    25, 1997. One-half of the original area was relinquished on August 25, 2000
    in addition to the area which would normally be required to be relinquished
    upon renewal of PEP 38256.  The other participants of PEP 38256 are: AMG Oil
    Ltd. (52.5%), Orion New Zealand Ltd (10%), Durum Cons. Energy Corp (10%) and
    Magellan Petroleum Ltd (7.5%).

    By an agreement dated June 25, 1998, AMG Oil Ltd. ("AMG") acquired a right
    to earn up to an 80% participating interest in PEP 38256 from Trans-Orient
    Petroleum Ltd. ("Trans-Orient") and the Company.  In December 1998, AMG
    earned a 30% participating interest in PEP 38256 by funding all of the costs
    of acquiring, processing and interpreting 200 kilometers of seismic data.
    The Company received a 35% participating interest in the permit under the
    purchase from Trans-Orient detailed in Note 8.  AMG earned the right to an
    additional 50% participating interest by funding all of the costs of
    drilling two exploration wells, Ealing-1 and Arcadia-1, in October and
    November 2000.  AMG subsequently farmed out certain interests to Orion,
    Durum and Magellan upon their contributing to the costs of the two wells.

    The Company and the other participants have completed the work program
    required for the entire first five year term.

    At December 31, 2000, PEP 38256 is in good standing with respect to its work
    commitments and does not require the Company to incur minimum exploration
    expenditures for the 2001 fiscal year.

    Refer to Note 8
================================================================================

<PAGE>
Page 63

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 7 - OIL AND GAS PROPERTIES (continued)

c)  PEP 38328

    The Company has a 62.5% participating interest in, and is the operator of,
    Petroleum Exploration Permit 38328 ("PEP 38328") which was granted on June
    19, 1996.  The other participant of PEP 38328 is Origin Energy Resources
    Limited - formerly Boral Limited - (37.5%).  The Company received a 22.5%
    participating interest in the permit under the purchase from Trans-Orient
    detailed in Note 8.

    The Company and the other participant have completed the work program
    required for the first five years that included drilling the Kereru-1 and
    Whakatu-1 exploration wells.  PEP 38328 requires the participants to submit
    an acceptable work programme for the second five year term prior to June 19,
    2001, or surrender the permit.

    At December 31, 2000, PEP 38328 is in good standing with respect to its work
    commitments and does not require the Company to incur minimum exploration
    expenditures for the 2001 fiscal year.

    Refer to Note 8

d)  PEP 38330

    The Company has a 39.3% participating interest in, and is the operator of,
    Petroleum Exploration Permit 38330 ("PEP 38330") which was granted on July
    1, 1996.  The other participants of PEP 38330 are Pan Continental Petroleum
    N.L. (38.2%) and Origin Energy Resources Limited ("Origin") - formerly Boral
    Limited - (22.5%).

    In January 2000, Origin earned a 17.5% participating interest by funding the
    costs of acquiring, processing and interpreting approximately 45 km of
    seismic in the permit.  By agreements effective December 31, 2000, Norwest
    Energy N.L. assigned its interest to Pan Continental Petroleum N.L., and
    Mosaic Oil N.L. assigned its interest to the Company and the remaining
    participants for no consideration.

    The Company and the other participants have completed the work program
    required for the first four and half years.  PEP 38330 requires the
    participants to complete the remaining work program to drill an exploration
    well by July 1, 2001, or surrender the permit.

    At December 31, 2000, PEP 38330 is in good standing with respect to its work
    commitments.  The Company's share of work commitments for the 2001 fiscal
    year requires an estimated $150,000 of exploration expenditures to be
    incurred.

    Refer to Note 14

e)  PEP 38332

    The Company has a 62.5% participating interest in, and is the operator of,
    Petroleum Exploration Permit 38332 ("PEP 38332") which was granted on June
    24, 1997.  The other participant of PEP 38332 is Origin Energy Resources
    Limited - formerly Boral Limited - (37.5%).  The Company received a 20%
    participating interest in the permit under the purchase from Trans-Orient
    detailed in Note 8.

================================================================================

<PAGE>
Page 64

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 7 - OIL AND GAS PROPERTIES (continued)

e)  PEP 38332 (continued)

    The Company and the other participant have completed the work program
    required for the first five year term.

    At December 31, 2000, PEP 38332 is in good standing with respect to its work
    commitments and does not require the Company to incur minimum exploration
    expenditures for the 2001 fiscal year.

    Refer to Note 8

f)  PEP 38335

    The Company has a 25% participating interest in Petroleum Exploration Permit
    38335 ("PEP 38335") which was granted on November 29, 1998.  The other
    participants of PEP 38335 are Westech Energy Corporation (35%), as the
    operator, Orion New Zealand Ltd (35%) and Everest Energy Inc. (5%).  The
    Company received a 15% participating interest in the permit under the
    purchase from Trans-Orient detailed in Note 8.

    The Company and the other participants have completed the work program for
    the first year including acquiring, processing and interpreting 20
    kilometers of seismic data.  The Company and the other participants are also
    required to complete the work program originally due by November 29, 2000
    and extended to March 29, 2001 to drill one exploration well.  Additionally,
    PEP 38335 requires the participants to complete the remaining work program
    that includes the following:

    (i)    prior to March 29, 2001, either commit to complete the next stage of
           the work program detailed below in (ii) or surrender the permit; and
    (ii)   prior to November 29, 2001, evaluate the results of the exploration
           well drilled during the second year and either commit to a
           satisfactory work program for the remainder of the permit term or
           surrender the permit.

    At December 31, 2000, PEP 38335 is in good standing with respect to its work
    commitments.  The Company's share of work commitments for the 2001 fiscal
    year requires an estimated $440,000 of exploration expenditures to be
    incurred.

    Refer to Note 8

g)  PEP 38339

    The Company has a 100% participating interest in, and is the operator of,
    Petroleum Exploration Permit 38339 ("PEP 38339") which was granted on
    November 26, 1998. The Company received a 50% participating interest in the
    permit under the purchase from Trans-Orient detailed in Note 8.

    The Company has completed the work program required to February 26, 2000.

================================================================================

<PAGE>
Page 65

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 7 - OIL AND GAS PROPERTIES (continued)

g)  PEP 38339 (continued)

    As at December 31, 2000, the Company decided to relinquish PEP 38339 prior
    to incurring any further significant expenditures.  Accordingly the Company
    has written off all costs associated with the permit in these financial
    statements and no further expenditure will be incurred.

    Refer to Note 8

h)  PEP 38716

    The Company has a 23.8% participating interest in Petroleum Exploration
    Permit 38716 ("PEP 38716") which was granted on January 30, 1996.  The
    other participants of PEP 38716 are Marabella Enterprises Ltd. (29.6%), as
    the operator, Australian Worldwide Exploration N.L. (25%), Antrim Oil and
    Gas Limited (7.5%), Swift Energy International Inc. (7.5%) and Euro-Pacific
    Energy Pty. Ltd. (6.6%).

    In December 1999, Durum Cons. Energy Corp. relinquished its 4% participating
    interest in PEP 38716 in favor of the Company for no consideration.

    By an agreement effective July 30, 1998 with Antrim Oil and Gas Limited
    ("Antrim"), the Company and one other participant agreed to assign a 15%
    participating interest in PEP 38716 to Antrim for a total amount of
    $450,000.  The Company received $150,000 for assigning a 5% participating
    interest in PEP 38716 to Antrim.

    The Company and the other participants have completed the work program
    required to January 30, 2001 that included drilling the Huinga-1 exploration
    well.

    A work program has been submitted for approval for the second five year term
    of PEP 38716 from January 30, 2001 over 50% of the original area.

    At December 31, 2000, PEP 38716 is in good standing with respect to its work
    commitments and does not require the Company to incur minimum exploration
    expenditures for the 2001 fiscal year.

    Refer to Note 8

i)  PEP 38720

    The Company has a 100% participating interest in, and is the operator of,
    Petroleum Exploration Permit 38720 ("PEP 38720") which was granted on
    September 2, 1996.  The Company received a 50% participating interest in the
    permit under the purchase from Trans-Orient detailed in Note 8.

    The Company has completed the work program required for the first four years
    that included drilling the Clematis-1 exploration well.  A work program has
    been submitted for approval for the remaining term of PEP 38720 which
    expires on September 2, 2001 unless renewed.

    At December 31, 2000, PEP 38720 is in good standing with respect to its work
    commitments and does not require the Company to incur minimum exploration
    expenditures for the 2001 fiscal year.

    Refer to Note 8

================================================================================

<PAGE>
Page 66

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 7 - OIL AND GAS PROPERTIES (continued)

j)  PEP 38723

    The Company has an 80% participating interest in, and is the operator of,
    Petroleum Exploration Permit 38723 ("PEP 38723") which was granted on
    October 30, 1997.  The other participant of PEP 38723 is Gondwana Energy,
    Ltd. (20%). The Company received a 40% participating interest in the permit
    under the purchase from Trans-Orient detailed in Note 8.

    The Company and the other participant have completed the work program
    required to April 30, 2000, including acquiring, processing and interpreting
    eight kilometers of seismic data.  PEP 38723 requires the participants to
    complete the remaining work program that includes drilling an exploration
    well by October 30, 2000, extended to January 31, 2001 or surrender the
    permit.

    At December 31, 2000, PEP 38723 is in good standing with respect to its work
    commitments.  The Company's share of work commitments for the 2001 fiscal
    year requires an estimated $555,000 of exploration expenditures to be
    incurred.  These expenditures will be fully met by Texas Petroleum
    Investment Company ("TPIC"), under the terms of a farmin agreement,
    outlined in Note 14.

    Refer to Notes 8 and 14

k)  PEP 38736

    The Company has a 100% participating interest in Petroleum Exploration
    Permit 38736 ("PEP 38736") which was granted on July 14, 1999.  The Company
    received a 50% participating interest in the permit under the purchase from
    Trans-Orient detailed in Note 8.

    The Company has completed the work program required to January 14, 2002,
    including acquiring, processing and interpreting eight kilometers of seismic
    data.  PEP 38736 requires the Company to complete a work program that
    includes the following:

    (i)    prior to January 14, 2002, either commit to complete the next stage
           of the work program detailed below in (ii) or surrender the permit;
           and
    (ii)   prior to July 14, 2002, drill one exploration well and either commit
           to a satisfactory work program for the remainder of the permit term
           or surrender the permit.

    At December 31, 2000, PEP 38736 is in good standing with respect to its work
    commitments and does not require the Company to incur minimum exploration
    expenditures for the 2001 fiscal year.

AUSTRALIA

Unless otherwise indicated, offshore exploration permits granted in Australia
provide for the exclusive right to explore for petroleum for an initial term of
six years, renewable for an unlimited number of five-year terms over one-half of
the remaining area at each renewal.  The participants can apply for extensions
or reductions of the committed work programs for the permits under certain
circumstances.  Any production permits granted will be for a term of 21 years
from the date of issue, renewable for a further 21 years. In addition to general
Australian taxation provisions, most offshore permits, including all of the
Company's Australian permits, are subject to Petroleum Resource Rent Taxation at
the rate of 40% on a project's net income after deduction of allowable project
and exploration expenditures, with undeducted exploration

================================================================================

<PAGE>
Page 67

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 7 - OIL AND GAS PROPERTIES (continued)

expenditures compounded forward at the Long-term Bank Rate ("LTBR") plus 15% and
project expenditures at LTBR plus 5%.

l)  AC/P19

    The Company has a 65% participating interest in, and is the operator of,
    Ashmore-Cartier Permit 19 ("AC/P19") which was granted on May 30, 1997.  The
    other participant of AC/P19 is Mosaic Oil N.L. (35%).  AC/P19 is subject to
    a maximum 5% carried interest to the original participants, convertible to
    an equivalent participating interest upon commencement of production through
    the reimbursement of past costs payable out of 50% of net production
    revenue.

    The Company and the other participant have completed the work program
    required for the first three years.  AC/P19 requires the participants to
    complete the remaining work program that includes the following:
    (i)    prior to May 30, 2001, acquire, process and interpret additional
           seismic data;
    (ii)   prior to May 30, 2002, drill one exploration well; and
    (iii)  prior to May 30, 2003, reinterpret and evaluate results.

    The participants have the right to withdraw from AC/P19 at the end of each
    year's work program starting in the third year.

    At December 31, 2000, AC/P19 is in good standing with respect to its work
    commitments.  The Company's share of work commitments for the 2001 fiscal
    year requires an estimated $50,000 of exploration expenditures to be
    incurred.

m)  AC/P31

    The Company acquired a 65% participating interest in, and is the operator
    of, Ashmore-Cartier Permit 31 ("AC/P31") which was granted on September 12,
    1999.  The other participant of AC/P31 is Mosaic Oil N.L. (35%).

