Petro Kamchatka

The Board's primary responsibility is to foster the long-term success of the Company as consistent with the Board's fiduciary responsibility to the shareholders to maximize shareholder value. The Board of Directors has plenary power. Any responsibility not delegated to management or a committee of the Board remains with the Board. These terms of reference are prepared to assist the Board and management in clarifying responsibilities and ensuring effective communication between the Board and management. In carrying out this mandate, the Board meets regularly and a broad range of matters are discussed and reviewed for approval. These matters include selecting senior management, reviewing compensation, establishing standards of business conduct and ethical behaviour, evaluating senior management performance, succession planning, overseeing strategic management and planning, overseeing risk management, affirming a control environment, overseeing capital management and overseeing the independent inspection/audit group.

The Board strives to ensure that actions taken by the Company correspond closely with the objectives of its shareholders. The Board will meet at least once annually to review in depth the Company's strategic plan and it reviews the Company's resources which are required to carry out the Company's growth strategy and to achieve its objectives.

The Board currently consists of six directors. Of these, four are independent directors as defined under National Policy 58-201 - Corporate Governance Guidelines ("NP 58-201") and, accordingly, the majority of the directors on the Board is independent. Under NP 58-201, a director is independent if he or she has no direct or indirect material relationship with the Company. A "material relationship" is a relationship which could, in the view of the Board, be reasonably expected to interfere with the exercise of a director's independent judgment. In addition, certain individuals are deemed, for the purposes of NP 58-201, to have material relationships with the Company, including any individual who is, or has recently been, an employee or executive officer of the Company, and an individual whose immediate family member is, or has recently been, an executive officer of the Company. Under this definition, the Board has determined that the four independent directors, for the purpose of NP 58-201, are Yoon Suck Nam, Jonathan Morley-Kirk, Adam Landes and Teck Soon Kong.

For the purpose of NP 58-201, Graeme Phipps and Robert McClinton are not considered independent directors. Graeme Phipps, President and Chief Executive Officer, is not considered an independent director because he is an executive officer of the Company. Robert McClinton is not considered an independent director because he was the Chief Financial Officer of the Company until his resignation on October 17, 2008.

The size of the Company is such that all of its operations are conducted by a small management team. The Board considers that management is effectively supervised by the independent directors, including the Chairman of the Board, on an informal basis because the independent directors have regular and full access to management. The independent directors are also able to meet at any time they consider necessary without any members of management, including the non-independent directors, being present.

Mr. Phipps is also a director of the following public international oil and gas companies: Sterling Resources Ltd. (TSXV), Primeline Energy Holdings Ltd. (TSXV) and Norwood Resources Ltd. (TSXV).

Mr. McClinton is also a director of CriticalControl Solutions Inc. (TSX) and CE Franklin Ltd. (TSX and NASDAQ).

Mr. Kong is also a director of Sterling Resources Ltd. (TSXV) and Sunkar Resources Plc (AIM).

The Board has not developed a formal orientation and training program for newly appointed directors. However, all directors are provided with a Director's Handbook, which includes material regarding the Company's Articles and Memorandum, operating contracts, organization, administration and corporate governance (including the Board and committee mandates), in addition to the legal obligations and liabilities of directors, the expectations of directors, the expectations of directors, and the Code of Business Conduct and Ethics. New directors are also informed of important Company business activities, strategies and initiatives as appropriate by the Chief Executive Officer and other directors and executive officers of the Company.

The Board endorses management's initiatives to operate with sound integrity and ethical values and promotes this conduct at Board meetings. A whistleblower program is in place for employees to report violations of ethical conduct. To date, no issues have been reported through the Company's whistleblower program.

The Board has adopted a Code of Business Conduct and Ethics and also encourages and promotes a culture of ethical business conduct by expecting each other, all officers and management to act in a manner that exemplifies ethical business conduct and consistent with the Code of Business Conduct and Ethics. This expectation sets the tone for all employees of the Company. The Company makes every effort to ensure that prospective directors, employees and consultants are of good character.

