Regal starts spudding of exploration well RBN-4 in the Barlad Concession in which the Company holds a 100% working interest. It is planned that the RBN-4 well, once completed, will be followed by the Company’s second planned exploration well, RBN-3.

The RBN-4 well is being drilled on a Sarmatian formation gas prospect identified by Regal in late 2006 using the 2D seismic data acquired by the Company in 2006 and is planned to reach a target depth of 1,050 metres. The well will be logged on completion of drilling and the rig moved to the RBN-3 location approximately 5 kilometres to the northwest. It is envisaged that the RBN-4 well will take approximately 18 days to drill at a cost of approximately US$1.0 million. Any testing of the well, if required, will be deferred until a lower cost well workover unit can be mobilised.

The RBN-3 well is also planned to test a Sarmatian formation gas prospect and is estimated to take approximately 20 days to drill at a cost of approximately US$1.1 million.

These prospects are supported by seismic amplitudes and have been assessed by the Company as having geological probability of success of approximately 30%. The Company has computed best estimate unrisked undiscovered gas-initially-in-place volumes of 30 bcf for the RBN-4 prospect and 61 bcf for the RBN-3 prospect. The proximity of a network of gas pipelines coupled with the low costs of both drilling and gas handling facilities allows small gas accumulations to be commercially exploited.

Following evaluation of the results from these two Barlad wells, Regal plans to extend the Barlad licence into its second exploration period in order to further test Sarmatian prospects and to finalise evaluation of the potential of the deeper oil play within Eocene and pre-Miocene formations in the south of the Barlad Concession, within an area known as the Barlad Depression.