In July 2005, Junex sold to Pétrolia a block of more than 1.6 million acres under exploration permits in the basin of Gaspé. After receiving 3.2 million stocks from Pétrolia, Junex kept a back-in right on these lands which confers Junex an option in participating to any commercial discovery of oil or gas up to 50% from Pétrolia. By exercising its option, Junex instantly becomes operator of the development phase following the discovery of oil or gas. This is what happened with the Haldimand #1 well which was drilled by Pétrolia, 1,434 meters deep. The well indicated a presence of oil and natural gas as long as drilling was performed and Junex exercised its back-in option on this well on March 9, 2006, us becoming partner of the project up to 45%*, along with being in charge of operating the development phase.

The interpretation of the well diagraphies allowed the identification of four significant zones which were tested for their productivity. We concluded that the best tested zone was located in the Devonian sandstones at a depth varying between 950.5 meters and 1,090 meters. The significant zone was perforated and acid cleaned on a 22 meters thickness. The production test that took 70 hours, allowed the gathering of 156 barrels of light petroleum (47° API). Then, we conducted a Four Point Isochronal type test which is a better indicator, in order to determine the stabilized production of the well. This flow was reached during the last ten days of testing as the well came to a daily production of 34 barrels of light petroleum associated with a production of 1,100 cubic feet of natural gas for each petroleum barrel (equivalent to 6 barrels of petroleum). No presence of water was detected during the test performed with a pump jack.

Following this test, the 45-day pressure rising analysis indicated that the well had retrieved a pressure higher than the one registered at the end of the drilling, being 12,403 kPa, as it was 11,383 kPa at the end of the drilling at a reference level of 1,073 meters. The well was completed and equipped with a pump jack and production reservoirs as soon as the end of last May.

It is the opinion of Junex that the development of the Haldimand project has to be done while respecting all the following development steps:

• JOA between the partners : this agreement will better define the rights and obligations of each partner. As soon as it is signed, the discovery well will be put back into production therefore allowing us to pursue our technical evaluation of the field potential.
  
  
  • Phase 1 of the field work: : this phase should consist firstly in a seismic survey followed by 1 or 2 delineation drillings. These works should give us a first independent evaluation of the reserves in place. Junex hopes that these works will be carried out before the end of the year 2007.
    
    
    • Phase 2 of the development works : : the results of Phase 1 will help us to better understand the discovery structure of Haldimand and to direct the Phase 2 works. This phase could consist in more systematic drilling work (ideally at least 4 or 6 additional wells) in order to increase the proven reserves and the production capacity of the field. Junex hopes that this phase will continue during the course of the year 2008.