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Anzon Energy Ltd (AEL)

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Monday 31 March, 2008

Anzon Energy Ltd

Final Results

Anzon Energy Limited
31 March 2008

31 March 2007



                        ANZON ENERGY LIMITED (CODE: AEL)

            Financial Statements for the year ended 31 December 2007


The Board of Anzon Energy Limited ('the Company') is pleased to release the
audited Financial Statements of the Company for the year ended 31 December 2007.

Extracts from these Financial Statements follow, with amounts stated in
Australian dollars.

A full copy of the Company's 2007 Annual Report is available at the Company's
website at:  www.anzonenergy.com.



For further information please contact:



Anzon Energy Limited: Mr Tony Strasser +61 2 99227899
Grant Thornton Corporate Finance: Fiona Owen +44 20 7383 5100



Operations Report

DEVELOPMENT ACTIVITIES

Sale of Indonesian Operations

On 27 September 2007, Anzon Energy Limited ('AEL') completed the sale of all its
shares in PT Binatek Reka Kruh (which holds the Kruh TAC, located in South
Sumatra) and PT Indama Putera Kayapratama (which holds the Kaya TAC, located in
South Sumatra).



Basker Manta Gummy (BMG) Production

2007 has been an exciting year for the BMG development. It was the first full
year of production.



Production to date since commissioning commenced on 17 December 2006 has been
approximately 2.9 million barrels. However, total production from the fields is
approaching 3.8 million barrels, when the 868,000 barrels produced during the
EPT is included, (nearly 10% of current proved plus probable oil reserves).



These production figures were achieved despite the impact of an incident that
occurred on 5 July 2007 when the Single Point Mooring (SPM) subsea chain for the
Basker Spirit parted and the Basker Spirit drifted from location. The incident
curtailed production for 4 months. Normal operation resumed in November 2007.
The incident was covered by our insurance policy.



In August 2007, the BMG Joint Venture was awarded production licences for permit
VIC/L27 and VIC/L28 in respect of the previously held retention leases VIC/RL9
and VIC/RL10. These new licences lie adjacent to the existing VIC/L26 which was
awarded to the BMG Joint Venture in 2005.





EXPLORATION ACTIVITIES

VIC/L26, VIC/L27, VIC/L28

The BMG Joint Venture holds three production licences in the Gippsland Basin.
Oil production commenced from VIC/L26 initially in 2005, with the Full Field
Development coming on line in December 2006. VIC/L27 and VIC/L28 provide for the
development of the known gas resources and exploration of further hydrocarbon
potential in the acreage.



Potential exists for additional hydrocarbon accumulations in the intra-latrobe
formations within the company's production licences. Geophysical and geological
studies by Anzon Australia have identified at least 4 leads which are presently
being matured for potential drilling in 2008 or later. Reprocessing of the 1996
Basker-Manta 3D seismic survey has been completed and is being used to refine
the leads previously mentioned.



Interests in VIC/L26, VIC/L27, VIC/L28 are:



Anzon Australia Limited                                          40% (Operator)
Beach Petroleum Limited                                          40%
CIECO Exploration and Production (Australia) Pty Limited         20%





PEP 38259

The Company advised the ASX in November 2006 that drilling of the Cutter-1
exploration well had reached final depth on 9 November 2006. The well was
drilled to a total depth of 2,930 metres before being plugged and abandoned.
Further feasibility studies are continuing in this exploration acreage.



Joint Venture interests in PEP 38259 are:

Tap (New Zealand) Pty Limited               40% (Operator)*
AWE New Zealand Pty Limited                 25%
Beach Petroleum (NZ) Pty Limited            20%
Anzon New Zealand Limited                   15%

*Upon Tap resigning as Operator, AWE was appointed effective 31 December 2007.



VIC/P56, VIC/P49

Anzon Australia farmed in to these Nexus operated exploration permit areas,
which are adjacent to the Basker-Manta fields.  Further studies are continuing
in this exploration acreage, to prepare for drilling in 2009.



Joint Venture interests in VIC/P56 are as follows:

Nexus Energy Limited                        80%* (Operator)
Anzon Australia Limited                     20%*

*subject to regulatory approval



Joint Venture interests in VIC/P49 are as follows:

Nexus Energy Limited                        80% (Operator)
Anzon Australia Limited                     20%






Yours sincerely,




Andrew A Young
Managing Director
31 March 2008




Directors' Report



The Directors of Anzon Energy Limited hereby present the financial report of the
Company for the 12 month period ended 31 December 2007 and the Auditors' Report
thereon. In order to comply with the provisions of the Corporations Act 2001,
the Directors report as follows:



DIRECTORS

The names of the Directors of the Company who held office during the period and
in office as at the date of this report are:



Michael N Arnett (Chairman)

Term of office: Appointed Chairman on 4 April 2007

Appointed a Director on 7 August 2002

Qualifications: BCom, LLB

Skills and experience: Mr Arnett was a Partner, member of the Board of Directors
and national head of the Natural Resources Business Unit of the law firm
Deacons. He was also one of the firm's 3 representatives on the International
Management Board responsible for the management of Deacons' international
operations which extend throughout Asia. Mr Arnett has been involved in
significant corporate and commercial legal work for the resource industry for
over 18 years. Mr Arnett is the Chairman of Anzon Energy Limited.

