Syria

The figures in the table below are taken from an independent estimate of reserves as at 31 December 2007 carried out by RPS Energy, adjusted for production in 2008. An updated reserves estimate is under preparation by RPS but the work had not been completed as at the date of the 2008 annual report.

Working interest reserves represent the proportion, attributable to the Group's 50% joint venture participating interest, of forecast future crude oil production during the economic life of the Khurbet East Production Sharing Contract ("PSC"), including the share of that production attributable to Syrian Petroleum Company ("SPC") under the terms of the PSC. In assessing the economic life it has been assumed that the option to extend the life of the PSC beyond 25 years for a further ten years after its initial expiry date, will be exercised.

Entitlement reserves represent the Group's estimated share of working interest reserves after deducting the proportion of forecast future production attributable to the state under the terms of the PSC. This proportion is impacted by assumptions as to future development expenditure and future oil prices. For the purpose of the estimate as at 31 December 2007 the average price of Brent crude during 2008 was assumed to be $95/bbl, declining to $88/bbl in 2012 and constant thereafter. No adjustment has been made to this estimate to reflect current assumptions as to future oil prices.

Under the terms of the PSC the Group's liability for income tax in Syria is settled by SPC out of their share of crude oil production.

These estimations were made using the recommended definitions of reserves approved by the Society of Petroleum Engineers ("SPE"). The comparable gross reserves figures at 31 December 2007 taking into account the economic life of the PSC were 58.7 mmbbls (proved and probable) and 130.0 mmbbls (proved, probable and possible). Gulfsands' working interest reserves at that date, on the same basis, were 50% of these figures.

GROUP RESERVES at 31 DECEMBER 2008
million barrels of oil equivalent ("mmboe")

USA

The figures in the table above are taken from a new independent estimate of reserves attributable to the Group's interest in oil and gas properties in the Gulf of Mexico and onshore in the state of Texas as at 31 December 2008 carried out by Netherland, Sewell & Associates, Inc. ("NSA").

Working interest reserves represent the proportion, attributable to the Group's participating interests, of forecast future oil & gas production during the economic life of the properties in question, before deduction of state production taxes and overriding royalty interests. Working interest reserves have been derived from the net revenue interest reserves data contained in the NSA report, by grossing up for the percentage production tax and royalty "burden" applicable to each property. The reserves-weighted average burden at 31 December 2008 was 23.6%.

Net revenue interest reserves represent the Group's estimated share of working interest reserves after deduction of the equivalent share of oil and gas production attributable to state production taxes and overriding royalty interests.