SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-K/A1

   AMENDMENT NO.1 TO THE ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended December 31, 1999.

                         Commission file number 0-29344

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

     Yukon Territory, Canada                              Not Applicable
(State or Jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                        Identification No.)

                          1200-1090 West Pender Street
                           Vancouver, British Columbia
                                 Canada, V6E 2N7
         (Address of Principal Executive Offices, including Postal Code)

                Registrant's telephone number,     (604) 682-6496

        Securities registered pursuant to Section 12(b) of the Act: NONE
        ----------------------------------------------------------------


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

                                  Common Stock
                              (Title of each class)

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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K: Yes [ ].

The aggregate market value of the voting stock held by non-affiliates of the
Registrant, as of March 28, 2000, was approximately $10,456,656.  As of November
21, 2000 the Registrant had 32,446,622 shares outstanding without par value.

Documents Incorporated by Reference: None



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                                     PART I

ITEM 1. BUSINESS

Forward Looking Statements

   Except for the description of historical facts contained herein, this Form
10-K contains certain forward-looking statements within the meaning of the
provisions of the Private Securities Litigation Reform Act of 1995 concerning
future activities, of the Registrant and the Registrant's future prospects, that
involve risks and uncertainties, including the possibility that the Registrant
will: (i) be unable to find commercial quantities of hydrocarbons, (ii) ever
achieve profitable operations, or (iii) not receive additional financing as
required to support future operations, as detailed herein and under ITEM 7
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" and from time to time in the Registrant's future filings with the
Securities and Exchange Commission and elsewhere. Such statements are based on
management's current expectations and are subject to a number of factors and
uncertainties which could cause actual results to differ materially from those
described in the forward-looking statements.

General Development of the Business

   The Registrant is an oil and gas exploration company based in Vancouver,
British Columbia, Canada with interests in the Austral- Pacific region in
hydrocarbon properties described in Item 2. The Registrant is to a lesser extent
involved in the development and production of hydrocarbons. Total production
revenue for the year ended December 31, 1999 was $314,698. 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 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 is currently 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 1.5 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 hydrocarbon assets 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 trades 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 in Vancouver, British Columbia and an exploration office in Wellington,
New Zealand.

   From 1996 to 1999, 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

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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.

   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 U.S.
Securities and Exchange Commission (the "SEC") staff had outstanding comments
from October 30, 1998, regarding the Registrant's SEC Form 10 registration
statement (the "Form 10"). From August 20, 2000 until present the Registrant's
Common Shares have not traded on an organized market.

   On January 31, 2000 the Registrant announced that it had entered into a
letter of intent to acquire all the exploration permit interests (the "Assets")
of Trans-Orient Petroleum Ltd. The terms of the formal agreement (the
"Agreement") were finalized with formal closing of the Agreement occurring on
March 29, 2000 while the effective date of the Agreement is January 1, 2000. The
Agreement was subject to ratification by the shareholders of Trans-Orient
Petroleum Ltd. at a General Meeting of the shareholders to be held on May 23,
2000.  In an event subsequent to this report, an Extraordinary General Meeting
of Trans-Orient Petroleum Ltd was held on May 23, 2000, where this Agreement was
ratified by a 99.4% shareholder vote in favor. Like the Registrant, Trans-Orient
Petroleum Ltd. concentrated its exploration efforts within New Zealand,
Australia and Papua New Guinea. The Assets purchased by the Registrant consisted
of the following interests:

    Permit Description           Location          Participating Interest

    New Zealand

    PEP 38328                East Coast Basin               22.5%
    PEP 38332                East Coast Basin               20%
    PEP 38335                East Coast Basin               15%
    PEP 38339                East Coast Basin               50%
    PEP 38720                Taranaki Basin                 50%
    PEP 38723                Taranaki Basin                 40%
    PEP 38256                Taranaki Basin                 35%

    Australia and ZOCA ( Zone of Cooperation, Area A; between Australia &
    United Nations)

    ZOCA 96-16               Timor Sea                      10%
    AC/P 26                  Timor Sea                      35%


    Papua New Guinea

    PPL 192                  Papuan Basin - Foreland        20%
    PPL 157                  Papuan Basin - Foreland        7.5%
    PPL 215                  Papuan Basin - Foreland        40%
    PPL 213                  Papuan Basin - Highlands       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. The value placed upon the Assets by the Registrant and Trans-
Orient Petroleum Ltd. was $4,097,362 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 $3,053,179 (the "Purchase Price").

<PAGE>


Summary of the Material Conditions of the Trans-Orient Petroleum Transaction

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

     - received from the transaction a range of exploration assets, none of
       these being producing assets, from Trans-Orient Petroleum Ltd.  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 various shares held by the Registrant
        to Trans-Orient Petroleum Ltd., including shares held by the Registrant
        in Trans-Orient,
     3) issuance of shares and warrants in the Registrant to Trans-Orient
        Petroleum Ltd., and
     4) grant to Trans-Orient Petroleum Ltd. of a range of gross over-riding
        royalties on the transferred assets

   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.

   The terms of the Agreement are set out in more detail below.

Material Terms of the Agreement.

   Under the terms of the Agreement, the Registrant agreed to pay the Purchase
Price to Trans-Orient Petroleum Ltd. as follows:

   a) transfer of 1,800,000 shares of AMG Oil Ltd. to Trans-Orient Petroleum
      Ltd. at a deemed value of $720,000;

   b) transfer of 600,000 shares of Gondwana Energy Ltd. to Trans-Orient
      Petroleum Ltd. at a deemed value of $20,000;

   c) transfer of 517,020 shares of Trans-Orient Petroleum Ltd. to Trans-Orient
      Petroleum Ltd. for cancellation;

   d) grant to Trans-Orient Petroleum Ltd. of a 1% gross overriding royalty
      ("GORR") on the interest transferred on any hydrocarbon production from
      the following permits: ZOCA 96-16, AC/P 26, PPL 192, PPL 157, PPL 213, PPL
      215, and a 2% GORR on any hydrocarbon production from the following
      properties: PEP 38328, PEP 38332, PEP 38335, PEP 38339, PEP 38720, PEP
      38723, PEP 38256 , and a 5 % GORR on any wells drilled within one
      kilometer of the Whakatu-1 well located on License PEP 38328 in Hawkes
      Bay, New Zealand.

   e) allotting and issuing 4,184,224 Units to Trans-Orient Petroleum Ltd.  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
      the end of business on the day that is one year from the date of issuance
      and thereafter for $0.75 per common share up to the close of business on
      the day that is two years from the date of issuance. 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.

   f) issuing additional units (the "Additional Units") to Trans-Orient
      Petroleum Ltd., excluding any existing issued warrants and options, if
      within 12 months from the closing date of the transaction, the registrant
      completes equity financings (the "Equity Financings") in the aggregate

<PAGE>

      amount of not less than $500,000, at an average price (the "Average
      Price") per share or unit issued of less than $0.50 per share or unit. If
      the Registrant completes the Equity Financings, then it shall issue the
      number of Additional Units, excluding additional B Warrants, that Trans-
      Orient Petroleum Ltd. would have been entitled to receive had the Units
      been issued to Trans-Orient Petroleum Ltd. at the Average Price;

   g) 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; and

   h) the Registrant shall meet all ongoing costs accruing to Trans-Orient
      Petroleum Ltd.'s account after December 31, 1999, and shall hold Trans-
      Orient Petroleum Ltd. harmless from any loss or claim arising out of
      activities on the Assets or the Subsidiaries Assets after the closing date
      of the transaction.

   The Registrant's operations are conducted through its wholly owned
subsidiaries, as described below:

                           Indo-Pacific Energy Ltd.

      Source Rock Holdings Limited         Indo Overseas Exploration Limited
                                                       (B.C.)

      Indo-Pacific Energy (NZ) Limited     Indo-Pacific Energy (PNG) Ltd.

      Indo-Pacific Energy Pty. Ltd.        Ngatoro Energy Limited PEP 38716
                (Aust.)                                Limited

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

   All monetary amounts contained in this Statement are, unless otherwise
indicated, expressed in United States dollars. On December 31, 1999 the closing
rate for Canadian dollars was US$1.00 for CDN$1.4433. 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. See Item 6. Selected Financial Data - Exchange Rates.

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's share of production revenue from oil &
gas sales from PMP 38148 was $487,941 for the year ended December 31, 1997,
$234,168 for the year ended December 31, 1998 and $314,698 for the year ending
December 31, 1999.

   The Registrant's revenue from interest was $382,118 for the year ended
December 31, 1997, $450,597 for the year ended December 31, 1998 and $344,085
for the year ending December 31, 1999, providing total revenues of $870,059 for
the year ended December 31, 1997, $684,765 for the year ended December 31, 1998
and $658,783 for the year ending December 31, 1999. Operating profits or
(losses) were $509,192 for the year ended December 31, 1997, $(316,208) for the
year ended December 31, 1998 and $(494,706) for the year ending December 31,
1999.

Acquisition, Exploration and Development Expenditures.

   The Registrant incurred expenditures relating to the acquisition,
exploration and development of its petroleum properties in the amounts of
$1,064,976 for the year ended December 31, 1997, $1,901,030 for the year ended
December 31, 1998 and $1,923,921 for the year ending December 31, 1999 See ITEM
2 DESCRIPTION OF PROPERTIES for a description of the Registrant's properties.

<PAGE>


Plan of Operations

The Registrant is required or plans to carry out the following work by the
following date:

Anticipated Total Work Obligation Before December 31, 2000


Property[1]        Description of Work                               (US$)

Developed

TB/ PMP 38148      Workovers of Ngatoro-1/-9/-11 (completed)          51,250

Undeveloped

ECB/ PEP 38330     Seismic acquisition & studies (completed)          10,250
ECB/ PEP 38335     Seismic acquisition (completed)                   292,250
ECB/ PEP 38328     Drill Whakatu-1 well (completed)                  432,750
ECB/ PEP 38332     Seismic acquisition and 1 well(completed)         376,250
TB/ PEP 38736      Seismic acquisition (completed)                   131,000
TB/ PEP 38716      Administration & geological studies                19,500
TB/ PEP 38720      Well review & 3D seismic data purchase             65,000
TB/ PEP 38723      Seismic acquisition and 1 well (carried
                     through cost)                                    60,000
ECB/ PEP 38339                                                        80,500
CB/ PEP 38256      Drill 2 wells (carried through cost)               20,000
TS/ AC/P19         3D seismic data purchase (completed)              103,000
TS/ AC/P31         Administration & geological studies                 8,000
TS/ AC/P26         Administration & geological studies                18,000
TS/ ZOCA 96-16     Drill 1 well (carried through cost) & admin        22,500
PBF/ PPL 192       Administration & geological studies                40,000
PBF/ PPL 215       Administration & geological studies                67,500
PBF/ PPL 157       Administration & geological studies                15,000
PBH/ PPL 213       Administration & geological studies                 9,000
                                                        TOTAL    $ 1,821,750

   [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

   Where marked as 'completed', this represents completion of the work
subsequent to the date of this report.

   Where marked as 'carried through cost' this represents a zero cost
contribution by the Registrant to the well(s)

Employees and Consultants

   The Registrant employs six people 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, joint venture
accounting, office management and New Zealand, Australian and PNG corporate
affairs. The Registrant is also provided office space in Vancouver, B.C. in
which one person is employed by the Registrant to provide shareholder relations.
The Registrant also receives office use and management, reception, legal and
accounting services from DLJ Management Ltd. DLJ Management Ltd. maintains a
Vancouver, B.C. office where it employs seven people who devote approximately
30% of their time to matters relating to the Registrant. DLJ Management Ltd.
charges the Registrant for the services on a cost recovery basis.

   In addition to the foregoing, the Registrant also receives technical
services from a number of exploration consultants. The principal consultants
engaged from time to time by the Registrant are Bruce Morris, Roger Brand, David
Francis and Carey Mills.

<PAGE>

   Dr. Morris trained in geology and lectured as a sedimentologist at
University of Victoria (New Zealand). Over the last nine years, he has been
involved in remote oilfield operations in Papua New Guinea, and with exploration
in the Taranaki Basin and East Coast Basin of New Zealand. Dr. Morris has also
worked as a well site geologist for Exxon in the Gippsland Basin, Australia.

   Mr. Brand has over 20 years experience in the oil industry. After
graduating from Oxford University (United Kingdom) in 1974, he worked for
British Petroleum as a geologist in the North Sea and onshore United Kingdom.
Following a move to New Zealand in 1982, Mr. Brand served as Chief Geologist for
New Zealand Oil and Gas Ltd. for three years. Since 1986, he has conducted a
variety of exploration assessments and prospect valuations for major and minor
oil companies based in New Zealand, Australia and Papua New Guinea. His main
interests lie in the definition of hydrocarbon plays in New Zealand's Taranaki
Basin.

   Mr. Francis is a highly experienced field geologist with over 15 years
specialist activity in New Zealand's East Coast Basin. He has completed numerous
scientific papers and company reports detailing East Coast petroleum geology.

   Mr. Mills provides the group with a broad range of capabilities. Before
joining the Registrant, Mr. Mills worked as a petrophysicist for Exxon on the
West Tuna Field in the Gippsland Basin, Australia, on the Moran discovery in
Papua New Guinea, as well as other responsibilities.


Hydrocarbon Tenures 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 Papau New Guinea which authorize
prospecting and exploration for hydrocarbons. These are listed on page 4.

   In New Zealand, Petroleum Exploration Permits ("PEP") are granted to the
successful bidder for that area, if gazetted, or the first applicant for an
ungazetted area; and generally prescribe work to be performed over the term of
the permit.  Permits contain a work program approved by the Minister of Energy.
Under the Crown Minerals Act of 1991, a Petroleum Exploration Permit, grants the
right to explore for petroleum for a term of five years and may be extended for
up to ten years on conditions the Minister of Energy considers appropriate. If
the holder of an exploration permit discovers a deposit or occurrence to which
the exploration permit relates and satisfies the Minister of Energy that the
results of exploration justify granting a mining permit, the holder may, on
application before the expiry of the exploration permit, obtain a Petroleum
Mining Permit ("PMP") for up to 40 years for such part of the land as the
deposit or occurrence relates, and exchange the exploration permit for such part
of the land. Changes to the conditions prescribed in a permit may be made by
application to the Minister of Energy if the holder of a permit is in
substantial compliance with the conditions of the permit.

   In Australia, the Petroleum (Submerged Lands) Act 1967 governs permits
lying further offshore than three miles from the coast. Coastal waters and lands
are within state jurisdiction. The Australian exploration permits of the
Registrant are granted and regulated under the Petroleum (Submerged Lands) Act
1967. This statute provides for four types of permits, exploration permits,
retention leases, production licenses and pipeline licenses. An exploration
permit provides the exclusive right to undertake seismic surveys and drilling in
a defined area. Permits are awarded by a work program bidding system or a cash
bidding system over acreage released each year by the Commonwealth. Work program
permits are issued for an initial term of six years with an unlimited number of
five year renewals. At each renewal, 50% of the permit area must be
relinquished. On discovering petroleum, a holder must notify the authority. If
commercial, the holder may apply for a production license. Production licenses
are issued for 21 years and may be renewed for a further 21 years. If the holder
makes a non-commercial discovery which has a reasonable chance of becoming
commercial within the next 15 years, a retention lease may be granted. Retention
leases are issued for terms of five years with renewal periods of five years. A
pipeline license is usually granted at the same time as a production licence.

   In Papua New Guinea, the Petroleum Act provides for four different types of
license: petroleum prospecting licenses ("PPL") for exploration, which is the
form of tenure held by the Registrant, petroleum development licenses ("PDL")
for petroleum developments, petroleum retention licenses ("PRL") for gas
reserves which are considered presently non-commercial and pipeline licenses. A
PPL is granted for a term of six years with one five year extension permitted.

<PAGE>


At the end of the first term, the holder must relinquish 50% of the initial size
of the permit, less the area of any PRLs on extension. A PPL usually contains a
work program which is submitted to, and approved by, the Minister for Petroleum
and Energy. The Minister may approve appropriate variations to a work program at
any time during the third to sixth years of a PPL. The State has the option to
acquire a 22.5% interest in any petroleum development. Where it does so, a two
percent interest is held for the benefit of the landowners in the project area.
The price payable by the State is 22.5% of sunk costs, including the allowable
exploration expenditure of the project. Orogen Minerals Limited ("Orogen"), a
publicly listed company 51% owned by the State, has an option to acquire up to a
20.5% interest in future petroleum projects out of the State's entitlement of
22.5%. If Orogen does not exercise its option, the permit holder is obliged to
carry the State's acquisition of its 22.5% interest and all development costs.
This carried interest is repaid with a commercial rate of interest out of
petroleum production attributable to the State's share. If Orogen exercises its
option, the sunk costs of the carried interest is repaid immediately. A PDL is
granted for an initial term of 25 years with one 20 year extension. A PRL is
granted for an initial term of five years with two five year extensions. A
pipeline licence is granted for a term of 25 years with one 20 year extension.
Assignments of, and dealings in, all types of petroleum licences are permitted,
subject to the Minister's consent. Any assignment or dealing without such
consent is void. Before drilling an exploration well, the permit holder and the
State generally enter into a production agreement that sets out additional
conditions applying to operations, the procedures which will lead to a
development and the terms on which the state will acquire its equity interest in
a development.

   In November 1998, the PNG parliament passed the Oil and Gas Act 1998
which has replaced the Petroleum Act. The material changes effected by the Oil
and Gas 1998 Act are (1) for new projects, the royalty benefit equal to the
royalty paid by a licensee, which is currently two percent of the well head
value, less tax, which is currently five per cent, is to be shared among the
project area landowners, local level government and provincial governments; (2)
the carried interest of two percent in a project held for local landowners is to
be provided free to the area landowners and local government (s); (3) licensing
of petroleum processing facilities is required; (4) third party access
arrangements must be adopted where a pipeline is strategic; (5) social mapping
and landowner identification studies must be carried out by licensees; (6) the
State's entitlement to its 22.5% interest and all development costs is enshrined
in law; (7) provincial governments may form a national gas corporation to
acquire on commercial terms interests in gas projects; (8) extended well testing
may be carried on with the State's consent; and (9) development forums must be
held before the development of a project.

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 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
establish their own rules and standards for environmental effect assessments and
required degrees of consultation. Both regional and district councils must
produce and continuously update planning schemes for their jurisdictions. These
schemes may limit industries to designated areas, depending on the environmental
or social effects. The right to take from, and discharge into, waterways for
industrial purposes requires approval from various regional catchment
authorities, which may require maintenance of water quality standards.