Directorships of other listed companies in last 3 years:

•          Non Executive Director, Anzon Australia Limited
•          Non-Executive Director, Archipelago Resources PLC
•          Non-Executive Director, Cloncurry Metals Limited
•          Non-Executive Director, NWR Holdings Limited
•          Non-Executive Director, Queensland Energy Resources Ltd
•          Non-Executive Director, Red Sky Energy Limited
•          Non-Executive Director, Axiom Mining Limited (Resigned 30 April 2007)
•          Non-Executive Chairman, Aztec Resources Limited (Resigned 20 February 2006)
•          Non-Executive Director, Kids Campus Limited (Resigned 29 May 2006)



Andrew A Young (Chief Executive Officer/Managing Director)

Term of office: Appointed a Director on 1 September 2006

Qualifications: BE - Chemical (Melbourne); MBA (Hons) (Rochester, New York),
SPE, FAICD

Skills and experience: Mr Young performs the role of Chief Executive Officer of
Anzon Australia Limited on secondment from Anzon Energy Limited. Mr Young is
also the Managing Director of Anzon Energy Limited. Mr Young has over 30 years
experience in the oil industry, having commenced his career with Esso Australia
Limited working on the Bass Strait operations prior to joining Bridge Oil
Limited where he was Production Manager. Subsequently, Mr Young was the General
Manager of Operations for the New Zealand Natural Gas Corp. and Managing
Director/CEO of Century Drilling prior to establishing the Gaffney Cline &
Associates consulting group in Australasia. Between 1997 and 2001, he served as
a Non-Executive Director of the National Safety Council of Australia (NSCA).
Most notably he was the 2003 President of the International Society of Petroleum
Engineers (SPE) and is a Board member of the University of NSW, School of
Petroleum Engineering. Mr Young is a Council Member of the Australian Petroleum
Production and Exploration Association (APPEA).

Directorships of other listed companies in last 3 years:

•          Director, Anzon Australia Limited



Olivier Fric

Term of office: Appointed a Director on 6 September 2002

Skills and experience: Mr Fric has extensive experience in the international oil
and gas industry, with a particular focus on project and structured finance.
During his career he has been involved in numerous oil and gas financings and
trades. He is a former Director, Energy Derivatives at Total Fina Elf, based in
Geneva, focusing on marketing and strategic development, and formerly worked in
senior executive roles at Elf Trading in Paris and at Credit Lyonnais in SE Asia
and Europe.

Directorships of other listed companies in last 3 years:

Nil.





Steven J Koroknay

Term of office: Appointed a Director on 7 August 2002.

Qualifications: BE (Hons) - Civil Eng (Sydney), FAICD, FAusIMM, FIEA

Skills and experience: Mr Koroknay was appointed a Director, Executive Chairman
and Chief Executive Officer of Anzon Australia Limited on 18 December 2003, and
is now the Non-Executive Chairman of Anzon Australia. Mr Koroknay's career
encompasses over 30 years in the international oil and gas industry commencing
with Esso Australia Limited. During 15 years with Esso Australia, he served in
senior management positions, namely Head of Operations and Technical Manager,
Bass Strait fields, as well as undertaking US assignments. Mr Koroknay then
spent 10 years at Bridge Oil becoming Executive Director and COO. He was
formerly a councillor of Australian Petroleum Production and Exploration
Association (APPEA) and Chairman of the Advisory Board for the School of
Petroleum Engineering at UNSW. Mr Koroknay previously held the position of
Chairman of Anzon Energy Limited and is currently a Non-Executive Director of
Anzon Energy Limited.

Directorships of other listed companies in last 3 years:

•          Non-Executive Director, Anzon Australia Limited



Robert C.A. Leon

Term of office: Appointed a Director on 6 September 2002

Skills and experience: Mr Leon is currently a managing partner in Qualis, a
diversified French private equity group. Prior to working with Qualis, Mr Leon
was a member of the Board and CEO of the Groupe Arnault holding company. In this
role, Mr Leon was also a member of the Board and Adviser and Delegate of the
President of Louis Vuitton - Moet Hennessy (LVMH). Mr Leon was specifically in
charge of strategic and financial operations and of the negotiations which were
instrumental to the construction of the LVMH Group.

Mr Leon's former roles have also included Head of Division of Crude Oil
(Products Supply) in the French Ministry of Industry and Head of CIRI (French
Industrial Restructuring Authority) at the French Ministry of Economics and
Finance.

