HEALTH, SAFETY, ENVIRONMENT AND COMMUNITIES

Emerald is committed to effective Heath, Safety and Environment (“HSE”) practices. In 2006, the Company’s business unit in Colombia completed the development and implementation of its HSE Management System, policies and procedures for the conduct of its operations.

Health

An occupational health programme has been established, including medical evaluations and vaccinations.

Safety

HSE training programmes and a risk identification, reporting and mitigation system have been introduced. In 2006, the frequency of incidents resulting in lost operational time was significantly reduced compared to the previous year.

Environment

The regulatory authorities in Colombia have a well-developed environmental permitting and monitoring system which applies to oil and gas exploration and production activities. An environmental licence must be obtained prior to any well drilling activity and maintained through production activities.

In Colombia, the Company conducts environmental studies in accordance with the established regulatory guidelines and complied with commitments made in previous environmental studies prior to conducting operations.

During 2006, Emerald further developed its infrastructure for the disposal of the water produced with oil from its wells in the Company’s fields to ensure compliance of regulations, meeting or exceeding regulatory requirements. These developments included the use of evaporators in the Gigante field and a dedicated water disposal well in the Vigia field.

The identification, classification, and protection of forests is one component of the environmental permitting and monitoring system. Emerald has three licence areas that contain areas with forests; these areas cover parts and not all of these licences. In one licence which is approaching drilling, the environmental permitting process has identified and classified the areas of forests, and identified restricted areas in which drilling will not take place. The remaining two licences are in the early stages in which seismic surveys are being run. Environmental permitting is not required for seismic surveys as they can generally be conducted without impact on trees.

Communities

Emerald engages in communities’ programmes in support of its operations in Colombia. A “Good Neighbour” policy is followed consisting of environmental conservation, and contributions to regional development and welfare. Specific examples are the hiring of local personnel, giving priority to the local region, where possible, when procuring goods and services, and fulfilling commitments with the communities and authorities for local development. Local development projects have included environmental education for children, the setting up of dental care facilities, improving grass cultivation for cattle fodder, and irrigation improvement.

The Company believes its commitment to effective HSE performance benefits the Company, its employees, contractors, and the communities in which the Company conducts its operations.