   Resource consents authorize the use or development of a natural or physical
resource or permit an activity to be conducted which may affect the environment.
Under the Resource Management Act 1991 there are five types of resource
consents: land use consent, subdivision consent, water permits, discharge
permits and coastal permits. Certain applications require public notice and
allow public involvement in the assessment process. Adverse decisions made by a
regional or district council may be appealed in the Environmental Court. Prior
to conducting operations on a permit the Registrant must secure the necessary
permits from the applicable authority, the withholding of which may postpone or
prevent the Registrant from conducting the planned operations.

   Petroleum exploration and development outside of twelve miles from the
coast comes under the Maritime Transport Act 1994 administered by the Maritime
Safety Authority.

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

<PAGE>


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.

   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. To use 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.

Risk Factors

The common shares of the Registrant must be considered a speculative investment
due to a number of factors. The purchase of the Registrant's common shares
requires consideration of a number of significant risk factors. Purchasers of
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 president has an employment agreement with the
   Registrant. The Registrant does not maintain key person insurance on the
   president or any other employee.

   2. Limited Financial Resources and Lack of Sufficient Capital. 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 its
   permits (See ITEM 1-Plan of Operation). 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 #14). 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 in order 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
   agreement 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 expresses substantial doubt about the
   Registrant's ability to continue as a going concern.

   3. Competition with Other Companies. Other companies with greater financial
   resources or expertise are in competition with the Registrant. The Registrant
   must compete with such companies in bidding for the acquisition of petroleum

<PAGE>


   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.

   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 has
   been maintained above $30/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
   $20-24/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 demand to meet supply, which counteract such
   price rises over a time scale of a year or so. Therefore, the longer that
   prices remain elevated, the more certain 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)
    Sep-98              $11.17
    Oct-98              $ 9.89              Oct-99               $20.14
    Nov-98              $ 9.51              Nov-99               $20.47
    Dec-98              $ 7.47              Dec-99               $20.59
    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

   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.

<PAGE>

   *  The Registrant has Permits in the Timor Sea (ACP26 and ACP 19), an area
   which , to the knowledge of the Registrant, is not subject to any aboriginal
   claims and is 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, to the knowledge of the
   Registrant, is not subject to any aboriginal claims and 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.

   *  The Registrant has Permits in Papua New Guinea (PPL 215, PPL 192, PPL 157,
   PPL 213) which has a democratic government and the local aboriginals claim is
   enshrined in law, which is up to a maximum of 4% wellhead royalty and 2%
   beneficial interest in a permit, taken from the States potential claim of
   22.5% beneficial interest in the permit. To the knowledge of the Registrant,
   the area is not subject to any aboriginal claims

   *  The Registrant has Permits in New Zealand (PEP's 38 330, 38332, 38328,
   38720, 38736, 38716, 38723, 38 339, 38256 and PMP 38148) where the government
   has a right to either a 5% Ad Valorum Royalty or 20% accounting profits tax
   from which it will settle any aboriginal (Maori) claims. The Registrant is
   not aware of any Aboriginal claims over the area.

   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 only one oil or
   gas producing property which does 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 third fiscal quarter dated September 30,
   2000, the Registrant has an accumulated deficit of $6,824,221 and the
   Registrant is expected to continue incurring operating losses and
   accumulating deficits in future periods. This will happen because there are
   expenses associated with the research and exploration of PEP 38256. The
   Registrant cannot guarantee that it will be successful in 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

<PAGE>


   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. Even if
   discoveries in commercial quantities are made by the Registrant, development
   of a discovery offshore or in PNG may take a number of years and financial
   conditions at that time cannot be determined

   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 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 increases the value of the Registrant's cash
   reserves and decreases the expenses 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. In order to be re-listed on the
   OTCBB, the Registrant is required to achieve a "no comment" status with
   Securities and Exchange Commission There is currently no organized market
   within which the Registrant's common shares can be traded.  If the Registrant
   reaches a no comment state with the Securities and Exchange Commission, the
   Registrant is required to thereafter 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.  There can be no assurance that a stable market for the
   Registrant's common shares will ever be developed or be sustained once
   developed. It should be assumed that the market for the Registrant's common
   shares will continue to be somewhatilliquid, sporadic and volatile. These
   securities should not be purchased by anyone who cannot afford the loss of
   the entire investment. If the Registrant fails to achieve a "no comment"
   status with the Securities and Exchange Commission, 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 can or will
   obtain or maintain such status.

   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.

<PAGE>

   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 2-
   DESCRIPTION OF PROPERTY, ITEM 10-DIRECTORS AND OFFICERS OF REGISTRANT AND
   ITEM 13-INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS.


GLOSSARY


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

Metric Units       Imperial Units

Hectare            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 6
Mesozoic        Cretaceous             66 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

Other Geologic Expressions

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.

<PAGE>

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.

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.

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.

<PAGE>


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

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.

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.

ITEM 2.   DESCRIPTION OF PROPERTIES

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 amended Form 10K/A, 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.

   (b)  The royalty owing back to Trans-Orient Petroleum Ltd is 1% on the
        properties acquired from Trans-Orient Petroleum Ltd. in Papua New Guinea
        and Australia and 2% on the New Zealand properties, except for a pool of
        a one kilometre radius around the Kereru-1 well in PEP 38328, where the
        royalty is to be 5%.

   (c)  A Right of Participation exists in favor of Lonman Pty Ltd, 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 premium
        in such farmout. Lonman will be required to repay all past costs
        associated with this equity out of its share of production revenue.

<PAGE>


   For definitions of technical terms used in the description of properties,
see the Glossary of Industry Terms at the end of ITEM 1. BUSINESS.

The following properties which are discussed in this ITEM 2,


Property         Location                          Working Interest

PEP 38330        East Coast Basin, New Zealand        28.05% [1]
PEP 38335        East Coast Basin, New Zealand        25.0%
PEP 38328        East Coast Basin, New Zealand        62.5% [1]
PEP 38332        East Coast Basin, New Zealand        62.5% [1]
PMP 38148        Taranaki Basin, New Zealand          5.0%
PEP 38736        Taranaki Basin, New Zealand          100.0%
PEP 38716        Taranaki Basin, New Zealand          12.4%
PEP 38720        Taranaki Basin, New Zealand          100.0% [1]
PEP 38723        Taranaki Basin, New Zealand          36.0% [1]
PEP 38339        Clarence Basin, New Zealand          100.0% [1]
PEP 38256        Canterbury Basin, New Zealand        20.0% [1]

AC/P19           Offshore Timor Sea, Australia        65.0% [1]
AC/P31           Offshore Timor Sea, Australia        65.0% [1]
AC/P26           Offshore Bonaparte Basin, Timor Sea  35.0%
ZOCA 96-16       The Timor Gap Zone of Cooperation    10%

PPL 192          Onshore Papua New Guinea Foreland    20.0% [1]
PPL 215          Onshore Papua New Guinea Foreland    40.0% [1]
PPL 157          Onshore Papua New Guinea Foreland    7.5%
PPL 213          Onshore Papua New Guinea Foreland    5%

[1] Operated by the Registrant. See Item 13 - Certain Relationships and Related
    Transactions

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.

East Coast Basin, North Island, New Zealand

Petroleum Exploration Permit PEP 38330 (28.05%)

   PEP 38330 was granted on July 1, 1996. The other participants are Mosaic
Oil NL (27.225%), Boral Energy Resources (NZ) Ltd (17.5%) and NWE (ZOCA 96-16)
Pty. Ltd. (27.225%). 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, reprocessing of existing seismic data, and remapping of the
permit. On March 12, 1999, the participants in the permit where 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). If committed to, the well must
be drilled in year five (2001) of the permit. Approximately 28 miles of new
seismic was acquired during January 2000 over the Waingaromia, Kanakanaia,
Arataha and Kowhai lead areas. This seismic was funded by Boral Energy
Resources (NZ) Ltd. at their sole cost, in order to earn a 17.5% equity in the
permit. The permit area is geologically complex, with numerous surface

<PAGE>

structures and oil and gas seeps, and is lightly explored with considerable
discovery potential. Further participants are likely to be sought prior to any
possible drilling.

   For work planned to be done before December 31, 2000 on PEP 38330 and its
estimated cost, See ITEM 1. BUSINESS - Plan of Operations.

   Petroleum Exploration Permit PEP 38335 (10.0%) (covering the same area as
the lapsed Petroleum Prospecting License PPL 38312).

   PPL 38312 was granted in 1992 to Asia Pacific Oil Sdn. Bhd. of Malaysia. In
August 1997 the Registrant earned a participating interest of 10.5% by funding
10.5 percent of the costs of drilling the Waitaria-1 well. The other
participants were Asia Pacific Oil Sdn. Bhd. (64.5%), Northern Oil Ltd. (2.5%),
Everest Oil Co. Ltd. (12.5%) Asia Pacific Oil Sdn. Bhd. was the operator. The
license area was approximately 90,000 acres. The license expired in November
1997.

   Before the license expired, the participants drilled the Waitaria-1 well to
a depth of 1,344 meters (~4,400 feet) and encountered high gas levels, but was
abandoned due to engineering problems encountered while drilling before the
target Tunanui Sandstones were reached.

   Application was made by the Registrant and the participants for the grant
of a new permit covering the area. Petroleum Exploration Permit PEP 38335 was
granted on November 29, 1998 for an initial term of five years, renewable over
50% of the permit area at the end of the five years. The participants are now
registered as Westech Energy NZL Ltd (35%), Orion Energy Ltd 35%, Everest Energy
Ltd. ( 5.0%), Trans-Orient Petroleum Ltd. (15%) and the Registrant (10.0%).
After completing the purchase of Trans-Orient Petroleum Ltd.'s interest, the
Registrant's interest will be (25%). _Westech Energy NZL Ltd. is the operator.
An operating agreement is being negotiated. Before execution of an operating
agreement, the participants proceed in accordance with standard local industry
conventions. Several exploration leads have been identified within the permit,
including the Waitaria structure which the Waitaria-1 well did not properly
test, due to engineering problems, and the Kaiponi structure immediately along
trend from the Waitaria structure.

   According to the terms of the permit, the Registrant and the other
participants are required to complete the following:

(i)    prior to November 29, 2000, complete a work program which includes
       drilling one exploration well and 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
       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.

   PEP 38335 is in good standing with respect to its current work commitments.
The Registrant and its partners acquired fourteen miles of new seismic in
January 2000, over the Waitaria and Kaiponi structures. A well is being planned
for drilling in late 2000.

   For work planned to be done before December 31, 2000 on PEP 38335 See ITEM
1. BUSINESS - Plan of Operations.

Petroleum Exploration Permit PEP 38328 (62.5%)

   The participants in the permit are the Registrant (62.5%)and Boral Energy
Resources 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.

<PAGE>


   Through the past 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 have
been identified. These include an anticline feature in the north of PEP 38328
(the Mai Mai Prospect), anticlinal features in the coastal area around and south
of Napier (the Napier Lead, the Whakatu Prospect and the Haumoana Lead), and
several features near the border of the two permits (the Rosearl Leads).

   During the year the Registrant and its partner concentrated their exploration
efforts within this permit on three prospects: the Napier, Whakatu and Mai Mai
by collecting 25 miles of new seismic data over these areas.  Subsequent
processing and mapping of the seismic confirmed the Whakatu Prospect, located
near the city of Hastings, as a drillable prospect with the other prospects also
considered as possible future drilling sites. The Whakatu-1 well was then
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, The. Whakatu-1 well was, therefore, plugged and abandoned in early
February.  The permit area has ongoing exploration potential, and other
prospects and leads will be reviewed in the light of the results of Whakatu-1
before any further exploration program is defined.

   Current gas consumption in this area is around 2.5 billion cubic feet per
annum. This is supplied by an eight inch pipeline from the Taranaki area on the
west coast of the North Island (220 miles from Hastings). This pipeline passes
through the center of the PEP 38328 permit and the adjacent PEP 38332 permit
area, giving Indo-Pacific excellent access to the national gas pipeline
infrastructure as well as close proximity to the local market.

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

   An operating agreement has been entered into among the participants. Among
other things, the operating agreement provides that a participant may not sell,
assign, transfer, mortgage, pledge, charge, encumber, lease, sub-lease, declare
itself trustee of or otherwise dispose of or create a charge or encumbrance over
all or part of its participating interest except to a "related body corporate"
as that expression is defined in the Companies Act (NZ) if that related body
corporate holds the participating interest for at least one year without either
the consent of the other participants or first offering the participating
interest proposed to be dealt with to the other participants.

   For work planned to be done before December 31, 2000 on PEP 38328 and its
estimated cost See ITEM 1. BUSINESS-Plan of Operations.

Petroleum Exploration Permit PEP 38332 (62.5%)

   PPL 38332 was granted on June 24, 1997. The other participant is Boral
Energy Resources 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 nearly 68 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. During the year, the Registrant and the other participants acquired
a further 43 miles of seismic data over the Tukipo Lead and other areas.
Subsequent processing and mapping of the seismic have ruled out the Tukipo Lead
as a favorable drilling prospect. The Boar Hill Prospect which has been defined
by earlier seismic mapping is being considered as a possible drilling target by
the permit participants, as also are a number of seismic and surface geology
leads, including Speedy, Waewaepa and Oparae A further four mile seismic line
was acquired over Speedy in January 2000, and confirmed a closed structure,
which is now being considered for drilling to about 3000 feet depth in mid 2000.

   The Registrant and the other participant have completed the work program
required for the first two and a half years, and have made the permit commitment
required by December 24, 1999 to drill one exploration well prior to June 24,
2000, or surrender the permit. Other participants may be sought to fund
drilling.

<PAGE>

   An operating agreement is being negotiated. Before execution of an operating
agreement, the participants proceed in accordance with local industry
conventions. Among other things, the operating agreement will provide that a
participant may not sell, assign, transfer, mortgage, pledge, charge, encumber,
lease, sub-lease, declare itself trustee of or otherwise dispose of or create a
charge or encumbrance over all or part of its participating interest except to a
"related body corporate" as that expression is defined in the Companies Act (NZ)
if that related body corporate holds the participating interest for at least one
year without either the consent of the other participants or offering the
participating interest proposed to be dealt with to the other participants.

   For work planned to be done before December 31, 2000 on PEP 38332 and its
estimated cost see ITEM 1. BUSINESS-Plan of Operations.

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 Canterbury Basin is about twelve million acres with the 2,760,120 acre
(4,312.7 square miles) PEP 38256 covering most 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 provided AMG with an option to earn up to 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. In June 2000 AMG Oil Ltd. exercised its
option to acquire a further 50 % and thereby own an 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 by further farmouts of its 80% to
Orion Exploration Limited, Durum Energy Cons. Ltd. and Magellan Petroleum
Australia Ltd

   In February 1999, The Registrant and its joint venture partners completed a
165 mile 2D seismic program as a second stage follow up survey to the joint
venture's earlier 120 mile seismic survey. The second phase of seismic surveys
were paid solely by AMG Oil Ltd. Field sampling and laboratory analysis has
identified several potential source and reservoir rock sequences.

   The participants have completed the interpretation and mapping of the
recently acquired seismic, and a further 112 miles of seismic were acquired in
March 2000 to further define the Ealing and Arcadia Prospects and the Chertsey
South Lead for drilling in late 2000.

   The Arcadia Prospect is a well defined four-way dip closed anticline in
excess of 8000 acres as mapped at Oligocene level. The main targets are the Mt
Brown Limestone at approximately 2,100 ft, Homebush Sandstones at 3,800 ft and
Broken River Formation sandstones at 4,500 ft.

   The Ealing Prospect is a large paleo-drape structure which is augmented by
monoclinal flexure above a reactivated basement fault on its northern margin.
The main targets are the Homebush and Broken River Sandstones.

<PAGE>

On October 19, 2000 the joint venture spudded the Ealing-1 well. On November 1,
2000 it was announced by the Registrant that the Ealing-1 exploration well in
permit PEP 38256 in had reached its TD of 1696m (5565 feet) and electric logging
of the well was in progress. The main objective sandstones were encountered near
the predicted depth and are well developed, but there is no evidence for
commercial hydrocarbons. The well was plugged and abandoned, and preparation was
being made to move the rig to the Arcadia-1 location, about 70 miles to the
north. By drilling the Ealing-1 well, the participants have completed all work
required under the permit conditions, which included, the drilling of one
exploration well.

On November 13,2000 the Registrant announced that the Arcadia-1 well had
spudded.

   For work planned to be done before December 31, 2000 on PEP 38256 and its
estimated cost, see ITEM 1. BUSINESS-Plan of Operations.

Petroleum Exploration Permit PEP 38339, Cook Strait (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.

   The permit area is approximately 815,400 acres and encloses the southern
part of a Miocene-Pliocene basin formed in response to movement along the Alpine
Fault and associated plate boundary faults. No wells have been drilled and there
is no previous onshore seismic data. However, surface geological mapping has
identified the Blind River Anticline as a focus of exploration.

   Before February 26, 2000 the Registrant is required to reprocess available
offshore seismic data and collect additional gravimetric data, conduct rock
sampling and evaluate the database to define the basin structure and identify
prospects and leads for further evaluation. Before November 26, 2000, the
Registrant is to collect and interpret a minimum of 12 miles of onshore seismic
data and 30 miles of offshore seismic data. Any additional seismic data required
to identify a drilling prospect is to be collected by May 2001 and a well is to
be drilled before November 26, 2001. A work program for the remainder of the
permit is then to be submitted for approval.

   The initial focus of exploration on this permit has been the onshore Blind
River Anticline, a feature that BP geologists mapped as an area of interest
several decades ago. The Registrant. acquired 15 miles of new seismic data over
the Blind River area in March 1999. The data was of poor quality, which has
hindered interpretation. Further geological and geophysical work is being
considered.

   For work planned to be done before December 31, 2000 on PEP 38339 and its
estimated cost, see ITEM 1. BUSINESS-Plan of Operations.

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 (CDN$478,755, 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, which has six producing oil wells and one
producing gas well.

<PAGE>

   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 Fletcher Challenge Energy Taranaki Ltd. (59.57%).
New Zealand Oil & Gas Ltd. is the operator. The Crown in right of New Zealand
has reserved a royalty of the greater of five per cent of net sales revenue from
the sale of petroleum products or 20% of accounting profits.

   Oil and gas production and sales revenue during the Registrant's last three
fiscal years:

Year  Oil Sales (bbl)  Oil Revenue (US$)  Gas Sales( 000 scf)  Gas Revenue (US$)

1997   26,556                487,941              [1]
1998   20,628                224,921          27,688                  9,247
1999   19,786                302,064          38,605                 12,634

[1]   To August 1998 gas was flared.

   The Registrant entered into an oil sales contract dated November 9, 1997
with Fletcher Challenge Energy Taranaki Limited and a gas sales contract dated
February 18, 1998 with Fletcher Challenge Energy Limited. Under the oil sales
contract, the Registrant sells its share of production from the field at the
monthly average of the mean of the Asian Petroleum Price Index published in Hong
Kong. The agreement may be terminated on 30 days' notice on the occurrence of
certain events. Gas sales began in the third quarter of 1998.

