Recently, the economic development of Four BRIC countries namely Brazil, Russia, India and China take off rapidly, stimulating the demand for oil. The oil imports of India and China expecially grew substantially that the business opportunities in oil industry increased. To coordinate this global development, in April 2006, we acquired 15% interest in the exploration and production rights of oil field known as Block 2, West Esh El Mallaha, in the Arab Republic of Egypt. In August 2006, we increased our beneficial interest in the Block 2 oil field to 20%. In November 2006, we have issued a bidder statement to Volant Petroleum Limited conditionally offering to purchase all shares of Volant. Volant is a company duly incorporated under the laws of Queensland and its shares are listed on the Australian Stock Exchange. At present, Volant is actively pursing tender or acquisition of various upstream projects in Yemen, Colombia, Sudan, Algeria, and the US. Volant will bring US as the future operating backbone which provides resources for us to go into newer of riskier oil producing countries.

The oil field is located in West Esh E1 Mallache in the Arab Republic of Egypt. Egypt is an important transportation center that connecting Middle East Region with Europe. It offers a stable political environment and structured legal system. This oil field is a mature exploratory block with extensive seismic data available for technical review and well-developed infrastructure for production and transportation of oil.

The principle business of Volant is the acquisition of oil and gas exploration and production tenements, the investment in companies which are active in oil and gas exploration and production, the provision of capital and management to those investee companies. Volant is in the process of accumulating a portfolio of oil and gas exploration and production assets within the America and African continents.

Furthermore, Volant has beneficial interests in both Block 2 oil field and Block 3 West Kom Ombo in the Arab Republic of Egypt in the exploration and production rights of oil. In November 2006, Volant has entered into 2 participating agreements to acquire 100% mining interest in respect of 2 oil and gas prospects in the US.

The investment in the oil business is a good investment opportunity for the Company and is in the interest of the Company. We believe the investment will broader our earning base and strength our cash flow position in the long run. We keep optimistic towards the oil market and are looking for good investment opportunities to strength the upstream oil business.