Zhibek Resources

Zhibek Resources Ltd (Kyrgyzstan)

Zhibek Resources is an oil and gas exploration and production company which has a 72% interest in the Tash Kumyr and Pishkoran exploration licences in the Kyrgyz Republic. Xtract has entered a farm-out agreement to fund a seismic and drilling programme for 2008-09. Xtract owns 25.0% of the issued share capital of Zhibek Resources.

In October 2008, Xtract and Santos International Holdings Pty Ltd ("Santos"), a subsidiary of Santos Ltd, Australia’s second largest oil and gas company entered a farm-in agreement in relation to Xtract’s wholly-owned subsidiary, Zhibek Resources Limited ("Zhibek"). Santos assumed operatorship and control of Zhibek.

Under the agreement, Santos is funding up to US$8.5 million of Zhibek’s near-term exploration programme, which includes a 2D seismic programme over the Tash Kumyr and Pishkaran licence areas in the Fergana basin area in the Kyrgyz Republic, to earn a 75% interest in Zhibek. The seismic acquisition programme commenced in November 2008 and was completed in February 2009. Analysis and interpretation are in progress. If the seismic results are in line with expectations, a well is planned for 2010. Zhibek has now dropped the Pishkaran licence in order to focus on Tash Kumyr.

Xtract retains representation on the Board of Zhibek and will contribute up to US$1.5 million to Zhibek’s funding in the latter stages of the current exploration programme and may contribute to Zhibek’s future exploration and development programs.

As part of re-arranging its Central Asian investments, commitments, and staffing, Xtract ceased its involvement in development of a water injection project at the Beshkent-Togap oil field in Kyrgyzstan. Wholly owned subsidiary Zhibek Oil and Gas Ltd was closed and de-registered.