Poland Exploration
New Exploration Permits
CalEnergy participates in five exploration permits, and was awarded and operates four exploration permits covering approximately 2,540 square kilometers, where it currently holds a 100 percent working interest. CalEnergy has conducted significant technical studies on all four permits, including the acquisition of 3D and 2D seismic and extensive reprocessing of 2D seismic data, acoustic impedance inversion projects and evaluating well data.

CalEnergy is actively seeking farm in partners for permits they operate.

Debicze Permit
Covering part of Block 289, this permit was awarded in May 2007 and is prospective for the Rotliegendes and Zechstein Main Dolomite reservoirs. CalEnergy has completed substantial technical work, including completion of seismic reprocessing and acoustic impedance inversion projects.

CalEnergy has completed the Kopeć-1 well. The well spudded March 15, 2011, and was plugged and abandoned as non-commercial May 11, 2011. The well was drilled to 2,113 meters below ground level, and CalEnergy managed to successfully retrieve cores from the Rotliegendes and Zechstein Main Dolomite formations. The well was completed for less than £2.0m.

Additional prospectivity has been identified within the block in the Rotliegendes – two structurally robust Rotliegendes prospects and one lead – for a total P50 OGIP 97 Bcf. CalEnergy acquired two 2D lines over the main Debicze Prospect in June 2011 and is currently incorporating this data into the mapping project. CalEnergy continues to evaluate the Kopeć-1 well information and integrate the results into its regional evaluation.

Wersk Permit
The Wersk permit covers parts of Blocks 126 and 127 and is prospective for the Zechstein Main Dolomite reservoirs. CalEnergy was awarded the permit in October 2009 and already owns all available seismic and well data in and around the permit, which is on trend with the Brzozowka Main Dolomite oil field approximately 15 kilometers to the northwest. A number of potential carbonate build-ups and brightening within the Main Dolomite have been identified. A data review is complete, and selected key seismic lines (approximately 300 kilometers) have been reprocessed, with seismic attribute inversion modelling completed. The modelling benefited from the predictive model generated on the Debicze permit. The Rotliegendes and Carboniferous reservoirs also are recognized as potential objectives in this permit.

The reprocessing/inversion work is complete; CalEnergy selected the optimum area for acquiring an approximately 108 square kilometer 3D survey in late 2011. Data processing has begun and is expected to be complete in first quarter 2012.

Zdbowo Permit
Covering parts of Blocks 125 and 145, the Zdbowo permit was awarded in August 2008 and is prospective for the Zechstein Main Dolomite reservoirs. CalEnergy has identified a new and potentially significant play fairway, based upon proprietary regional seismic data and advances in the understanding of the development of the Zechstein Basin. The basin had previously been thought of as too deep, and unprospective. This play fairway is on trend with promontories and embayments in the proven reefal facies of the Main Dolomite – mapped on both the southern and northern margins of the Polish Zechstein Basin. The permit has the potential to host substantial reserves of a similar order to the BMB oil and gas complex (550 Bcf of gas, 150 Mmbo).

CalEnergy acquired a focused seismic acquisition program in late 2011 to define reservoir character and will utilize inversion analysis to determine the best target location for an exploration well on the play. Data processing has begun and is expected to be complete in early 2012.

Dargin Permit
The Dargin permit covers parts of Blocks 65, 66, 85 and 86. The permit was awarded in November 2008 and is prospective for the Carboniferous, Rotliegendes and Zechstein Main Dolomite reservoirs. CalEnergy was awarded this acreage ahead of a major local player; the principal focus is on the Carboniferous and Permian reservoirs within structural closure at Base Zechstein level. Existing wells – mainly late-1960s through mid-1970s – are sparse in the permit and due to halokinesis, seismic data quality is poor; however, significant structuration is evident. Well intersections confirm the presence of a good reservoir and that productive fields exist on trend.

CalEnergy is finalizing the interpretation of an extensive reprocessing program (approximately 900 kilometers), which shows considerable promise. Based on historic mapping, CalEnergy recognizes individual prospect potential in the 10 to 75 Bcf range. An experimental 2D seismic program was acquired in late 2011 to delineate currently identified prospectivity. Data processing has begun and is expected to be complete in early 2012.

Greater Zaniemysl Area
CalEnergy has a 24.5 percent interest in approximately 43,350 acres, or 175 square kilometers, around the Zaniemysl No. 3 well. Farm in partners include FX Energy, which holds a 24.5 percent working interest in the well, and Polish Oil and Gas Company, which holds a 51 percent working interest in the well. CalEnergy has identified a number of small satellite Rotliegendes structures within the Greater Zaniemysl Area that could be developed through the Zaniemysl facilities. The operator does not have a work program in place to evaluate the prospectivity, so it remains on hold.

Resource Development
Producing
Gas Fields
Share of Remaining
Reserves as of 1/1/12
Share of Contingent Resources Current Percentage
Poland - Greater Zaniemysl Area 5.3 Bcf - 24.5%
Victor 1.2 Bcf - 5%
Gas Projects in Development Permit
Status
Current Percentage
Working Interest
Perth Basin Evaluation 2011 55%
Otway Basin Evaluation 2011 5%
Block 48/1a, 48/1c and 47/5b Appraisal Drilling Early 2012 15%
Poland Evaluation 2012 100%