In addition, the Company intends to resolve all conflicts of interest in accordance with the provisions of the Jersey Act in order to ensure directors exercise independent judgment in considering transactions and agreements in which a director or officer has a material interest.

A copy of the Code of Business Conduct and Ethics is available on SEDAR, at www.sedar.com, under the Company's profile, or can be obtained from the Corporate Secretary, Darrell Peterson, at Bennett Jones LLP, 4500 Bankers Hall East, 855 - 2nd Street S.W., Calgary, Alberta T2P 4K7, Canada.

1. Application

   This Code of Business Conduct and Ethics (the "Code") applies to all directors, officers, employees and consultants of PetroKamchatka Plc and its subsidiaries (collectively, the "Company").

2. Purpose

   The Company's reputation for honesty and integrity has been earned by maintaining the highest standards of business ethics in all our interactions with our co-workers, governments, local communities, shareholders, customers, suppliers, competitors and the public. The commitment of each director, officer, employee and consultant to preserve and perpetuate the letter and spirit of this Code is essential to our continued success.

   This Code affirms the policy of the Company and is a guideline to:

   1. assure compliance with laws and regulations that govern the business activities of the Company;
   2. maintain a corporate climate in which the integrity and dignity of each individual is valued;
   3. foster a standard of conduct that reflects positively on the Company; and
   4. protect the Company from unnecessary exposure to financial loss.

   This Code does not specifically address every potential form of unacceptable conduct, and it is expected that directors, officers, employees and consultants will exercise good judgment in compliance with the principles set out in this Code and act in the best interests of the Company. Each director, officer, employee and consultant has a duty to avoid any circumstance that would violate the letter or spirit of this Code. Unscrupulous dealings, non-compliance with this Code or the law or other dishonest or unethical business practices are forbidden and may result in disciplinary action, including termination from employment.

3. Compliance with the Law

   The Company and each director, officer, employee and consultant should be aware of and shall comply with all laws and regulations applicable to the Company's business. In conducting such business, employees should operate in a manner consistent with recognized industry standards and such legal requirements.

   Ignorance of the law will not usually excuse a party who contravenes a law. Directors, officers, employees and consultants must therefore work together with the Company to keep informed of laws which may affect those affairs of the Company which are under his or her control.

4. Health, Safety and the Environment

   The Company is committed to safe and healthy working conditions for all employees and third parties, and to conducting its activities in an environmentally responsible manner consistent with the principles of sustainable development.

   All conditions, situations or accidents which give rise to health, safety or environmental concerns must be immediately reported to the Manager of Environment, Health and Safety.

5. Conflicts of Interest

   Directors, officers, employees and consultants must avoid interests or relationships where their personal interests may affect, or may appear to affect, their judgement in acting in the best interests of the Company. A potential conflict of interest arises when a director, officer, employee or consultant, either directly or indirectly (including as an officer, director or shareholder of a third party), supplies products to the Company, purchases products from the Company, borrows from or lends money to the Company or competes with the Company, or receives a commission or payment in connection with the foregoing transactions.

   Each director, officer, employee and consultant is required to disclose to either the Chief Executive Officer or the Chair of the Board in writing all business, commercial or financial interests and activities which might reasonably be regarded as creating an actual or potential conflict with their duties with the Company. The Company will determine whether a conflict of interest does or could exist and, if necessary, advise the director, officer, employee or consultant of what steps should be taken.

   Employees shall not use their employment status to obtain personal gain from those doing or seeking to do business with the Company. Employees must avoid all situations in which their personal interests conflict or might conflict with their duties to the Company.

6. Inside Information

   The Company encourages directors, officers, employees and consultants to be shareholders in the Company as one way to link shareholder interests with their own.

   Certain information, which the Company treats as secret and may be characterized as a "material fact" or "material change" under Canadian securities laws, may influence the price or trading of the Company's shares or other securities if it is disclosed to members of the public. This information may include information concerning results of operations, major contracts, proposed acquisitions or earnings.