   A workover of the Ngatoro-1 well was completed successfully in mid-June
1999, adding approximately 280 barrels of oil per day to production. The joint
venture participants have also approved workovers of the Ngatoro-9, Ngatoro-11
and Ngatoro-1 production wells which should add at least 100 barrels of oil per
day to production. At the 1999 year end, production from the field was averaging
approximately 1100 barrels of oil per day and 2.6 million cubic foot of gas per
day. Drilling of two new wells to test separate oil prospects is being
considered.

   For work planned to be done before December 31, 2000 on PMP 38148 and its
estimated cost see ITEM 1. BUSINESS-Plan of Operations.

Petroleum Prospecting License PEP 38736 (100%) (includes the area formerly held
under PPL 38706)

   The Registrant has a 100% participating interest in Petroleum Exploration
Permit 38736 ("PEP 38736") which was granted on July 14, 1999. The Registrant
had a 7.75% participating interest in Petroleum Prospecting License 38706 ("PPL
38706") with Fletcher Challenge Energy Ltd. ("Fletcher Challenge"), as the
operator, holding the remaining 92.25% participating interest. PPL 38706
required the participants to complete a work program including reprocessing 300
kilometers of seismic data by July 31, 1999 and drilling one exploration well by
July 31, 2000. However, Fletcher Challenge relinquished its interest in PPL
38706 and as a result, the Registrant was permitted to add the acreage of PPL
38706 as part of PEP 38736, subject only to a slight increase in the work
program required under PEP 38736.PEP 38736 now requires the Registrant to
complete a work program including the following

    (i)    prior to January 14, 2002, acquire, process and interpret eight
           kilometers of seismic data or equivalent 3D seismic data, reprocess
           ten kilometers of seismic data, and 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, 1999, PEP 38736 is in good standing with respect to its
work commitments. For work planned to be done before December 31, 2000 on PEP
38706 and its estimated cost, see ITEM 1. BUSINESS-Plan of Operations.

Petroleum Exploration Permit PEP 38716 (23.8%)

   PEP 38716 was granted on January 30, 1996. The participants are the
Registrant (23.8%), Marabella Enterprises Ltd. (29.6%), Euro-Pacific Energy Pty.

<PAGE>

Ltd. (6.6%), Australia Worldwide Exploration NL (25.0%) and Antrim Energy Ltd.
(15%).

   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. The gathering station for the Waihapa-Ngaere
oil and gas field is located within a few miles of the boundary of PEP 38716.
The area consists of gently rolling hills with rural agriculture being the main
activity. Previous exploration of PEP 38716 has resulted in the collection of
several hundred miles of seismic data, and the drilling of several wells, all of
which had oil shows. The Crown Prospect is located in the northern part of PEP
38716. The main target horizons in the Crown Prospect were prognosed as the
Tikorangi limestones, at an estimated depth near 9,000 feet and the Tariki
sandstones below about 11,500 feet, while Kapuni Group sandstones are expected
to be encountered below 12,500 feet. The Crown Prospect was interpreted as a
thrust block anticline, somewhat similar in geological style and size to the
nearby Waihapa oil field.

   On March 31, 1999, drilling of the Huinga-1 well on the Crown Prospect
commenced. The Huinga-1 well was drilled to a total depth of 13,000 feet in
order to test several target zones. The well was plugged and suspended as in
order to allow a reassessment of the prospect, given that the geology drilled so
far is somewhat different to that expected.

   South of the Crown Prospect lies the Oru Prospect which targets the Miocene
sandstones of the Mount Messenger Formation at depths of less than 5,000 feet.
This is considered to be a secondary target within the permit area. The
Waihapa-8 well, drilled on the very edge of the Oru structure, flow tested oil
from the target sandstones at rates in excess of 750 barrels per day. Oru
Prospect is a potential future drilling target.

   For work planned to be done before December 31, 2000 on PEP 38716 and its
estimated cost see ITEM 1. BUSINESS-Plan of Operations.

Petroleum Exploration Permit PEP 38720 (100%)

   PEP 38720 was granted on September 2, 1996.  The permit is approximately
6,322 acres in area. The Registrant has completed the work program of seismic
data collection, seismic reprocessing and modeling and reservoir engineering
studies on offset wells required for the first two and a half years. The
remaining work program required the Registrant to drill one exploration well
prior to September 2, 1999 and either commit to a satisfactory work program for
the remainder of the permit term or surrender the permit. The Clematis-1 well
was spudded in early December 1999 to test the shallow potential of the
Waitoriki Structure. Clematis -1 well 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, the structure's major gas potential in the deeper play zones to
13,000-foot depth are planned to be tested with a deep well.

   An agreement has been entered into with Westech Energy (NZ) Ltd. whereby
the Registrant will contribute NZ$50,000 to the cost of a 3D seismic survey
which covers an area including about 1000 acres in the south of PEP 38720, for
which the Registrant will receive approximately 2000 acres of 3D seismic data
covering an area including that within PEP 38720. This survey was acquired in
February 2000.

   For work planned to be done before December 31, 2000 on PEP 38720 and its
estimated cost, see ITEM 1. BUSINESS-Plan of Operations.

Petroleum Exploration Permit PEP 38723 (80%)

   PEP 38723 was granted on October 30, 1997. The other participant in this
permit is Gondwana Energy Ltd. (20.0%). The Registrant is the operator. The
permit is 19,783 acres in area.

   The Registrant and the other participant has completed the work program
required, which included reprocessing and interpreting a minimum of 30 miles of
seismic data. On June 2, 1999, the Ministry approved a change in conditions of
the Permit such that the remaining work program requires the participants to
collect a minimum of 5 miles of 2D seismic data prior to April 30, 2000 and
either commit by April 30, 2000 to drill an exploration well by October 30, 2000
or surrender the permit. The Registrant has committed to the new stage of the
seismic, which will be acquired in April 2000 over the Ratapiko Prospect. The

<PAGE>

Ratapiko Prospect is a combination trap with the main target being Mt Messenger
sandstones between 3,500 and 4,600 ft.


   For work planned to be done before December 31, 2000 on PEP 38723 and its
estimated cost, see ITEM 1. BUSINESS-Plan of Operations.

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 or 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%.

Offshore Petroleum Exploration Permit Ashmore Cartier AC/P19 (65.0%), Timor Sea

   A participating interest of 65.0% was acquired by the Registrant in AC/P19
in May, 1997. The other participant is Mosaic Oil NL (35.0%). The Registrant is
the operator.

   The AC/P19 Permit is approximately 364,500 acres and is located across the
southern Ashmore Platform and Cartier Trough area in the Timor Sea. Fan sands
are one reservoir objective, similar to those found in the Tenacious-1 well to
the southeast of the permit. The Registrants earlier acquired the Corvus 2D
seismic data, which has detailed the Ursa Prospect as a potential Plover Sands
trap covering an area of up to 5,000 acres.

   The Ursa Prospect's expected main reservoir, Middle Jurassic Plover
Formation sandstones, are both sourced and sealed by organic-rich
Oxfordian/Kimmeridgian syn-rift shales and mudstones of the Lower Vulcan
Formation. The Plover sands are a proven high quality producer at Jabiru and
other nearby fields.

   By an agreement dated August 12, 1997 the participants granted an interest
to Lonman Pty. Ltd. which is 5% of the premium obtained in farmout of the first
well in the permit, unless previously converted to an equivalent participating
interest by repayment of past costs. 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.

   The Company has also committed to purchase 20 sq. miles of 3D seismic from
PGS Ltd. to further define prospects and identify new leads.

   For work planned to be done before December 31, 2000 on AC/P19 and its
estimated cost, see ITEM 1. BUSINESS-Plan of Operations.

Petroleum Permit Area AC/P31 (65%),

   On September 12, 1999, the Northern Territory Department of Mines and
Petroleum formally awarded permit AC/P31 in the Timor Sea to the Registrant as
Operator (65%) and Mosaic Oil NL (35%). The permit, of approximately 18,000
acres, is adjacent to the much larger AC/P19, and is being explored in
conjunction with the program in AC/P 19.

   AC/P31 is awarded for six years subject to the Registrant fulfilling the
following minimum work requirements:

    (i)    in the first year, these work requirements comprise the purchase of
           geological and geophysical data and the completion of geological and
           geophysical studies;

<PAGE>

    (ii)   in the second year, they comprise the reprocessing of 18 miles of 2D
           seismic data and completion of AVO and pre-stack depth migration
           studies over a test line;

    (iii)  in the third year, they comprise the acquisition of 12 miles of new
           2D seismic and their integration into and interpretation of the
           existing database;

    (iv)   in year four, the obligation is to acquire 12 miles of new 2D seismic
           to high grade prospects, and

    (v)    in the fifth year the participants must conduct a re-evaluation and
           re-interpretation of seismic data and prior to September 12, 2005,
           one exploration well must be drilled.

   For work planned to be done before December 31, 2000 on AC/P31 and its
estimated cost, see ITEM 1. BUSINESS-Plan of Operations.

Permit AC/P26, Offshore Bonaparte Basin, (35%)

   Permit AC/P26 was granted under the Petroleum (Submerged Lands) Act 1967 on
February 25, 1997 for a term of six years. The participants in the permit are
the Registrant (35.0%), West Oil N.L. (30.0%) and Mosaic Oil N.L. (35.0%).
Mosaic Oil N. L. is the operator. The permit is situated in the Timor Sea on the
eastern flank of the oil-rich Vulcan Graben, about 120 miles offshore from the
Western Australia coastline and is administered by the state government of the
Northern Territory, Australia. The water depth is about 300 feet. The permit
area is 101,250 acres

   The Vulcan Basin is a northeast-trending, fault bounded to the northwest
and the southeast by the high blocks of the Ashmore Platform and the
Londonderry High. The basin is characterized by several prominent troughs and a
horst and graben terrain. The grabens lie in an echelon distribution along the
flanks of the basin. Pre-rift, rift, sag and collision phases are recognized in
the structural and stratigraphic development of the area. Up to 30,000 feet of
Upper Permian to Cenozoic sediments occur in the Basin. For the most part,
Jurassic sediments are not present on the Londonderry High and Ashmore Platform.

   Nearby commercial oil fields include the Jabiru, Challis and Skua oil
fields with combined reserves of approximately 200 million barrels of oil. These
have been profitable producers using low cost FPSO (floating production, storage
and offloading) technology which enables profitable production even at low oil
prices. Other mostly uneconomic discoveries including the Montara, Bilyara and
Tahbilk (oil and gas) discoveries west of the permit area and the Talbot oil
field adjacent to the permit area. Petroleum discoveries in the region have been
made in Triassic and Lower to Mid Jurassic sandstones.

   The occurrence of hydrocarbons at the Skua, Montara and Talbot fields has
proved that hydrocarbons have been generated in this region. Migration pathways
from potential Lower Cretaceous and upper Jurassic source shales can be traced
on existing tectonic and detailed structural maps out of the Skua Trough and
Northern Browse Basin into the permit area.

   By an agreement dated May 5, 1998 the participants granted an interest to
Lonman Pty. Ltd. which is 5% of the premium obtained in farmout of the first
well in the permit, unless, previously converted to an equivalent participating
interest by repayment of past costs. 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.

   The participants in the permit have completed the work program required for
the first and second 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 100 kilometers of new 3D seismic data, or purchase of
         existing 3D data, or surrender the permit;

<PAGE>


   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.

   Two hydrocarbon traps along trend from the Talbot oil field have been
identified and mapped from interpretation of a100 square mile 3D seismic survey
purchased in 1998. Several other leads have been identified from interpretation
of 2D seismic data, including a stratigraphic trap in the east of the permit. A
large fault trap, the Rossini Prospect, has been identified as the most
attractive drilling target. Presentations of the results at various industry
forums are being conducted with a view to securing a farm out with third parties
to fund the drilling of an exploration well, planned for late 2000.

   An industry standard operating agreement is near finalization. Before
execution of an operating agreement, the participants proceed in accordance with
local industry conventions.

   For work planned to be done before December 31, 2000 on AC/P26 and its
estimated cost, see Item 1. Business- Plan of Operations.

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 administered by the
Australia-United Nations ( on behalf of the Republic of East Timor) Joint
Authority.

   ZOCA 96-16 is subject to an annual contract service fee of US$125,000 and a
production sharing agreement 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 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. The
production sharing contract requires the following minimum work to be done:

Year of Contract     Description of Work         Estimated Cost (US$)

One                  Data review                   $  100,000
Two                  Data review                      100,000
Three                1500 km of seismic survey        800,000
Four                 Data review                      160,000
Five                 One exploration well           5,000,000
Six                  Data review                       80,000

<PAGE>

   The work prescribed for the first three years has been completed. The
Registrant has paid its one-third share of the above costs. The requirements of
the remaining work program are as follows:

    (i)    prior to November 14, 2000, complete a work program which includes
           seismic data review, or surrender the permit; prior to November 14,
           2001, drill one exploration well, or surrender the permit; and

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

   Following the agreement with Phillips Petroleum Ltd, they will fund the
drilling and testing of an exploration well in the permit during Year 2000, at
no cost to the Registrant. This well will fulfill the Year 2001 well obligation.

   The Registrant's equity in the permit is reduced to 10%, following
Phillips entry and assumption of permit operatorship and the obligation to the
other parties to drill the well during 2000.

   After recovery of investment credits for exploration and capital costs and
of operating costs, the value of production, if any, of petroleum is to be
divided as follow:

    (i)    for average daily production up to 50,000 barrels, 50% to the Joint
           Authority and 50% to the participants;

    (ii)   for average daily production of between 50,001 and 150,000 barrels,
           60% to the Joint Authority and 40% to the participants; and

    (iii)  for average daily production over 150,000 barrels, 70% to the Joint
           Authority and 30% to the participants;

and for any production of gas, after recovery of investment credits for
exploration and capital costs and of operating costs, the value of production,
if any, of gas is to be divided 50% to the Joint Authority and 50% to the
participants.

   An operating agreement exists among the participants. Among other things,
the operating agreement provides that a participant may not sell, assign,
transfer, charge, mortgage, or otherwise dispose of, deal with, encumber, make a
declaration of trust or undertake any other act whereby any legal or equitable
interest is created over all or part of its participating interest except to an
"affiliated corporation" as that expression is defined in the production sharing
contract of November 14, 1996 without the written consent of the other
participants or permit a transfer or allotment of shares not outstanding on
February 10, 1998 without the consent of the other participants.

   A seismic grid totaling some 4,000 miles of data already existed within
ZOCA 96-16, and under the terms of the ZOCA 96-16 Contract, the joint venture
has carried out a reinterpretation of this data, together with a reanalysis of
the wells in and around the Contract Area, and has now acquired an additional
1500 km of new seismic, which is presently being computer processed, prior to
interpretation which will rank and risk the prospects.

   For work planned to be done before December 31, 2000 on ZOCA 96-16 and its
estimated cost see ITEM 1. BUSINESS-Plan of Operations.

Offshore Gippsland Basin, Bass Strait Permit VIC/P-39 (33.33% relinquished in
1999).

<PAGE>

   After extensive geological and geophysical work in this permit the
participants determined that there is a lack of sufficient prospectivity in this
permit area. This conclusion has resulted in the Joint Venture's formal offer to
surrender the permit. The Joint Venture awaits a response from the Federal
Government of Australia.

PAPUA NEW GUINEA

Petroleum Prospecting Licence PPL 192 (60%)

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

   PPL 192 grants the exclusive right to explore for petroleum for an initial
six year term commencing January 28, 1997, 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 and a two per cent participating
interest that can be acquired by local landowners. See Item 2 Hydrocarbon
tenures in New Zealand, Australia and Papua New Guinea.

   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 the lack of roads
leaves the principal mode of transport as the Strickland River.

   The participants have not entered into an operating agreement. Before
execution of an operating agreement, the participants proceed in accordance with
local industry conventions.

   Reprocessing and remapping of the existing seismic data and various
geologic studies were completed to better define the potential size and
exploration uncertainties of the existing prospects and leads, particularly
focusing on the Kamu and Douglas Prospects and the Langia Field. The
participants then completed the acquisition of approximately 30 miles of 2D
seismic in November - December, 1999 ( the Kamu Seismic Survey ) to delineate
the two main prospects: Kamu and Douglas, and to further evaluate the Langia gas
discovery. The Kamu Prospect, a structure in the center part of the area, is
defined on seismic as covering an area of approximately 4,500 acres, with a
vertical relief of about 260 feet at the Toro Sands level at about 5,500 feet
depth. The Douglas Prospect is now mapped as a closed feature incorporating
several separate culminations, covering a total area of approximately 15,000
acres, with maximum vertical relief of approximately 250 foot at Toro Sands
level at about 5,500 foot depth. The Toro Sands are widely developed across the
Papuan Basin, and are the main producing reservoir sequence in virtually all the
onshore discoveries. In addition to the Toro Sands, the Digimu and Imburu
Formations may also hold reservoir quality sandstones and be targets in Kamu and
other structures in PPL 192.

   The license required the participants to reprocess seismic and other data
in the first year of the license at a cost of $100,000 and in the second year of
the license to spend $100,000 on an area review and an analysis of gas
development in a "Kamu" type gas discovery. This work has been done.

   The Kamu Seismic Survey has met the license requirement to acquire 30
miles of seismic in Year 3. The remaining work program requires the participants
to complete the following:

    (i)    prior to January 28, 2001, complete a work program which includes
           drilling 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, complete a work program which includes
           acquiring 240 miles of new 2D or equivalent 3D seismic data; and

    (iii)  prior to January 28, 2003, complete a work program which includes
           drilling a second exploration well.

<PAGE>

   Farm-in parties will now be sought to assist in funding the drilling of one
of the prospects in late 2000.

   For work planned to be done before December 31, 2000 on PPL 192 and its
estimated cost, see ITEM 1. BUSINESS-Plan of Operations.

Petroleum Prospecting Licence PPL 215 (80%)

   PPL 215 was awarded in May 1999. The participants in the permit are the
Registrant holding 80%, and Mosaic Oil of Australia with 20%. The Registrant is
the operator. The PPL 215 license covers approximately 600,000 acres situated in
the lightly explored Papuan Basin Foreland, and adjoins the Registrant's PPL 192
permit.

   With regard to the work program on the permit, the Registrant and the other
participant is required to complete the following:

    (i)    prior to May 7, 2001, complete a work program which includes
           reprocessing 120 miles of existing 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, complete a work program which includes
           acquiring, processing and interpreting 60 miles 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, complete a work program which includes drilling
           one exploration well.

   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,
which counts towards part fulfillment of the Year Three seismic obligation.

   For work planned to be done before December 31, 2000 on PPL 215 and its
estimated cost, see ITEM 1. BUSINESS-Plan of Operations.