    The Company and the other participant have completed the work program
    required for the first year.  AC/P31 requires the participants to complete
    the remaining work program that includes the following:
    (i)    prior to September 12, 2001, reprocess 30 kilometers of seismic data;
    (ii)   prior to September 12, 2002, acquire, process and interpret 20
           kilometers of seismic data;
    (iii)  prior to September 12, 2003, acquire, process and interpret 20
           kilometers of seismic data;
    (iv)   prior to September 12, 2004, reinterpret and evaluate seismic data;
           and
    (v)    prior to September 12, 2005, drill one exploration well.

    The participants have the right to withdraw from AC/P31 at the end of each
    year's work program starting in the third year.

    At December 31, 2000, AC/P31 is in good standing with respect to its work
    commitments.  The Company's share of work commitments for the 2001 fiscal
    year requires an estimated $25,000 of exploration expenditures to be
    incurred.

================================================================================

<PAGE>
Page 68

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 7 - OIL AND GAS PROPERTIES (continued)

n)  AC/P 26

    The Company received a 35% participating interest in Ashmore-Cartier Permit
    26 ("AC/P26"), which commenced on February 26, 1998, under the purchase from
    Trans-Orient detailed in Note 8.  The other participants in AC/P26 are
    Mosiac Oil N.L., as operator (35%) and West Oil N.L. (30%).  AC/P26 is
    subject to a maximum 5% carried interest to the original participants,
    convertible to an equivalent participating interest upon commencement of
    production through the reimbursement of past costs payable out of 50% of net
    production revenue.

    The Company and the other participants have completed the work program
    required for the first two years.  The remaining work program requires the
    participants to complete the following:
    (i)    prior to February 25, 2001, drill one exploration well;
    (ii)   prior to February 25, 2002, complete a work program which includes
           acquiring the balance of 3D seismic data from the Onnia Survey or
           acquire 100 kilometers of new 3D seismic data, or surrender the
           permit;
    (iii)  prior to February 25, 2003, complete a work program which includes
           interpreting seismic data to define prospects, or surrender the
           permit; and
    (iv)   prior to February 25, 2004, drill a second exploration well, or
           surrender the permit.

    At December 31, 2000, AC/P26 is in good standing with respect to its work
    commitments.  The Company's share of the committed work program for the 2001
    fiscal year requires an estimated $1,445,000 of exploration expenditures to
    be incurred.

    Refer to Note 8

o)  ZOCA 96-16

    The Company received a 10% participating interest in the Zone of Cooperation
    Area 96-16 ("ZOCA 96-16") which commenced on November 14, 1996, under the
    purchase from Trans-Orient detailed in Note 8.  ZOCA 96-16 grants the
    exclusive right to explore for petroleum for an initial term of six years,
    renewable for a further four years.  The participants have relinquished 25%
    of the original permit area at the end of the third year and are required to
    relinquish a further 25% of the original permit area at the end of the sixth
    year, with the remaining area relinquished in its entirety by the end of the
    tenth year.  ZOCA 96-16 is subject to an annual contract service fee of
    US$125,000 and production sharing with the Australia-Indonesia Joint
    Authority.  For the first five years of production, the Joint Authority is
    entitled to 50% to 70% of the initial 10% of gross production, and of the
    initial 20% of gross production for each year thereafter.  Any excess
    production, after deduction of allowable operating costs and investment
    credits of 127% of exploration expenditures, is shared with the Joint
    Authority at rates of 50% to 70%.  In addition, any taxable income from the
    area is also subject to a combined tax regime, with an effective corporate
    tax rate of 42%.  The other participants in ZOCA 96-16 are Phillips
    Petroleum Ltd (66%), as operator, Norwest Energy N.L., (14%) and West Oil
    N.L. (10%).

    The Company and its co-participants have completed the work program required
    for the four years.  The requirements of the remaining work program are as
    follows:

================================================================================

<PAGE>
Page 69

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 7 - OIL AND GAS PROPERTIES (continued)

o)  ZOCA 96-16 (continued)

    (i)      prior to November 14, 2001, complete a work program which includes
             seismic data review, or surrender the permit;
    (ii)     prior to November 14, 2002, complete a work program which includes
             seismic data review, or surrender the permit.

    At December 31, 2000, ZOCA 96-16 is in good standing with respect to its
    work commitments. The Company's share of the committed work program for the
    2001 fiscal year requires an estimated $15,000 of exploration expenditures
    to be incurred.

    Refer to Note 8

PAPUA NEW GUINEA

Petroleum prospecting licenses granted in Papua New Guinea provide for the
exclusive right to explore for petroleum for an initial term of six years,
renewable for a further five years over one-half of the original area, and the
right to enter into a Petroleum Agreement upon a discovery. The Petroleum
Agreement provides the right to produce any oil and gas discovered for a period
of up to 30 years from discovery, subject to a maximum 22.5% participating
interest that can be acquired by the Government of Papua New Guinea and a 2%
participating interest that can be acquired by local landowners. The
participants can apply for extensions or reductions of the committed work
programs for the licenses under certain circumstances.

p)  PPL 192

    The Company has a 60% participating interest in, and is the operator of,
    Petroleum Prospecting License No. 192 ("PPL 192") which was granted on
    January 28, 1997.  The other participants of PPL 192 are Durum Cons. Energy
    Corp. (20%) and Mosaic Oil N.L. (20%).

    The Company and the other participants have completed the work program
    required for the first three years. PPL 192 requires the participants to
    complete the remaining work program that includes the following:
    (i)    prior to January 28, 2001, drill one exploration well. In addition,
           the participants must commit to a minimum work program prior to
           November 28, 2000 for the fifth and sixth years, or surrender the
           permit;
    (ii)   prior to January 28, 2002, acquire, process and interpret 400
           kilometers of seismic data or equivalent 3D seismic data; and
    (iii)  prior to January 28, 2003, drill a second exploration well.

    At December 31, 2000, PPL 192 is in good standing with respect to its work
    commitments. The Company's share of work commitments for the 2001 fiscal
    year requires an estimated $3,000,000 of exploration expenditures to be
    incurred.

    Refer to Notes 8 and 14

================================================================================

<PAGE>
Page 70

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 7 - OIL AND GAS PROPERTIES (continued)

q)  PPL 215

    The Company acquired an 80% participating interest in, and is the operator
    of, Petroleum Prospecting License No. 215 ("PPL 215") which was granted on
    May 6, 1999. The other participant of PPL 215 is Mosaic Oil N.L. (20%).

    PPL 215 requires the participants to complete a work program that includes
    the following:

    (i)    prior to May 7, 2001, reprocess 200 kilometers of seismic data.  In
           addition, the participants must commit to a minimum work program
           prior to March 7, 2001 for the third and fourth years, or surrender
           the permit;
    (ii)   prior to May 7, 2003, acquire, process and interpret 100 kilometers
           of seismic data. In addition, the participants must commit to a
           minimum work program prior to March 7, 2003 for the fifth and sixth
           years, or surrender the permit; and
    (iii)  prior to May 7, 2005, drill one exploration well.

    At December 31, 2000, PPL 215 is in good standing with respect to its work
    and does not require the Company to incur minimum exploration expenditures
    for the 2001 fiscal year.

    Refer to Note 8

r)  PPL 157

    The Company acquired a 7.5% participating interest in Petroleum Prospecting
    License No. 157 ("PPL 157") which commenced on June 2, 1993, by purchasing
    Trans-Orient Petroleum (PNG) Ltd in the transaction detailed in Note 8.  The
    other participants in PPL 157 are Santos Ltd. (35.25%), as the operator,
    Omega Oil N.L. (15%), Carnarvon Petroleum N.L. (15%), Bligh Oil & Minerals
    N.L. (7.25%) and SPI Ltd. (20%).

    By a farmout agreement dated August 3, 1998, Trans-Orient acquired its 7.5%
    participating interest in PPL 157 from Santos Ltd. by funding 10% of the
    costs of drilling the Stanley-1 exploration well.

    The Company and the other participants made applications for an extension
    license over 50% of the original permit area of PPL 157 and two retention
    licenses over the Ketu/Elevala and Stanley prospects.  The two retention
    licenses were granted on February 15, 2000 and September 27, 2000
    respectively.

    At December 31, 2000, PPL 157 is in good standing with respect to its work
    commitments and does not require the Company to incur minimum exploration
    expenditures for the 2001 fiscal year.

    Refer to Note 8

================================================================================

<PAGE>
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================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 7 - OIL AND GAS PROPERTIES (continued)

s)  PPL 213

    The Company acquired a 5% participating interest in Petroleum Prospecting
    License No. 213 ("PPL 213") which commenced on February 11, 1999, by
    purchasing Trans-Orient Petroleum (PNG) Ltd in the transaction detailed in
    Note 8.  The other participants in PPL 213 are Santos Ltd. (35%), as the
    operator, Woodside Petroleum Ltd. (25%), First Australian Resources N.L.
    (8.67%), Bligh Oil & Minerals N.L. (7.5%), Sun Resources N.L. (6.46%), Lakes
    Oil N.L. (5%), Victoria Petroleum N.L. (4.91%) and Kestrel Energy, Inc.
    (2.46%).

    By a farmout agreement dated January 11, 1999, Trans-Orient acquired a 5%
    participating interest in PPL 213 by funding 8.45% of the costs of drilling
    the Tumuli-1 exploration well to a maximum of $929,500.

    The Company and the other participants have completed the work program
    required for the first two years by drilling the Tumuli-1 exploration well
    and completing various technical studies.

    All participants have agreed to relinquish PPL 213, and an application, by
    those participants, has been submitted for a new license covering an area
    including part of the PPL 213 area. Accordingly the Company has written off
    all the costs associated with the license and no further expenditures are
    required under the license.

    Refer to Note 8


PEOPLE'S REPUBLIC OF CHINA

t)  Nanling-Wuwei Blocks

    By a Joint Study Agreement dated March 18, 1996 with China National Oil and
    Gas Exploration and Development Corp. ("CNODC"), the Company acquired a 50%
    participating interest to study the Nanling and Wuwei Blocks ("the Blocks").
    The other participant in the Blocks was Moondance Energy Limited (50%).

    The Company had an exclusive right to obtain partners to enter into a
    Production Sharing Contract which expired in July 1999. Accordingly, the
    Company has written off the Blocks in its entirety.

================================================================================

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INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 8 - RELATED PARTY TRANSACTIONS

a)  Purchase of Oil & Gas Properties from Trans-Orient Petroleum Limited

    By a letter of intent dated January 30, 2000 and under an effective date of
    January 1, 2000 between Trans-Orient Petroleum Ltd. ("Trans-Orient") and the
    Company, the Company agreed to acquire all of Trans-Orient's onshore and
    offshore oil and gas interests located in New Zealand, Australia and Papua
    New Guinea at a purchase price of $4,097,360, representing an aggregate 20%
    premium of the total book value of the interests. At the request of the
    boards of directors of both Trans-Orient and the Company, an independent
    party reviewed the proposed transaction and determined that the transaction
    was fair to both companies.  As part of the transaction, the loan receivable
    from Trans-Orient to the Company was offset against the purchase price.

    The Company issued 4,184,224 units of the Company to Trans-Orient at a
    deemed value of $0.50 per unit for a total value of $2,092,112.  Each unit
    consists of one common share of the Company, one Series A warrant and one
    Series B warrant.  Each Series A warrant is exercisable to purchase one
    common share at a price of $0.50 during the first year and thereafter at a
    price of $0.75 during the second year.  Each Series B warrant will, upon a
    commercial discovery on any one of the oil and gas interests in the
    transaction, replace each Series A warrant exercised and is exercisable to
    purchase one common share at a price of $1.50 until expiry during the first
    two years.  Additionally, the Company provided Trans-Orient with anti-
    dilution protection for a period of one year from the closing date (March
    31, 2000) if the aggregate amount raised was greater than $500,000 and the
    average price is less than $0.50 per share or unit.

    The Company provided Trans-Orient additional consideration for the
    transaction, as follows:

    (i)    1,800,000 common shares of AMG Oil Ltd. ("AMG Oil") acquired at a
           cost of $650,000 and valued at $720,000 for the transaction,
           including the option to purchase a further 200,000 shares of AMG Oil
           at a price of $0.50 per share expiring on December 31, 2000;
    (ii)   600,000 shares of Gondwana Energy, Ltd. acquired at a cost of and
           valued at $20,000 for the transaction;
    (iii)  517,020 shares of Trans-Orient Petroleum Ltd. acquired at a cost of
           $383,075 and valued at $222,319 for the transaction; and
    (iv)   gross overriding royalties, valued at $1 for the transaction, on all
           oil and gas interests purchased from Trans-Orient ranging from 1% to
           5%.

At an extraordinary general meeting held on May 23, 2000, this transaction was
approved by the shareholders of Trans-Orient and completed.

The Company purchased the following Trans-Orient subsidiaries as part of the
transaction: Trans-Orient Petroleum (PNG) Limited, Trans-Orient Petroleum (Aust)
Pty Limited and its wholly-owned subsidiary ZOCA 96-16 Pty Limited.