   All directors, officers, employees and consultants who come into possession of a "material fact" or "material change" in respect of the Company before it is publicly disclosed are deemed to be in a "special relationship" with the Company under Canadian securities laws. Such persons are prohibited from buying or selling shares of the Company or from disclosing such information to anyone (unless the person has a need to know the information for legitimate, business-related reasons) until such information has generally been disclosed. This prohibition applies also to business partners and relatives (husbands, wives and immediate families) who live in the same house as such director, officer, employee or consultant.

   Each director, officer, employee and consultant is required to abide by the insider trading and confidentiality guidelines established by the Company from time to time. If in doubt as to the propriety of actions, the director, officer, employee or consultant should seek the advice of the Chief Executive Officer or the Chair of the Board.

7. Gifts and Benefits

   Directors, officers, employees and consultants should neither seek nor accept gifts, payments, services, fees, trips or accommodations, special privileges of value, or loans from any person (except from persons in the business of lending and then on conventional terms) or from any organization or group that does, or is seeking to do, business with the Company, or from a competitor of the Company. Gifts of nominal value (advertising mementos, desk calendars, pens, etc.) or accepting hospitality or entertainment (lunch, dinner, tickets to a local social event, etc.) are acceptable. Directors, officers, employees and consultants should report gifts of a more substantial nature to their superior.

   No director, officer, employee or consultant shall offer, or provide on behalf of the Company, any expensive gifts, excessive entertainment or payments of any amount of money to any supplier, customer, subcontractor, competitor, or any public official, or to their representatives, nor pay to them, either directly or indirectly, any commissions or fees which are excessive in relation to the services rendered. Modest gifts, favours or entertainment may be furnished by employees whose duties permit them to do so, provided all of the following tests are met:

   1. they are not in cash or securities and are of modest value; and
   2. they do not contravene any law and are made as a matter of generally accepted practice; and
   3. if subsequently disclosed to the public, they would not in any way embarrass the Company or their recipients.

8. Public Officials and Political Parties

   The Company interacts with government and regulatory agencies and officials in an honest and co-operative manner. All dealings between directors, officers, employees and consultants of the Company and public officials are to be conducted in a manner that will not compromise the integrity or impugn the reputation of any public official or that of the Company. Use of the Company's funds, goods, or services as contributions to political parties, candidates or campaigns is forbidden, unless authorized by the Board of Directors.

9. Books of Account

   The Company's books of account and records must reflect in reasonable detail all of its business transactions in a timely, fair and accurate manner to ensure that all transactions with which it is involved are authorized and executed in accordance with the Company's procedures and that no undisclosed or unrecorded transactions are made.

10. Use of Corporate Assets/Information

    Certain reports, records, processes, plans and strategies of the Company are considered by the Company to be secret and confidential and employees are prohibited from revealing information concerning such matters without proper authorization. Directors, officers, employees and consultants are prohibited from taking opportunities discovered through the use of corporate property, information or position, using corporate property, information or position for personal gain, and competing with the Company. Unauthorized removal or destruction of the Company's assets is strictly prohibited.

    The Company provides Internet access to its officers and employees to facilitate their researching and sharing of business-related information. The Internet is a business tool, and officers and employees should, in using their Internet privileges, exercise the same degree of discretion that a third party reasonable person would apply when using other business tools, such as office telephones and photocopiers. For greater clarity, telephones, photocopiers, computers and similar business tools should not be used in any significant manner for personal use.

11. Respectful Workplace

    A motivated, cohesive team approach is essential to the success of the Company. The Company strives to provide a work environment free of discrimination and harassment in which individuals are accorded equality of employment opportunity based on merit and ability. Each employee is entitled to receive and obligated to show fairness, integrity and respect.

    Employees are ambassadors for the Company and as such, should exercise their good judgment and common sense in carrying out the various business activities of the Company in a manner which reflects the Company's commitment to honesty, integrity, energy and passion to create a socially responsible enterprise which benefits both shareholders and the communities in which the Company operates. Fraudulent activity of any kind is prohibited.

