Extrem Energy

Extrem Energy A.S. ('Extrem Energy')

Xtract built up its 50 per cent stake in Extrem Energy in the period September 2008 to February 2010. The remaining 50 per cent of Extrem Energy was owned by Merty Energy, Petroleum Exploration, Education and Services Inc. ('Merty') and individual members of the Yoldemir family.

Extrem Energy has a portfolio of licence interests in onshore and offshore Turkey. In 2010, Xtract reviewed the entire asset portfolio of Extrem Energy with Merty and others, to determine the most advantageous way to progress the Extrem Energy portfolio given competing demands on Xtract resources, whilst retaining value for shareholders.

Pursuant to a share transfer and royalty agreements Merty has acquired Xtract's 50 per cent share ownership in Extrem Energy, thereby giving Marty and the Yoldemir family complete control of Extrem Energy. Merty and the Yoldemir family as the sole owners of Extrem Energy have granted Xtract certain gross over riding royalty interests in the existing licences and may make other success based payments in consideration of Xtract's 50 per cent share in Extrem Energy.

Xtract is expected to benefit from this strategy in that it will have no further financial liability in relation to Extrem Energy or the Turkish licences. However Xtract has received near term income by payment of US$100,000 from Merty and will retain a participation in any future successful commercial production by virtue of Merty's assignment to it of a gross over riding royalty interest.