================================================================================

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================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 8 - RELATED PARTY TRANSACTIONS (continued)

The following is a summary of the oil and gas interests purchased in the
transaction:

                                    Interest            Agreed       GORR on
                                  Purchased at          Transfer     Interest
Permit                              January 1,         Value of       Due to
Description                           2000            Properties    Trans-Orient
                      ----------------------------------------------------------
Unproved:
New Zealand
   PEP 38256                           35%          $      50,153     2%
   PEP 38328                           22.5%              774,183     2%(A)/(B)
   PEP 38332                           20%                120,898     2%
   PEP 38335                           15%                118,076     2%
   PEP 38339                           50%                 42,568     2%
   PEP 38720                           50%                554,902     2%
   PEP 38723                           40%                 22,910     2%
   New Ventures                                             3,242
Australia
   AC/P 26                             30%                144,084     1%
   ZOCA 96-16                          10%                603,767     1%
Papua New Guinea
   PPL 157                              7.5%            1,224,522     1%
   PPL 192                             20%                250,506     1%
   PPL 213                              5%                   -        1%
   PPL 215                             40%                187,548     1%
                                                    -------------
                                                    $   4,097,359
                                                    =============

Notes:

    (A)  A 2% GORR applies over PEP 38328 unless a discovery is made on a well
         drilled within one kilometer of the Whakatu-1 well in which case a 5%
         GORR would apply.
    (B)  The value of the GORR of $1 has been applied to PEP38328.

b)  Prepaid Expenses

    The Company had in its prepaid expenses Nil (December 31, 1999: $41,571)
    relating to general and administrative expenses to DLJ Management Corp., a
    wholly-owned subsidiary of a company having directors, officers and/or
    principal shareholders in common with the Company.

c)  Loan Receivable from Related Party

    The Company was owed Nil  (December 31, 1999: $1,062,211) by Trans-Orient
    Petroleum Ltd., a company having directors, officers and/or principal
    shareholders in common with the Company.

================================================================================

<PAGE>
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================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 8 - RELATED PARTY TRANSACTIONS (continued)

    Refer to Note 3 and 8 a)

d)  Marketable Securities and Investments

    Marketable securities and investments held at December 31, 1999 consisted
    entirely of common shares of companies having directors, officers and/or
    principal shareholders in common with the Company.  These companies are
    Trans-Orient Petroleum Limited, AMG Oil Ltd and Gondwana Energy, Ltd.

    Refer to Notes 4 and 5

e)  Due from Related Parties

    At December 31, 2000, the Company is owed $79,838 (December 31, 1999:
    $62,667) by certain public companies with directors, officers and/or
    principal shareholders in common with the Company. This amount is unsecured,
    non-interest bearing and has no fixed terms of repayment.

f)  Oil and Gas Properties

    Certain participants of oil and gas properties have directors, officers and/
    or principal shareholders in common with the Company.  These participants
    are AMG Oil Ltd., Durum Cons. Energy Corp. and Gondwana Energy, Ltd.

    Refer to Note 7

g)  Other

    During the 2000 fiscal year, the Company incurred $81,275 (1999 fiscal year
    - $60,899, 1998 fiscal year - $57,123) in consulting fees and $23,439 (1999
    fiscal year - $27,177, 1998 fiscal year - $19,480) in rent to the President
    of the Company.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

a)  Work Commitments

    The Company participates in oil and gas exploration and development joint
    operations with third and related parties and is contractually committed
    under agreements to complete certain exploration programs.  The Company's
    management estimates that the total commitments under various agreements is
    approximately $5,680,000 of which an unrelated third party participant which
    has farmed into PEP 38723 is to contribute approximately $555,000.

b)  Political Risks

    Papua New Guinea is subject to political uncertainty and instability and the
    Company faces a number of risks and uncertainties which may adversely impact
    on its ability to pursue its exploration and development activities.

================================================================================

<PAGE>
Page 75

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 9 - COMMITMENTS AND CONTINGENCIES (continued)

c)  Environmental Laws and Regulations

    The Company is not aware of any events of noncompliance in its operations
    with any environmental laws or regulations nor of any potentially material
    contingencies related to environmental issues.  However, the Company cannot
    predict whether any new or amended environmental laws or regulations
    introduced in the future will have a material adverse effect on the future
    business of the Company.


NOTE 10 - COMMON STOCK

a)  Authorized and Issued Share Capital

    The authorized share capital of the Company is 100,000,000 shares of common
    stock without par value.

                                                      Number
    Issued and fully paid:                           of Shares       Amount
                                                    -----------    -------------
    Balance at December 31, 1998                     28,262,398    $  17,386,253

    Issued during the 1999 fiscal year                     -                -
                                                    -----------    -------------

    Balance at December 31, 1999                     28,262,398    $  17,386,253

    Issued during the 2000 fiscal year:
    Issued pursuant to property purchase
      from Trans-Orient                               4,184,224        2,092,112
                                                    -----------    -------------

    Balance at December 31, 2000                     32,446,622    $  19,478,365
                                                    ===========    =============

    Refer to Note 15

b)  Incentive Stock Options

    The following stock options are outstanding at December 31, 2000:

                      Number            Price           Expiry
                   of Shares          per Share          Date
                  ------------      -------------   ---------------
                   2,000,000          $0.60          July 6, 2005
                   3,668,000          $0.50          July 6, 2005
                  ------------
                   5,668,000
                  ============

================================================================================

<PAGE>
Page 76

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 10 - COMMON STOCK (continued)

    During the 2000 fiscal year, previously granted stock options to purchase
    1,950,000 shares at a price of $0.90 per share expired without exercise.
    During the 2000 fiscal year, the Company granted stock options to purchase
    3,668,000 shares exercisable at a price of $0.50 per share until July 6,
    2005, which vest over a period of 4 years, and stock options to purchase
    2,000,000 shares exercisable at a price of $0.60 per share until July 6,
    2005, which are non-vesting.

    During the 1999 fiscal year, previously granted stock options to purchase
    50,000 shares at a price of $2.50 per share, 6,000 shares at a price of
    $3.00 per share and 10,000 shares at a price of $3.125 per share expired
    without exercise.  No stock options were granted or amended by the Company
    during the 1999 fiscal year.

c)  Share Purchase Warrants

    The following share purchase warrants to purchase shares of the Company are
    outstanding at December 31, 2000:

                      Number            Price           Expiry
                   of Shares          per Share          Date
                  ------------      -------------   ---------------
                  Warrants:
                     950,000          $0.40          May 27, 2001
                   1,000,000          $0.40          July 3, 2001
            Series A Warrants:
                   4,184,224          $0.50 (1)      March 29, 2001
                                      $0.75 (1)      March 29, 2002
                  ------------
                   6,134,224
                  ============

(1) Upon a commercial discovery in one of the properties received in the
    purchase from Trans-Orient Petroleum Limited, detailed in Note 8, for each
    Series A warrant exercised a Series B warrant will be issued exercisable at
    a price of $1.50 per share for a period of one year from the issuance date,
    but no later than March 29, 2003.

During the 2000 fiscal year, previously issued share purchase warrants to
purchase 950,000 shares exercisable at a price of $0.90 per share until May 27,
2000 were amended to 950,000 shares exercisable at a price of $0.40 per share
until May 27, 2001.  Additionally, previously issued share purchase warrants to
purchase 1,000,000 shares exercisable at a price of $0.90 per share until July
3, 2000 were amended to 1,000,000 shares exercisable at a price of $0.40 per
share until July 3, 2001.  During the 2000 fiscal year the Company issued Series
A share purchase warrants to purchase 4,184,224 shares exercisable at a price of
$0.50 per share until March 29, 2001, and thereafter at a price of $0.75 per
share until March 29, 2002, pursuant to the asset purchase from Trans-Orient
Petroleum Limited detailed in Note 8.

================================================================================

<PAGE>
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================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 10 - COMMON STOCK (continued)

    During the 1999 fiscal year, previously issued share purchase warrants to
    purchase 950,000 shares exercisable at a price of Cdn$3.485 per share until
    May 27, 1999 were amended to 950,000 shares exercisable at a price of $0.90
    per share until May 27, 2000.  Additionally, previously issued share
    purchase warrants to purchase 1,000,000 shares exercisable at a price of
    $2.00 per share until July 3, 1999 and thereafter at a price of $2.10 per
    share until July 3, 2000 were amended to 1,000,000 shares exercisable at a
    price of $0.90 per share until July 3, 2000.

d)  Escrow Shares

    During the 1998 fiscal year, 1,406,250 shares at a price of Cdn$0.00333 per
    share, subject to escrow restrictions, were cancelled.  To replace these
    cancelled escrow shares, 1,406,250 shares at a price of Cdn$0.01 per share
    were issued by private placements.


NOTE 11 - LOSS PER SHARE

The following is a reconciliation of the numerators and denominators of the
basic and diluted loss per share calculations for the 2000, 1999 and 1998 fiscal
years:

                                        2000            1999            1998
                                    -----------     -----------     -----------

Numerator, net loss for the year    $(2,871,035)    $(1,181,258)    $(1,008,688)
                                    -----------     -----------     -----------

Denominator:
Weighted-average number of shares    30,800,370      28,262,398      28,262,398
                                    -----------     -----------     -----------

Basic and diluted loss per share    $     (0.09)    $     (0.04)    $     (0.04)
                                    ===========     ===========     ===========

Due to net losses incurred for the 2000, 1999 and 1998 fiscal years, stock
options and share purchase warrants outstanding were not included in the
computation of diluted loss per share as the inclusion of such securities would
be antidilutive.


NOTE 12 - INCOME TAXES

There are no income taxes payable for the 2000 and 1999 fiscal years.  At
December 31, 2000, the Company has approximately Cdn$1.63 million (December 31,
1999 - Cdn$1.61 million) of resource and other unused tax pools to offset future
taxable income derived in Canada.  Additionally, the Company has non-capital
losses of approximately Cdn$1.55 million (December 31, 1999 - Cdn$1.26 million)
available for future deductions from taxable income derived in Canada, which
expire as follows:

================================================================================

<PAGE>
Page 78

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 12 - INCOME TAXES (continued)

                              2000     Cdn$    10,071
                              2001             52,731
                              2002            251,664
                              2003            662,559
                              2004               -
                              2005            153,875
                              2006            131,714
                              2007            286,535
                                   ------------------
                                       Cdn $1,549,149
                                   ==================

Significant components of the Company's deferred tax assets are comprised of the
following at December 31, 2000 calculated at 44.12% (December 31, 1999: 44.12%):

    December 31,                                        2000          1999
    ----------------------------------------------------------------------------

    Resource and other unused tax pools           $     719,454   $     711,601
    Net operating loss carry-forwards                   683,485         557,065
                                                  -------------   -------------

                                                      1,402,939       1,268,666
    Valuation allowance                              (1,402,939)     (1,268,666)
                                                  -------------   -------------

                                                  $      -        $         -
                                                  =============   =============

A valuation allowance has been established, and accordingly, no benefit has been
recognized for the Company's net operating losses and deferred tax assets.  The
Company believes that, based on a number of factors, the available objective
evidence creates sufficient uncertainty regarding the realizability of the
deferred tax assets such that a full valuation allowance has been recorded.
These factors include the Company's current history of net losses and the
expected near-term future losses.  The Company will continue to assess the
realizability of the deferred tax assets based on actual and forecasted
operating results.

The Company also has losses and deductions of approximately NZ$19.82 million
(December 31, 1999: NZ$9.79 million) available to offset future taxable income
derived in New Zealand, Australia and Papua New Guinea.


NOTE 13 - COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform to the current
year's presentation.


================================================================================

<PAGE>
Page 79

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 14 - SUBSEQUENT EVENTS

a)  PMP 38148

    In February 2001 the Company drilled the Goldie-1 exploration well in PMP
    38148, as a sole risk operation. The Company funded 100% of the costs of the
    well and will receive 100% of the revenues from the well, subject to a buy
    back option available to the other participants.  The other participants are
    entitled to "buy back" into their interest share of revenues by either:
    (i)    paying the Company their share of the sole risk well costs up front
           and receipt by the Company of revenues equal to 6 times the cost of
           the well; or
    (ii)   receipt by the Company of revenues equal to 15 times the cost of the
           well.

    The Goldie-1 well was completed and put onto production test in March 2001,
    and at March 22, 2001 was producing at a rate of approximately 580 barrels
    of oil per day.  The Company is entitled to the entire revenue from the sale
    of the oil from the well.

b)  PEP 38330

    Mosaic Oil NL withdrew from PEP38330 effective December 31, 2000, and by a
    deed of assignment dated  March 16, 2001 assigned their interest to the
    remaining participants.  Effective January 1, 2001 the participants in PEP
    38330 will be: the Company (39.3%), Pan Continental Oil NL (38.2%) and
    Origin Energy Resources Ltd (22.5%).

c)  PEP 38723

    The participants of PEP 38723 committed to drill one exploration well prior
    to January 31, 2001.  This was fulfilled by the drilling of Ratapiko-1.