12. Accounting, Auditing or Disclosure Concerns

    The Company is required to provide full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to the Canadian securities regulatory authorities and applicable exchanges upon which the Company's stock is listed, as well as in other public communications made by the Company. All staff responsible for the preparation of the Company's public disclosures, or who provide information as part of the process, must ensure that disclosures are prepared and information is provided honestly, accurately and in compliance with the various the Company disclosure controls and procedures.

13. Competitors

    The Company will compete vigorously and creatively in its business activities with honesty and morality. The Company's efforts in the marketplace shall be conducted in a fair and ethical manner in strict compliance with applicable competition and trade practice laws and regulations.

14. Community Relations

    The Company and its directors, officers, employees and consultants come in contact with many members of the public, including individuals, community groups, public officials and members of the media. The Company strives to maintain its good reputation in the community and, therefore, needs to ensure that only designated spokespersons speak on behalf of the Company in order to recognize and deal with sensitive issues in an appropriate manner. Enquiries from members of the community related to matters of a sensitive nature should be directed to the appropriate spokesperson.

Compliance with the Code and Reporting of Any Suspected Violations

No Retaliatory Action

No retaliatory action shall be taken against any person in respect of "whistleblowing" in accordance with the Company's Whistle Blowing Procedures.

Any allegations regarding retaliation will be investigated and dealt with in accordance with the procedures set forth in the Company's Whistle Blowing Procedures.

Compliance Certificate

As part of the effort to ensure compliance with this Code, each director, officer, employee and consultant is required periodically to complete a Compliance Certificate certifying observance with this Code and noting any suspected or known exceptions to the Code. Certificates completed by directors, officers, employees and consultants are to be returned directly to the Chief Executive Officer.

Reporting of Suspected Violations

Whenever any director, officer, employee or consultant is in doubt about the application or interpretation of any legal requirement or the Code, the individual should immediately seek the advice of the Chief Executive Officer or the Chair of the Board. The Company requires that all directors, officers, employees or consultants promptly report any suspected breaches of this Code to the Chief Executive Officer. Alternatively, if you would be more comfortable or feel it would be more appropriate, you may report any suspected violation or breach directly to the Chair of the Board or the Chair of the Audit Committee.

In addition, to the extent you have a concern, require remedial action, or are aware of a suspected violation of this Code, any law or the Company's policy related to its accounting, internal accounting controls or auditing matters, you may contact the Chair of the Audit Committee, who is responsible for investigating and resolving such matters in accordance with the Company's Whistle Blowing Procedures.

Confidentiality

Confidentiality and anonymity will be provided to all directors, officers, employees and consultants who make complaints or report suspected violations pursuant to the Code or the Company's Whistle Blowing Procedures.

To ensure that outside complaints are properly understood and treated, third parties making a complaint regarding accounting, internal accounting controls or auditing matters should make such complaint to the Chair of the Audit Committee.

Waiver

The Corporate Governance and Compensation Committee of the Company's Board of Directors must approve any waiver of any of the provisions of this Code for a director or an executive officer. Material departures from this Code by a director or executive officer which constitute a material change to the Company will be promptly disclosed to shareholders.

The Board shall be responsible for nominating members for election to the Board and for filling vacancies on the Board that may occur between annual meetings of members based on the recommendations of the Corporate Governance and Compensation Committee. The Corporate Governance Committee is responsible for developing and reviewing the Company's management succession and development plans; reviewing and assessing the size, composition and operation of the Board and committees of the Board to ensure effective decision-making; and identifying and assessing new candidates for nomination to the Board.

The Board regularly considers its size when it considers the number of directors to recommend to the Shareholders for election at the annual meeting of shareholders, taking into account the number required to carry out the Board's duties effectively and to maintain a diversity of view and experience.

At the November 28, 2008 meeting of Shareholders, the Shareholders voted in a new slate of directors that included three new directors. These additional new directors, Mr. Robert McClinton, Mr. Teck Soon Kong and Mr. Adam Landes, complemented and added to the broad business and industry experience base thereby strengthening the Board as a whole.

