COLOMBIA : FORTUNA ASSOCIATION CONTRACT

The Fortuna contract area lies in the oil-producing Middle Magdalena Valley basin and includes the Totumal oil field, produced by Ecopetrol when it was abandoned in 1993 after producing over 800,000 barrels of oil.

Following a discovery, Ecopetrol has the right to participate in the development of the discovery with a 20% working interest and Emerald has the right to recover reimbursable costs from a share of production.

Silfide field

The Silfide No.1 discovery well was drilled in 2005, targeting a prospect within the Lisama sands that lie at a depth of around 5,700 feet and which produce in three oil fields just to the south of the Fortuna block. The well discovered and tested hydrocarbons in the Umir formation and recovered 38 bbls of oil during swabbing operations. Analysis of seismic, drilling and logging data indicates that Silfide No.1 has penetrated a secondary target and not the primary main Lisama sands. The well commenced production with an initial rate of 35 bopd

In December 2007, Ecopetrol elected not to exercise its 20% back-in right in the Silfide field and Emerald elected for sole-risk field exploitation status. Under sole-risk, Ecopetrol will not contribute to future costs and will receive a 5% overriding royalty interest from future production from the field.

Production operations in the Silfide field were temporarily suspended at the end of 2008 due to the low oil price environment.

Totumal field

The Totumal oil field produced over 830,000 barrels of oil from the La Luna limestone formation prior to being abandoned in 1993. Emerald re-entered the Totumal No.4 well in July 2007. The well bore was cleaned out and a production tubing string with a mechanical pump installed. Production commenced at an initial rate of 40 bopd of 24 API gravity oil. The Totumal No.1 well was re-entered in November 2007, the well bore was cleaned out and a production tubing string with a mechanical pump installed. Production of No.1 commenced in November at an initial rate of approximately 40 bopd. It is anticipated that the information gained from production from these wells will assist in evaluating the future production potential of both the Totumal and Aureliano fields.

Production operations in the Totumal field were temporarily suspended at the end of 2008 due to the low oil price environment.

Aureliano field

Emerald identified a potentially prospective fault block adjacent to the Totumal field (see the Play Schematic below for an illustration of both plays). The Aureliano No.1 well was drilled into this fault block to a total measured depth of 8,745 feet with a maximum deviation of 45 degrees, with the aim of intersecting the natural fault planes of the fractured carbonate formation. The target La Luna limestones were encountered as forecast, and production testing established an initial flow rate of 10 bopd.  Production operations in the Aureliano field were suspended in August 2007 due to the low flow rates.

Exploration

Fortuna Location Map

Fortuna Play Schematic

Existing wells on Fortuna block