Petroleum Prospecting License 157,

   The participants in the license 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%), the Registrant (7.5%) and SPI Ltd. (20%).

   PPL 157 was granted to Santos on June 2, 1993 for a term of six years. The
license area is about 1,248,600 acres. The Stanley Prospect is located in the
northwest of PPL 157.

   Santos is the operator of the license. An operating agreement dated
December 1, 1997 sets out the procedures for work on PPL 157. Among other
things, the operating agreement provides that a participant may assign its
participating interest to an affiliate, as defined in the operating agreement,
if the affiliate continues to be an affiliate for one year after the date of
execution of the documents effecting the assignment. If there is a change of
control of a participant that is not listed on a stock exchange, the other
participants may within 45 days of receipt of notice elect to acquire the
participating interest of the participant of which control is to change. If a
participant wishes to sell, or receives an offer to purchase all or part of its
participating interest, the participant must give notice to the other
participants which have 45 days to elect to acquire such interest subject to
regulatory acceptance. The participant wishing to sell has, generally, 90 days
to close the sale of its participating interest subject to regulatory
acceptance.

   The Stanley-1 well was spudded on January 17, 1999, to test a large dip and
fault closure at the Toro sandstones level (~10,000 feet). Good reservoir
sandstones were encountered during drilling at the shallower Upper Ieru level

<PAGE>

(~7,000 feet), but the formation did not contain hydrocarbons. The well was
drilled to a total depth of approximately 10,600 feet, and encountered good
reservoir sandstones at the main objective level- the Toro Formation - at a
depth of approximately 10,300 feet. Electric logs run in the well have been
interpreted by the operator, Santos Ltd, to be gas charged over a 40 foot
interval, with at least 25 feet of this interval being good pay. However, on
March 9, 1999 all the companies in PPL 157 joint venture decided to defer any
flow testing of the Stanley-1 well until some future date. The Stanley-1 well
has been left plugged and suspended and can be reopened for future flow testing
at the appropriate time should the joint venture decide to do so. The PPL 157
permit has numerous other prospects identified for future exploration drilling,
as well as the already drilled Elevala and Ketu gas discoveries.

   An extension license over part PPL 157 and retention licenses (APRL4 over
the Stanley field and APRL5 over the Elevala and Ketu fields) were offered to
the joint venture partners on September 9, 1999 and from the end of 1999 the
existing license will be replaced by these new licenses.

   Both PPL 192 and the adjacent PPL 157 lie within the foreland of the Papuan
Basin. PPL 213 lies within the fold and thrust belt portion of this same basin.
This is a Mesozoic-Cenozoic basin situated on the northern margin of the
Australian craton. Following some Triassic fluvial deposition, a rifted passive
margin was formed by continental break-up in the Jurassic. At the end of the
Jurassic, a sequence of marine transgressions deposited clean quartz sands on a
broad marine shelf, which now forms the main reservoir units in the basin. The
most important of these are the Lower Cretaceous Toro Formation sands and the
closely underlying sandstones of the Upper Jurassic Digimu and Iagifu Members of
the Imburu Formation. Through the Cretaceous period a thick sequence of
siltstones and shales with localised sandstones (the Ieru Formation) was
deposited across the basin. These form a blanket seal to the Toro Formation
sandstones. Within the upper part of the Ieru Formation, locally developed
sandstones can form good potential reservoirs and these were a secondary
objective in the Stanley-1 well in PPL 157, and were well developed but not
charged. During much of the Lower and Mid-Tertiary, platform carbonates of the
Darai Limestone were deposited over much of the basin. Major deformation and
uplift commenced in the late Miocene, with the collision of the Australian plate
into the Bismark Arc to the northeast. This created the rugged, uplifted terrain
of the Papuan Highlands as a fold and thrust belt within which PPL 106 is
situated, and deposited the thick, dominantly siltstone Era Beds to the south
across the largely undeformed foreland area, in which PPL157, PPL 192 and PPL
215 are all situated.

Petroleum Prospecting License 213 (5%)

   The participants in the permit are Santos Ltd. (35%), as the 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 on February 11,
1999 for an initial term of six years. The permit area is approximately 900,000
acres.

   Santos, through its subsidiary Barracuda Property Limited, is the operator
of the license. An operating agreement for the preceding PPL106 dated December
14, 1989 sets out the procedures for work on PPL 213. Among other things, the
operating agreement provides that a participant may assign or transfer, which
includes any and all means of disposition, including the effects of financing
arrangements, its participating interest to an affiliate, as defined in the
operating agreement, if the affiliate continues to be an affiliate for one year
after the date of the assignment. Any other assignment requires the consent of
the other participants regarding the technical and financial competence of the
assignee and regulatory acceptance. Any financial encumbrance of a participating
interest requires the consent of the other participants and must be made subject
to regulatory acceptance and in compliance with certain other conditions. If a
participant wishes to sell, or receives an offer to purchase all or part of its
participating interest, the participant must give notice to the other
participants which have 30 days to elect to acquire such interest. The
participant wishing to sell has, generally, 180 days to close the sale of its
participating interest.

   PPL 213 is situated in the rugged terrain of the Papuan Highlands, which
have been created by the thrust faulting, folding and uplift associated with the
Upper Tertiary plate collision event. This has created numerous potential
petroleum traps in the form of compressional fold features. Some 30 of these are

<PAGE>


currently recognized within PPL 213 alone and many more are identified in the
surrounding area outside PPL 213. During the past 20 years, a number of these
features have been drilled as successful oil or gas discoveries. These include
the P'nyang, Juha, Hides and Angore gas fields within 50 miles of PPL 213, and
the Moran, Paua, Iagifu, Hedinia and Gobe oil fields further along trend to the
southeast. The Hides field is in production, as are the Moran, Iagifu and Hedina
(collectively, the Kutubu oil fields) and the Gobe. Oil production from these
fields currently amounts to about 130,000 barrels a day. The gas accumulations
typically have high condensate (light oil) content and the oil accumulations
typically have an overlying gas cap. Plans by Chevron and other participants to
construct a gas pipeline from the Kutubu fields across the Coral Sea to
Queensland, Australia are now proceeding, and may bring many more of the gas
fields into production in the next few years.

   The Tumuli-1 well was spudded in April 1999 to test a large compressional
fold anticline which has been mapped from surface geology as a potential
petroleum trap at the Toro Formation level covering an area of about twelve
square miles. The well was plugged and abandoned at a depth of 6,600 feet. High
formation pressures and unstable rock conditions encountered during drilling
resulted in the decision to terminate the well several hundred metres above the
level at which the seismic data indicated the Toro sandstone objective would be
reached. In addition, a deviation of some 30 degrees from vertical built up
during drilling, due to the steep dips of the rock strata, and it was considered
that given the range of problems encountered, it was unlikely the Toro objective
could be reached using this particular drilling operation.

   The Registrant and the other participants have completed the work program
required for the first year of PPL 213 by drilling the Tumuli-1 exploration
well. The remaining work program requires the participants to complete the
following:

    (i)    prior to February 11, 2001, complete a work program which includes
           reprocessing existing seismic data and acquisition of 30km of
           geotraverse data.  In addition, the participants must commit to a
           minimum work program prior to December 11, 2000 for the third and
           fourth years, or surrender the permit;

    (ii)   prior to February 11, 2003, complete a work program which includes
           drilling a second exploration well. In addition, the participants
           must commit to a minimum work program prior to December 11, 2003 for
           the fifth and sixth years, or surrender the permit; and

    (iii)  prior to February 11, 2005, complete a work program which includes
           drilling a third exploration well.

   The PPL 213 joint venture has now reviewed all exploration possibilities in
the licence and had to decide in January whether or not to continue exploration
of the area or collectively withdraw from the permit at the end of Year One.
However, under the Petroleum Act of Papua New Guinea, since less than all
parties have now elected to withdraw at end of Year One, the permit must
continue to the end of Year Two before the Registrant is entitled to withdraw.

CHINA

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

   The Production Sharing Contract entered into by the Registrant and its
other joint venture partner , Moondance Energy Ltd., with Sinopec (China
Petrochemical Corporation) has expired. The joint venture participants have not
yet decided whether to attempt to renegotiate a new agreement with the Chinese
authorities. Due to the expiry of the PSC, the joint venture does not have an
interest in the permit area.

ITEM 3.   LEGAL PROCEEDINGS

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

<PAGE>

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

   There were no matters submitted for the vote of security holders in the
fourth quarter of the year.


                                  PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Market Price of and Dividends on the Registrant's Common Equity

   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.

Year and
Quarter                     High(1)               Low(2)

1998
First Quarter               3.563                 2.406
Second Quarter              3.000                 1.492
Third Quarter               1.813                 0.563
Fourth Quarter              1.031                 0.6875

1999
First Quarter               1.281                  .42
Second Quarter              1.25                   .5625
Third Quarter                .781                  .50
Fourth Quarter               .656                  .3125

2000
First Quarter                .905                  .3125
Second Quarter               .63                   .32
Third Quarter (3)            .95                   .125


(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 1998 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 U.S. Securities and
     Exchange Commission (the "SEC") staff had outstanding comments from October
     30, 1998, regarding the Registrant's SEC Form 10 registration statement.
     From August 20, 2000 until present the Registrant's Common Shares have not
     traded on an organized market.

   As at March 27, 2000 there were 28,262,398 shares outstanding. At February
16, 2000 there were 213 shareholders of record resident in Canada holding
8,713,458 shares and 1,149 shareholders of record resident in the United States
holding 19,316,901 shares.

   No cash dividends have been declared by the Registrant nor are any intended
to be declared. The Registrant is not subject to any legal restrictions
respecting the payment of dividend (except that they may not be paid to render
the Registrant insolvent). Dividend policy will be based on the Registrant's
cash resources and needs and it is anticipated that all available cash will be
needed for property development for the foreseeable future.

<PAGE>

Recent Sales of the Registrant's Securities

   No securities were issued by the Registrant during the 1999 fiscal year.

Subsequent Event

   As part of the consideration to be paid by the Registrant to Trans-Orient
Petroleum Ltd. for the purchase of Trans-Orient Petroleum Ltd.'s Assets, the
Registrant issued 4,184,224 Units. 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 the end of business on the date which is one year from
their issuance and thereafter for $0.75 per common share up to the close of
business on the date which is two years from the date of issuance. Upon the
exercise of the "A" Warrants by Trans-Orient Petroleum Ltd. and subject to a
commercial discovery having occurred on the 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. The securities were issued
pursuant to the exemptions from registration under the 1933 Securities Act
contained with Regulation S (Rules 901-905).


Rights to Acquire Common Shares on Exercise of Options

   No options to acquire the common shares of the Registrant were issued
during the fiscal year ending December 31, 1999. At the Annual General Meeting
of Shareholders held in June 1998, the Registrant did receive approval to grant
options to directors, officers and employees. In March 1999 the registrant
announced that it intended to cancel all previously granted but unexercised
options and grant directors, officers and employees new options to acquire 5.6
million common shares in the capital stock of the Registrant at a price of
US$0.85 per share. The plan to grant options to directors, officers and
employees to acquire up to 5.6 million Common Shares of the Registrant at $0.85
was not carried out by the Registrant and the previously issued options were not
cancelled. The Registrant did not carry out the plan as management later
determined that it was not in the best interests of the Registrant to grant the
options while the final results of from the ongoing Huinga-1 exploration well
had not yet been made public. The previously issued options that were not
cancelled were allowed to expire unexercised in May and October of 2000.

Subsequent Event

On July 10, 2000 the Registrant announced that the Board of Directors approved
the granting to directors, officers, employees and consultants of options to
acquire up to 3,668,000 common shares of the Registrant at an exercise price of
$.50 per share. The exercise price was determined by calculating a 15% discount
from the 10-day trading average prior to the date of granting. Additionally,
further options were granted to two directors to acquire up to 2,000,000 common
shares of the Registrant at an exercise price of $.60 per share. The exercise
price was determined by calculating the 10-day trading average prior to the date
of granting.

Rights to Acquire Common Shares on Exercise of Warrants

   No warrants to acquire the common shares of the Registrant were issued
during the fiscal year ending December 31, 1999. The names, holdings, exercise
price and expiry date of outstanding warrants to purchase common shares of the
Registrant are as follows:


Name                  Number of Share               Purchase     Expiration
                      Purchase Warrants [1]         Price        Date

Tracy Godoy[2]          160,000                      $.40        05/27/01
Alex Guidi[2]           494,000                      $.40        05/27/01
Peter Loretto[3][2]     146,000                      $.40        05/27/01
                      1,000,000                      $.40        07/03/01
Tanya Loretto[2]        150,000                      $.40        05/27/01

[1] In the year ended December 31, 1999, no warrants to acquire shares were
exercised.

<PAGE>

[2] During the 2000 fiscal year the Registrant amended the exercise price from
Cdn. $.90 to US$.40 and extended the expiry date from May 27, 2000 to May 27,
2001.

[3] During the 2000 fiscal year the Registrant amended the exercise price at
which the holder may exercise his warrant from Cdn. $.90 to US$.40 and extended
the expiry date from 07/03/00 to 07/03/01.

Subsequent Event

A part of the purchase price paid to Trans-Orient Petroleum Ltd. for the
purchase of its assets, the Registrant issued, on March 29, 2000, 4,184,224 "A"
Warrants. 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 the end of business on the date which is one year from their
issuance and thereafter for $0.75 per common share up to the close of business
on the date which is two years from the date of issuance. Upon the exercise of
the "A" Warrants by Trans-Orient Petroleum Ltd. and subject to a commercial
discovery having occurred on the Assets, the Registrant will 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.

ITEM 6.   SELECTED FINANCIAL DATA

   The following constitutes selected financial data for the Registrant
prepared in accordance with United States generally accepted accounting
principles for the last five completed financial periods. The information,
expressed in United States dollars unless otherwise indicated, must be read in
conjunction with the more detailed financial information contained in the
accompanying audited financial statements.
<TABLE>
<CAPTION>
                            1999               1998               1997               1996               1995[1]            1995[2]
<S>                       <C>                 <C>               <C>                 <C>                <C>            <C>
Current assets            $ 6,408,980         $ 9,047,114       $10,872,800         $ 9,597,265        $ 1,024,635    $    575,210
Investments                   740,000           1,500,000              -                   -                  -               -
Pet. & Gas                  3,656,224           2,819,946         1,929,839           1,113,928             60,438          10,320
Prop. & Equip                 143,961             134,076           115,244              34,933              6,150            -
Incorp costs                     -                   -                 -                   -                   867             867
Total assets               10,949,165          13,501,136        12,917,883         10,746,126           1,092,090         586,397
Share capital              18,245,867          18,253,992        18,376,476         15,512,578           4,993,739       4,397,920
Deficit                    (7,644,685)         (6,471,552)       (5,591,864)        (4,853,487)         (3,968,214)     (3,824,570)
Cum. comp. adjustment          70,000           1,561,800            87,567               -                   -               -
Gross rev.                    673,609             684,765           870,059            426,432              38,980          25,768
Net loss                   (1,173,133)           (879,688)         (738,377)          (885,273)           (143,644)        (50,706)
Other comp.
 income (loss)             (1,491,800)          1,474,233            87,567               -                   -               -
Comp. income
 (loss)                    (2,664,933)            594,545          (650,810)          (885,273)           (143,644)        (50,706)
Net Loss per Share              (0.04)              (0.03)            (0.03)             (0.04)              (0.01)          (0.01)
</TABLE>

[1]   For the eleven month period ended December 31, 1995.
[2]   For the year ended January 31, 1995.

<PAGE>

Exchange Rates

   On December 31, 1999 the buying rate for Canadian dollars was US$1.00: Cdn
$1.4433. The following table sets out the buying rate for Canadian dollars for
the period indicated. 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.

                     1994     1995     1996     1997     1998     1999
Year End            1.4018   1.3640   1.3706   1.4305   1.5333   1.4433
Average             1.3659   1.3726   1.3636   1.3844   1.4831   1.4868
High [1]            1.4065   1.4243   1.3855   1.4393   1.5795   1.5287
Low [1]             1.3109   1.3303   1.3295   1.3365   1.4082   1.4433

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

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Summary

   The Registrant is in the exploration and evaluation stage on nearly all its
oil and gas properties and hence has not yet achieved profitability or break
even cash flow. The Registrant has experienced losses in each fiscal period
reported on and expects to continue to incur losses for the upcoming fiscal
year. Total losses incurred from incorporation to December 31, 1999 were
$7,644,685. 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 discovered by the Registrant will be largely dependent on
factors beyond the Registrant's control such as the market value of the
hydrocarbons produced.

Liquidity

   As of December 31, 1999 the Registrant had $6,130,997 in working capital as
compared with $8,890,218 as of December 31, 1998 and $10,827,096 as of December
31, 1997. For the upcoming fiscal year, the Registrant does 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 ITEM 1 BUSINESS- Plan of Operations. In
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
receives is not sufficient to satisfy the Registrant's operating expenses and as
such these revenues will not improve the Registrant's anticipated deficiency in
working capital. 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 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, and has commenced investigation of the
possibility of raising additional capital in Australia (subject, of course, to
meeting all regulatory requirements in all applicable jurisdictions) to meet all
capital commitments in fiscal 2000. Accordingly, the Registrant's working
capital has only reduced to approximately $2.5 million at November 2000

Capital Resources

   For a description of the Registrant's material capital commitments for the
upcoming fiscal year see ITEM 1 BUSINESS- Plan of Operations. The Registrant has
no other anticipated capital expenditures of a material amount.

<PAGE>

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 which can be used as collateral. The
Registrant's producing property ( PMP 38148) is 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. 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.

Anticipated Total Work Obligation Before December 31, 2000
(As at 31 December 1999)

Property         Description of Work              (US$)       Source of funds

Developed
PMP 38148        Workovers of Ngatoro-1/-9/-11      51,250    Ngatoro oil and
                                                               gas revenue

Undeveloped
PEP 38330        Seismic acquisition & studies      10,250    Funded by Working
                                                              Capital
PEP 38335        Seismic acquisition and 1 well    292,250    Working capital
                                                              and farmout
PEP 38328        Drill Whakatu-1 well & studies    432,750    Funded by Working
                                                              capital
PEP 38332        Seismic acquisition and 1 well    376,250    Funded by Working
                                                              capital
PEP 38736[1]     Seismic acquisition & studies     131,000    Funded by Working
                                                              capital
PEP 38716        Administration & geological        19,500    Funds in Joint
                 studies                                      Venture
PEP 38720        Well review & 3D seismic           65,000    Funded by Working
                 data purchase                                capital
PEP 38723        Seismic acquisition and 1 well    604,000    Funded by Farmout
PEP 38339        Marine seismic acquisition         80,500    Renegotiated/not
                                                              required
PEP 38256        Drill 1 well                      868,750    Funded by Farmout
AC/P19           3D seismic data purchase          103,000    Funded by Working
                                                              capital
AC/P31           Administration & geological         8,000    Funded by Working
                 studies                                      capital
AC/P26           Administration & geological        18,000    Funded by Working
                 studies                                      capital
ZOCA 96-16       Drill 1 well (carried through      22,500    Funded by Working
                 cost) & admin                                capital & Farmout
PPL 192          Drill 1 well                    3,000,000    Deferral until
                                                              funded by farmout
PPL 215          Administration & geological        67,500    Funded by Working
                 studies                                      capital
PPL 157          Administration & geological        15,000    Funded by Working
                 studies                                      capital
PPL 213          Administration & geological         9,000    Funded by Working
                 studies                                      capital
                                                 -------------------------------
     TOTAL                                      $6,174,500

   All projects have already been funded (mostly by farmout) for the year,
with the exception of the well to be drilled in PPL192, for which a deferral has
been sought to obtain funding by way of farmout.

