News and Press Releases

Update on Proposed Refinancing and TEG USA Operations

1 August 2014

Further to the announcement of July 16, 2014 (the "Announcement"), the Board can provide the following update in respect of the forbearance agreement with the Bank. The required forbearance payment of $120,000 was made on July 31, 2014 utilizing funds provided by Hawker under the terms of the Subordinated Loan. An interest payment was also made to the Bank.

Hawker and the Company are continuing negotiations for alternative financing to replace the Bank and complete the Tapia joint venture transaction. A definitive closing date has not yet been determined.

In California, 22 wells are on production (17 Tapia / 5 Eureka). Two wells are off-line for steam injection and soak cycles and 5 wells are shut-in pending mechanical repairs and/or pump changes. Hartje #14 will be returned to production August 1 and Hartje #15 is showing improved oil cut after a recent return to production. Total oil production for July is expected to be 2,200 barrels, an increase of 14% over the previous month.

An upsized steam injection pump, on order for September delivery, is expected to reduce steam injection times and reduce fuel costs associated with running a steam injection program. Once the Joint Venture with Hawker Energy is completed, plans call for the drilling of a second injection well in Tapia Field to allow for increased water injection disposal associated with higher oil production volumes. Interim financial statements for the period ended 30 June 2014, are required to be filed with the Bank by 15 August 2014, and will be posted at when finalized.

A transcript of the 23 July 23 2014 EGM has been posted for a short time on for shareholders and other interested parties.

For further information please visit or contact:

Keith Morris, Director   Tel: 0207 448 5111
Nick Harriss, Nick Athanas, Allenby Capital (Nomad) Tel: 0203 328 5656
Neil Badger, Dowgate Capital Stockbrokers (Broker) Tel: 01293 517744