Directorships of other listed companies in last 3 years:

•          Non Executive Director, Anzon Australia Limited

•          Member of the Board of the Mandarin Oriental Group.



Vincenzo Paglione

Term of office: Appointed a Director on 21 January 2004

Skills and experience: Mr Paglione has 30 years of experience in the oil and gas
industry, former executive Vice-Chairman of the Board of Directors of Petroleos
de Venezuela SA; former Managing Director of Petroleos de Venezuela UK; former
Vice-President of the Committee of Developing Countries and the World Energy
Council Program (1991-1998); former member of the Venezuela-US Department of
Energy Agreement Co-ordinating Committee.

Directorships of other listed companies in last 3 years:

Nil.



Charles J Pope, ONZM

Term of office: Appointed a Director on 7 August 2002

Qualifications: B Com (Economics), Fellow Institute of Directors in New Zealand

Skills and experience: More than 30 years corporate experience. Chairman and
Director of major New Zealand corporations, including Chairman of TeamTalk Ltd
and Revera Ltd. Former Chairman of NZ Market Development Board and Horticulture
and Food Research Institute. Former CEO of Petrochemical Corporation of NZ and
NZ Apple and Pear Marketing Board. Fellow on the Institute of Directors of New
Zealand

Directorships of other listed companies in last 3 years:

Chairman, TeamTalk Limited

Non Executive Director, Cavotec MSL Holdings Limited







Peter D Sadler

Term of office: Appointed a Director on 30 August 2007

Qualifications: BA (Physics), MSc (Petroleum Engineering)

Skills and experience: Mr Sadler is Chief Executive Officer of Ras Al Khaimah
Petroleum PCL (RAK Petroleum) and is RAK Petroleum's nominated representative on
the Board of Anzon Energy. Mr Sadler commenced work with Schlumberger Limited in
1978 and after obtaining his MSc joined Union Oil Company of California as a
petroleum engineer. After working in a steady progression of staff and
consulting engineering roles, in 1996, Mr Sadler was appointed Head of
Engineering at Novus Petroleum Limited. His role with Novus was combined with
his appointment as Regional Manager Middle East in 2000 when he relocated to
Dubai in order to manage the company's portfolio in the United Arab Emirates,
Oman, Pakistan, Egypt and Qatar. Peter became the Chief Executive Officer of
Indago Petroleum Limited when the Middle East assets of Novus where separated
and floated on AIM of the London Stock Exchange in December 2005. Peter was
appointed the Chief Executive Officer of RAK Petroleum following RAK Petroleum's
acquisition in 2007 of a major portion of Indago's production and exploration
assets.

 Directorships of other listed companies in last 3 years:

Indago Petroleum Limited (resigned April 2007)



Philip G Turberville

Term of office: Appointed a Director on 7 December 2006 and resigned effective
25 July 2007

Qualifications: MA (Accounting and Economics), Member of the Institute of
Chartered Accountants of Scotland.

Skills and experience: Mr Turberville has had an extensive international career
in the oil, gas and energy industries. He has progressed rapidly via various
senior financial and commercial positions to challenging Chief Executive roles
in large-scale enterprises such as Royal Dutch Shell (President European Oil
Products Division) and TXU Corp Dallas (President of International Operations).
Mr Turberville is currently Chief Executive Officer of RAK Petroleum PCL.

Directorships of other listed companies in last 3 years:

Nil.





COMPANY SECRETARY



Anthony J Strasser

Term of office: Appointed 7 August 2002

Qualifications: BCom (Accounting), CA

Skills and experience: Mr Strasser has been involved in taxation, corporate
finance and advisory services for more than 16 years, having gained experience
initially in the taxation division of Arthur Andersen and subsequently reaching
senior management level with Coopers & Lybrand in their Corporate Finance
division. More recently, Mr Strasser has held senior positions with boutique
investment and advisory firms Inteq Limited and Claymore Capital in Sydney,
focusing on financial management, due diligence assignments, mergers and
acquisitions and private and public capital raisings. In addition to his role as
Company Secretary of the Company, Mr Strasser also performs the role of Chief
Financial Officer and jointly with Ms Nairn, the role of Company Secretary of
Anzon Australia Limited.



Gillian M Nairn

Term of office: Appointed March 2006

Qualifications: BA/LLB, LLM

Skills and experience: Ms Nairn was appointed as a solicitor of New South Wales
in 1991 and was involved in commercial litigation work for 8 years. Prior to her
appointment as Company Secretary, Ms Nairn was working as Special Counsel in the
Workplace Relations group of a medium sized commercial law firm. In addition to
her role as Company Secretary of the Company, Ms Nairn also performs the role of
Company Secretary of Anzon Australia Limited, jointly with Mr Strasser.




Principal Activities



The principal activities of the Group in the year consisted of the following:

•    The evaluation of potential acquisitions of mature, underexploited
     oil and gas properties, in the international oil and gas market;

•    Through its 53.1% - owned subsidiary, Anzon Australia Limited, the
     development of it's offshore oil project (Basker-Manta oil fields) in 
     Gippsland Basin, Bass Strait, Australia;

•    Securing of key strategic partners and additional funds for the Company.