   The total amount of commitment expenditure, listed above, funded from
working capital was approximately $1,400,000. In addition, the well in PEP
38332 required a remedial sidetrack operation which cost approximately $400,000
more than the stated commitment.

   The significant commitments for the next [6-12 months to mid 2000] to be
funded are as follows:

<PAGE>

Property         Description of Work              (US$)       Source of funds

Developed
PMP 38148        Exploration well GO880            650,000    Farmout 75%/
                 (and completion)                             revenue and
                                                              working capital

Undeveloped
PEP 38256        Drill 1 well - Arcadia-1          220,000    Already fully
                                                              funded by Farmout
PEP 38723        Drill 1 or 2 wells - Ratapiko-1   500,000    Already fully
                                                              funded by Farmout
PEP 38335        Drill 1 well - Waitaria-2         225,000    Working capital
                                                              and farmout
PEP 38330        Drill 1 well - Waingaromia-1      125,000    Funded by Working
                                                              Capital
PPL 192          Drill 1 well - Douglas-1        3,000,000    To be fully funded
                                                              by farmout
PEP 38736        Drill 1 well - Kahili-1         1,000,000    To be funded by
                                                              Farmout
AC/P26           Drill 1 well - Anson West-1     1,750,000    To be fully funded
                                                              by farmout

   For anticipated source of funds for capital expenditures, see 'Liquidity'
above.

Results of Operations

   The Registrant is an exploration company. The Registrant's primary focus as
of December 31, 1999 is the investigation and acquisition of oil and gas
properties. The Registrant's policy is to acquire interests and where possible,
minimize its risk exposure by farming out or joint venturing these interests to
other industry participants.

   The Registrant's current property focus is on the acquisition and exploration
of properties primarily in the Austral Pacific region with the objective of
establishing a solid cash flow base and participating in high potential
exploration blocks in under explored countries with attractive fiscal regimes.

   Revenues for the year ended December 31, 1999 were $658,783 compared with
$684,765 for the year ended December 31, 1998 and $870,059 for the year ended
December 31, 1997. The revenue figures reported by the Registrant include both
production revenues and interest income earned on the Registrant's cash and
short-term deposits.

   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. PMP 38148 has six producing oil wells, four producing gas
wells and two shut-in gas and oil wells.

   Production revenue for the year ending December 31, 1999 was $314,698
compared with gross 1998 production revenue of $234,168. The increase is due to
a rise in the average oil sale price of US$4.30 per barrel of oil to US$15.30
per barrel, partially offset by a fall in production volume from 20,629
barrels to 19,786 barrels. The above includes revenue from gas production of
$12,634 (year ended December 31, 1998: $9,247).

Costs and Expenses

   In the year ended December 31, 1999 the Registrant incurred expenditures in
the acquisition, exploration and development of petroleum interests of
$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. The
amount incurred in the acquisition, exploration and development of petroleum
interests for the year ended December 31, 1997 was $1,064,976. The increase is
largely attributable to the Registrant's participation in the drilling of the
Huinga-1 and Whakatu-1 and Clematis-1 wells, the acquisition of additional
petroleum interests and development and implementation exploration programs.

   As a result of the Registrant's recent acquisition of Trans-Orient Petroleum
Ltd.'s exploration assets, the Registrant anticipates that:

    (1)  There should be no change in cost of acquisition subsequent to the
         acquisition of Trans-Orient's assets
            There should be no significant change in other costs as a result of
         the acquisition, apart from some small increase in Registrant
         administration costs, which should be less than US$50,000, and

    (2)  The Registrant will incur approximately $675,840 in additional
         exploration commitment in fiscal 2000 which are attributable to the
         permit interests acquired from Trans-Orient Petroleum Ltd.

   Depletion and amortization expense for the year ended December 31, 1999 was
$176,855. For the year ended December 31, 1998 the depletion and amortization
expense was $148,875 and for the year ended December 31, 1997 was $97,827.

<PAGE>

   General and administrative expenses for the year ended December 31, 1999
were $517,671. For the year ended December 31, 1998 the general and
administrative expenses were $563,480 and for the year ended December 31, 1997
were $1,247,569.

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.

Interest Income

   Interest income for the year ended December 31, 1999 was $344,085. Interest
income for the year ended December 31, 1998 was $450,597 and for the year ended
December 31, 1997 was $382,118. The source of the Registrant's interest income
has been from interest paid on cash and cash equivalent accounts.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   The Registrant operates in the international crude oil, refined product,
natural gas and natural gas liquids markets and is exposed to fluctuations in
hydrocarbon prices, foreign currency rates, and interest rates that can affect
the revenues and cost of operating, investing and financing. The Registrant has
not established any policies to protect against the foregoing risks.

Commodity Price Risk

   The Registrant's policy is to generally be exposed to market pricing for
commodity purchases and sales. The Company has not taken any steps to protect
against the fluctuating market price of oil or gas and as such the Registrant's
operating revenue will be affected by changes in the market price for oil & gas.
All other things being equal, where the oil & gas prices decrease it can be
expected that the Registrant's revenues will in turn be reduced, whereas where
oil & gas prices increase it can be expected that the Registrant's revenues will
in turn increase.

Currency Risk

   The Registrant has foreign currency exchange rate risk resulting from
operations in overseas countries in the south Pacific and Canada. The Registrant
generally holds its cash reserves in Canadian dollars while its operations
expenditures are incurred in Papua New Guinea, New Zealand and Australian
dollars ("Foreign Currencies"). As such any strengthening of Foreign Currencies
against the Canadian dollar will cause an increase in the Registrant's operating
costs. The Registrant does not 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.

Interest Rate Risk

   The Registrant believes that it has no material interest rate risk to
manage, as the Registrant has not made use of debt as a means of financing its
operations.


ITEM 8.  FINANCIAL STATEMENTS.

Financial Statements begin on the following page.

<PAGE>

                          INDO-PACIFIC ENERGY LTD.

                      CONSOLIDATED FINANCIAL STATEMENTS
                     (Expressed in United States Dollars)

                          DECEMBER 31, 1999 AND 1998



                                                        SADOVNICK TELFORD + SKOV

<PAGE>


STS                        SADOVNICK TELFORD + SKOV
                 A Partnership of Incorporated Professionals
                             CHARTERED ACCOUNTANTS
================================================================================

                                AUDITORS' REPORT



To the Shareholders of Indo-Pacific Energy Ltd.

We have audited the accompanying consolidated balance sheets of Indo-Pacific
Energy Ltd. and its subsidiaries as of December 31, 1999 and 1998 and the
related consolidated statements of operations and comprehensive income (loss),
changes in stockholders' equity and cash flows for each of the years in the
three year period ended December 31, 1999. 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 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. and its subsidiaries as of December 31, 1999 and 1998 and the
results of their operations and cash flows for each of the years in the three
year period ended December 31, 1999, in conformity with generally accepted
accounting principles in the United States.

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 as a going concern. 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 28, 2000

================================================================================
  Sixth Floor, 543 Granville Street, Vancouver British Columbia, Canada V6C 1X8
    Telephone:  (604) 688-7800   Fax:  (604) 688-7880    Email: sts@stsca.com

<PAGE>

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

As at December 31,                                  1999                1998
--------------------------------------------------------------------------------

Assets


Current
Cash and short-term deposits                   $  4,863,254        $  8,194,849
Accounts receivable                                 148,419             102,194
Loan receivable from related party (Note 3)       1,062,211                -
Marketable securities (Note 4)                      222,319             694,875
Due from related parties (Note 8)                    62,667              46,161
Prepaid expenses (Note 8)                            50,110               9,035
--------------------------------------------------------------------------------

                                                  6,408,980           9,047,114
Investments (Note 5)                                740,000           1,500,000
Property and equipment (Note 6)                     143,961             134,076
Oil and gas properties (Note 7)                   3,656,224           2,819,946
--------------------------------------------------------------------------------

Total Assets                                   $ 10,949,165        $ 13,501,136
================================================================================

Liabilities

Current
Accounts payable and accrued liabilities       $    277,983        $    156,896
--------------------------------------------------------------------------------

Total Liabilities                                   277,983             156,896
--------------------------------------------------------------------------------

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,
 1999 and 1998: 28,262,398 shares                18,245,867          18,253,992
Accumulated deficit                              (7,644,685)         (6,471,552)
Cumulative comprehensive adjustment                  70,000           1,561,800
--------------------------------------------------------------------------------

Total Stockholders' Equity                       10,671,182          13,344,240
--------------------------------------------------------------------------------

Total Liabilities and Stockholders' Equity     $ 10,949,165        $ 13,501,136
================================================================================

Approved by the Directors:

/s/ David Bennett                     /s/ Alex Guidi
------------------------------        ------------------------------
Director                              Director

     See accompanying notes to the consolidated financial statements

<PAGE>


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

For the Years Ended December 31,           1999          1998           1997
--------------------------------------------------------------------------------

Revenues

Oil and gas sales                    $    314,698   $    234,168   $    487,941
Interest income                           358,911        450,597        382,118
--------------------------------------------------------------------------------

                                          673,609        684,765        870,059
--------------------------------------------------------------------------------

Cost of Sales

Production costs                           50,598        129,781         67,593
Royalties                                  15,248         10,269         44,209
Depletion                                 104,475         95,779         87,017
Write-off of oil and gas properties       983,168        765,144        162,048
--------------------------------------------------------------------------------

                                        1,153,489      1,000,973        360,867
--------------------------------------------------------------------------------

                                         (479,880)      (316,208)       509,192
--------------------------------------------------------------------------------

Expenses

General and administrative (Schedule)     532,497        563,480      1,247,569
Write-down of marketable securities       160,756           -              -
--------------------------------------------------------------------------------

                                          693,253        563,480      1,247,569
--------------------------------------------------------------------------------

Net loss for the year                  (1,173,133)      (879,688)      (738,377)

Other comprehensive income (loss)

Unrealized gain (loss) on marketable
 securities and investments            (1,491,800)     1,474,233         87,567
--------------------------------------------------------------------------------

Comprehensive income (loss) for
  the year                           $ (2,664,933)  $    594,545   $   (650,810)
================================================================================

Basic and diluted loss per share
  (Note 11)                          $      (0.04)  $      (0.03)  $      (0.03)
================================================================================


     See accompanying notes to the consolidated financial statements

<PAGE>


================================================================================
INDO-PACIFIC ENERGY LTD.
Consolidated Statements of Changes in Stockholders' Equity
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                              Cumulative                             Total
                                    Common Stock              Accumulated        Comprehensive   Stockholders'
                             ---------------------------
                              Shares             Amount         Deficit            Adjustment        Equity
                             ---------------------------------------------------------------------------------------
<S>                          <C>                <C>             <C>                <C>               <C>
Balance at December 31,
  1996                       26,933,398         $15,512,578     $(4,853,487)       $      -          $10,659,091

Common stock issued for
  private placement           1,000,000           1,800,000            -                  -            1,800,000
Common stock issued for
  exercise of stock options     279,000             652,151            -                  -              652,151
Common stock issued for
  exercise of warrants           50,000             125,667            -                  -              125,667
Net compensation expense
  from stock options               -                286,080            -                  -              286,080
Net loss during the year           -                   -           (738,377)              -             (738,377)
Unrealized gain on
  marketable securities            -                   -               -                87,567            87,567
--------------------------------------------------------------------------------------------------------------------
Balance at December 31,
  1997                       28,262,398         $18,376,476     $(5,591,864)       $    87,567       $12,872,179

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 compensation recovery
  from stock options               -               (129,000)           -                  -             (129,000)
Net loss during the year           -                   -           (879,688)              -             (879,688)
Unrealized gain on
  marketable securities
  and investments                  -                   -               -             1,474,233         1,474,233
--------------------------------------------------------------------------------------------------------------------

Balance at December 31,
  1998                       28,262,398         $18,253,992     $(6,471,552)       $ 1,561,800       $13,344,240

Net compensation
  recovery from
  stock options                    -                 (8,125)           -                  -               (8,125)
Net loss during the year           -                   -         (1,173,133)              -           (1,173,133)
Unrealized loss on
  marketable securities
  and investments                  -                   -               -            (1,491,800)       (1,491,800)
--------------------------------------------------------------------------------------------------------------------

Balance at December 31,
  1999                       28,262,398         $18,245,867     $(7,644,685)       $    70,000       $10,671,182
====================================================================================================================
</TABLE>

     See accompanying notes to the consolidated financial statements

<PAGE>

================================================================================
INDO-PACIFIC ENERGY LTD.
Consolidated Statements of Cash Flows
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31,           1999          1998           1997
--------------------------------------------------------------------------------

Operating Activities

Net loss for the year                $ (1,173,133)  $   (879,688)  $   (738,377)
Adjustments to reconcile net
 loss to cash applied to
 operating activities:
   Depletion                              104,475         95,779         87,017
   Write-off of oil and
    gas properties                        983,168        765,144        162,048
   Compensation expense
    (recovery)                             (8,125)      (129,000)       286,080
   Depreciation                            72,380         53,096         10,810
   Write-down of marketable
    securities                            160,756           -              -
Changes in non-cash working
  capital:
   Accounts receivable                    (46,225)        32,280          8,361
   Due from related parties               (16,506)       106,212       (157,821)
   Prepaid expenses and deposits          (41,075)           434          2,003
   Accounts payable and accrued
    liabilities                           121,087        111,192        (35,479)
--------------------------------------------------------------------------------

Net cash provided by (used in)
  operating activities                    156,802        155,449       (375,358)
--------------------------------------------------------------------------------

Financing Activity

Common shares issued for cash                -             6,516      2,577,818
--------------------------------------------------------------------------------

Net cash provided by financing
  activity                                   -             6,516      2,577,818
--------------------------------------------------------------------------------

Investing Activities

Loan receivable from related party     (1,062,211)          -              -
Purchase of marketable securities            -          (149,565)      (233,510)
Purchase of investments                  (420,000)      (250,000)          -
Purchase of property and equipment        (82,265)       (71,928)       (91,121)
Oil and gas properties, net
  of recoveries                        (1,923,921)    (1,901,030)    (1,064,976)
Proceeds from sale of license
  interest                                   -           150,000           -
--------------------------------------------------------------------------------

Net cash used in investing
  activities                           (3,488,397)    (2,222,523)    (1,389,607)
--------------------------------------------------------------------------------

Net increase (decrease) in
  cash during the year                 (3,331,595)    (2,060,558)       812,853

Cash and short-term deposits -
 Beginning of year                      8,194,849     10,255,407      9,442,554
--------------------------------------------------------------------------------

Cash and short-term deposits -
  End of year                        $  4,863,254   $  8,194,849   $ 10,255,407
================================================================================

     See accompanying notes to the consolidated financial statements

<PAGE>


================================================================================
INDO-PACIFIC ENERGY LTD.
Consolidated Schedules of General and Administrative Expenses
(Expressed in United States Dollars)
================================================================================

For the Years Ended December 31,           1999          1998           1997
--------------------------------------------------------------------------------

GENERAL AND ADMINISTRATIVE EXPENSES

Accounting and audit                 $     46,189   $     43,576   $     54,165
Compensation expense
  (recovery), net                          (8,125)      (129,000)       286,080
Consulting fees (Note 8)                   29,751         44,081        150,298
Corporate relations and development        46,775         57,938         71,548
Depreciation                               72,380         53,096         10,810
Filing and transfer agency fees             4,836         11,413          9,803
Foreign exchange loss (gain)              (42,886)        14,771        239,713
Legal                                      50,795        113,101         61,395
Office and miscellaneous                  110,152        127,988         68,614
Printing                                   67,243        109,453        104,901
Rent (Note 8)                              57,294         70,132         33,791
Telephone                                  39,823         51,176         23,005
Travel and accommodation                   52,530         54,470        101,567
Wages and benefits                        159,618         64,922         31,879
Recovery of general and
  administrative expenses                (153,878)      (123,637)          -
                                    --------------------------------------------
                                     $    532,497   $    563,480   $  1,247,569
                                    ============================================



     See accompanying notes to the consolidated financial statements

<PAGE>


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

For the Years Ended December 31, 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 generally
     accepted accounting principles in the United States 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.

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 and PEP 38716 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>


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

For the Years Ended December 31, 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)   Accounting Pronouncements Recently Issued

     The Financial Accounting Standards Board issued Statement of Financial
     Accounting Standards No. 133: Accounting for Derivative Instruments and
     Hedging Activities ("SFAS 133"), effective for fiscal periods beginning
     after June 15, 1999. SFAS 133 requires that the fair-market value of
     derivatives be reported on the balance sheet and any changes in the fair
     value of the derivative be reported in income or other comprehensive
     income, as appropriate. The Company does not expect adoption of this new
     standard to have a material effect on its financial reporting.

g)   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.

h)   Marketable Securities and Investments

     Marketable securities and investments are classified as available-for-sale
     securities and reported at fair value, based on quoted market prices, with
     any unrealized losses not resulting from an other-than-temporary impairment
     or unrealized gains reported as a component of "Cumulative Comprehensive
     Adjustment" in stockholders' equity. An other-than-temporary impairment
     requires the cost basis of the individual security to be written down to
     the fair value with the amount of the write-down accounted for as a
     realized loss and included in earnings.

i)   Property and Equipment

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

<PAGE>


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

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


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

j)   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.

     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.

k)   Stock Options

     In accordance with Statement of Financial Accounting Standards No. 123,
     Accounting for Stock-Based Compensation, the Company elected to apply
     Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
     Employees to account for stock options and provide pro forma disclosures of
     net loss as if the fair value method had been applied.

l)   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.

<PAGE>


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

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

NOTE 3 - LOAN RECEIVABLE FROM RELATED PARTY

The Company is owed $1,062,211 including interest of $18,051 by Trans-Orient
Petroleum Ltd. ("Trans-Orient") for payments relating to oil and gas exploration
on behalf of Trans-Orient. This amount is unsecured with no fixed terms for
repayment and accrues interest on a monthly basis at the average three-month
bankers' acceptance rate plus 3%.

