FIN RESOURCES LIMITED — Capital/Financing Update 2010

Jul 28, 2010

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ASX/MEDIA ANNOUNCEMENT 29 July 2010

MONITOR TO ACQUIRE UP TO 90% STAKE IN ONSHORE TRINIDAD OILFIELDS & LOCAL DRILLING COMPANY

Highlights:

• Monitor signs HOA to acquire up to a 90% interest in three production licences in producing onshore oilfields in Trinidad;

• Following the Acquisition Monitor will be a fully-funded oil production company with a significant daily production profile and identified exploration upside;

• Independent experts Forrest A. Garb and Associates, Inc[1] have assessed that the producing fields contain oil reserves of:

• Proved plus probable (2P) of 4.8 million barrels

• Undeveloped Prospective Resources of 19.9 million barrels;

• Current production at the Project is approximately 700 bopd and, Monitor has a planned work programme to lift production to more than 3500 bopd;

• Acquisition comes with established drilling inventory (9 rigs), personnel and operations all in place on site.

Australian-based oil and gas company Monitor Energy Limited ( ASX: MHL ) (“Monitor ” or “the Company ”) has entered into a binding Heads of Agreement (“HOA”) with SOCA Petroleum (“SOCA”) to acquire its rights for up to 90 per cent interest in a company whose wholly owned subsidiaries hold production licences for three blocks in producing onshore oilfields in Trinidad (see Figure 1) and a major local drilling company.

The production acreage and operating wells of the Project cover the Morne Diablo, Beach Marcelle and South Quarry oilfields, with the total acreage covering 13,253 gross acres on the southern coast onshore Trinidad. Current production from the fields is approximately 700 bopd, however Monitor considers that a minimal work program could lift production to more than 3500 bopd within 36 months based on known reserves. The production increase excludes exploration upside with independently identified possible recoverable resource from the Herrera formation which is producing on adjacent blocks.

“This is truly a company making transaction, we are acquiring a controlling interest in a company that has not only a pure crude play in an established oil environment, but also one of five onshore drilling companies in Trinidad,” said Monitor Energy Managing Director, Jon Roestenburg.

“There is significant potential for value enhancement, as we move from 1P to 2P and 3P, plus this is a relatively low risk exploration, drilling and production operation.”

“Onshore Trinidad is a low operating cost, high profit margin environment with oil production sold at the wellhead and transported to the Pointe-a-Pierre Refinery, which has capacity for all additional planned production,” he added.

1 Forrest A. Garb & Associates, Inc is an international petroleum consulting firm based in Dallas, Texas USA.

35 Richardson Street West Perth WA 6005 Australia PO Box 1440 West Perth WA 6872 Australia Ph: +61 8 9211 1555 Fx: +61 8 9211 1500 ABN 25 009 121 644

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In addition to the onshore acreage the proposed acquisition also includes an interest in the parent of a wholly owned drilling company located in Trinidad, which owns five onshore drill rigs, three production rigs, one swab rig, full workshop and pipe yard and storage tanks and facilities – representing substantial current and replacement value.

Fellow ASX listed oil and gas company Range Resources Ltd ( ASX: RRS ) is joining Monitor in this venture and is progressing agreements to acquire the other 10 percent equity share of SOCA, as announced by Range on 12 July 2010.

Consideration

Monitor will use a combination of scrip and cash to purchase up to 90 per cent interest in SOCA Petroleum whose wholly owned subsidiary companies own the Project and all associated assets. Under the terms of the HOA, the Company will (in the event it takes up its full 90% option interest) issue two billion Monitor shares and raise AUD$90 Million with these proceeds being used to fund as follows:

• a) The acquisition (production licences and drilling company);

• b) Operational expenditure for the 3 year – 3,500 bopd production target;

• c) The drilling of the Herrera formation; and

• d) Capital raising costs

In addition there are two milestone performance payments of 500 million shares, as the company achieves future production targets. The proposed equity issues and cash payments will be reduced proportionately in the event that Monitor takes up an interest less than 90%.