Operating Results



The profit / (loss) after income tax for the Group for the year ended 31
December 2007 was $131,777,848 (2006: ($22,342,258)).



Review of Operations and Likely Developments



A summary of the operations for the financial year, together with future
developments, are set out in the Chairman's Letter to shareholders.



Dividends



After the balance sheet date, Anzon Australia Limited, a 53.1% - owned
subsidiary of Anzon Energy Limited, proposed a special unfranked dividend of 7
cents per ordinary share, payment of which will be conditional upon both the
Anzon Australia Limited and Anzon Energy Limited Schemes of Arrangement per the
proposed acquisition by Nexus Energy Limited becoming effective. The proposed
amount has not been recognised as a liability in 2007 but will be brought to
account in 2008 when it is proposed that it will be declared.  The record date
and timing for payment of the proposed dividend is yet to be determined.



No dividend was recommended or paid during the prior year ended 31 December
2006.



Changes in state of affairs



During the year, there was no significant change in the state of affairs of the
Company other than that referred to in the financial statements or notes
thereto.



Subsequent Events



There has not been any matter or circumstance, other than that referred to in
the financial statements or notes thereto, that has arisen since the end of the
financial period, that has significantly affected, or may affect, the operations
of the Company, the results of those operations, or the state of affairs of the
Company in future financial years.



Share Options

Unissued ordinary shares of the Company under option at the date of this report
are:

     Number of share options    Exercise Price                     Expiry Date
                   1,800,000       US$0.50                    16 February 2009
                   5,500,000       US$0.50                        5 April 2010
                     750,000       GBP1.13                     1 February 2014
                   8,050,000



Since the date of the last Annual Report, the following movements in the
unissued ordinary shares of the Company under option occurred:



•    In April 2007, the Company issued 750,000 options to an executive of
     the Company with an exercise price of GBP1.13 and an expiry date of 
     1 February 2014.

•    On 15 January 2007, 900,000 options with an exercise price of US$0.50
     and an expiry date of 16 February 2009 were exercised resulting in 
     US$450,000 of equity funds.

Meeting of Directors

The following table sets out the number of Directors' meetings held during the
year ended 31 December 2007 and the number of meetings attended by Directors in
office during the period.

Director                 Directors Meetings        Audit and Risk Management Committee Meetings
                     Eligible to      Number       Eligible to Attend        Number Attended
                        Attend       Attended
M N Arnett                18            18                 2                        2
O Fric                    18            16                 2                        2
S J Koroknay              18            18                 -                        -
R C A Leon                18            17                 -                        -
V Paglione                18            15                 -                        -
C J Pope                  18            16                 2                        2
+P Sadler                 7              6                 -                        -
*P G Turberville          9              8                 -                        -
A A Young                 18            18                 -                        -

+Mr Sadler was appointed on 30.08.2007

*Mr Turberville resigned on 25.07.07

Remuneration of Key Management Personnel

Remuneration of Directors is approved by the Board and is set in aggregate
within the maximum amount approved by the shareholders from time to time.



The remuneration and terms and conditions of employment for the Chief Executive
and other Senior Executives are reviewed annually having regard to performance
and relative comparative information, and approved by the Board after seeking
independent professional advice, as required.



During or since the end of the financial year, no Director of the Company has
received or become entitled to receive a benefit other than a benefit included
in the aggregate amount of emoluments received or due and receivable by
Directors shown in Note 27 of the financial statements or the fixed salary of a
full time employee of the Company.



Directors' and officers' remuneration for the year ended 31 December 2007:

                        Salary & Fees         Bonus          Super-       Options         Total     Performance
                                                          annuation                                     Related
Directors                           $             $               $             $             $               %
Michael Arnett                187,500             -          16,875             -       204,375               -
Andrew Young                  475,153             -          42,764             -       517,917               -
Olivier Fric                   75,000             -               -             -        75,000               -
Steven Koroknay                12,500             -           1,125             -        13,625               -
Robert Leon                    75,000             -               -             -        75,000               -
Vincenzo Paglione              75,000             -               -             -        75,000               -
Charles Pope                   75,000             -               -             -        75,000               -
Philip Turberville             56,250             -               -             -        56,250               -
Peter Sadler                                      -               -             -                             -
Total                       1,031,403             -          60,764             -     1,092,167

Executives
Bruce Atkins                  350,092             -          31,508             -       381,600               -
Anthony Strasser              261,250             -          23,513             -       284,763               -
                              611,342             -          55,021             -       666,363



Directors' and officers' remuneration for the year ended 31 December 2006:

                       Salary & Fees      Bonus              Super-       Options         Total     Performance
                                                          annuation                                     Related
Directors                           $             $               $             $             $               %
Michael Arnett                110,000             -          11,970        15,741       137,711               -
Andrew Young                  404,816       200,000          36,433       153,674       794,923               -
Jean-Marc Georgy              102,500             -               -        15,741       118,241               -
Olivier Fric                   50,000             -               -        15,741        65,741               -
Steven Koroknay               424,664       200,000          38,220        15,741       678,625               -
Robert Leon                    50,000             -               -        15,741        65,741               -
Vincenzo Paglione              50,000             -               -        15,741        65,741               -
Charles Pope                   50,000             -               -        15,741        65,741               -
Total                       1,241,980       400,000          86,623       263,861     1,992,464

Executive
Bruce Atkins                  305,046        50,000          27,454        16,369       398,869               -
Anthony Strasser              259,150        50,000          23,323        15,741       348,214               -
                              564,196       100,000          50,777        32,110       747,083



The elements of remuneration for key management personnel are not dependent on
the satisfaction of any specific performance conditions.

Key Management Personnel Shareholdings



At the date of this report, the direct and indirect interests of the key
management personnel in the securities of the Company are as follows:


                                                     Shares    Options over unissued ordinary
                                                                                       shares
Director
S J Koroknay                                      2,245,000                           500,000
M N Arnett                                          367,375                           500,000
R C A Leon                                          250,000                           500,000
O Fric                                              350,000                           500,000
V Paglione                                          350,000                           500,000
C J Pope                                                  -                           500,000
A A Young                                            85,500                           500,000
P G Turberville                                           -                                 -
P Sadler                                                  -                                 -
Total                                             3,647,875                         3,500,000

Other Key Management Personnel
B N Atkins                                                -                           500,000
A J Strasser                                        250,000                           500,000
Total                                               250,000                         1,000,000



The terms of the options are set out in Note 28 to the Financial Statements.



Indemnification of Officers



During the period, the Company paid a premium in respect of a contract insuring
the Directors and Officers of the Company and of any related body corporate
against a liability incurred as such a Director, Secretary or Executive Officer
to the extent permitted by the Corporations Act 2001.  The contract of insurance
prohibits disclosure of the nature of liability and the amount of the premium.
No claims under the indemnity insurance policy have been made against the
Company during or since the end of the financial year.



Environmental Regulations



The Company participates in ventures which are parties' exploration and
development licences.  These licences specify the environmental regulations
applicable to the exploration, construction and operations of petroleum. As the
Company is in the development planning stages of its operations, there have been
no known breaches of the environmental obligations of the Company's contracts or
licences at this time.



Rounding



The amounts contained in this report and in the financial report have been
rounded to the nearest $1,000 (where rounding is applicable) under the option
available to the Company under ASIC Class Order 98/0100. The Company is an
entity to which the Class Order applies.



Auditors' Independence Declaration



In accordance with the Audit Independence requirements of the Corporations Act
2001, the Directors have received and are satisfied with the 'Audit Independence
Declaration' provided by the Company's external auditors, PKF. The Audit
Independence Declaration has been attached following the Directors' Report.



Non-Audit Services



The following non-audit services were provided by the entity's auditor, PKF. The
Directors are satisfied that the provision of non-audit services is compatible
with the general standard of independence for auditors imposed by the
Corporations Act 2001. The nature and scope of each type of non-audit service
provided means that audit independence was not compromised.



PKF received or are due to receive the following amounts for the provision of
non-audit services from the Group:


                                             $'000
Taxation services                              284
Due diligence services                          72
                                               356



Signed in accordance with a resolution of the Directors made pursuant to s.298
(2) of the Corporations Act 2001.



For and on behalf of the Directors








Michael N Arnett
Chairman


31 March 2008



Corporate Governance Statement

Corporate Governance Policy

The Board of Directors is responsible for the corporate governance of the
Company. The Board monitors the business and affairs of the Company on behalf of
the shareholders by whom they are elected and to whom they are accountable.



Composition of the Board

The composition of the Board is subject to shareholder approval. All nominations
for appointment to the Company's Board will be reviewed by the Board.



The number of directors is specified in the Company's Constitution as a minimum
of three and up to a maximum of nine. At present, there are eight (8) Directors
of the Company, seven (7) of whom are non-executive Directors.



The retirement and rotation of Directors is governed by the Corporations Act
2001 and the Company's Constitution. Each year one third of the Directors (apart
from the Chairman) retire from office and may offer themselves for re-election.



The Board reviews its composition on a regular basis to ensure that it has the
appropriate mix of skills, expertise and experience. When a Board vacancy exists
or where it is considered that the Board would benefit from the appointment of a
director with particular skills or experience, the Board will make an
appointment of a candidate with the appropriate range of skills, qualifications
and experience based on the recommendations of the Board's Nomination Committee.
Any casual vacancy filled is subject to shareholder vote at the next annual
general meeting of the Company.