The duties of the Corporate Governance and Compensation Committee include: (i) reviewing and assessing the size, composition and operation of the Board to ensure effective decision-making and make recommendations to the Board for consideration; (ii) after consulting with the Chairman of the Board and individual directors, reviewing and assessing the size, composition and committee chairs of all Board committees and making recommendations to the Board for consideration; (iii) identifying and assessing new candidates for appointment or nomination to the Board, including any nominee appropriately recommended by a shareholder, considering the performance, independence, competencies, skills, financial acumen, and ability to devote sufficient time and resources to his or her duties and the Board, as a whole, to ensure effective governance and satisfy applicable law and make recommendations to the Board for consideration; (iv) annually reviewing and recommending to the Board for consideration the individual directors proposed to be nominated for election at the next annual general meeting of shareholders of the Company; (v) annually reviewing and recommending to the Board for consideration those individual directors to be designated as independent under applicable law; and (vi) regularly reviewing and assessing the Company's policies on tenure and terms of individual directors. In addition, the Chairman of the Board and committee chairs may recommend any changes to the Board for consideration.

The Corporate Governance and Compensation Committee is responsible for, among other things, (i) regularly reviewing all incentive compensation plans and equity-based plans and making recommendations to the Board for consideration; (ii) reviewing management's proposals for grants of equity-based incentives and make recommendations to the Board for consideration; (iii) as required under applicable law, reviewing employee benefit plans and reports, and making recommendations to the Board for consideration; and (iv) reviewing the compensation policies of the Company and make recommendations to the Board to improve the Company's ability to recruit, retain and motivate employees.

The Board does not believe that formal assessments would be useful at this stage of the Company's development. The Board conducts informal annual assessments of its effectiveness, the individual directors and each of its committees. The Chairman of the Board is charged with ensuring that the Board carries out its responsibilities and that these responsibilities are clearly understood by all of its members. The Chairman also ensures that the Board can function independent of management that the necessary resources and procedures are available or in place to support its responsibilities and that the appropriate functions are delegated to the relevant committees. The Corporate Governance and Compensation Committee is responsible for overseeing and setting the Board agenda, the quality of information sent to directors and the in camera sessions held without management. The Chairman is also responsible for ensuring a process is in place for an annual performance review of the Chief Executive Officer, which is conducted by the Board, and for senior management succession planning matters.

The board of the Company has established three board committees: the Audit Committee, the Corporate Governance and Compensation Committee and the Reserves Committee. The information below summarizes the functions of each of the committees in accordance with their charters.

The Audit Committee has been structured to comply with the requirements of National Instrument 52-110 - Audit Committees ("NI 52-110") as it relates to TSXV listed issuers. The Board has determined that the Audit Committee members have the appropriate level of financial understanding and industry specific knowledge to be able to perform the duties of the position and in particular are financially literate as defined in NI 52-110.

Pursuant to its mandate, the primary purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities for the Company's financial reporting process, including: (i) the integrity of annual and quarterly financial statements any other financial information relating to the Company to be provided to shareholders and regulatory bodies; (ii) compliance with accounting and finance based legal and regulatory requirements; (iii) the independent auditor's qualifications and independence; (iv) the system of internal accounting and financial reporting controls that management has established; and (v) performance of the audit process and of the independent auditor.

The Audit Committee will meet at least once per financial quarter to fulfil its mandate. The Audit Committee is comprised of Jonathan Morley-Kirk, Adam Landes and Robert McClinton. Each member of the Audit Committee is financially literate. Mr. Morley-Kirk is independent in accordance with NI 52-110. Mr. McClinton is not independent as he was the Chief Financial Officer of the Company until October 17, 2008. Although independent for the purpose of NP 58-201, Mr. Landes is not independent for the purpose of NI 52-110, as he has a consulting relationship with the Company. See the Management segment for the relevant education and experience of each of the Audit Committee members.

