REVLOC,

APPALACHIAN BASIN,PENNSYLVANIA

Appalachian Basin and location of Revloc project

Operator:

Admiral Bay (USA) Inc. – 50% 

Osceola – 50%

The Revloc project covers approximately 20,000 acres in Cambria County, Pennsylvania and is targeting CBM gas production in the north eastern region of the hydrocarbon prolific Appalachian Basin which has been producing gas from coal seams since 1932.  The project area is close to the strong gas markets of the eastern US Seaboard.

Questa Engineering, an independent reserve analyst, operating out of Golden, Colorado, has reported possible reserves of 28 BCF (billion

cubic feet) for the project.  Osceola holds a 50% interest in the project, acquired in two tranches – an initial   25% in 2007 followed by a further 25% in 2008 following a successful seven well drilling programme.  Admiral Bay (TSX: ADB), a Canadian listed company, holds the remaining interest and is the operator.

Seven wells were drilled in 2007/2008 to evaluate separate coal horizons between 300 to 1,500 feet in the Palaeozoic Carboniferous Pennsylvanian Alleghany and Pottsville Group formations.

Four of the wells have been cored in the main coals and samples collected for desorption, absorption and mechanical properties to determine gas content and completion methods for the wells.

The results of these tests indicate that the gas content of the wells are as high as 590 scf/ton dry ash free.  Osceola and Admiral Bay are continuing to expand their acreage position based on the positive drilling results. 

Five of the seven wells drilled now form a pilot production project.  One of the pilot wells and both the Weiland and Williams wells were placed on extended production tests through Autumn 2008.  All three wells are showing increasing production. In conjunction with testing, Admiral Bay is now acquiring rights of way to construct a pipeline to a main tap with substantial take away capacity.  The rights of way programme is nearing completion and engineering work is expected to be finalised during Summer 2009.

An additional seven development wells are in the permitting process.

Night drilling operations at Revloc

Williams well - Location 4

Winter drilling operations