Board Committees



The Board has established the following four Committees to assist with the
execution of its responsibilities: the Audit and Risk Management Committee, the
Remuneration Committee, the Nomination Committee and the Strategy Committee.



The membership of the Board's Committees is set out below:


Committee                          Members


Audit and Risk Management          Michael N. Arnett (Chairman)
                                   Peter D Sadler
                                   Charles J Pope ONZM
                                   Olivier Fric


Remuneration                       Steven J Koroknay (Chairman)
                                   Vincenzo Paglione
                                   Robert C A Leon


Nomination                         Steven J Koroknay (Chairman)
                                   Robert C A Leon
                                   Vincenzo Paglione


Strategy                           Steven J Koroknay (Chairman)
                                   Andrew A Young
                                   Robert C A Leon
                                   Peter D Sadler





Audit and Risk Management Committee



The Audit and Risk Management Committee consists of four members all of whom are
non-executive Directors. The duties of the Committee are set out in a formal
Terms of Reference approved by the Board.



The Audit and Risk Management Committee's responsibilities include:



•          assisting the Board in ensuring that the Company's published
financial statements comply with applicable accounting standards;



•          reviewing the effectiveness of the Company's internal financial
controls and audit arrangements and investigating and advising on these and
related matters;



•          discussing with the Company's auditors matters arising from their
work and encouraging and monitoring compliance with relevant codes of best
practice in corporate governance and general reporting; and



•          keeping under review, the scope and results of the annual audit, its
cost effectiveness and independence and objectivity of the auditors.



Remuneration Committee



The Remuneration Committee comprises three members all of whom are non-executive
directors. The main purpose of the Remuneration Committee is to:



•          set the remuneration of the executive directors of the Company; and



•          demonstrate to the shareholders of the Company that the remuneration
of the principal executive directors of the Company and other senior executives
of the Company and its subsidiaries is set by a committee of the Board whose
members have no personal interest in the outcome of the decisions of the
Committee and who will have due regard to the interests of shareholders.



The Remuneration Committee reviews and makes recommendations to the Board on an
annual basis regarding all elements of the remuneration of executive directors.
Remuneration levels are competitively set to attract or retain, as appropriate,
qualified and experienced directors and senior executives.



From time to time, the Board or the Remuneration Committee seeks independent
professional advice on the appropriateness of remuneration packages.



Nomination Committee



The Nomination Committee comprises three members, all of whom are non-executive
directors and were appointed on 2 March 2007.



Strategy Committee



The Strategy Committee comprises four directors, three of whom are non-executive
directors. The fourth member of the Committee is Andrew Young who is the
Company's Chief Executive Officer.



The members of the Strategy Committee were appointed on 2 March 2007.



Independent Professional Advice



To facilitate independent judgment in decision making, each Director has the
right to seek independent professional advice at the Company's expense with the
prior approval of the Chairman



Business Risk



The Board monitors and receives advice on areas of operational and financial
risk, and considers strategies for appropriate risk management arrangements on a
regular basis.



Specific areas of risk that are identified are regularly considered at Board
meetings. Included in these areas are foreign currency and commodities price
fluctuations, performance of activities, human resources, the environment,
general business environment and continuous disclosure obligations.



Ethical Standards



The Board's policy for the Directors and Management is to conduct themselves
with the highest ethical standards. All Directors and employees are expected to
act with integrity and objectivity, striving at all times to enhance the
reputation and performance of the Company.



The Board is responsible for ensuring compliance with legal requirements and
ethical principles. The Board monitors systems to ensure prompt and appropriate
responses to any shareholder enquiry or complaint.





Environment, Health and Safety Management



The Company recognises the importance of environmental and occupational health
and safety issues and is committed to the highest levels of performance in these
areas. All employees are required to continually assess and minimise the impact
of the Company's operations on the environment; comply with all relevant
environmental and occupational health and safety legislation; and to encourage
the adoption of similar standards by the Company's principal suppliers and
contractors.




Balance Sheet           
As At 31 December 2007                                         Consolidated               Company
                                                            2007        2006         2007         2006
                                                      Note  $'000       $'000        $'000        $'000
ASSETS
Current Assets
Cash and cash equivalents                              22   130,872     102,790      4,871        5,691
Trade and other receivables                            7    18,414      5,128        3,059        1,972
Inventories                                            6    8,322       3,491        -            -
Other financial assets                                 8    -           2,004        -            -
Total Current Assets                                        157,608     113,413      7,930        7,663

Non-current Assets
Plant and equipment                                    10   1,959       478          1,189        43
Intangible assets                                      11   18,859      26,591       -            -
Investments                                            13   120,222     90,659       12,332       12,332
Exploration and evaluation expenditure                      1,218       -            -            -
Oil and gas assets                                     12   219,952     264,634      -            -
Other non-current assets                               9    1,996       4,378        255          11,098
Deferred tax assets                                    5    95,090      14,076       -            -
Total Non-current Assets                                    459,296     400,816      13,776       23,473
TOTAL ASSETS                                                616,904     514,229      21,706       31,136