Auditor

The auditor of the Company is KPMG LLP, Chartered Accountants, of Calgary, Alberta, Canada. KPMG LLP was first appointed as the Company's auditor on May 31, 2000.

1. Establishment of Audit Committee

   The Board of Directors (the "Board") of PetroKamchatka Plc (the "Company") hereby establishes a committee to be called the Audit Committee (the "Committee"). The mandate of the Committee is as described below.

2. Composition of the Committee

   The membership of the Committee shall be as follows:

   1. the Committee shall consist of a minimum of three directors of the Company;
   2. unless agreed upon by the Board, a majority of the members of the Committee shall be "independent", as such term is defined for the purpose of audit committees in National Instrument 52-110 Audit Committees ("NI 52-110");
   3. all members of the Committee shall be "financially literate" within the meaning of NI 52 110;
   4. members of the Committee shall be appointed annually by the Board from among directors of the Company;
   5. the Chair of the Committee and Audit Committee members shall be appointed by the Board;
   6. a member of the Committee shall ipso facto cease to be a member of the Committee upon ceasing to be a director of the Company; and
   7. any member of the Committee may be removed or replaced at any time by resolution of the directors of the Company. If and whenever a vacancy shall exist on the Committee, the remaining members may exercise all its powers so long as a quorum remains.

3. Objectives of the Committee

   The Committee's primary purpose is to assist the Board in fulfilling its oversight responsibilities for the Company's financial reporting process, including: (a) the integrity of annual and quarterly financial statements any other financial information relating to the Company to be provided to shareholders and regulatory bodies; (b) compliance with accounting and finance based legal and regulatory requirements; (c) the independent auditor's qualifications and independence; (d) the system of internal accounting and financial reporting controls that management has established; and (e) performance of the audit process and of the independent auditor.

4. Duties and Responsibilities of the Committee

   Audit Process

   The Committee shall:

   1. review the audit plan with the Company's external auditors and with management;
   2. discuss with management and the external auditors any proposed significant changes to or any new or pending developments in accounting principles, policies or principles, the presentation and impact of significant risks and uncertainties and key estimates and judgements of management that may be material to financial reporting;
   3. review with management and with the external auditors significant financial reporting issues arising during the most recent fiscal period and the resolution or proposed resolution of such issues;
   4. review any problems experienced or concerns expressed by the external auditors in performing an audit, including any restrictions imposed by management or significant accounting issues on which there was a disagreement with management;
   5. review with senior management the process of identifying, monitoring and reporting the principal risks that could affect financial reporting;
   6. review audited annual financial statements and related documents in conjunction with the report of the external auditors and obtain an explanation from management of all significant variances between comparative reporting periods; and
   7. review and approve the Company's hiring policies regarding partners, employees, former partners and former employees of the present and former external auditors.

5. Internal Controls

   The Committe shall:

   1. review with management and the external auditors, the adequacy and effectiveness of the internal controls over financial reporting and disclosing controls and procedures, any material weaknesses or deficiencies and subsequent follow-up to any identified weaknesses; and
   2. ensure the preparation and filing of the annual and interim certifications of the Chief Executive Officer and Chief Financial Officer in accordance with NI 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings.

6. Disclosure

   The Committee shall:

   1. review with financial management and the external auditors the quarterly unaudited financial statements and management discussion and analysis before release to the public; and
   2. before release, review and if appropriate, recommend for approval by the Board, all public disclosure documents containing audited or unaudited financial information, including any prospectuses, annual reports, annual information forms, management discussion and analysis and press releases, which review should include discussions with management, the internal auditors and the external auditors of significant issues regarding accounting principles, practices and judgments.