Refer to Notes 8 and 15

NOTE 4 - MARKETABLE SECURITIES

Marketable securities comprise of 517,020 shares (December 31, 1998: 517,020
shares) of Trans-Orient Petroleum Ltd. acquired at a cost of $383,075 and
recorded at an estimated market value of $222,319 (December 31, 1998: $694,875).
During the 1999 fiscal year, the Company recorded a write-down of marketable
securities of $160,756 resulting from an other-than-temporary impairment in fair
value. The amount of the write-down was accounted for as a realized loss and
included in earnings. At December 31, 1999, gross unrealized holdings gains are
Nil (December 31, 1998: $311,800).

Refer to Notes 8 and 15

NOTE 5 - INVESTMENTS

Investments comprise of 1,800,000 shares (December 31, 1998: 1,000,000 shares)
of AMG Oil Ltd. acquired at a cost of $650,000 (December 31, 1998: $250,000) and
600,000 shares (December 31, 1998: Nil) of Gondwana Energy, Ltd. acquired at a
cost of $20,000 (December 31, 1998: Nil), recorded at estimated market values of
$720,000 (December 31, 1998: $1,500,000) and $20,000 (December 31, 1998: Nil),
respectively. At December 31, 1999, gross unrealized holdings gains are $70,000
(December 31, 1998: $1,250,000).

The Company holds an option to purchase a further 200,000 shares of AMG Oil Ltd.
at a price of $0.50 per share expiring on December 31, 2000.

Refer to Note 8

NOTE 6 - PROPERTY AND EQUIPMENT

Property and equipment are comprised as follows:

                                                          1999           1998
                                                       ----------    -----------
Furniture and office equipment                         $  263,868    $  181,603
Automobile                                                   -            5,043
                                                       ----------    -----------
                                                          263,868       186,646
Accumulated depreciation                                 (119,907)      (52,570)
                                                       ----------    -----------
                                                       $  143,961    $  134,076
                                                       ==========    ===========

<PAGE>


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

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

NOTE 7 - OIL AND GAS PROPERTIES

Oil and gas properties are comprised as follows:

                              Net Book                               Net Book
                              Value at     Additions   Depletion/    Value at
                             December 31,  During the  Recoveries/  December 31,
                                1998          Year     Write Downs      1999
                            ----------------------------------------------------
Proved:
New Zealand
  PMP 38148
  Ngatoro Oil Field         $  417,435   $   61,457   $  (104,475)   $  374,417
                            ----------------------------------------------------
  Total Proved                 417,435       61,457      (104,475)      374,417
                            ----------------------------------------------------

Unproved:
New Zealand
  PEP 38256 - Exploration       29,920       16,670          -           46,590
  PEP 38328 - Exploration      645,836      218,100      (142,207)      721,729
  PEP 38330 - Exploration      194,286       16,893          -          211,179
  PEP 38332 - Exploration      194,961       43,451          -          238,412
  PEP 38335 - Exploration        3,829        6,979          -           10,808
  PEP 38339 - Exploration        4,270       35,427          -           39,697
  PEP 38716 - Exploration      370,781      490,657      (449,115)      412,323
  PEP 38720 - Exploration      208,335      338,814          -          547,149
  PEP 38723 - Exploration       17,957        4,470          -           22,427
  PEP 38736 - Exploration         -          28,428          -           28,428
  PPL 38706 - Exploration       79,038         -          (79,038)         -
  New licenses                  29,322         -          (26,620)        2,702
Australia
  AC/P 19                      183,073      107,033          -          290,106
  AC/P 31                         -           9,489          -            9,489
  VIC/P 39                        -          21,023       (21,023)         -
Papua New Guinea
  PPL 192 - Exploration        125,677      402,827          -          528,504
  PPL 215 - Exploration          3,784      168,480          -          172,264
People's Republic of China
  Nanling-Wuwei Blocks         311,442         -         (311,442)         -
                            ----------------------------------------------------

                             2,402,511    1,908,741    (1,029,445)    3,281,807
                            ----------------------------------------------------

                            $2,819,946   $1,970,198   $(1,133,920)   $3,656,224
                            ====================================================

<PAGE>


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

For the Years Ended December 31, 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. 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 $15,248 for the 1999 fiscal year (1998 fiscal year: $10,269).

     At December 31, 1999, 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 2000 fiscal year.

b)   PEP 38256

     The Company has a 35% participating interest in, and is the operator of,
     Petroleum Exploration Permit 38256 ("PEP 38256") which was granted on
     August 25, 1997. At least one-half of the original area must be
     relinquished by 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 Trans-Orient Petroleum Ltd. (35%) and
     AMG Oil Ltd. (30%).

     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. 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. AMG
     has the right to earn an additional 50% participating interest by funding
     all of the costs of drilling two exploration wells including any further
     seismic data required prior to drilling. By agreements dated December 3,
     1998 and October 26, 1999, this right has been extended to May 31, 2000.

     The Company and the other participants have completed the work program
     required for the first two and a half years. PEP 38256 requires the
     participants to complete the remaining work program that includes
     committing by February 25, 2000 to drill one exploration well prior to
     August 25, 2000, or surrender the permit.

     At December 31, 1999, PEP 38256 is in good standing with respect to its
     work commitments. Upon committing to drill one exploration well prior to
     August 25, 2000, the Company's share of work commitments for the 2000
     fiscal year requires an estimated $455,000 of exploration expenditures to
     be incurred.

     Refer to Notes 8 and 15

<PAGE>


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

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


NOTE 7 - OIL AND GAS PROPERTIES (continued)

c)   PEP 38328

     The Company has a 40% participating interest in, and is the operator of,
     Petroleum Exploration Permit 38328 ("PEP 38328") which was granted on June
     19, 1996. The other participants of PEP 38328 are Boral Limited (37.5%) and
     Trans-Orient Petroleum Ltd. (22.5%).

     The Company and the other participants have completed the work program
     required for the first four years that included drilling the Kereru-1
     exploration well. PEP 38328 requires the participants to complete the
     remaining work program that includes committing by June 19, 2000 to drill
     one exploration well prior to June 19, 2001, or surrender the permit.

     At December 31, 1999, 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 2000 fiscal year.

     Refer to Note 8

d)   PEP 38330

     The Company has a 34% 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 Norwest Energy N.L. (33%)
     and Mosaic Oil N.L. (33%).

     The Company and the other participants have completed the work program
     required for the first three years. PEP 38330 requires the participants to
     complete the remaining work program that includes acquiring, processing and
     interpreting 25 kilometers of seismic data and committing prior to July 1,
     2000 to drill an exploration well by July 1, 2001, or surrender the permit.

     At December 31, 1999, PEP 38330 is in good standing with respect to its
     work commitments and does not require the Company to incur minimum
     exploration expenditures for the 2000 fiscal year.

     Refer to Note 15

e)   PEP 38332

     The Company has a 42.5% participating interest in, and is the operator of,
     Petroleum Exploration Permit 38332 ("PEP 38332") which was granted on June
     24, 1997. The other participants of PEP 38332 are Boral Limited (37.5%) and
     Trans-Orient Petroleum Ltd. (20%).

     The Company and the other participants have completed the work program
     required for the first two and a half years. PEP 38332 requires the
     participants to complete the remaining work program that includes drilling
     one exploration well prior to June 24, 2000.

     At December 31, 1999, PEP 38332 is in good standing with respect to its
     work commitments. The Company's share of work commitments for the 2000
     fiscal year requires an estimated $268,000 of exploration expenditures to
     be incurred.

     Refer to Note 8

<PAGE>


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

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


NOTE 7 - OIL AND GAS PROPERTIES (continued)

f)   PEP 38335

     The Company has a 10% 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 (70%), as
     the operator, Trans-Orient Petroleum Ltd. (15%) and Everest Energy Inc.
     (5%).

     The Company and the other participants are required to complete the work
     program originally due by November 29, 1999 and extended to March 31, 2000
     that includes acquiring, processing and interpreting 20 kilometers of
     seismic data or equivalent 3D seismic data. Additionally, PEP 38335
     requires the participants to complete the remaining work program that
     includes the following:

     i)   prior to November 29, 2000, drill one exploration well and 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, 1999, PEP 38335 is in good standing with respect to its
     work commitments. The Company's share of work commitments for the 2000
     fiscal year requires an estimated $122,000 of exploration expenditures to
     be incurred.

     Refer to Note 8

g)   PEP 38339

     The Company has a 50% participating interest in, and is the operator of,
     Petroleum Exploration Permit 38339 ("PEP 38339") which was granted on
     November 26, 1998. The other participant of PEP 38339 is Trans-Orient
     Petroleum Ltd. (50%).

     The Company and the other participant have completed the work program
     required to February 26, 2000. PEP 38339 requires the participants to
     complete the remaining work program that includes the following:

     i)    prior to November 26, 2000, acquire, process and interpret a minimum
           of 20 kilometers of onshore and 50 kilometers of offshore seismic
           data, and either commit to complete the next stage of the work
           program detailed below in ii) or surrender the permit;
     ii)   prior to May 26, 2001, acquire, process and interpret additional
           seismic data and either commit to complete the next stage of the work
           program detailed below in (iii) or surrender the permit; and
     iii)  prior to November 26, 2001, drill one onshore or offshore exploration
           well and either commit to a satisfactory work program for the
           remainder of the permit term or surrender the permit.

     At December 31, 1999, PEP 38339 is in good standing with respect to its
     work commitments. The Company's share of work commitments for the 2000
     fiscal year requires an estimated $42,000 of exploration expenditures to be
     incurred.

     Refer to Note 8

<PAGE>


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

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


NOTE 7 - OIL AND GAS PROPERTIES (continued)

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 June 30, 1999 that included drilling the Huinga-1 exploration
     well. A work program has been submitted for approval for the remaining term
     of PEP 38716 which expires on January 30, 2001 unless renewed.

     At December 31, 1999, PEP 38716 is in good standing with respect to its
     work commitments. The Company's share of work commitments for the 2000
     fiscal year, if approved as submitted, requires an estimated $20,000 of
     exploration expenditures to be incurred.

     Refer to Note 8

i)   PEP 38720

     The Company has a 50% participating interest in, and is the operator of,
     Petroleum Exploration Permit 38720 ("PEP 38720") which was granted on
     September 2, 1996. The other participant of PEP 38720 is Trans-Orient
     Petroleum Ltd. (50%).

     The Company and the other participant have completed the work program
     required for the first three 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, 1999, PEP 38720 is in good standing with respect to its
     work commitments. The Company's share of work commitments for the 2000
     fiscal year, if approved as submitted, requires an estimated $60,000 of
     exploration expenditures to be incurred.

     Refer to Note 8

j)   PEP 38723

     The Company has a 40% participating interest in, and is the operator of,
     Petroleum Exploration Permit 38723 ("PEP 38723") which was granted on
     October 30, 1997. The other participants of PEP 38723 are Trans-Orient
     Petroleum Ltd. (40%) and Gondwana Energy, Ltd. (20%).

<PAGE>


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

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


NOTE 7 - OIL AND GAS PROPERTIES (continued)

     The Company and the other participants have completed the work program
     required to March 30, 1999. PEP 38723 requires the participants to complete
     the remaining work program that includes acquiring, processing and
     interpreting eight kilometers of seismic data and committing by April 30,
     2000 to drill an exploration well by October 30, 2000 or surrender the
     permit.

     At December 31, 1999, PEP 38723 is in good standing with respect to its
     work commitments. The Company's share of work commitments for the 2000
     fiscal year requires an estimated $316,000 of exploration expenditures to
     be incurred.

     Refer to Note 8

k)   PEP 38736 and PPL 38706

     The Company has a 100% participating interest in Petroleum Exploration
     Permit 38736 ("PEP 38736") which was granted on July 14, 1999. The Company
     had a 7.75% participating interest in Petroleum Prospecting License 38706
     ("PPL 38706") with Fletcher Challenge Energy Ltd. ("Fletcher Challenge"),
     as the operator, holding the remaining 92.25% participating interest. PPL
     38706 required the participants to complete a work program that included
     reprocessing 300 kilometers of seismic data by July 31, 1999 and drilling
     one exploration well by July 31, 2000. However, Fletcher Challenge
     relinquished its interest in PPL 38706 and as a result, the Company was
     permitted to add the acreage of PPL 38706 as part of PEP 38736 and subject
     only to the work program required under PEP 38736. All costs associated
     with PPL 38706 have been written off during the 1999 fiscal year.

     PEP 38736 requires the Company to complete a work program that includes the
     following:

     i)    prior to January 14, 2002, acquire, process and interpret eight
           kilometers of seismic data or equivalent 3D seismic data, reprocess
           ten kilometers of seismic data, and 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, 1999, 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 2000 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
expenditures compounded forward at the Long-term Bank Rate ("LTBR") plus 15% and
project expenditures at LTBR plus 5%.

<PAGE>


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

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


NOTE 7 - OIL AND GAS PROPERTIES (continued)

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 two years. AC/P19 requires the participants to
     complete the remaining work program that includes the following:

     i)    prior to May 30, 2000, acquire, process and interpret 300 kilometers
           of seismic data;
     ii)   prior to May 30, 2001, acquire, process and interpret additional
           seismic data;
     iii)  prior to May 30, 2002, drill one exploration well; and
     iv)   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, 1999, AC/P19 is in good standing with respect to its work
     commitments. The Company's share of work commitments for the 2000 fiscal
     year requires an estimated $108,000 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%).

     AC/P31 requires the participants to complete a work program that includes
     the following:

     i)    prior to September 12, 2000, conduct geological and geophysical
           studies;
     ii)   prior to September 12, 2001, reprocess 30 kilometers of seismic data;
     iii)  prior to September 12, 2002, acquire, process and interpret 20
           kilometers of seismic data;
     iv)   prior to September 12, 2003, acquire, process and interpret 20
           kilometers of seismic data;
     v)    prior to September 12, 2004, reinterpret and evaluate seismic data;
           and
     vi)   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, 1999, AC/P31 is in good standing with respect to its work
     commitments. The Company's share of work commitments for the 2000 fiscal
     year requires an estimated $13,000 of exploration expenditures to be
     incurred.


<PAGE>


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

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


NOTE 7 - OIL AND GAS PROPERTIES (continued)

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.

n)   PPL 192

     The Company has a 40% 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 Trans-Orient
     Petroleum Ltd. (20%), 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, 1999, PPL 192 is in good standing with respect to its work
     commitments. The Company's share of work commitments for the 2000 fiscal
     year requires an estimated $2,045,000 of exploration expenditures to be
     incurred.

     Refer to Note 8

o)   PPL 215

     The Company acquired a 40% participating interest in, and is the operator
     of, Petroleum Prospecting License No. 215 ("PPL 215") which was granted on
     May 6, 1999. The other participants of PPL 215 are Trans-Orient Petroleum
     Ltd. (40%) and 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


<PAGE>


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

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


NOTE 7 - OIL AND GAS PROPERTIES (continued)

           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, 1999, PPL 215 is in good standing with respect to its work
     commitments. The Company's share of work commitments for the 2000 fiscal
     year requires an estimated $35,000 of exploration expenditures to be
     incurred.

     Refer to Note 8

PEOPLE'S REPUBLIC OF CHINA

p)   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.


NOTE 8 - RELATED PARTY TRANSACTIONS

a)   Prepaid Expenses

     The Company prepaid $41,571 (December 31, 1998: Nil) 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.

b)   Loan Receivable from Related Party

     The Company is owed $1,062,211 (December 31, 1998: Nil) by Trans-Orient
     Petroleum Ltd., a company having directors, officers and/or principal
     shareholders in common with the Company.

     Refer to Note 3

c)   Marketable Securities and Investments

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

     Refer to Notes 4 and 5


<PAGE>


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

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


NOTE 8 - RELATED PARTY TRANSACTIONS (continued)

d)   Due from Related Parties

     At December 31, 1999, the Company is owed $62,667 (December 31, 1998:
     $46,161) by certain public companies with directors, officers and/or
     principal shareholders in common with the Company. This amount is non-
     interest bearing and has no fixed terms for repayment.

e)   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 Trans-Orient Petroleum Ltd., AMG Oil Ltd., Durum Cons. Energy Corp. and
     Gondwana Energy, Ltd.

     Refer to Note 7

f)   Other

     During the 1999 fiscal year, the Company incurred $60,899 (1998 fiscal year
     - $57,123, 1997 fiscal year - $132,214) in consulting fees and $27,177
     (1998 fiscal year - $19,480, 1997 fiscal year - Nil) in rent to the
     President of the Company.

     During the 1997 fiscal year, the Company paid $12,820 to a private company
     owned by a former director of the Company pursuant to a consulting
     agreement cancelled during the same year.


NOTE 9 - COMMITMENTS AND CONTINGENCIES

a)   Work Commitments

     The Company participates in oil and gas exploration and development
     activities as a joint venturer 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 $3,484,000 of which a related
     party participant has farmed into PEP 38256 to contribute approximately
     $455,000.

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.

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.

<PAGE>


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

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


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. At December 31, 1999 and 1998, there were
     28,262,398 shares of common stock issued and outstanding.

b)   Incentive Stock Options

     The Company applies 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.

     In accordance with SFAS 123, the following is a summary of the changes in
     the Company's stock options for the 1999, 1998 and 1997 fiscal years:

                       1999                 1998                   1997
                   ------------------  ------------------   --------------------
                            Weighted            Weighted                Weighted
                             Average             Average                 Average
                    Number   Exercise   Number   Exercise    Number     Exercise
Fixed options      of Shares    Price  of Shares    Price   of Shares      Price
                   ------------------  ------------------   --------------------
Balance at
 beginning of
  year             1,066,000  $ 2.51   2,098,000   $ 2.50   1,949,000    $ 4.05
Granted                 -        -          -         -       570,000      2.52
Exercised               -        -          -         -      (279,000)     2.34
Expired/
 cancelled           (66,000)   2.64  (1,032,000)    2.50    (142,000)     0.60
                   ---------          ----------            ---------
Outstanding and
 exercisable
  at end of year   1,000,000  $ 2.50   1,066,000   $ 2.51   2,098,000    $ 2.50
                   ---------  ------   ---------   ------   ---------    ------
Weighted-average
 fair value of
 options granted
 during the year              $  -                 $  -                  $ 1.16
                              ------               ------                ------

There were no stock options granted during the 1999 and 1998 fiscal years thus
no weighted-average fair values have been assigned. For the 1997 fiscal year,
the weighted-average fair value for stock options granted was estimated at the
date of grant or amendment using a Black-Scholes option pricing model with the
following weighted-average assumptions: risk-free interest rate of 6.23%;
volatility factors of the expected market price of the Company's common stock of
0.66; option lives of 1.64 years; and no expected dividends. A stock option
grant during the 1997 fiscal year to purchase 500,000 shares at a price of $2.50

<PAGE>


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

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


NOTE 10 - COMMON STOCK (continued)

per share has been excluded from the fair value calculations as this stock
option was cancelled without exercise subsequent to the year.