LIABILITIES
Current Liabilities
Trade and other payables                               16   27,880      33,069       1,352        437
Provisions                                             17   24,750      425          169          39
Interest bearing liabilities                           14   38,838      81,384       -            -
Other financial liabilities                            18   12,169      13,297       12,169       12,169
Total Current Liabilities                                   103,637     128,175      13,690       12,645

Non-current Liabilities
Interest bearing liabilities                           14   51,147      75,009       -            -
Provisions                                             17   31,083      23,070       -            -
Other financial liabilities                            18   41,787      46,117       -            -
Deferred tax liabilities                               5    45,328      53,421       -            -
Total Non-current Liabilities                               169,345     197,617      -            -
TOTAL LIABILITIES                                           272,982     325,792      13,690       12,645
NET ASSETS                                                  343,922     188,437      8,016        18,491
EQUITY


Contributed equity                                     19   109,933     109,358      72,803       72,228
Retained earnings                                      20   31,041      (29,263)     (65,527)     (54,402)
Reserves                                               20   31,321      18,170       740          665
Parent entity interest                                      172,295     98,265       8,016        18,491
Minority interest                                           171,627     90,172       -            -
TOTAL EQUITY                                                343,922     188,437      8,016        18,491





Income Statement
For The Year Ended 31 December 2007                                 Consolidated                  Company
                                                                  2007         2006          2007         2006
                                                    Note         $'000        $'000         $'000        $'000
Continuing operations
Revenue                                               2        105,901       49,998             -           -
Cost of sales                                                 (63,456)     (18,478)             -           -

Gross profit                                                    42,445       31,520             -           -

Other income                                          3        106,734       12,200         8,767         339
Exploration and evaluation expenses                              (355)      (7,831)         (355)           -
Depreciation and amortisation expense               4(b)       (4,197)      (9,062)         (148)        (30)
Administration expense                              4(d)      (20,192)     (10,108)       (7,817)     (2,923)
Finance costs                                       4(a)      (18,359)      (7,818)       (1,154)     (1,138)
Impairment of non-current assets                    4(e)       (7,894)     (22,789)       (6,895)    (35,976)
Fair value loss on financial instruments                      (19,437)            -             -           -
Repairs and maintenance                                       (17,109)            -             -           -
Other expenses                                                   (625)      (1,031)       (3,523)     (2,215)
Profit / (loss) from continuing operations before               61,011      (9,023)      (11,125)    (41,943)
tax

Income tax benefit / (expense)                        5         72,896      (9,871)             -           -
Profit / (loss) from continuing operations after               133,907     (18,894)      (11,125)    (41,943)
tax

Discontinued operations
Loss from discontinued operations after tax          23        (2,129)      (3,448)             -           -
Net profit / (loss) for the period                             131,778     (22,342)      (11,125)    (41,943)
(Profit) / loss attributable to minority interest             (71,474)      (3,732)             -           -
Profit / (loss) attributable to members of the                  60,304     (26,074)      (11,125)    (41,943)
parent entity
Earnings / (loss) per share for profit from
continuing operations attributable to the ordinary
equity holders of the Company:
Basic (cents per share)                              21          65.11      (27.28)
Diluted (cents per share)                            21          60.49      (27.28)

Earnings / (loss) per share for profit attributable
to the ordinary equity holders of the Company:
Basic (cents per share)                              21          62.89      (31.00)
Diluted (cents per share)                            21          58.42      (31.00)









Statement of Changes in Equity

For The Year Ended 31 December 2007
Consolidated                        Ordinary        Asset     Options     Foreign     Retained    Minority     Total
                                      Shares  Revaluation     Reserve    Currency     Earnings    Interest
                                                  Reserve             Translation
                                                                          Reserve
                                       $'000        $'000      $'000       $'000        $'000       $'000      $'000