7. Relationship with External Auditors

   The Committee shall:

   1. evaluate the independence and performance of the external auditors and annually recommend to the Board the appointment of the external auditor or the discharge of the external auditor when circumstances are warranted;
   2. ensure compliance by the Company's external auditor with the requirements set forth in National Instrument 52-108 Auditor Oversight;
   3. recommend to the Board the compensation of the external auditor;
   4. pre-approve all non-audit services to be provided to the Company or its subsidiary entities by its external auditors', or the external auditors of the Company's subsidiary entities;
   5. approve the engagement letter for non-audit services to be provided by the external auditors or affiliates, together with estimated fees, and considering the potential impact of such services on the independence of the external auditors;
   6. when there is to be a change of external auditors, review all issues and provide documentation related to the change, including the information to be included in the Notice of Change of Auditors and documentation required pursuant to National Instrument 51-102 Continuous Disclosure Obligations and the planned steps for an orderly transition period; and
   7. review all reportable events, including disagreements, unresolved issues and consultations, as defined by applicable securities policies, on a routine basis, whether or not there is to be a change of external auditors.

8. Risk Management

   1. discuss guidelines and policies with respect to risk assessment and risk management, including the processes management uses to assess and manage the Company's risk;
   2. discuss major financial risk exposures and steps management has taken to monitor and control such exposures; and
   3. review reports from management with respect to risk assessment, risk management and major financial risk exposures.

9. Other Committee Responsibilities

   The Committee shall oversee the financial affairs of the Company, its subsidiaries or affiliates, and, if deemed appropriate, make recommendations to the Board, external auditors or management.

   1. The Committee shall review the amount and terms of any insurance to be obtained or maintained by the Company with respect to risks inherent in its operations and potential liabilities incurred by the directors or officers in the discharge of their duties and responsibilities.
   2. The Committee shall enquire into and determine the appropriate resolution of any conflict of interest in respect of audit or financial matters, which are directed to the Committee by any member of the Board, a shareholder of the Company, the external auditors or management.
   3. The Committee shall periodically review with management the need for an internal audit control/procedural function.
   4. The Committee shall review the Company's accounting and reporting of environmental costs, liabilities and contingencies.
   5. The Committee shall establish and maintain procedures for:
      1. the receipt, retention and treatment of complaints received by the Company regarding accounting controls, or auditing matters; and
      2. the confidential, anonymous submission by employees of the Company or concerns regarding questionable accounting or auditing matters.
   6. The Committee shall review and submit for approval of the Board, the Company's whistleblowing procedures.
   7. The Committee shall review the appointments of the Chief Financial Officer and any key financial managers who are involved in the financial reporting process.
   8. The Committee shall review and approve the Company's hiring policies regarding partners, employees, former partners and former employees of the present and former external auditors.
   9. The Committee shall review with the Company's legal counsel, as and when appropriate, any legal matter that could have a significant impact on the Company's financial statements, and any enquiries received from regulators, or government agencies.

10. Reporting to the Board

    The Committee shall, at the earliest opportunity after each meeting, report to the Board the results of its activities and any reviews undertaken and make recommendations to the Board as deemed appropriate.

11. Authority of the Committee

    The Committee shall have the authority to:
    inspect any and all of the books and records of the Company, its subsidiaries and affiliates;

    1. discuss with the management and employees of the Company, its subsidiaries and affiliates, any affected party and the external auditors, such accounts, records and other matters as any member of the Committee considers necessary and appropriate;
    2. engage independent counsel and other advisors as it determines necessary to carry out its duties; and
    3. to set and pay the compensation for any advisors employed by the Committee in (c) above.

    The Committee shall be provided with resources and support to carry out its duties and responsibilities delegated to it by the Board, including administrative support.

12. Other

    The Committee shall:
    have the authority to make non-material and technical amendments to this Mandate to honour the spirit and intent of applicable law as it evolves, which proposed amendments must be reported to the Board prior to adoption thereof; and

    1. assess, on an annual basis, the adequacy of this Mandate and the performance of the Committee.

