Molopo Canada has commenced its Spearfish drilling and development campaign for the northern hemisphere summer 2010. The first rig commenced drilling on the 17th of June. Two additional rigs will be added shortly for a total of three drilling rigs targeting 6 to 9 new wells per month during third quarter of calendar year 2010 (Q3 CY10). The new drilling will be a combination of vertical and horizontal wells. Production at the end of CY10 is expected to exceed 2,000 b/d net to Molopo. Depending on initial well results, drilling may be extended up to and beyond the end of the calendar year. Production is expected to exceed 3,000 b/d net by mid CY11.

Progress with the outstanding completions has allowed Molopo to achieve its mid-year production target range of 800-1000 b/d, albeit with interruptions curtailing weekly average flows.

Molopo Canada's oil production potential has reached a total of 900 b/d net. Spearfish is contributing approximately 740 b/d net, with all seven horizontal wells drilled in Q1 CY10 now completed and on production. Bakken will contribute 130 to 290 b/d net, with three of six horizontals completed and on production and one additional well expected to commence production during June. One Bakken well has been shut-in indefinitely due to high water cuts.

In terms of actual production, spring conditions are continuing to provide significant interruptions to continuous production, with unseasonably high rainfall in May and June curtailing the ability to access several well sites to truck oil to sales. As at mid June, average weekly production was 600 b/d net with approximately 300 b/d net production shut-in due to local site conditions.

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