Balance at 1 January 2006             73,840            -        621        (271)      (3,189)     38,165    109,166
Net gains on available for sale            -       33,807          -            -            -          -     33,807
investments
Net gains on available for sale            -     (15,852)          -            -            -     15,852          -
investments attributable to
minority interest
Translation of foreign operations          -            -          -        (477)            -          -      (477)
Total income and expense for the           -       17,955          -        (477)            -     15,852     33,330
year recognised directly in
equity
Loss for the year                          -            -          -            -     (22,342)          -   (22,342)
Profit attributable to minority            -            -          -            -      (3,732)      3,732          -
interest
Total income for the year                  -       17,955          -        (477)     (26,074)     19,584     10,988
Equity transactions:
Issue of share capital                11,503            -          -            -            -          -     11,503
Transaction costs on share issues      (648)            -          -            -            -          -      (648)
Additional equity acquired as a        9,102            -          -            -            -     32,260     41,362
result of shares issued by
controlled entity
Exercise of options                   13,685            -          -            -            -          -     13,685
Equity component of convertible        1,876            -          -            -            -          -      1,876
note
Cost of share based payments               -            -        505            -            -          -        505
Attributable to minority interest          -            -      (163)            -            -        163          -
Balance at 31 December 2006          109,358       17,955        963        (748)     (29,263)     90,172    188,437
Net gains on available for sale            -       21,254          -            -            -          -     21,254
investments
Net gains on available for sale            -      (9,968)          -            -            -      9,968          -
investments attributable to
minority interest
Translation of foreign operations          -            -          -        1,976            -          -      1,976
Foreign currency translation               -            -          -        (444)            -          -      (444)
transferred to Income Statement
on disposal of subsidiaries
Total income and expense for the           -       11,286          -        1,532            -      9,968     22,786
year recognised directly in
equity
Profit for the year                        -            -          -            -      131,778          -    131,778
Profit attributable to minority            -            -          -            -     (71,474)     71,474          -
interest
Total income for the year                  -       11,286          -        1,532       60,304     81,442    154,564
Equity transactions:
Exercise of options                      575            -          -            -            -          -        575
Cost of share based payments               -            -        346            -            -          -        346
Attributable to minority interest          -            -      (127)          114            -         13          -
Balance at 31 December 2007          109,933       29,241      1,182          898       31,041    171,627    343,922

Statement of Changes in Equity

For The Year Ended 31 December 2007


Company                                       Ordinary Shares  Options Reserve         Retained            Total
                                                                                       Earnings
                                                        $'000            $'000            $'000            $'000

Balance at 1 January 2006                              45,812              491         (12,459)           33,844
Total income and expense for the year                       -                -                -                -
recognised directly in equity
Loss for the year                                           -                -         (41,943)         (41,943)
Total income for the year                                   -                -         (41,943)         (41,943)
Equity transactions:
Issue of share capital                                 11,503                -                -           11,503
Transaction costs on share issues                       (648)                -                -            (648)
Exercise of options                                    13,685                -                -           13,685
Equity component of convertible notes                   1,876                -                -            1,876
Cost of share based payments                                -              174                -              174
Balance at 31 December 2006                            72,228              665         (54,402)           18,491
Total income and expense for the year                       -                -                -                -
recognised directly in equity
Loss for the year                                           -                -         (11,125)         (11,125)
Total income for the year                                   -                -         (11,125)         (11,125)
Equity transactions:
Exercise of options                                       575                -                -              575
Cost of share based payments                                -               75                -               75
Balance at 31 December 2007                            72,803              740         (65,527)            8,016








Cash Flow Statement
For The Year Ended 31 December 2007                                   Consolidated                 Company
                                                                    2007         2006         2007         2006
                                                     Note          $'000        $'000        $'000        $'000
Cash flows from operating activities

Receipts from oil and gas production                              98,459       43,853            -            -
Other receipts                                                     8,885        7,147        6,347           11
Payments to suppliers and employees                             (88,877)     (33,709)      (7,590)      (3,967)
Borrowing costs                                                 (15,188)     (12,719)      (1,065)      (1,248)


Interest received                                                  8,317        2,765          140          313
Net cash flows provided by / (used in) operating     22(a)        11,596        7,337      (2,168)      (4,891)
activities

Cash flows from investing activities

Purchase of plant and equipment                                  (1,772)        (378)      (1,295)          (1)
Proceeds from sale of subsidiaries                                 5,902            -            -            -
Purchase of available-for-sale financial assets                      (5)            -            -            -
Payments for exploration expenditure                             (1,638)      (4,392)        (355)            -
Purchase of exploration licences                                     (8)      (3,587)            -            -
Sale of retention leases                                         126,491       50,000            -            -
Payments for development expenditure                            (34,020)    (163,519)            -            -
Payment for purchase of investments                                    -            -            -     (12,321)
Advances from / (to) related entities                                  -            -        2,409     (10,104)
Net cash flows provided by / (used in) investing                  94,950    (121,876)          759     (22,426)
activities

Cash flows from financing activities

Proceeds from issue of ordinary shares                                 -       11,503            -       11,503
Payment of share issue costs                                           -        (648)            -        (577)
Proceeds from exercise of options                                    575       13,685          575       13,685
Proceeds from convertible notes                                        -       50,390            -            -
Proceeds from borrowings (net of costs)                           12,489      101,303            -            -
Repayment of borrowings                                         (63,355)      (1,348)            -            -
Payment for financial instruments                               (18,562)            -            -            -
Net cash flows (used in) / provided by financing                (68,853)      174,885          575       24,611
activities


Cash and cash equivalents at beginning of the year               102,790       46,307        5,691        9,004
Net increase / (decrease) in cash and cash                        37,693       60,346        (834)      (2,706)
equivalents
Effects of exchange rate changes on cash                         (9,611)      (3,863)           14        (607)
Cash and cash equivalents at the year end            22(b)       130,872      102,790        4,871        5,691






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