Challenger Project

Mosman acquired 16% working interest (half of Baja's 32% interest) in the 352 acre Challenger Project, in East Texas. This project includes a lease which is Held By Production (HBP) with two production wells in the Wilcox, with nominal periodic production. The intention is to use 3D seismic to identify development well locations within the existing lease area. A Reserve Report indicates the project has Reserves (gross) as follows (thousands of barrels of oil equivalent “MBOE”):

Proved
Developed
Producing
Proved
Developed
Behind Pipe
Proved
Undeveloped
Total
Proved
Total
Probable
Total
Proved
Plus Probable
2
49
614
665
184
849

This Reserves Report was prepared by a third party independent petroleum engineering firm for Barry Lasker, a Managing Partner at Baja, in June 2017 and conforms to SPE-PRMS petroleum guidelines. The royalties on the lease are circa 25%.

Mosman and Baja will continue the technical and other work required to prepare to drill wells at Challenger. Drilling locations will be selected based on sub-surface technical work, and also locations with, or close to, existing production infrastructure are prioritised so that any successful well can be quickly completed and brought on production, as demonstrated at the Stanley Project.