    By an agreement dated October 9, 2000 between Texas Petroleum Investment
    Company ("TPIC") and the Company, TPIC funded the drilling of the above well
    and will fund a second exploration well in the permit to earn a 55%
    participating interest in the permit.  Upon TPIC fulfilling their
    obligations under the agreement, the participants in PEP 38723 will be: the
    Company (36%), TPIC (55%) and Gondwana Energy, Ltd (9%).

d)  AC/P 26

    The Company and the other participants had not commenced drilling a well in
    the permit by the time of this report, March 23, 2001, and negotiations with
    the Department of Mines and Energy of Northern Territory, Australia, for a
    variation to the permit work program were ongoing.

================================================================================

<PAGE>
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================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 14 - SUBSEQUENT EVENTS (continued)

e)  PPL 192

    On January 31, 2001, the Department of Petroleum and Energy in Papua New
    Guinea granted the Company and the other participants of PPL 192 a variation
    to the remaining work program on the licence.  PPL 192 now requires the
    participants to complete the following remaining work program:

    (i)    prior to January 28, 2002, drill one exploration well, and commit to
           the minimum work program for the sixth year, or surrender the permit;
    (ii)   prior to January 28, 2003, acquire, process and interpret 400
           kilometers of seismic data or equivalent 3D seismic data; and
    (iii)  if applying for an extension for a second 5 year term, prior to
           January 28, 2003, commence drilling a second exploration well;
    at a total cost of not less than $10,000,000.


NOTE 15 - DIFFERENCES BETWEEN UNITED STATES AND CANADIAN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES

These financial statements have been prepared in accordance with Canadian
generally accepted accounting principles ("Canadian GAAP") which conform in all
material respects with United States generally accepted accounting principles
("U.S. GAAP") except for the following differences:

CONSOLIDATED BALANCE SHEETS
---------------------------

a)  Assets

    i)    Marketable Securities

          Under Canadian GAAP, the Company's marketable equity securities are
          valued at the lower of cost or market value.

          Under U.S. GAAP, the Company's marketable equity securities are
          classified as available-for-sale securities and reported at market
          value, with unrealized gains and losses included as a component of
          comprehensive income.

================================================================================

<PAGE>
Page 81

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 15 - DIFFERENCES BETWEEN UNITED STATES AND CANADIAN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (continued)


a)  Assets

    i)    Marketable Securities (continued)

          December 31,                                    2000          1999
          ----------------------------------------------------------------------

          Marketable Securities under Canadian GAAP     $      -    $   222,319

          Adjustment required under U.S. GAAP                  -       (311,800)
          Cumulative historical adjustments to date            -        311,800
                                                        ----------- -----------
          Marketable Securities under U.S. GAAP         $      -    $   222,319
                                                        =========== ===========

          Total current assets under US GAAP as at December 31, 2000 and 1999
          are $3,226,174 and $6,408,980  respectively.

    ii)   Investments

          Under Canadian GAAP, the Company's long-term investments are reported
          at cost or, for other than a temporary decline from cost, market
          value.  Under U.S. GAAP, the Company's long-term investments are
          classified as available-for-sale securities and reported at market
          value, with unrealized gains and losses included as a component of
          comprehensive income.

          December 31,                                    2000          1999
          ----------------------------------------------------------------------

          Investments under Canadian GAAP               $      -    $   670,000

          Adjustment required under U.S. GAAP                  -     (1,180,000)
          Cumulative historical adjustments to date            -      1,250,000
                                                        ----------- -----------

          Investments under U.S. GAAP                   $      -    $   740,000
                                                        =========== ===========

          Total assets under US GAAP as at December 31, 2000 and 1999 are
          $9,987,426 and $10,949,165, respectively.

================================================================================

<PAGE>
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================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 15 - DIFFERENCES BETWEEN UNITED STATES AND CANADIAN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (continued)

b)  Stockholders' Equity

    i)    Common Stock

          Under U.S. GAAP, compensation cost must be considered for all stock
          options granted requiring the Company to utilize both the intrinsic
          value-based and the fair value based methods of accounting and
          reporting stock-based compensation.  Under Canadian GAAP, no such cost
          is recognized.

          The Company, if required to report under US GAAP, would elect to apply
          Accounting Principles Board Opinion No. 25: Accounting for Stock
          Issued to Employees ("APB 25") to account for all stock options
          granted.  Further, Statement of Financial Accounting Standards No.
          123: Accounting for Stock-Based Compensation ("SFAS 123") requires
          additional disclosure to reflect the results of the Company had it
          elected to follow SFAS 123.  SFAS 123 requires a fair value based
          method of accounting for stock options using the Black-Scholes option
          pricing model.  This model was developed for use in estimating the
          fair value of traded options and require the input of and are highly
          sensitive to subjective assumptions including the expected stock price
          volatility.  Stock options granted by the Company have characteristics
          significantly different from those of traded options.  In the opinion
          of management, the existing model does not provide a reliable single
          measure of the fair value of stock options granted by the Company.

          Under APB 25, compensation cost must be recognized for all
          compensatory stock options granted whenever the market price of the
          Company's shares on the date of grant exceeds the exercise price.

          December 31,                                    2000          1999
          ----------------------------------------------------------------------

          Common stock under Canadian GAAP              $19,478,365 $17,386,253

          Accrued compensation from stock options
           granted or amended during the year               440,000        -
          Compensation recovery from cancellation
           of previously issued stock options              (125,000)     (8,125)
          Cumulative historical adjustments to date         859,614     867,739
                                                        ----------- -----------

          Common stock under U.S. GAAP                  $20,652,979 $18,245,867

================================================================================

<PAGE>
Page 83

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 15 - DIFFERENCES BETWEEN UNITED STATES AND CANADIAN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (continued)

          In accordance with SFAS 123, the following is a summary of the changes
          in the Company's stock options for the 2000, 1999 and 1998 fiscal
          years:
<TABLE>
<CAPTION>
    December 31,                                  2000                            1999                            1998
    ----------------------------------------------------------------------------------------------------------------------------
                                                     Weighted                        Weighted                        Weighted
                                                      Average                         Average                         Average
                                        Number       Exercise           Number       Exercise            Number      Exercise
    Fixed options                     of Shares        Price           of Shares       Price           of Shares       Price
                                  -------------------------------  -------------------------------  -------------------------------
     <S>                             <C>                <C>           <C>               <C>           <C>              <C>
     Balance at beginning of year     1,000,000         $ 2.50        1,066,000         $ 2.51         2,098,000       $ 2.50
     Granted                          5,668,000           0.54             -              -                 -            -
     Exercised                             -              -                -              -                 -            -
     Expired/cancelled               (1,000,000)          2.50          (66,000)          2.64        (1,032,000)        2.50
                                     ----------         ------        ---------         ------        ----------       ------

     Outstanding and exercisable
      at end of year                  5,668,000         $ 0.54        1,000,000         $ 2.50         1,066,000       $ 2.51
                                     ==========         ======        =========         ======        ==========       ======

     Weighted-average fair
      Value of options granted
      During the year                                   $ 0.77                          $ -                            $ -
                                                        ======                          ======                         ======
</TABLE>

          There were no stock options granted during the 1999 and 1998 fiscal
          years thus no weighted-average fair values have been assigned.  For
          the 2000 fiscal year, the weighted-average fair value for stock
          options granted was estimated at the date of grant using a Black-
          Scholes option pricing model with the following weighted-average
          assumptions: risk-free interest rate of 6.16%; volatility factors of
          the expected market price of the Company's common stock of 229%;
          option lives of 5 years; and no expected dividends.

          The following is a summary of the Company's net loss and basic and
          diluted loss per share as reported and pro forma as if the fair value
          based method of accounting defined in SFAS 123 had been applied for
          the 2000, 1999 and 1998 fiscal years:

<TABLE>
<CAPTION>
    December 31,                                  2000                            1999                            1998
    ----------------------------------------------------------------------------------------------------------------------------
                                            As             Pro              As             Pro             As             Pro
                                         Reported         Forma          Reported         Forma         Reported         Forma
                                  -------------------------------  -------------------------------  -------------------------------
     <S>                             <C>             <C>             <C>             <C>             <C>             <C>

     Net loss for the year           $(3,186,035)    $(3,086,035)    $(1,173,133)    $(1,090,738)    $  (879,688)    $(1,008,688)
                                     ===========     ===========     ===========     ===========     ===========     ===========
     Basic and diluted
       Loss per share                $     (0.10)    $     (0.10)    $     (0.04)    $     (0.04)    $     (0.03)    $     (0.04)
                                     ===========     ===========     ===========     ===========     ===========     ===========
</TABLE>

================================================================================

<PAGE>
Page 84

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 15 - DIFFERENCES BETWEEN UNITED STATES AND CANADIAN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (continued)

    ii)   Accumulated Deficit

          The effects of Note 15(b)i) on accumulated deficit are as follows:

          December 31,                                  2000          1999
          ----------------------------------------------------------------------

          Accumulated deficit under Canadian GAAP    $ (9,656,106) $ (6,785,071)

          Adjustment required under US GAAP:
           For compensation recovery on cancellation
              of previously issued stock options          125,000         8,125
           For stock options issued during the year      (440,000)         -

          Cumulative historical adjustments
              Required under US GAAP                     (859,614)     (867,739)
                                                     ------------  ------------

          Accumulated deficit under U.S. GAAP        $(10,830,720) $ (7,644,685)
                                                     ============  ============

    iii)  Cumulative Comprehensive Adjustment

          Under U.S. GAAP, the components of other comprehensive income (loss)
          are required to be reported as part of the basic financial statements.
          Under Canadian GAAP, no such requirement exists.

          The effects of Note 15(a) on cumulative comprehensive adjustment are
          as follows:

          December 31,                                  2000          1999
          ----------------------------------------------------------------------

          Cumulative comprehensive adjustment
              Under Canadian GAAP                    $       -     $       -

          Adjustments required under US GAAP              (70,000)   (1,491,800)

          Cumulative historical adjustments
              Required under US GAAP                       70,000     1,561,800
                                                     ------------  ------------

          Cumulative comprehensive adjustment
              Under U.S. GAAP                        $       -     $     70,000
                                                     ============  ============

          As a result of these adjustments under US GAAP, total stockholders'
          equity as at December 31, 2000 and 1999 are $ 9,822,259 and
          $10,671,182, respectively.

================================================================================

<PAGE>
Page 85

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 15 - DIFFERENCES BETWEEN UNITED STATES AND CANADIAN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (continued)

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
-------------------------------------------------

c)  Net Loss for the Year

    The following are the effects of Note 15 (b) on Net Loss for the 2000, 1999
    and 1998 fiscal years:

<TABLE>
<CAPTION>
    December 31,                                       2000          1999         1998
    ---------------------------------------------------------------------------------------
    <S>                                           <C>           <C>           <C>
    Net loss for the year under Canadian GAAP     $(2,871,035)  $(1,181,258)  $(1,008,688)

    Compensation (expense) / recovery, from:
      previously issued stock options expired         125,000         8,125       129,000
      stock options issued during the year           (440,000)         -             -
                                                  ---------------------------------------
    Net loss for the year U.S. GAAP               $(3,186,035)  $(1,173,133)  $  (879,688)

    Other comprehensive income/(loss)
      under US GAAP                                   (70,000)   (1,491,800)    1,474,233
                                                  ---------------------------------------

    Net comprehensive income/(loss) for the year
      under U.S. GAAP                             $(3,256,035)  $(2,664,933)  $   594,545
                                                  =======================================
</TABLE>

d)  Loss per Share

    Under U.S. GAAP, shares held in escrow are excluded from the calculation of
    the eighted-average number of shares outstanding until such shares are
    released for trading.  Under Canadian GAAP, shares held in escrow are
    included in the calculation of loss per share.

    The following is a reconciliation of the numerators and denominators of the
    basic and diluted loss per share calculations for the 2000, 1999 and 1998
    fiscal years:

================================================================================

<PAGE>
Page 86

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 15 - DIFFERENCES BETWEEN UNITED STATES AND CANADIAN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (continued)

<TABLE>
<CAPTION>
    December 31,                                       2000          1999         1998
    ---------------------------------------------------------------------------------------
    <S>                                           <C>           <C>           <C>
    Numerator, net loss for the year
      under US GAAP                               $(3,186,035)  $(1,173,133)  $  (879,688)

    Denominator:
      Weighted average number of shares
       under Canadian GAAP                         30,800,370    28,262,398    28,262,398
      Adjustment required under US GAAP                  -             -         (400,685)
                                                  ---------------------------------------
    Weighted average number of shares
       under US GAAP                               30,800,370    28,262,398    27,861,713
                                                  ---------------------------------------

    Basic and diluted loss per share
       under U.S. GAAP                            $     (0.10)  $     (0.04)  $     (0.03)
                                                  =======================================
</TABLE>

    Due to net losses incurred for the 2000, 1999 and 1998 fiscal years, stock
    options and share purchase warrants outstanding were not included in the
    computation of diluted loss per share as the inclusion of such securities
    would be antidilutive.

CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------

e)  Operating Activities

    The following are the effects of the adjustments required to reconcile from
    Canadian to U.S. GAAP for the 2000, 1999 and 1998 fiscal years:

<TABLE>
<CAPTION>
    December 31,                                       2000          1999         1998
    ---------------------------------------------------------------------------------------
    <S>                                           <C>           <C>           <C>
    Net loss for the year under US GAAP           $(3,186,035)  $(1,173,133)  $  (879,688)

    Compensation expense / (recovery), from:
      previously issued stock options expired        (125,000)       (8,125)     (129,000)
      stock options issued during the year            440,000          -             -
    Other components of operating activities
      which are similar under US and
      Canadian GAAP                                 2,638,809     1,338,060     1,164,137
                                                  ---------------------------------------

    Net cash provided by / (used in)
      operating activities under U.S. GAAP        $ (232,226)  $    156,802   $   155,449
                                                  =======================================
</TABLE>

================================================================================

<PAGE>
Page 87

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 15 - DIFFERENCES BETWEEN UNITED STATES AND CANADIAN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (continued)


CONSOLIDATED SCHEDULES OF GENERAL AND ADMINISTRATIVE EXPENSES
-------------------------------------------------------------

f)  General and Administrative Expenses

    The following are the effects of Note 15(b) on general and administrative
expenses for the 2000, 1999 and 1998 fiscal years:


<TABLE>
<CAPTION>
    December 31,                                       2000          1999         1998
    ---------------------------------------------------------------------------------------
    <S>                                           <C>           <C>           <C>
    General and administrative expenses
      under Canadian GAAP                         $   743,600   $   540,622   $   692,480
    Compensation expense / (recovery), from:
      previously issued stock options expired        (125,000)       (8,125)     (129,000)
      stock options issued during the year            440,000          -             -
                                                  ---------------------------------------

    General and administrative expenses
      under U.S. GAAP                             $ 1,058,600   $   532,497   $   563,480
                                                  =======================================
</TABLE>

================================================================================

<PAGE>
Page 88

ITEM 18.     FINANCIAL STATEMENTS

Not Applicable



ITEM 19.     EXHIBITS

EXHIBITS AND REPORTS ON FORM 8K

All schedules are omitted because they are not applicable or the required
information is included in the financial statements or notes thereto.

B.     Reports on Form 8-K

10     Asset Purchase Agreement between the Registrant and Trans-Orient
       Petroleum Ltd. [1]


C.     Index to Exhibits

       The following Exhibits are incorporated by reference:

--------------------------------------------------------------------------------
Exhibit Reference  Exhibit Description                               Page Number
--------------------------------------------------------------------------------
3.5/3.8            Articles of Association for the Registrant [2]         N/A
--------------------------------------------------------------------------------
4.1                BC Form 20 - Issue of Stock Options -                   89
                   dated July 20, 2000
--------------------------------------------------------------------------------
4.2                Stock Option Agreement with David Bennett               93
                   for Non-vesting options, July 6, 2000
--------------------------------------------------------------------------------
4.3                Stock Option Agreement with Alex Guidi for             100
                   Non-vesting options, dated July 6, 2000
--------------------------------------------------------------------------------
4.4                Stock Option Agreement with David McDonald             106
                   for Vesting options, dated July 6, 2000
                   (Form of agreement for all vesting options
                   granted to other named directors and officers)
--------------------------------------------------------------------------------
8                  List of Subsidiaries of the Registrant                 113
--------------------------------------------------------------------------------
10                 Asset Purchase Agreement between the Registrant        N/A
                   and Trans-Orient Petroleum Ltd. [1]
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

        Exhibit Number     Document Description


[1]     herein incorporated by reference as previously included in our Form 8-K
        filed on April 13, 2000.

[2]     herein incorporated by reference as previously included in our Form 10-K
        for the Year Ended  December 31, 1997 filed on April 8, 1998.

<PAGE>
Page 89

This is the form required under section 139 of the Securities Regulation and, if
applicable, by an order issued under section 76 of the Securities Act.

                                      FORM 20

                                   Securities Act
                           Notice of Exempt Distribution

Report of a distribution of a security under section 74(2)(1) to (5), (8) to
(10), 11(i), (14), (16)(i), (18), (19) or (23) to (26) of the Securities Act,
S.B.C. 1996, c. 418, or section 128(a), (b), (c) or (e) to (h) of the Securities
Rules, B.C. Reg. 194/97 or, if applicable, by an order issued under section 76
of the Securities Act.

1.     Name, address and telephone number of the Issuer of the security
       distributed:

       INDO-PACIFIC ENERGY LTD.
       Suite 1200, 1090 West Pender Street
       Vancouver, BC  V6E 2N7
       (604) 682-6496

2.     State whether the Issuer is or is not an exchange issuer (i.e. listed on
       the Vancouver Stock Exchange, but not listed or quoted on any other stock
       exchange or trading or quotation system in Canada):

       The Issuer is not an exchange issuer.

3.     Describe the type of security and the aggregate number distributed:

       Issuance of stock options to directors, officers and employees of the
       Company to acquire up to 3,668,000 common shares of the Company at an
       exercise price of US$0.50 per share and 2,000,000 common shares of the
       Company at an exercise price of US$0.60 per share.

4.     Date of the distribution(s) of the security:

       July 6, 2000

5.     Specify the section(s) of the Act or Rules and, if applicable, the date
       of the discretionary order or the blanket order number under which the
       distribution(s) of the security was made:

       Section 74(2)(9) of the Act

6.     If the distribution(s) of the security was made to 50 purchasers or less,
       circle and complete clause (a) of this section.  If the distribution(s)
       of the security was made to more than 50 purchasers, circle clause (b) of
       this section:

<PAGE>
Page 90

(a)
<TABLE>
<CAPTION>
                                         Number of           Price           Total       Section of
Full Name and Residential               Securities          Per Share       Purchase      Act/Rules
Address of Purchaser                     Purchased                           Price
<S>                                   <C>                    <C>              <C>        <C>
David Bennett                         1,500,000              US$0.50          N/A        s. 74(2)(9)
736 Makara Road
Makara, Wellington, New Zealand

Alex Guidi                            1,000,000              US$0.50          N/A        s. 74(2)(9)
3516 Athalmer Road
Kelowna, BC  V1Y 9M8

Ron Bertuzzi                            200,000              US$0.50          N/A        s. 74(2)(9)
4489 Angus Drive
Vancouver, BC  V6J 4J2

Brad Holland                            200,000              US$0.50          N/A        s. 74(2)(9)
P.O. Box 2314
Dhahran, Saudi Arabia  31311

David McDonald                          200,000              US$0.50          N/A        s. 74(2)(9)
65 Riverview Gardens
26 Lower River Terrace
South Brisbane, Qld. Australia 4101

Jenni Lean                             120,000               US$0.50          N/A        s. 74(2)(9)
736 Makara Road
Makara, Wellington, New Zealand

John Burt                               64,000               US$0.50          N/A        s. 74(2)(9)
c/o 284 Karori Road
Karori, Wellington, New Zealand

Peter Rantucci                          40,000               US$0.50          N/A        s. 74(2)(9)
#403 - 3083 W. 4th Ave.
Vancouver, BC  V6K 1R5

Mark Katsumata                          40,000               US$0.50          N/A        s. 74(2)(9)
15755 - 92B Avenue
Surrey, BC  V4N 3B2

Dave Stephens                           40,000               US$0.50          N/A        s. 74(2)(9)
c/o Suite 1200, 1090 West Pender
Vancouver, BC  V6E 2N7

Garth Johnson                           24,000               US$0.50          N/A        s. 74(2)(9)
1724 Ocean Park Road
Surrey, BC  V4A 3L9

Ronda Travers                           16,000               US$0.50          N/A        s. 74(2)(9)
#307 - 125 West 5th Street
North Vancouver, BC  V7M 1J6

Brian Tycho                             16,000               US$0.50          N/A        s. 74(2)(9)
8626 Saffron Place
Burnaby, BC  V5A 4H9

Gary Saik                               16,000               US$0.50          N/A        s. 74(2)(9)
1001-1415 West Georgia St.
Vancouver, BC  V6G 3C8
</TABLE>

<PAGE>
Page 91

<TABLE>
<CAPTION>
                                         Number of           Price           Total       Section of
Full Name and Residential               Securities          Per Share       Purchase      Act/Rules
Address of Purchaser                     Purchased                           Price
<S>                                   <C>                    <C>              <C>        <C>
Bruce Morris                            48,000               US$0.50          N/A        s. 74(2)(9)
c/o 284 Karori Road
Karori, Wellington, New Zealand

Carey Mills                             48,000               US$0.50          N/A        s. 74(2)(9)
c/o 284 Karori Road
Karori, Wellington, New Zealand

Scott Langdale                          16,000               US$0.50          N/A        s. 74(2)(9)
c/o 284 Karori Road
Karori, Wellington, New Zealand

Ralph Warlich                           16,000               US$0.50          N/A        s. 74(2)(9)
c/o 284 Karori Road
Karori, Wellington, New Zealand

Philip Cridge                           16,000               US$0.50          N/A        s. 74(2)(9)
c/o 284 Karori Road
Karori, Wellington, New Zealand

Keren Witt                              16,000               US$0.50          N/A        s. 74(2)(9)
c/o 284 Karori Road
Karori, Wellington, New Zealand

Geoff Lean                              32,000               US$0.50          N/A        s. 74(2)(9)
c/o 284 Karori Road
Karori, Wellington, New Zealand

David Bennett                        1,000,000               US$0.60          N/A        s. 74(2)(9)
736 Makara Road
Makara, Wellington, New Zealand

Alex Guidi                           1,000,000               US$0.60          N/A        s. 74(2)(9)
3516 Athalmer Road
Kelowna, BC  V1Y 9M8
</TABLE>

      (b)  The Issuer has prepared and certified a list of purchasers comprising
           the information required by clause (a) of this section and a
           certified true copy of the list will be provided to the Commission
           upon request.

7.  State the total dollar value of the securities distributed by the Issuer to
    purchasers resident in British Columbia in respect of which this report is
    filed:

    N/A

8.  State the name and address of any person acting as agent in connection with
    the distribution(s) of the security, the compensation paid or to be paid to
    the agent and the name(s) of the purchaser(s) in respect of which the
    compensation was paid or is to be paid:

    N/A

9.  If the distribution of the security was made under section 128(a) of the
    Rules, state the number of different purchasers who acquired any securities
    of the Issuer under that section during the 12 month period preceding the
    distribution of this security:

    N/A

<PAGE>
Page 92

10. If the distribution of the security was made under section 128(h) of the
    Rules, state:

    (a)  the number of different purchasers who acquired any securities of
         the issuer under that section during the 12 month period preceding the
         distribution of this security:

         N/A; and

    (b)  the total dollar value of all securities of the Issuer distributed
         under that section (including the distribution of this security),
         during the 12 month period preceding the distribution of this security:

         N/A

The undersigned hereby certifies that the statements made in this report are
true and correct.


DATED at Vancouver, British Columbia this 21th day of July, 2000.


                                         INDO-PACIFIC ENERGY LTD.
                                         ---------------------------------------
                                         Name of Issuer


                                         ---------------------------------------
                                         Signature of authorized signatory

                                         Mark Katsumata,.Corporate Secretary
                                         ---------------------------------------
                                         Name and office of authorized signatory



IT IS AN OFFENCE FOR A PERSON TO MAKE A STATEMENT IN A RECORD REQUIRED TO BE
FILED OR PROVIDED UNDER THE SECURITIES ACT OR SECURITIES RULES THAT, AT THE TIME
AND IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH IT IS MADE, IS A
MISREPRESENTATION

<PAGE>
Page 93


THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER (1)
    THE U.S. SECURITIES ACT OF 1933, AND THE RULES AND REGULATIONS PROMULGATED
    THEREUNDER, OR (2) ANY APPLICABLE CANADIAN LAWS, AND MAY NEITHER BE OFFERED
    OR SOLD WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO OR FOR
    THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S), EXCEPT
    PURSUANT TO REGISTRATION UNDER THE 1933 ACT OR AN EXEMPTION THEREFROM NOR
    FOR THE BENEFIT OF A CANADIAN RESIDENT EXCEPT IN COMPLIANCE WITH APPLICABLE
    CANADIAN LAWS.

THIS STOCK OPTION AGREEMENT is made as of the 6th day of July, 2000.