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 1999, 1998, and 1997
fiscal years:
<TABLE>
<CAPTION>
                                   1999                                 1998                              1997
                         -----------------------------     ------------------------------     -----------------------------
                             As              Pro              As              Pro               As              Pro
                          Reported          Forma          Reported          Forma            Reported         Forma
                         -----------------------------     ------------------------------     -----------------------------
<S>                      <C>              <C>             <C>                <C>             <C>               <C>
Net loss for the year   $ (1,173,133)     $ (1,090,738)   $   (879,688)      $ (1,008,688)   $   (738,377)     $ (1,346,697)
                         -----------------------------     ------------------------------     -----------------------------
Basic and diluted
  loss per share        $      (0.04)     $      (0.04)   $      (0.03)      $      (0.04)   $      (0.03)     $      (0.05)
                         -----------------------------     ------------------------------     -----------------------------
</TABLE>

The following stock options are outstanding at December 31, 1999:

                    Number            Price                Expiry
                  of Shares          per Share              Date
                -------------      -------------      -----------------
                     300,000           $2.50              May 13, 2000
                     700,000           $2.50          October 30, 2000
                -------------
                  1,000,000
                =============

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.

During the 1998 fiscal year, previously granted stock options to purchase
832,000 shares exercisable at a price of $2.50 per share until May 13, 1998 were
amended to 300,000 shares exercisable at a price of $2.50 per share until May
13, 2000 and previously granted stock options to purchase 700,000 shares
exercisable at a price of $2.50 per share until October 30, 1998 were extended
to October 30, 2000. Additionally, previously granted stock options to purchase
500,000 shares exercisable at a price of $2.50 per share until March 25, 1999
were cancelled. No stock options were granted by the Company during the 1998
fiscal year.

c)   Share Purchase Warrants

     The following share purchase warrants to purchase shares of the Company are
     outstanding at December 31, 1999:


<PAGE>


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

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


NOTE 10 - COMMON STOCK (continued)

                    Number            Price                Expiry
                  of Shares          per Share              Date
                -------------      -------------      -----------------
                    950,000            $0.90              May 27, 2000
                  1,000,000            $0.90              July 3, 2000
                -------------
                  1,950,000
                =============

     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.

     During the 1998 fiscal year, share purchase warrants to purchase 950,000
     shares exercisable at a price of Cdn $3.485 per share until May 27, 1998
     were extended to May 27, 1999.

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 1999, 1998 and 1997 fiscal
years:

                                        1999             1998            1997

Numerator, net loss for the year    $(1,173,133)    $  (879,688)    $  (738,377)
                                     ----------      ----------      ----------
Denominator:
 Weighted-average number of shares   28,262,398      27,861,713      26,176,186
                                     ----------      ----------      ----------
Basic and diluted loss per share    $     (0.04)    $     (0.03)    $     (0.03)
                                     ==========      ==========      ==========

Due to net losses incurred for the 1999, 1998 and 1997 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.


<PAGE>


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

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


NOTE 12 - INCOME TAXES

There are no income taxes payable for the 1999 and 1998 fiscal years. At
December 31, 1999, the Company has approximately Cdn $1.62 million (December 31,
1998 - Cdn $1.59 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 $1.28 million (December 31, 1998 - Cdn $1.13
million) available for future deductions from taxable income derived in Canada,
which expire as follows:

                           2000   Cdn$    10,071
                           2001           52,731
                           2002          251,664
                           2003          662,559
                           2004             -
                           2005          153,875
                           2006          153,478
                                  --------------
                                  Cdn$ 1,284,378
                                  ==============

The Company also has losses and deductions of approximately NZ$9.79 million
(December 31, 1998: NZ$6.39 million) available to offset future taxable income
derived in New Zealand, Australia and Papua New Guinea.

At December 31, 1999, the Company has approximately Cdn $1.32 million (December
31, 1998 - Cdn $1.24) of deferred tax assets derived in Canada offset by a
valuation allowance in its entirety resulting in a net deferred tax asset amount
of Nil (December 31, 1998 - Nil)


NOTE 13 - COMPARATIVE FIGURES

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


NOTE 14 - UNCERTAINTY DUE TO THE YEAR 2000

The year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as the year 1900 or some other date, resulting in errors when
information is processed using year 2000 dates. In addition, similar problems
may arise in some systems which use certain year 1999 dates to represent
something other than a date. Although the change in date has occurred, it is
not possible to conclude that all aspects of the year 2000 issue affecting the
Company, including those related to the efforts of suppliers and other third
parties, have been fully resolved.


<PAGE>


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

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


NOTE 15 - SUBSEQUENT EVENTS

a)   PEP 38256

     The participants of PEP 38256 have committed to drill one exploration well
     prior to August 25, 2000.

     By an amended agreement dated February 23, 2000 between AMG Oil Ltd.
     ("AMG"), Trans-Orient Petroleum Ltd. and the Company, AMG will fund the
     acquisition of additional seismic data in return for an extension of AMG's
     right to earn up to an additional 50% participating interest in PEP 38256
     to June 15, 2000.  Additionally, AMG's right to increase its participating
     interest in PEP 38256 has been amended as follows:

     i)    earn an additional 50% participating interest in PEP 38256 by funding
           all of the costs of drilling two exploration wells including any
           further seismic data required prior to drilling; or
     ii)   earn an additional 35% participating interest in PEP 38256 by funding
           all of the costs of drilling one exploration well including any
           further seismic data required prior to drilling and, at the option of
           AMG upon completion of the first exploration well, earn a further 15%
           participating interest in PEP 38256 by funding all of the costs of
           drilling a second exploration well including any further seismic data
           required prior to drilling.

b)   PEP 38330

     By a farmout agreement dated January 20, 2000, the participants of PEP
     38330 assigned a 17.5% participating interest in PEP 38330 to Boral Limited
     ("Boral") in return for funding by Boral of certain survey costs up to
     NZ$385,000. The other participants of PEP 38330 are Norwest Energy N.L.
     (27.225%), Mosaic Oil N.L. (27.225%) and the Company (28.05%).

c)   Purchase of Oil and Gas Properties

     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 will be offset against the
     purchase price.

     The Company will issue 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 will provide Trans-Orient with anti-
     dilution protection for a period of one year from the closing date if the
     aggregate amount raised is greater than $500,000 and the average price is
     less than $0.50 per share or unit.

<PAGE>


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

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


NOTE 15 - SUBSEQUENT EVENTS (continued)

     The Company will provide 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%.

     This transaction is subject to approval by the shareholders of Trans-Orient
     and upon closing, will be subject to certain exchange gains or losses.

<PAGE>





                       INDO-PACIFIC ENERGY LTD.

               CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                  (Expressed in United States Dollars)

                            MARCH 31, 2000

<PAGE>

================================================================================
INDO-PACIFIC ENERGY LTD.
Consolidated Interim Balance Sheets
Unaudited - Prepared by Management
(Prepared in Accordance with United States Generally Accepted Accounting
Principles)
(Expressed in United States Dollars)
================================================================================

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

Assets

Current
Cash and short-term deposits                   $  4,036,804        $  4,863,254
Accounts receivable                                 104,813             148,419
Loan receivable from related party                1,256,541           1,062,211
Marketable securities                               196,468             222,319
Due from related parties                             58,462              62,667
Prepaid expenses and deposits                        42,571              50,110
--------------------------------------------------------------------------------
                                                  5,695,659           6,408,980
Investments                                       2,720,000             740,000
Property and equipment                              138,492             143,961
Oil and gas properties                            4,180,112           3,656,224
--------------------------------------------------------------------------------

Total Assets                                   $ 12,734,263        $ 10,949,165
================================================================================

Liabilities

Current
Accounts payable and accrued liabilities       $    160,928        $    277,983
--------------------------------------------------------------------------------

Total Liabilities                                   160,928             277,983
--------------------------------------------------------------------------------

Commitments and Contingencies

Stockholders' Equity

Common stock without par value;
100,000,000 shares authorized;
Issued and outstanding at March 31, 2000
 and December 31, 1999: 28,262,398 shares        18,245,867          18,245,867
Accumulated deficit                              (7,722,532)         (7,644,685)
Cumulative comprehensive adjustment               2,050,000              70,000
--------------------------------------------------------------------------------
Total Stockholders' Equity                       12,573,335          10,671,182
--------------------------------------------------------------------------------

Total Liabilities and Stockholders' Equity     $ 12,734,263        $ 10,949,165
================================================================================

Approved by the Directors:

/s/ David Bennett                     /s/ Alex Guidi
------------------------------        ------------------------------
Director                              Director

   See accompanying notes to the consolidated interim financial statements

<PAGE>

================================================================================
INDO-PACIFIC ENERGY LTD.
Consolidated Interim Statements of Operations and Comprehensive Income (Loss)
Unaudited - Prepared by Management
(Prepared in Accordance with United States Generally Accepted Accounting
Principles)
(Expressed in United States Dollars)
================================================================================

For the Three Month Periods Ended March 31,           2000                1999
--------------------------------------------------------------------------------

Revenues

Oil and gas sales                              $    115,355        $     46,062
Interest income                                      83,258              63,424
--------------------------------------------------------------------------------

                                                    198,613             109,486
--------------------------------------------------------------------------------

Cost of Sales

Production costs                                     14,099               7,590
Depletion                                            25,768              24,398
--------------------------------------------------------------------------------

                                                     39,867              31,988
--------------------------------------------------------------------------------

                                                    158,746              77,498
--------------------------------------------------------------------------------

Expenses

General and administrative (Schedule)               236,593             106,217
--------------------------------------------------------------------------------

Net loss for the period                             (77,847)            (28,719)

Other Comprehensive Income (Loss)

Unrealized loss on marketable securities               -               (145,541)
Unrealized gain on investments                    1,980,000             800,000
--------------------------------------------------------------------------------

Comprehensive income for the period            $  1,902,153        $    625,740
================================================================================

Basic and diluted loss per share               $      (0.00)       $      (0.00)
================================================================================


See accompanying notes to the consolidated interim financial statements

<PAGE>


================================================================================
INDO-PACIFIC ENERGY LTD.
Consolidated Interim Statements of Changes in Stockholders' Equity
Unaudited - Prepared by Management
(Prepared in Accordance with United States Generally Accepted Accounting
Principles)
(Expressed in United States Dollars)
================================================================================

For the Three Month Period Ended March 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                              Cumulative                             Total
                                    Common Stock              Accumulated        Comprehensive   Stockholders'
                             ---------------------------
                              Shares             Amount         Deficit            Adjustment        Equity
                             ---------------------------------------------------------------------------------------
<S>                          <C>                <C>             <C>                <C>               <C>
Balance at December 31,
  1999                       28,262,398         $18,245,867     $(7,644,685)       $    70,000       $10,671,182

Net loss during the period         -                   -            (77,847)              -              (77,847)
Unrealized gain on
  investments                      -                   -               -             1,980,000         1,980,000
--------------------------------------------------------------------------------------------------------------------
Balance at March 31,
  2000                       28,262,398         $18,245,867     $(7,722,532)       $ 2,050,000       $12,573,335
====================================================================================================================
</TABLE>



   See accompanying notes to the consolidated interim financial statements

<PAGE>

================================================================================
INDO-PACIFIC ENERGY LTD.
Consolidated Interim Statements of Cash Flows
Unaudited - Prepared by Management
(Prepared in Accordance with United States Generally Accepted Accounting
Principles)
(Expressed in United States Dollars)
================================================================================

For the Three Month Periods Ended March 31,           2000                1999
--------------------------------------------------------------------------------

Operating Activities

Net loss for the period                        $    (77,847)       $    (28,719)
Adjustments to reconcile net loss to
 cash applied to operating activities:
   Depletion                                         25,768              24,398
   Depreciation                                      16,766              14,165
   Write-down of marketable securities               25,851                -
Changes in non-cash working capital:
   Accounts receivable                               43,606              (3,548)
   Due from related parties                           4,205             (29,997)
   Prepaid expenses and deposits                      7,539              (3,136)
   Accounts payable and accrued liabilities        (117,055)           (110,502)
--------------------------------------------------------------------------------

Net cash used in operating activities               (71,167)           (137,339)
--------------------------------------------------------------------------------

Financing Activity

Common shares issued for cash                          -                   -
--------------------------------------------------------------------------------

Net cash provided by financing activity                -                   -
--------------------------------------------------------------------------------

Investing Activities

Loan receivable from related party                 (194,330)               -
Purchase of investments                                -               (400,000)
Purchase of property and equipment                  (11,297)             (8,639)
Oil and gas properties                             (549,656)           (130,638)
--------------------------------------------------------------------------------

Net cash used in investing activities              (755,283)           (539,277)
--------------------------------------------------------------------------------

Net decrease in cash during the period             (826,450)           (676,616)

Cash and short-term deposits -
 Beginning of period                              4,863,254           8,194,849
--------------------------------------------------------------------------------

Cash and short-term deposits - End of period   $  4,036,804        $  7,518,233
================================================================================

   See accompanying notes to the consolidated interim financial statements

<PAGE>

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

INDO-PACIFIC ENERGY LTD.
Consolidated Interim Schedules of General and Administrative Expenses
Unaudited - Prepared by Management
(Prepared in Accordance with United States Generally Accepted Accounting
Principles)
(Expressed in United States Dollars)
================================================================================


For the Three Month Periods Ended March 31,           2000                1999
--------------------------------------------------------------------------------

GENERAL AND ADMINISTRATIVE EXPENSES

Accounting and audit                           $     16,872        $      8,448
Consulting fees                                      14,843               2,834
Corporate relations and development                  35,159               4,609
Depreciation                                         16,766              14,165
Filing and transfer agency fees                         930                 149
Foreign exchange loss (gain)                         26,511             (14,188)
Legal                                                34,933              14,046
Office and miscellaneous                             35,568              36,673
Printing                                              9,631              13,313
Rent                                                 10,557              16,766
Telephone                                             9,702              10,334
Travel and accommodation                              3,097              16,698
Wages and benefits                                   32,065              22,353
Write-down of marketable securities                  25,851                -
Recovery of general and administrative expenses     (35,892)            (39,983)
--------------------------------------------------------------------------------

                                               $    236,593        $    106,217
================================================================================


   See accompanying notes to the consolidated interim financial statements

<PAGE>

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Interim Financial Statements
Unaudited - Prepared by Management
(Prepared in Accordance with United States Generally Accepted Accounting
Principles)
(Expressed in United States Dollars)
================================================================================

For the Three Month Period Ended March 31, 2000
--------------------------------------------------------------------------------


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.

The unaudited consolidated interim financial statements of the Company reflect,
in the opinion of management, all adjustments, consisting only of normal and
recurring adjustments, necessary to present fairly the Company's consolidated
financial position at March 31, 2000 and December 31, 1999 and the Company's
consolidated interim results of operations and cash flows for the three-month
periods ended March 31, 2000 and 1999. The consolidated interim financial
statements have been prepared in accordance with the instructions to Form 10-Q
and therefore do not include all disclosures required for financial statements
prepared in conformity with generally accepted accounting principles. Interim
period results are not necessarily indicative of results of operations or cash
flows for a full year. These consolidated interim financial statements and the
notes thereto should be read in conjunction with the Company's Annual Report on
Form 10-K for the year ended December 31, 1999, including the financial
statements and notes thereto.


NOTE 2 - LOAN RECEIVABLE FROM RELATED PARTY

The Company is owed $1,256,541 including interest of $212,381 by Trans-Orient
Petroleum Ltd. ("Trans-Orient") for payments relating to oil and gas exploration
on behalf of Trans-Orient. This amount is unsecured with no fixed terms for
repayment and accrues interest on a monthly basis at the average three-month
bankers' acceptance rate plus 3%.


NOTE 3 - MARKETABLE SECURITIES

Marketable securities comprise of 517,020 shares (December 31, 1999: 517,020
shares) of Trans-Orient Petroleum Ltd. acquired at a cost of $383,075 and
recorded at an estimated market value of $196,468 (December 31, 1999: $222,319).
During the 2000 fiscal period, the Company recorded a write-down of marketable
securities of $25,851 resulting from an other-than-temporary impairment in fair
value. The amount of the write-down was accounted for as a realized loss and
included in earnings. At March 31, 2000, gross unrealized holdings gains
(losses) are Nil (December 31, 1999: Nil).

<PAGE>

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Interim Financial Statements
Unaudited - Prepared by Management
(Prepared in Accordance with United States Generally Accepted Accounting
Principles)
(Expressed in United States Dollars)
================================================================================

For the Three Month Period Ended March 31, 2000
--------------------------------------------------------------------------------


NOTE 4 - INVESTMENTS

Investments comprise of 1,800,000 shares (December 31, 1999: 1,800,000 shares)
of AMG Oil Ltd. acquired at a cost of $650,000 (December 31, 1999: $650,000) and
600,000 shares (December 31, 1999: 600,000 shares) of Gondwana Energy, Ltd.
acquired at a cost of $20,000, recorded at estimated market values of $2,700,000
(December 31, 1999: $720,000) and $20,000 (December 31, 1999: $20,000),
respectively. At March 31, 2000, gross unrealized holdings gains are $2,050,000
(December 31, 1999: $70,000).

The Company holds an option to purchase a further 200,000 shares of AMG Oil Ltd.
at a price of $0.50 per share expiring on December 31, 2000.


NOTE 5 - COMMITMENTS AND CONTINGENCIES

a)   Work Commitments

     The Company participates in oil and gas exploration and development
     activities as a joint venturer 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 $3,484,000 of which a related
     party participant has farmed into PEP 38256 to contribute approximately
     $455,000.

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.

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 6 - LOSS PER SHARE

The following is a reconciliation of the numerators and denominators of the
basic and diluted loss per share calculations for the three month periods ended
March 31, 2000 and 1999:

<PAGE>

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Interim Financial Statements
Unaudited - Prepared by Management
(Prepared in Accordance with United States Generally Accepted Accounting
Principles)
(Expressed in United States Dollars)
================================================================================

For the Three Month Period Ended March 31, 2000
--------------------------------------------------------------------------------


NOTE 6 - LOSS PER SHARE (continued)

                                                      2000               1999
                                                ------------        ------------
Numerator, net loss for the period             $    (77,847)       $    (28,719)
                                                ------------        ------------
Denominator:
Weighted-average number of shares                28,262,398          28,262,398
                                                ------------        ------------
Basic and diluted loss per share               $      (0.00)       $      (0.00)
                                                ============        ============

Due to net losses incurred for the three month periods ended March 31, 2000 and
1999, 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 7 - SUBSEQUENT EVENT

Purchase of Oil and Gas Properties

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, subject to certain exchange gains or
losses, 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 will be offset
against the purchase price.

