Health, Safety and Environment (HSE) Policy

A primary goal of the Group is the protection of Health, Safety and Environment (HSE). The Group is dedicated to continuous efforts to make its operations compatible with protecting people, property and the environment.

This policy, whose implementation is overseen by the Chief Executive Officer, governs the Group's operations and is specifically designed to:

• Comply with and exceed relevant HSE legislation, regulations and other requirements;
• Maintain and develop systems to identify, assess, monitor, review and control HSE issues;
• Set HSE objectives and targets;
• Implement mechanisms to communicate with and to obtain input from: employees, contractors, partners and associates;
• Coordinate HSE policy, including the HSE management systems of contractors, to provide a unified system to guide operations;
• Institute a site-specific Emergency Response Procedure (ERP) so that immediate actions are taken, without delay, to minimize danger to personnel, the environment and property. Emergency Response Procedures will be rehearsed prior to commencing operations to ensure that personnel make the appropriate responses in the event of emergency.

It is the policy of the Group to consider the health and welfare of employees by maintaining a safe place and system of work as required by the Safety, Health and Welfare at Work Act, 1989.

The Group closely monitors activities to ensure to the best of its knowledge there is not potential for any such breach. There have been no convictions in relation to breaches of these Acts recorded against the Group.

Gulfsands' health & safety record since it became operator of Block 26 in 2005 has been exemplary. Since formal safety records first began to be kept in April 2006 there have been no lost time incidents.

Our HSE record continues to be excellent with no catastrophic or serious accidents reported. By the end of 2010, more than 67,000 m had been drilled with no LTI (Lost Time Incidents) after approximately one million man-hours of drilling since the commencement of operations in 2006. The risk previously associated with the transport of our crude by truck was eliminated in October when the 22" pipeline was commissioned.

Our drilling, production and seismic operations today are all being conducted with either negligible or acceptable residual operational risks, mainly associated with the risk of driving and the risk of fire in low pressure facilities.

To address these risks, a regular formal HAZID (hazard identification) review process is in operation resulting in the issue of action plans for immediate implementation based on the Group's HSE policy and standards. As an example all vehicles in our fleet now have rollover bars and two firefighting trucks have been ordered. The focus going forward is to continue to improve awareness and qualification of our employees and contractors and to design and build our central production facility based on the highest international HSE standards.