BETWEEN:

         Indo-Pacific Energy Ltd., a body corporate duly incorporated pursuant
         to the laws of the Yukon Territory, Canada and having its head office
         at Suite 1200, 1090 West Pender Street, Vancouver, B.C., Canada V6E 2N7

         (the "Company")

                                                               OF THE FIRST PART

AND:

         David Bennett,
         736 Makara Rd
         Wellington
         New Zealand


         (the "Optionee")

                                                              OF THE SECOND PART


          WHEREAS the Company wishes to encourage the best efforts of the
Optionee and to recognize the Optionee's efforts by granting to the Optionee an
option to purchase shares in the capital stock of the Company (the "Option").

          WHEREAS the option hereunder is being granted pursuant to exemptions
from registration afforded by Regulation S ("Regulation S") as promulgated by
the United States Securities and Exchange Commission ("SEC"), under the United
States Securities Act of 1933, as amended and regulations thereto (the "1933
Act"), and under the British Columbia Securities Act and rules and regulations
thereto (the "B.C. Act")  (the 1933 Act and the B.C. Act are collectively
referred to herein as the "Securities Laws").

          NOW THEREFORE in consideration of the mutual covenants and agreements
herein, the parties agree as follows:

Interpretation
--------------

<PAGE>
Page 94

1.  For the purposes of clauses 2 and 3 of this Agreement, all references to the
    "Company" will, unless the context otherwise requires, include all
    subsidiaries of the Company.

2.  For the purposes of this Agreement, a Management Company Employee means an
    individual employed by another individual or a company ("Person") providing
    services to the Company, which are required for the ongoing successful
    operation of the business enterprise of the Company, but excluding a Person
    engaged in investor relations activities.

Representations and Warranties of the Optionee
----------------------------------------------

3.  The Optionee represents and warrants that the Optionee is one or more of the
    following (any of which are referred to herein as a "Qualifying
    Relationship"):

    (a) a director (including directors of subsidiaries of the Company), senior
        officer (as that term is defined in the B.C. Act), or Management Company
        Employee of the Company;

    (b) an employee of the Company, or a corporation providing services to the
        Company, by meeting the criteria of one of the following categories:

        i)    an individual who is considered an employee under the relevant
              Income Tax Act (i.e. for whom the equivalent Australian, New
              Zealand or Papua New Guinean type of income tax, employment
              insurance and CPP deductions must be made at source)
        ii)   an individual who works full-time for the Company providing
              services normally provided by an employee and who is subject to
              the same control and direction by the Company over the details and
              methods of work as an employee of the Company, but for whom income
              tax deductions are not made at source;
        iii)  an individual who works for the Company on a continuing and
              regular basis for a minimum amount of time per week providing
              services normally provided by an employee and who is subject to
              the same control and direction by the Company over the details and
              methods of work as an employee of the Company, but for whom income
              tax deductions are not made at source.
    (c) an individual (or a company wholly-owned by Individuals) who is a
        Consultant of the Company that, in relation to the Company:

        i)    provides ongoing consulting services to the Company or an
              affiliate of the Company under written contract to the Company;

        ii)   possesses technical, business or management expertise of value to
              the Company or an affiliate of the Company;

        iii)  spends a significant amount of time and attention on the business
              and affairs of the Company or an affiliate of the Company; and

        iv)   has a relationship with the Company or an affiliate of the Company
              that enables the individual to be knowledgeable about the business
              and affairs of the Company.

<PAGE>
Page 95

4.  The Optionee represents and warrants that the Optionee is not a U.S.
    Person (as defined in the attached Schedule "A"), and the grant of the
    Option hereunder was not made to the Optionee while present in the United
    States.

5.  If the Optionee is a corporation, the Optionee represents and warrants that:

    (a) the Optionee is wholly-owned by individuals in a Qualifying Relationship
        with the Company; and

    (b) the execution of this Agreement and all related documents by the
        Optionee have been duly authorized, and the Optionee has the full power
        and capacity to enter into this Agreement.

Grant of Option
---------------

6.  The Company hereby grants to the Optionee the Option to purchase all or any
    portion of 1,000,000 fully paid common shares (the "Optioned Shares") of the
    Company from treasury, exercisable at the price of US$0.60 per share (the
    "Exercise Price"), on or before July 6, 2005 (the "Expiry Date").

7.  The Option is exercisable by notice in writing to the Company Secretary
    accompanied by a certified cheque or equivalent form of guaranteed payment
    in favour of the Company for the full amount of the purchase price of the
    shares being then purchased at least 24 hours in advance of the termination
    or expiry of the Option. When due notice and payment are received, the
    Company covenants and agrees to issue and deliver to the Optionee share
    certificates or equivalent type of proof of ownership in the name of the
    Optionee for the number of shares so purchased.

8.  This is an option agreement only and does not impose upon the Optionee any
    obligation to take up and pay for any of the Optioned Shares.

Restrictions on Transfer of Option and Shares
---------------------------------------------

9.  The Option will not be transferable or assignable by the Optionee
    otherwise than by will or the law of intestacy and the Option may be
    exercised during the lifetime of the Optionee only by the Optionee.

10. The Optionee acknowledges and agrees that the Optioned Shares will be
    subject to the following resale restrictions and conditions:

    (a) Prior to the expiration of 40 days following the exercise of the Option
        hereunder, the Optionee may not offer, transfer or sell the Optioned
        Shares to a U.S. Person, or a person in the United States; and

    (b) The Optioned Shares may not be resold to a resident of any Province of
        Canada, other than a resident of British Columbia, except in accordance
        with an exemption from the registration and prospectus requirements
        under the securities laws and regulations applicable in such Province;

    and if the undersigned is a resident of a jurisdiction other than the
    province of British Columbia, Canada, the Optioned Shares may also be
    subject to additional hold periods.

11. If the Optionee should die while a Director, Senior Officer or employee of
    the Company, the Option may then be exercised by the legal heirs or personal
    representatives of the Optionee, to the same extent as if the Optionee were
    alive and a Director, Senior Officer or employee of the Company for a period
    not exceeding the earlier of 6 months after the death of the Optionee, or
    the Expiry Date but only for such shares as the Optionee was entitled to at
    the date of the death of the Optionee.

Termination and Expiry of Option
--------------------------------

12. Subject to paragraphs 11 and 13 hereof, the Option will terminate on the
    earlier of 45 days after the Optionee ceases to be in a Qualifying
    Relationship with the Company, and the Expiry Date.

<PAGE>
Page 96

13. If the Optionee's Qualifying Relationship to the Company is terminated by
    the Directors for cause, or terminated by regulatory sanction or by reason
    of judicial order, the Option will immediately expire. The Optionee
    acknowledges that the Company is under no obligation to provide advance
    notice of the termination of the Option.

Adjustment
----------

14. In the event of any subdivision, consolidation or other change in the share
    capital of the Company while any portion of the Option is outstanding, the
    number of shares under option to the Optionee and the price thereof will be
    adjusted in accordance with such subdivision, consolidation or other change
    in the share capital of the Company. For greater certainty, upon a
    consolidation of capital of the Company, the number of Optioned Shares will
    be reduced by dividing the number of outstanding Optioned Shares by the
    consolidation ratio, and multiplying the Exercise Price by the consolidation
    ratio.

Covenants of the Company and Optionee
-------------------------------------

15. The Optionee covenants and agrees to complete, execute and deliver to the
    Company such documents as may be necessary to carry out the intent of this
    Agreement.

16. The Optionee covenants and agrees not to exercise the Option hereunder if at
    the time of exercise the Optionee is a U.S. Person (as defined in the
    attached Schedule "A") or the Optionee is present in the United States,
    unless a legal opinion satisfactory to the Company has been delivered to the
    Company confirming compliance by the Optionee with state and federal
    securities laws and regulations in connection with the exercise of the
    Option.

17. The Company hereby covenants and agrees that it will reserve in its treasury
    sufficient shares to permit the issuance and allotment of shares to the
    Optionee in the event the Option is exercised.

18. The Optionee covenants and agrees to sign and be bound by all documents
    required in connection with an application for listing on any stock exchange
    or trading facility, including any amendments to this Option Agreement
    required in order for the Company to comply with or otherwise meet listing
    requirements of any such stock exchange or trading facility, provided that
    the Company will use reasonable efforts to preserve the terms of this
    agreement.

General Provisions
------------------

19. Time will be of the essence of this Agreement.

20. This Agreement will enure to the benefit of or be binding upon the Company,
    its successors and assigns and the Optionee and the Optionee's personal
    representatives to the extent provided in clauses 9 and 11.

21. This Agreement may be executed in counterparts which may be delivered by
    facsimile.  Each executed counterpart shall be deemed to be an original and
    all such counterparts when read together constitute one and the same
    instrument.


<PAGE>
Page 97

     IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.

Signed for an on behalf of Indo-Pacific Energy Ltd.  )
by its duly authorized attorney:                     )
                                                     )
                                                     )
-----------------------------------                  )
Authorized Signatory                                 )
                                                     )
                                                     )
                                                     )
                                                     )
                                                     )

SIGNED, SEALED AND DELIVERED in the presence of:     )
                                                     )
                                                     )
-----------------------------------                  )
Name                                                 )     ---------------------
                                                     )     DAVID BENNETT
-----------------------------------                  )
Address                                              )
                                                     )
-----------------------------------                  )
                                                     )


<PAGE>
Page 98

                                           Schedule "A"

Definitions of U.S. person.

(1)  "U.S. person" means:
     (i)    Any natural person resident in the United States;
     (ii)   Any partnership or corporation organized or incorporated under the
            laws of the United States;
     (iii)  Any estate of which any executor or administrator is a U.S. person;
     (iv)   Any trust of which any trustee is a U.S. person;
     (v)    Any agency or branch of a foreign entity located in the United
            States;
     (vi)   Any non-discretionary account or similar account (other than an
            estate or trust) held by a dealer or other fiduciary for the benefit
            or account of a U.S. person;
     (vii)  Any discretionary account or similar account (other than an estate
            or trust) held by a dealer or other fiduciary organized,
            incorporated, or (if an individual) resident in the United States;
            and
     (viii) Any partnership or corporation if:

           (A) Organized or incorporated under the laws of any foreign
               jurisdiction; and
           (B) Formed by a U.S. person principally for the purpose of investing
               in securities not registered under the '33 Act, unless it is
               organized or incorporated, and owned, by accredited investors (as
               defined in Rule 501(a) promulgated under the '33 Act) who are not
               natural persons, estates or trusts.
(2)  The following are not "U.S. persons":
     (i)    Any discretionary account or similar account (other than an estate
            or trust) held for the benefit or account of a non-U.S. person by a
            dealer or other professional fiduciary organized, incorporated, or
            (if an individual) resident in the United States;
     (ii)   Any estate of which any professional fiduciary acting as executor or
            administrator is a U.S. person if:
            (A) An executor or administrator of the estate who is not a U.S.
                person has sole or shared investment discretion with respect to
                the assets of the estate; and
            (B) The estate is governed by foreign law;
     (iii)  Any trust of which any professional fiduciary acting as trustee is a
            U.S. person, if a trustee who is not a U.S. person has sole or
            shared investment discretion with respect to the trust assets, and
            no beneficiary of the trust (and no settlor if the trust is
            revocable) is a U.S. person;
     (iv)   An employee benefit plan established and administered in accordance
            with the law of a country other than the United States and customary
            practices and documentation of such country;
     (v)    Any agency or branch of a U.S. person located outside the United
            States if:
            (A) The agency or branch operates for valid business reasons; and
            (B) The agency or branch is engaged in the business of insurance or
                banking and is subject to substantive insurance or banking
                regulation, respectively, in the jurisdiction where located; and
     (vi)   The International Monetary Fund, the International Bank for
            Reconstruction and Development, the Inter-American Development Bank,
            the Asian Development Bank, the African Development Bank, the United
            Nations, and their agencies, affiliates and pension plans, and any
            other similar international organizations, their agencies,
            affiliates and pension plans.

<PAGE>
Page 99

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER (1)
    THE U.S. SECURITIES ACT OF 1933, AND THE RULES AND REGULATIONS PROMULGATED
    THEREUNDER, OR (2) ANY APPLICABLE CANADIAN LAWS, AND MAY NEITHER BE OFFERED
    OR SOLD WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO OR FOR
    THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S), EXCEPT
    PURSUANT TO REGISTRATION UNDER THE 1933 ACT OR AN EXEMPTION THEREFROM NOR
    FOR THE BENEFIT OF A CANADIAN RESIDENT EXCEPT IN COMPLIANCE WITH APPLICABLE
    CANADIAN LAWS.

THIS STOCK OPTION AGREEMENT is made as of the 6th day of July, 2000.

BETWEEN:

         Indo-Pacific Energy Ltd., a body corporate duly incorporated pursuant
         to the laws of the Yukon Territory, Canada and having its head office
         at Suite 1200, 1090 West Pender Street, Vancouver, B.C., Canada V6E 2N7

         (the "Company")

                                                               OF THE FIRST PART

AND:

         Alex Guidi, c/o #1200 - 1090 West Pender Street,
         Vancouver, British Columbia, V6E 2N7


         (the "Optionee")

                                                              OF THE SECOND PART


          WHEREAS the Company wishes to encourage the best efforts of the
Optionee and to recognize the Optionee's efforts by granting to the Optionee an
option to purchase shares in the capital stock of the Company (the "Option").