13. Meetings of the Committee

    1. Subject to the following requirements, the Committee may determine its own meeting procedures.
    2. The Committee shall meet at least four times each year, with scheduled meetings to correspond with the review of the year-end and quarterly financial statements. The Chair of the Committee may call additional meetings as required. In addition, a meeting may be called by the Chairman of the Board, the Board or the external auditors.
    3. Notice of each meeting of the Committee shall be given to each member of the Committee. The external auditors, may attend any meeting upon the request of the Committee.
    4. Notice of a meeting of the Committee shall: (i) be in writing, (ii) state the nature of the business to be transacted at the meeting in reasonable detail; (iii) to the extent practicable, be accompanied by copies of documentation to be considered at the meeting; and (iv) be given at least two business days prior to the time stipulated for the meeting or such shorter period as the members of the Committee may permit.
    5. A quorum for the transaction of business at a meeting of the Committee shall consist of a majority of the members of the Committee.
    6. A member or members of the Committee may participate in a meeting of the Committee by means of telephone or other communication facilities as permits all persons participating in the meeting to communicate adequately with each other. A member participating in such a meeting by any such means is deemed to be present at the meeting.
    7. The Chair of the Committee shall preside at all meetings of the Committee. In the absence of the Chair of the Committee, the members of the Committee shall choose one of the members present to be Chair of the meeting. In addition, the members of the Committee shall choose one of the persons present to be the Secretary of the meeting.
    8. The Chairman of the Board, senior management of the Company and other parties may attend meetings of the Committee; however, the Committee (i) shall meet with the external auditors independent of management, and (ii) may meet separately with management.
    9. The Committee shall meet in a separate, non-management, in camera session at each meeting. The Committee may invite such officers, directors and employees of the Company or affiliates as it see fit from time to time to attend meetings of the Committee and to assist thereat in the discussion of matters being considered by the Committee.
    10. Minutes shall be kept of all meetings of the Committee and shall be signed by the Chair and the Secretary of the meeting. In-camera sessions will not be minuted.

The Company's Corporate Governance and Compensation Committee's primary purpose is to assist the Board in fulfilling its oversight responsibilities with respect to: (i) addressing corporate governance matters, including the effectiveness of the Board, committees of the Board, individual directors of the Board, the Chairman of the Board and chairs of Board committees; (ii) identifying qualified candidates, recommending nominees for director and providing an appropriate orientation for new directors; (iii) developing and assessing compensation and human resources policies; (iv) developing and assessing director, chief executive officer and management compensation, development and succession; and (v) reviewing incentive compensation plans and equity based plans as well as proposed grants thereunder.

The Corporate Governance and Compensation Committee is comprised of Yoon Suck Nam (Chair), Teck Soon Kong and Robert McClinton. Each of Mr. Nam and Mr. Kong is independent within the meaning of NP 58-201. Mr. McClinton is not independent as he was the Chief Financial Officer of the Company until October 17, 2008.

Notwithstanding that the Company currently has no reserves, the Board has determined it is appropriate to form the Reserves Committee, given the nature of the Company's oil and gas activities and its resources. The Reserves Committee of the Company has a defined mandate and is charged with assisting the Board in fulfilling its responsibilities with respect to compliance with NI 51-101.

The Reserves Committee is charged with: (i) arranging for the preparation, review by the Board and public filing with securities authorities of a Statement of Reserves Data and Other Information pursuant to Form 51-101F1 and related documents to be prepared and filed pursuant to NI 51-101; (ii) reviewing and recommending to the Board the appointment of a qualified reserves evaluator or auditor pursuant to the requirements of NI 51-101; (iii) reviewing and monitoring the safety and environmental policies and activities of the Company on behalf of the Board to ensure compliance with applicable laws and legislation; and (iv) reviewing safety and environmental compliance issues and incidents of non-compliance to determine, on behalf of the Board, that the Company is taking all necessary action in respect of those matters and that the Company has been duly diligent in carrying out its responsibilities and activities in that regard.

The Reserves Committee is comprised of Teck Soon Kong (Chair), Jonathan Morley-Kirk and Adam Landes. Mr. Kong, Mr. Landes and Mr. Morley-Kirk are independent within the meaning of NP 58-201. The composition of the Reserves Committee complies with Part 3 of NI 51-101.