The Company will issue 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 will
provide Trans-Orient with anti-dilution protection for a period of one year from
the closing date if the aggregate amount raised is greater than $500,000 and the
average price is less than $0.50 per share or unit.

The Company will provide 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;

<PAGE>

================================================================================
INDO-PACIFIC ENERGY LTD.
Notes to the Consolidated Interim Financial Statements
Unaudited - Prepared by Management
(Prepared in Accordance with United States Generally Accepted Accounting
Principles)
(Expressed in United States Dollars)
================================================================================

For the Three Month Period Ended March 31, 2000
--------------------------------------------------------------------------------


NOTE 7 - SUBSEQUENT EVENTS (continued)

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.


<PAGE>

                                      PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

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

Name                       Age        Position Held

Dr. David Bennett[1]       54         President, Chief Executive Officer and
                                      Director

Ronald Bertuzzi[1][2]      63         Director

Alex P. Guidi              41         Chairman of the Board and Director

Brad J. Holland [1]        43         Director

Mark Katsumata             34         Secretary

[1] Member of audit committee.

[2] Appointed on March 31, 1998.

   Dr. David Bennett has been a member of the board of directors and an
officer since October, 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 a subsequent event, Dr Bennett has 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 90%
of his total work time on behalf of the Registrant.

   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 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. 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>

   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. Mark Katsumata was a director and officer from December, 1994 to
November, 1995 and an officer from November, 1995 to February, 1997. Mr.
Katsumata was appointed Secretary on October 15, 1997. Mr. Katsumata is a
certified general accountant who was in public practice from 1990 to 1994 in
Vancouver, B.C. In 1994 Mr. Katsumata joined the Registrant. Mr. Katsumata is
also the secretary of Trans-Orient Petroleum Ltd., Durum Cons. Energy Corp., AMG
Oil Ltd. and Gondwana Energy, Ltd. Mr. Katsumata is also the Corporate Secretary
and Chief Financial Officer of Verida Internet Corp. He devotes approximately
20% of his time to the Registrant's matters.

   All directors have a term of office expiring at the next annual general
meeting of the Registrant to be scheduled in June 2000 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.

   Subsequent Event

   On February 21, 2000, Mr. Guidi resigned as chairman but remained a
director. On the same day, Mr. David McDonald replaced Mr. Guidi as Chairman of
the Board and also became a member of the Board of Directors. Also, on November
16, 2000 Mr. Mark Katsumata resigned as corporate secretary and was replaced by
Jeanette Watson.

Indemnification of Directors and Officers

   Except with respect to an action by the Registrant to obtain a judgment,
the constating documents of the Registrant provide for the indemnification of
any director, officer, employee or agent of the Registrant if the person acted
honestly and in good faith with a view to the best interests of the Registrant
and, with respect to any criminal action or administrative proceeding, had
reasonable grounds to believe that his action was lawful. The Registrant has
not, however, entered into any agreement with a director and officer providing
for the grant of a covenant of indemnity by the Registrant pursuant to this
provision in the constating documents of the Registrant.

   With respect to an action to obtain a judgment, the Registrant is required
under the Business Corporations Act (Yukon) before performing its obligation to
indemnify to obtain the approval of the Supreme Court (Yukon) of the indemnity
and any payment to be made in connection with the indemnity.

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

Compliance with Section 16(a) of the Securities Exchange Act of 1934.

   Section 16(a) of the Securities and Exchange Act of 1934 requires officers,
directors and persons who own more than ten percent of a registered class of a
company's equity securities to file initial reports of beneficial ownership and
to report changes in ownership of those securities with the Securities and
Exchange Commission. They are also required to furnish the Company with copies
of all Section 16(a) forms they file. To the Company's knowledge, based solely
on review of the copies of Forms 3, 4 and 5 furnished to the Company or written
representations that no other transactions were required, the Company has
determined that the pertinent officers, directors and principal shareholders
have complied with all applicable Section 16(a) requirements during fiscal 1998.

ITEM 11. EXECUTIVE COMPENSATION

   The following table sets forth the aggregate compensation paid by the
Company for services rendered during the period indicated:

<PAGE>


<TABLE>
<CAPTION>
                                                   SUMMARY COMPENSATION TABLE

                                      Annual Compensation             Long            Term         Compensation
                                                                      Awards                 Payouts
-------------------------------------------------------------------------------------------------------------------------------
a                 b           c                d            e              f             g             h               i
-------------------------------------------------------------------------------------------------------------------------------
Name and         Year        Salary           Bonus        Other         Restricted    Securities    LTIP         All Other
Principal                     ($)             ($)          Annual        Stock         Underlying    Payouts      Compensation
Position                                                Compensation     Awards        Options/      ($)
                                                            ($)            ($)            SARs
-------------------------------------------------------------------------------------------------------------------------------
<S>              <C>              <C>             <C>     <C>            <C>            <C>                 <C>              <C>
David Bennett    1999             0               0       $ 60,899[2][3]          0       200,000           0                0
President, CEO   1998             0               0       $ 57,123          560,936 [1]   200,000           0                0
and Director     1997             0               0       $132,214                0       200,000           0                0
-------------------------------------------------------------------------------------------------------------------------------
Ronald Bertuzzi  1999             0               0              0                0             0           0                0
Director         1998             0               0              0                0             0           0                0
                 1997             0               0              0                0             0           0                0
-------------------------------------------------------------------------------------------------------------------------------
Alex P. Guidi    1999             0               0              0                0       500,000           0                0
Director         1998             0               0              0        2,944,914[1]    500,000           0                0
                 1997             0               0              0                0             0           0                0
-------------------------------------------------------------------------------------------------------------------------------
Brad J. Holland  1999             0               0              0                0       300,000           0                0
Director         1998             0               0              0                0     1,082,000           0                0
                 1997             0               0              0                0             0           0                0
-------------------------------------------------------------------------------------------------------------------------------
Mark Katsumata   1999             0               0              0                0             0           0                0
Secretary        1998             0               0              0                0             0           0                0
                 1997             0               0              0                0        10,000           0                0
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

[1] In fiscal 1998, 1,406,250 shares held in escrow and previously issued for
CDN$4,688 in 1994 were cancelled. International Resource Management Corporation,
a private company wholly-owned by Alex Guidi, held 1,361,250 of these shares
with the remaining 45,000 shares held by two former directors. To replace the
cancelled shares, 1,406,250 shares for total proceeds of CDN$14,063 were
reallocated through private placements to International Resource Management
Corporation as to 1,181,250 shares and to the DJ and JM Bennett Family Trust as
to 225,000 shares.

[2] During the year Ms Jenni Lean, spouse of Dr. David Bennett, received
$24,125 in salary. Ms Lean is the Corporate Affairs Manager for the Registrant

[3] 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 $27,177 in office rental costs for the use of the
building.

Cash Compensation.

   During the year ended December 31, 1999 the Registrant had two executive
officers: David Bennett, president and chief executive officer and Alex Guidi,
chairman of the board. The aggregate cash compensation paid or payable by the
Registrant and its subsidiaries to its executive officers during the year ended
December 31, 1999 was $60,899 all of which was compensation paid to Dr. Bennett.

   During the year ended December 31, 1998 the Registrant had two executive
officers: David Bennett, president and chief executive officer and Alex Guidi,
chairman of the board. The aggregate cash compensation paid or payable by the
Registrant and its subsidiaries to its executive officers during the year ended
December 31, 1998 was $57,123 all of which was compensation paid to Dr. Bennett.

   During the year ended December 31, 1997 the Registrant had two executive
officers: David Bennett, president and chief executive officer and Alex Guidi,
chairman of the board. The aggregate cash compensation paid or payable by the
Registrant and its subsidiaries to its executive officers during the year ended
December 31, 1997 was $132,214 all of which was compensation paid to Dr.
Bennett.

<PAGE>

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 as outlined in
above "SUMMARY COMPENSATION TABLE". Certain directors also serve as executive
officers of the Registrant and have received compensation for those services as
outlined above in the "SUMMARY COMPENSATION TABLE

Aggregated Option/SAR Exercises and Fiscal 1999 Year-End Option/SAR Value Table.

   The following table sets forth certain information with respect to stock
options held during fiscal 1999 by each of the Named Executive Officers, and the
fiscal 1999 year-end value of unexercised options. The dollar values are
normally calculated by determining the difference between the exercise or base
price of the options and the fair market value of the underlying stock at the
time of exercise and at fiscal year-end if unexercised, respectively. Within the
following table no dollar values have been shown for the 1999 fiscal year as
there has been no options exercised and the exercise price of the unexercised
options held was at fiscal year end higher than the Registrant's quoted share
price


No Options were granted to the directors or executive officers during the 1999
fiscal year.

<TABLE>
<CAPTION>
                                                        Number of Securities               Value of Unexercised
                                                        Underlying Unexercised             In-the-Money at FY-End
                                                        Options/SARs Options/SARs (#)
                                                        at FY-END ($)
                        Shares          Dollar
                       Acquired         Value           Exercisable/                       Exercisable/
Name                  on Exercise     (#) Realized      Unexercisable                      Unexercisable
--------------------------------------------------------------------------------------------------------------------
<S>                            <C>               <C>           <C>                         <C>
David Bennett                  0                 0             200,000                     N/A

Alex Guidi                     0                 0             500,000                     N/A

Brad Holland                   0                 0             300,000                     N/A
</TABLE>

   There were no directors' or senior officers' options exercised in the year
ended December 31, 1999. There were no directors' or senior officers' options
exercised in the year ended December 31, 1998. The aggregate value of directors'
and senior officers' options exercised below the market price of the shares at
the time of exercise for the year ended December 31, 1997 was $570,660. These
benefits are calculated as the difference between the market price and option
exercise price on the date of exercise. Actual proceeds of the disposition will
usually vary from the date of the exercise to the date of actual disposition of
such shares.

Subsequent Event

On May 13, 2000 the option granted to Mr. Brad Holland expired unexercised. On
October 30, 2000 the options granted to Mr. Alex Guidi and Dr. David Bennett
also expired unexercised. On July 6, 2000 the Registrant granted new options to
its directors and officers in the following manner:

<PAGE>
                     Shares Underlying             Exercise       Expiry
Name                    the Option                   Price         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)
Ronald Bertuzzi              200,000                 $.50        July 6, 2005(1)
Brad Holland                 200,000                 $.50        July 6, 2005(1)
David McDonald               200,000                 $.50        July 6, 2005(1)
Mark Katsumata                40,000                 $.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.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

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, each director, individual, and all officers and
directors of the Registrant as a group. All ownership shown is of record and
reflects beneficial ownership as of March 20, 2000.

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

David Bennett[1]       428,000           President, CEO                   1.50%
Karori, Wellington                       and Director
New Zealand

Ronald Bertuzzi          1,790           Director                         0.07%
Vancouver, BC
Canada

Alex Guidi [2]       6,718,076           Chairman of Board               22.96%
Vancouver, BC
Canada

Brad Holland[3]        300,000           Director                         1.05%
Dhahran,
Saudi Arabia

Mark Katsumata           4,000           Secretary                        0.01%
Surrey, BC
Canada

ALL OFFICERS AND
DIRECTORS AS A
GROUP (5 persons)    7,451,866                                           25.04%

[1]   Of the 428,000 common shares reported to be beneficially owned 200,000
are held in a family trust of which Dr. Bennett is a beneficiary, 3,000 common
shares are owned by Dr. Bennett's spouse Jenni Lean, and the final 200,000
relate to underlying common shares which are the subject of an option held
within the family trust which can be exercised within 60 days.

[2]   Of the 6,718,076 common shares reported to be beneficially owned,
994,000 are the number of common shares which may acquired within 60 days
through the exercise of options and warrants held by Mr. Guidi.

[3]   These reflect the number of common shares, which may be acquired within
60 days under a stock option, held by Mr. Holland.

<PAGE>

Subsequent Event

Subsequent to December 31 1999, two events have occurred which have resulted in
a change to the ownership percentages provided in the above table: the issuance
of common shares as a result of the Registrant's purchase of Trans-Orient
Petroleum Ltd.'s assets; and the recent granting of options to directors and
officers. After taking into account these events, 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,
each individual director, and all officers and directors of the Registrant as a
group. All ownership shown is of record and reflects beneficial ownership as of
October 31, 2000.

(a)   Security Held by Certain Beneficial Owners

Name and address                   Number of               Percent
of owner                           Shares                  of Class

Trans-Orient Petroleum Ltd.     12,552,672(1)              30.75% (1)
Vancouver, BC
Canada

(b) Security Held by Management

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

David Bennett              1,638,000            President, CEO         4.81% (2)
Karori, Wellington                              and Director
New Zealand

Ronald Bertuzzi              126,790            Director                .39% (3)
Vancouver, BC
Canada

Alex Guidi                 7,468,076            Director               21.84%(4)
Vancouver, BC
Canada

Brad Holland                 200,000            Director                .61% (5)
Dhahran,
Saudi Arabia

David McDonald               200,000            Chairman and Director    .61%(6)
Vancouver, BC
Canada

Mark Katsumata                14,000            Secretary               0.04%(7)
Surrey, BC
Canada

ALL OFFICERS AND
DIRECTORS AS A
GROUP (6 persons)          9,646,866                                    26.77%

<PAGE>

(1) A part of the purchase price paid to Trans-Orient Petroleum Ltd. for the
purchase of its assets, the Registrant issued, on March 29, 2000, 4,184,224 "A"
Warrants. 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 the end of business on the date which is one year from their
issuance and thereafter for $0.75 per common share up to the close of business
on the date which is two years from the date of issuance. 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 12,552,672 common shares reported
to be beneficially owned, 4,184,224 are the number of common shares which may
acquired within 60 days through the exercise of the "A" warrants issued. while
an additional 4,184,224 are the number of common shares which may be acquired on
the exercise of the "B" warrants.

(2) Of the 1,638,000 common shares reported to be beneficially owned 200,000 are
held in a family trust which Dr. Bennett is a one of beneficiary of, 3,000
common shares are owned by Dr. Bennett spouse Jenni Lean, 1,000,000 relate to
underlying common shares which are the subject of an option held by Dr. Bennett
which can be exercised within 60 days while the final 405,000 relate to
underlying common shares which are the subject of options held within the family
trust which can be exercised within 60 days.

(3) Of the 126,790 common shares reported to be beneficially owned, 125,000 are
attributable to the number of common shares which may acquired within 60 days
through the exercise of options held by Mr. Bertuzzi.

(4) Of the 7,468,076 common shares reported to be beneficially owned, 1,644,000
are attributable to the number of common shares which may acquired within 60
days through the exercise of options and warrants held by Mr. Guidi.

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

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

(7)   Of the 14,000 common shares reported to be beneficially owned, 10,000
are attributable to the number of common shares which may acquired within 60
days through the exercise of options held by Mr. Bertuzzi.


ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED 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. A
   formal agreement has been finalized with formal closing of the Agreement
   occurring on March 31, 2000 while the effective date of the Agreement is
   January 1, 2000. The Agreement was subject to ratification by the
   shareholders of Trans-Orient Petroleum Ltd. at a General Meeting of the
   shareholders of Trans-Orient Petroleum Ltd., which was held on May 23, 2000.
   At the May 23, 2000 General Meeting, the Shareholders of Trans-Orient
   Petroleum Ltd. approved the sale of assets to Indo-Pacific Energy Ltd.
   pursuant to the terms of the Agreement of Purchase and Sale. The value
   placed upon the Assets by the Registrant and Trans-Orient Petroleum Ltd. was
   $4,089,836 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 $3,046,908. See
   ITEM 1. BUSINESS 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 owns
   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

<PAGE>

   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 outstanding. Mr. Brad Holland owned 1,565,500 common shares in Trans-
   Orient Petroleum Ltd., which represents 3.90% of outstanding.  Additionally,
   Mr. Holland owned warrants to acquire 2,000,000 common shares of Trans-Orient
   Petroleum Ltd. Mr. Mark Katsumata is the secretary and a shareholder of Trans
   -Orient Petroleum Ltd. owning 17,600 common shares of Trans-Orient Petroleum
   Ltd. which represents 0.04% of outstanding. 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 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 outstanding. Mr. Brad Holland owned
   1,173,500 common shares in AMG Oil Ltd. that represents 8.26% of outstanding.
   Mr. Mark Katsumata was the secretary and treasurer of AMG Oil Ltd. and
   beneficially owned 5,000 common shares of AMG Oil Ltd. which represented
   0.04% of 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.

<PAGE>

   which represented 7.77% of outstanding. Mr. Brad Holland owned 1,070,500
   common shares in AMG Oil Ltd. that represents 7.54% of outstanding. Mr. Mark
   Katsumata was the secretary and treasurer of AMG Oil Ltd. and beneficially
   owned 5,000 common shares of AMG Oil Ltd. which represented 0.04% of
   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, 1999, the Registrant paid $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.

                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

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

     On April 13 ,2000 the Registrant filed a Form 8-K detailing the Asset
     Purchase between the Registrant and Trans-Orient Petroleum Ltd.

C.   Index to Exhibits

     The following Exhibits are incorporated by reference:

Exhibit
Number     Document Description

10         Asset Purchase Agreement between the Registrant and Trans-Orient
           Petroleum Ltd. [1]
13         Registrant's Form 10-Q for the quarter ending March 31, 2000 [2]
27         Financial Data Schedule [3]
99.1       PEP 38256 Option Amending Agreement [3]
99.2       Change in conditions to permit PEP 38723 [3]
99.3       Farm-out Agreement on PEP38330 [3]

[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
      filed on April 12, 2000.

[3]   herein incorporated by reference as previously filed on our Form 10-Q on
      August 10, 2000.

<PAGE>

SIGNATURES

Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report and any amendment
thereto to be signed on its behalf by the undersigned,
thereunto duly authorized.

INDO-PACIFIC ENERGY LTD.

Date: November 29, 2000        By: /s/ Dr. David Bennett
                                   ---------------------------------------------
                                   Dr. David Bennett, President & Chief
                                   Executive Officer



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been duly signed below by the following persons on behalf of the Registrant
and in the capacities and on the date set forth above.

By: /s/ Dr. David Bennett
----------------------------------------------
Dr. David Bennett, Director President & Chief Executive Officer
(Principal Executive Officer)

By: /s/ Mr. John Burt
----------------------------------------------
Mr. John Burt, Controller

By: /s/ Mr. Ronald Bertuzzi
----------------------------------------------
Mr. Ronald Bertuzzi, Director

By: /s/ Mr. Alex Guidi
----------------------------------------------
Mr. Alex Guidi, Director


<PAGE>