          WHEREAS the option hereunder is being granted pursuant to exemptions
from registration afforded by Regulation S ("Regulation S") as promulgated by
the United States Securities and Exchange Commission ("SEC"), under the United
States Securities Act of 1933, as amended and regulations thereto (the "1933
Act"), and under the British Columbia Securities Act and rules and regulations
thereto (the "B.C. Act")  (the 1933 Act and the B.C. Act are collectively
referred to herein as the "Securities Laws").

          NOW THEREFORE in consideration of the mutual covenants and agreements
herein, the parties agree as follows:

Interpretation
--------------

1.  For the purposes of clauses 2 and 3 of this Agreement, all references to the
    "Company" will, unless the context otherwise requires, include all
    subsidiaries of the Company.

2.  For the purposes of this Agreement, a Management Company Employee means an
    individual employed by another individual or a company ("Person") providing
    services to the Company, which are required for the ongoing successful
    operation of the business enterprise of the Company, but excluding a Person
    engaged in investor relations activities.

<PAGE>
Page 100

Representations and Warranties of the Optionee
----------------------------------------------

3.  The Optionee represents and warrants that the Optionee is one or more of the
    following (any of which are referred to herein as a "Qualifying
    Relationship"):

    (a) a director (including directors of subsidiaries of the Company), senior
        officer (as that term is defined in the B.C. Act), or Management Company
        Employee of the Company;

    (b) an employee of the Company, or a corporation providing services to the
        Company, by meeting the criteria of one of the following categories:

        i)    an individual who is considered an employee under the relevant
              Income Tax Act (i.e. for whom the equivalent Australian, New
              Zealand or Papua New Guinean type of income tax, employment
              insurance and CPP deductions must be made at source)

        ii)   an individual who works full-time for the Company providing
              services normally provided by an employee and who is subject to
              the same control and direction by the Company over the details and
              methods of work as an employee of the Company, but for whom income
              tax deductions are not made at source;

        iii)  an individual who works for the Company on a continuing and
              regular basis for a minimum amount of time per week providing
              services normally provided by an employee and who is subject to
              the same control and direction by the Company over the details and
              methods of work as an employee of the Company, but for whom income
              tax deductions are not made at source.

    (c) an individual (or a company wholly-owned by Individuals) who is a
        Consultant of the Company that, in relation to the Company:

        i)    provides ongoing consulting services to the Company or an
              affiliate of the Company under written contract to the Company;

        ii)   possesses technical, business or management expertise of value to
              the Company or an affiliate of the Company;

        iii)  spends a significant amount of time and attention on the business
              and affairs of the Company or an affiliate of the Company; and

        iv)   has a relationship with the Company or an affiliate of the Company
              that enables the individual to be knowledgeable about the business
              and affairs of the Company.

4.  The Optionee represents and warrants that the Optionee is not a U.S. Person
    (as defined in the attached Schedule "A"), and the grant of the Option
    hereunder was not made to the Optionee while present in the United States.

5.  If the Optionee is a corporation, the Optionee represents and warrants that:

    (a) the Optionee is wholly-owned by individuals in a Qualifying Relationship
        with the Company; and

<PAGE>
Page 101

    (b) the execution of this Agreement and all related documents by the
        Optionee have been duly authorized, and the Optionee has the full power
        and capacity to enter into this Agreement.

Grant of Option
---------------

6.  The Company hereby grants to the Optionee the Option to purchase all or any
    portion of 1,000,000 fully paid common shares (the "Optioned Shares") of the
    Company from treasury, exercisable at the price of US$0.60 per share (the
    "Exercise Price"), on or before July 6, 2005 (the "Expiry Date").

7.  The Option is exercisable by notice in writing to the Company Secretary
    accompanied by a certified cheque or equivalent form of guaranteed payment
    in favour of the Company for the full amount of the purchase price of the
    shares being then purchased at least 24 hours in advance of the termination
    or expiry of the Option. When due notice and payment are received, the
    Company covenants and agrees to issue and deliver to the Optionee share
    certificates or equivalent type of proof of ownership in the name of the
    Optionee for the number of shares so purchased.

8.  This is an option agreement only and does not impose upon the Optionee
    any obligation to take up and pay for any of the Optioned Shares.

Restrictions on Transfer of Option and Shares
---------------------------------------------

8.  The Option will not be transferable or assignable by the Optionee
    otherwise than by will or the law of intestacy and the Option may be
    exercised during the lifetime of the Optionee only by the Optionee.

9.  The Optionee acknowledges and agrees that the Optioned Shares will be
    subject to the following resale restrictions and conditions:

    (a) Prior to the expiration of 40 days following the exercise of the Option
        hereunder, the Optionee may not offer, transfer or sell the Optioned
        Shares to a U.S. Person, or a person in the United States; and

    (b) The Optioned Shares may not be resold to a resident of any Province of
        Canada, other than a resident of British Columbia, except in accordance
        with an exemption from the registration and prospectus requirements
        under the securities laws and regulations applicable in such Province;

    and if the undersigned is a resident of a jurisdiction other than the
    province of British Columbia, Canada, the Optioned Shares may also be
    subject to additional hold periods.

10. If the Optionee should die while a Director, Senior Officer or employee of
    the Company, the Option may then be exercised by the legal heirs or personal
    representatives of the Optionee, to the same extent as if the Optionee were
    alive and a Director, Senior Officer or employee of the Company for a period
    not exceeding the earlier of 6 months after the death of the Optionee, or
    the Expiry Date but only for such shares as the Optionee was entitled to at
    the date of the death of the Optionee.

Termination and Expiry of Option
--------------------------------

11. Subject to paragraphs 11 and 13 hereof, the Option will terminate on the
    earlier of 45 days after the Optionee ceases to be in a Qualifying
    Relationship with the Company, and the Expiry Date.

12. If the Optionee's Qualifying Relationship to the Company is terminated by
    the Directors for cause, or terminated by regulatory sanction or by reason

<PAGE>
Page 102

    of judicial order, the Option will immediately expire. The Optionee
    acknowledges that the Company is under no obligation to provide advance
    notice of the termination of the Option.

Adjustment
----------

13. In the event of any subdivision, consolidation or other change in the share
    capital of the Company while any portion of the Option is outstanding, the
    number of shares under option to the Optionee and the price thereof will be
    adjusted in accordance with such subdivision, consolidation or other change
    in the share capital of the Company. For greater certainty, upon a
    consolidation of capital of the Company, the number of Optioned Shares will
    be reduced by dividing the number of outstanding Optioned Shares by the
    consolidation ratio, and multiplying the Exercise Price by the consolidation
    ratio.

Covenants of the Company and Optionee
-------------------------------------

14. The Optionee covenants and agrees to complete, execute and deliver to the
    Company such documents as may be necessary to carry out the intent of this
    Agreement.

15. The Optionee covenants and agrees not to exercise the Option hereunder if at
    the time of exercise the Optionee is a U.S. Person (as defined in the
    attached Schedule "A") or the Optionee is present in the United States,
    unless a legal opinion satisfactory to the Company has been delivered to the
    Company confirming compliance by the Optionee with state and federal
    securities laws and regulations in connection with the exercise of the
    Option.

16. The Company hereby covenants and agrees that it will reserve in its
    treasury sufficient shares to permit the issuance and allotment of shares to
    the Optionee in the event the Option is exercised.

17. The Optionee covenants and agrees to sign and be bound by all documents
    required in connection with an application for listing on any stock exchange
    or trading facility, including any amendments to this Option Agreement
    required in order for the Company to comply with or otherwise meet listing
    requirements of any such stock exchange or trading facility, provided that
    the Company will use reasonable efforts to preserve the terms of this
    agreement.

General Provisions
------------------

18. Time will be of the essence of this Agreement.

19. This Agreement will enure to the benefit of or be binding upon the
    Company, its successors and assigns and the Optionee and the Optionee's
    personal representatives to the extent provided in clauses 9 and 11.

20. This Agreement may be executed in counterparts which may be delivered by
    facsimile.  Each executed counterpart shall be deemed to be an original and
    all such counterparts when read together constitute one and the same
    instrument.

<PAGE>
Page 103

     IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.

Signed for an on behalf of Indo-Pacific Energy Ltd.  )
by its duly authorized attorney:                     )
                                                     )
                                                     )
-----------------------------------                  )
Authorized Signatory                                 )
                                                     )
                                                     )
                                                     )
                                                     )
                                                     )

SIGNED, SEALED AND DELIVERED in the presence of:     )
                                                     )
                                                     )
-----------------------------------                  )
Name                                                 )     ---------------------
                                                     )     ALEX GUIDI
-----------------------------------                  )
Address                                              )
                                                     )
-----------------------------------                  )
                                                     )


<PAGE>
Page 104

                                           Schedule "A"

Definitions of U.S. person.

(1)  "U.S. person" means:
     (i)    Any natural person resident in the United States;
     (ii)   Any partnership or corporation organized or incorporated under the
            laws of the United States;
     (iii)  Any estate of which any executor or administrator is a U.S. person;
     (iv)   Any trust of which any trustee is a U.S. person;
     (v)    Any agency or branch of a foreign entity located in the United
            States;
     (vi)   Any non-discretionary account or similar account (other than an
            estate or trust) held by a dealer or other fiduciary for the benefit
            or account of a U.S. person;
     (vii)  Any discretionary account or similar account (other than an estate
            or trust) held by a dealer or other fiduciary organized,
            incorporated, or (if an individual) resident in the United States;
            and
     (viii) Any partnership or corporation if:

           (A) Organized or incorporated under the laws of any foreign
               jurisdiction; and
           (B) Formed by a U.S. person principally for the purpose of investing
               in securities not registered under the '33 Act, unless it is
               organized or incorporated, and owned, by accredited investors (as
               defined in Rule 501(a) promulgated under the '33 Act) who are not
               natural persons, estates or trusts.
(2)  The following are not "U.S. persons":
     (i)    Any discretionary account or similar account (other than an estate
            or trust) held for the benefit or account of a non-U.S. person by a
            dealer or other professional fiduciary organized, incorporated, or
            (if an individual) resident in the United States;
     (ii)   Any estate of which any professional fiduciary acting as executor or
            administrator is a U.S. person if:
            (A) An executor or administrator of the estate who is not a U.S.
                person has sole or shared investment discretion with respect to
                the assets of the estate; and
            (B) The estate is governed by foreign law;
     (iii)  Any trust of which any professional fiduciary acting as trustee is a
            U.S. person, if a trustee who is not a U.S. person has sole or
            shared investment discretion with respect to the trust assets, and
            no beneficiary of the trust (and no settlor if the trust is
            revocable) is a U.S. person;
     (iv)   An employee benefit plan established and administered in accordance
            with the law of a country other than the United States and customary
            practices and documentation of such country;
     (v)    Any agency or branch of a U.S. person located outside the United
            States if:
            (A) The agency or branch operates for valid business reasons; and
            (B) The agency or branch is engaged in the business of insurance or
                banking and is subject to substantive insurance or banking
                regulation, respectively, in the jurisdiction where located; and

The International Monetary Fund, the International Bank for Reconstruction and
Development, the Inter-American Development Bank, the Asian Development Bank,
the African Development Bank, the United Nations, and their agencies, affiliates
and pension plans, and any other similar international organizations, their
agencies, affiliates and pension plans.

<PAGE>
Page 105


THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER (1)
    THE U.S. SECURITIES ACT OF 1933, AND THE RULES AND REGULATIONS PROMULGATED
    THEREUNDER, OR (2) ANY APPLICABLE CANADIAN LAWS, AND MAY NEITHER BE OFFERED
    OR SOLD WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO OR FOR
    THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S), EXCEPT
    PURSUANT TO REGISTRATION UNDER THE 1933 ACT OR AN EXEMPTION THEREFROM NOR
    FOR THE BENEFIT OF A CANADIAN RESIDENT EXCEPT IN COMPLIANCE WITH APPLICABLE
    CANADIAN LAWS.

THIS STOCK OPTION AGREEMENT is made as of the 6th day of July, 2000.

BETWEEN:

         Indo-Pacific Energy Ltd., a body corporate duly incorporated pursuant
         to the laws of the Yukon Territory, Canada and having its head office
         at Suite 1200, 1090 West Pender Street, Vancouver, B.C., Canada V6E 2N7

         (the "Company")

                                                               OF THE FIRST PART

AND:

         David McDonald, 65 Riverview Gardens, 26 Lover River
         Terrace, South Brisbane, Queensland, Australia, 4101


         (the "Optionee")

                                                              OF THE SECOND PART


          WHEREAS the Company wishes to encourage the best efforts of the
Optionee and to recognize the Optionee's efforts by granting to the Optionee an
option to purchase shares in the capital stock of the Company (the "Option").

          WHEREAS the option hereunder is being granted pursuant to exemptions
from registration afforded by Regulation S ("Regulation S") as promulgated by
the United States Securities and Exchange Commission ("SEC"), under the United
States Securities Act of 1933, as amended and regulations thereto (the "1933
Act"), and under the British Columbia Securities Act and rules and regulations
thereto (the "B.C. Act")  (the 1933 Act and the B.C. Act are collectively
referred to herein as the "Securities Laws").

          NOW THEREFORE in consideration of the mutual covenants and agreements
herein, the parties agree as follows:

Interpretation
--------------

1.  For the purposes of clauses 2 and 3 of this Agreement, all references to the
    "Company" will, unless the context otherwise requires, include all
    subsidiaries of the Company.

2.  For the purposes of this Agreement, a Management Company Employee means an
    individual employed by another individual or a company ("Person") providing
    services to the Company, which are required for the ongoing successful
    operation of the business enterprise of the Company, but excluding a Person
    engaged in investor relations activities.

<PAGE>
Page 106

Representations and Warranties of the Optionee
----------------------------------------------

3.  The Optionee represents and warrants that the Optionee is one or more of the
    following (any of which are referred to herein as a "Qualifying
    Relationship"):

    (a) a director (including directors of subsidiaries of the Company), senior
        officer (as that term is defined in the B.C. Act), or Management Company
        Employee of the Company;

    (b) an employee of the Company, or a corporation providing services to the
        Company, by meeting the criteria of one of the following categories:

        i)    an individual who is considered an employee under the relevant
              Income Tax Act (i.e. for whom the equivalent Australian, New
              Zealand or Papua New Guinean type of income tax, employment
              insurance and CPP deductions must be made at source)

        ii)   an individual who works full-time for the Company providing
              services normally provided by an employee and who is subject to
              the same control and direction by the Company over the details and
              methods of work as an employee of the Company, but for whom income
              tax deductions are not made at source;

        iii)  an individual who works for the Company on a continuing and
              regular basis for a minimum amount of time per week providing
              services normally provided by an employee and who is subject to
              the same control and direction by the Company over the details and
              methods of work as an employee of the Company, but for whom income
              tax deductions are not made at source.

    (c) an individual (or a company wholly-owned by Individuals) who is a
        Consultant of the Company that, in relation to the Company:

        i)    provides ongoing consulting services to the Company or an
              affiliate of the Company under written contract to the Company;

        ii)   possesses technical, business or management expertise of value to
              the Company or an affiliate of the Company;

        iii)  spends a significant amount of time and attention on the business
              and affairs of the Company or an affiliate of the Company; and

        iv)   has a relationship with the Company or an affiliate of the Company
              that enables the individual to be knowledgeable about the business
              and affairs of the Company.

4.  The Optionee represents and warrants that the Optionee is not a U.S. Person
    (as defined in the attached Schedule "A"), and the grant of the Option
    hereunder was not made to the Optionee while present in the United States.

5.  If the Optionee is a corporation, the Optionee represents and warrants that:

    (a) the Optionee is wholly-owned by individuals in a Qualifying Relationship
        with the Company; and

<PAGE>
Page 107

    (b) the execution of this Agreement and all related documents by the
        Optionee have been duly authorized, and the Optionee has the full power
        and capacity to enter into this Agreement.

Grant of Option
---------------

6.  The Company hereby grants to the Optionee the Option to purchase all or any
    portion of 1,000,000 fully paid common shares (the "Optioned Shares") of the
    Company from treasury, exercisable at the price of US$0.60 per share (the
    "Exercise Price"), on or before July 6, 2005 (the "Expiry Date").

7.  The Option is exercisable by notice in writing to the Company Secretary
    accompanied by a certified cheque or equivalent form of guaranteed payment
    in favour of the Company for the full amount of the purchase price of the
    shares being then purchased at least 24 hours in advance of the termination
    or expiry of the Option. When due notice and payment are received, the
    Company covenants and agrees to issue and deliver to the Optionee share
    certificates or equivalent type of proof of ownership in the name of the
    Optionee for the number of shares so purchased.

8.  This is an option agreement only and does not impose upon the Optionee
    any obligation to take up and pay for any of the Optioned Shares.

Restrictions on Transfer of Option and Shares
---------------------------------------------

8.  The Option will not be transferable or assignable by the Optionee
    otherwise than by will or the law of intestacy and the Option may be
    exercised during the lifetime of the Optionee only by the Optionee.

9.  The Optionee acknowledges and agrees that the Optioned Shares will be
    subject to the following resale restrictions and conditions:

    (a) Prior to the expiration of 40 days following the exercise of the Option
        hereunder, the Optionee may not offer, transfer or sell the Optioned
        Shares to a U.S. Person, or a person in the United States; and

    (b) The Optioned Shares may not be resold to a resident of any Province of
        Canada, other than a resident of British Columbia, except in accordance
        with an exemption from the registration and prospectus requirements
        under the securities laws and regulations applicable in such Province;

    and if the undersigned is a resident of a jurisdiction other than the
    province of British Columbia, Canada, the Optioned Shares may also be
    subject to additional hold periods.

10. If the Optionee should die while a Director, Senior Officer or employee of
    the Company, the Option may then be exercised by the legal heirs or personal
    representatives of the Optionee, to the same extent as if the Optionee were
    alive and a Director, Senior Officer or employee of the Company for a period
    not exceeding the earlier of 6 months after the death of the Optionee, or
    the Expiry Date but only for such shares as the Optionee was entitled to at
    the date of the death of the Optionee.

Termination and Expiry of Option
--------------------------------

11. Subject to paragraphs 11 and 13 hereof, the Option will terminate on the
    earlier of 45 days after the Optionee ceases to be in a Qualifying
    Relationship with the Company, and the Expiry Date.

12. If the Optionee's Qualifying Relationship to the Company is terminated by
    the Directors for cause, or terminated by regulatory sanction or by reason

<PAGE>
Page 108

    of judicial order, the Option will immediately expire. The Optionee
    acknowledges that the Company is under no obligation to provide advance
    notice of the termination of the Option.

Adjustment
----------

13. In the event of any subdivision, consolidation or other change in the share
    capital of the Company while any portion of the Option is outstanding, the
    number of shares under option to the Optionee and the price thereof will be
    adjusted in accordance with such subdivision, consolidation or other change
    in the share capital of the Company. For greater certainty, upon a
    consolidation of capital of the Company, the number of Optioned Shares will
    be reduced by dividing the number of outstanding Optioned Shares by the
    consolidation ratio, and multiplying the Exercise Price by the consolidation
    ratio.

Covenants of the Company and Optionee
-------------------------------------

14. The Optionee covenants and agrees to complete, execute and deliver to the
    Company such documents as may be necessary to carry out the intent of this
    Agreement.

15. The Optionee covenants and agrees not to exercise the Option hereunder if at
    the time of exercise the Optionee is a U.S. Person (as defined in the
    attached Schedule "A") or the Optionee is present in the United States,
    unless a legal opinion satisfactory to the Company has been delivered to the
    Company confirming compliance by the Optionee with state and federal
    securities laws and regulations in connection with the exercise of the
    Option.

16. The Company hereby covenants and agrees that it will reserve in its
    treasury sufficient shares to permit the issuance and allotment of shares to
    the Optionee in the event the Option is exercised.

17. The Optionee covenants and agrees to sign and be bound by all documents
    required in connection with an application for listing on any stock exchange
    or trading facility, including any amendments to this Option Agreement
    required in order for the Company to comply with or otherwise meet listing
    requirements of any such stock exchange or trading facility, provided that
    the Company will use reasonable efforts to preserve the terms of this
    agreement.

General Provisions
------------------

18. Time will be of the essence of this Agreement.

19. This Agreement will enure to the benefit of or be binding upon the
    Company, its successors and assigns and the Optionee and the Optionee's
    personal representatives to the extent provided in clauses 9 and 11.

20. This Agreement may be executed in counterparts which may be delivered by
    facsimile.  Each executed counterpart shall be deemed to be an original and
    all such counterparts when read together constitute one and the same
    instrument.

<PAGE>
Page 109

     IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.

Signed for an on behalf of Indo-Pacific Energy Ltd.  )
by its duly authorized attorney:                     )
                                                     )
                                                     )
-----------------------------------                  )
Authorized Signatory                                 )
                                                     )
                                                     )
                                                     )
                                                     )
                                                     )

SIGNED, SEALED AND DELIVERED in the presence of:     )
                                                     )
                                                     )
-----------------------------------                  )
Name                                                 )     ---------------------
                                                     )     DAVID MCDONALD
-----------------------------------                  )
Address                                              )
                                                     )
-----------------------------------                  )
                                                     )


<PAGE>
Page 110

                                           Schedule "A"

Definitions of U.S. person.

(1)  "U.S. person" means:
     (i)    Any natural person resident in the United States;
     (ii)   Any partnership or corporation organized or incorporated under the
            laws of the United States;
     (iii)  Any estate of which any executor or administrator is a U.S. person;
     (iv)   Any trust of which any trustee is a U.S. person;
     (v)    Any agency or branch of a foreign entity located in the United
            States;
     (vi)   Any non-discretionary account or similar account (other than an
            estate or trust) held by a dealer or other fiduciary for the benefit
            or account of a U.S. person;
     (vii)  Any discretionary account or similar account (other than an estate
            or trust) held by a dealer or other fiduciary organized,
            incorporated, or (if an individual) resident in the United States;
            and
     (viii) Any partnership or corporation if:

           (A) Organized or incorporated under the laws of any foreign
               jurisdiction; and
           (B) Formed by a U.S. person principally for the purpose of investing
               in securities not registered under the '33 Act, unless it is
               organized or incorporated, and owned, by accredited investors (as
               defined in Rule 501(a) promulgated under the '33 Act) who are not
               natural persons, estates or trusts.
(2)  The following are not "U.S. persons":
     (i)    Any discretionary account or similar account (other than an estate
            or trust) held for the benefit or account of a non-U.S. person by a
            dealer or other professional fiduciary organized, incorporated, or
            (if an individual) resident in the United States;
     (ii)   Any estate of which any professional fiduciary acting as executor or
            administrator is a U.S. person if:
            (A) An executor or administrator of the estate who is not a U.S.
                person has sole or shared investment discretion with respect to
                the assets of the estate; and
            (B) The estate is governed by foreign law;
     (iii)  Any trust of which any professional fiduciary acting as trustee is a
            U.S. person, if a trustee who is not a U.S. person has sole or
            shared investment discretion with respect to the trust assets, and
            no beneficiary of the trust (and no settlor if the trust is
            revocable) is a U.S. person;
     (iv)   An employee benefit plan established and administered in accordance
            with the law of a country other than the United States and customary
            practices and documentation of such country;
     (v)    Any agency or branch of a U.S. person located outside the United
            States if:
            (A) The agency or branch operates for valid business reasons; and
            (B) The agency or branch is engaged in the business of insurance or
                banking and is subject to substantive insurance or banking
                regulation, respectively, in the jurisdiction where located; and

The International Monetary Fund, the International Bank for Reconstruction and
Development, the Inter-American Development Bank, the Asian Development Bank,
the African Development Bank, the United Nations, and their agencies, affiliates
and pension plans, and any other similar international organizations, their
agencies, affiliates and pension plans.

<PAGE>
Page 111

                                       EXHIBIT 8

                                  LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Name                                          Jurisdiction             Business                             % of
----                                          ------------             --------
                                                                                                          Ownership
                                                                                                          ---------
-------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                   <C>                                         <C>
Indo-Pacific Energy Ltd.                   Yukon, Canada         Parent Company                              100%
-------------------------------------------------------------------------------------------------------------------

Source Rock Holdings Limited               New Zealand           Holding company                             100%
-------------------------------------------------------------------------------------------------------------------

Indo-Pacific Energy (NZ) Limited           New Zealand           Oil and gas exploration and development     100%
-------------------------------------------------------------------------------------------------------------------

Ngatoro Energy Limited                     New Zealand           Oil and gas exploration and development     100%
-------------------------------------------------------------------------------------------------------------------

PEP 38716 Limited                          New Zealand           Oil and gas exploration and development     100%
-------------------------------------------------------------------------------------------------------------------

Indo-Pacific Energy (Aust) Pty Limited     Australia             Oil and gas exploration and development     100%
-------------------------------------------------------------------------------------------------------------------

Indo-Pacific Energy (PNG) Limited          Papua New Guinea      Oil and gas exploration and development     100%
-------------------------------------------------------------------------------------------------------------------

Trans-Orient Petroleum (Aust) Pty Limited  Australia             Oil and gas exploration and development     100%
-------------------------------------------------------------------------------------------------------------------

ZOCA 96-16 Pty Limited                     Australia             Oil and gas exploration and development     100%
-------------------------------------------------------------------------------------------------------------------

Trans-Orient Petroleum (PNG) Limited       Papua New Guinea      Oil and gas exploration and development     100%
-------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>