Details of the consideration schedule will be released to the market in due course and set out in the notice of meeting sent to shareholders to consider and approve the Transaction at a meeting in early September 2010. The company is well advanced in discussions with strategic investors to fund the acquisition and the working capital needed to achieve all production and exploration milestones.

Technical Overview of assets to be acquired

Historical and current oil production is from the Forest and Cruse Formations which are shallow fluvio-deltaic reservoirs containing P1-P3 reserves of 6.9 million barrels of oil (MMbo), plus prospective undeveloped reserves of 19.9MMbo (Forest A. Garb & Associates report[1] ) . Current production is approximately 700 bopd with 500 bopd from Morne Diablo and the remainder from South Quarry and Beach Marcelle fields.

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South Quarry Morne Diablo Beach Marcelle
Block Block Block
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Figure 1. Location of Licence Areas - onshore Trinidad

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Significant potential exists in the deeper Herrera Formation. The Herrera Formation is a Miocene-aged deepwater turbidite. Production is typically found in the northeast to southwest thrusted structures to the east and north of the subject acreage, where the Penal field has produced more than 60 MMbo to date. 3D Seismic was used to identify prospective drilling locations in the license area that have a further resource potential of 100 MMbo in place, comprising 40 MMbo in place on Morne Diablo, 50 MMbo in place on South Quarry, and 10 MMbo in place on Beach Marcelle.

The Deeper Herrera Formation will be a target of future drilling using company-owned drilling rigs, which are more than capable of reaching these formations.

An independent recoverable reserves assessment by Forrest A. Garb & Associates[1] has provided the following certified reserves of the 3 blocks.

	Oil and Condensate (MMbbl) Attributable to Monitor (90%)
P1 Proved Reserves P2 Proven and Probable P3 Possible Prospective Undeveloped	2.6 2.3 2.2 2.0 2.10 1.9 19.9 18

Following completion of the Transaction, Monitor plans to use company-owned drilling rigs and equipment and, with cashflow from existing production, will be self-sufficient (other than initial working capital injection) in its forward program to increase production from 700 bopd to 3500 bopd within 36 months. A much larger increase in production can be achieved with exploration success given the 3500 bopd target is based on known existing reserves, without including the exploration upside.

The planned forward development program comprises of replacement and infill and step-out wells and deeper horizon drilling on the licences, as the current fields exploit only 5 percent of the available area.

Geological Background

Geologically, Trinidad lies on the South American tectonic plate and falls within the Orinoco Fold Belt which is a prolific oil producer in adjacent Venezuela some 14km southwest of the licences. The area is recognised as a worldclass petroleum province with over 3 billion barrels of oil produced and current production of 100,000 bopd.

The Morne Diablo, South Quarry and Beach Marcelle licences (Figure 1) are all within a complex thrust belt, with surface expression known as the Southern Range. The Southern Range, which contains numerous oil seeps, stretches from west to east forming the south coast of the island. Fluvial-deltaic sediments ranging to tidal and wave-dominated characterise the shallower producing zones in the Morne Diablo and South Quarry fields.

Due to growth faulting in the Beach Marcelle area, these sands are thicker and better developed there. The Pliocene-aged Cruse sands (orange layers in Figure 2) , can be segmented into three different members. The Lower Cruse is productive in the area, but largely unexplored. Just above the Lower Cruse, the Middle Cruse is widespread, and is the main producer in this area. The Upper Cruse consists of nicely developed sands that offer the possibility of more localised production.

Figure 2. Structural Cross Section of the Main Field

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The Pliocene-aged Forest sands (pink layers) represent the shallowest targets. Forest sands are comprised of two main oil producing members. The Lower Forest ranges from 250 to 300 metres deep, and the Shallow Forest ranges from 100 to 150 metres deep. These sands are ubiquitous, and are the shallowest most accessible targets. In the Beach Marcelle area, the Forrest equivalent is called the Gros Morne formation, where Monitor is considering reactivation and expansion of a water flood to increase production. The deepwater turbidite Herrera Formation (green layers) is a prolific producer to the north, and is the target of future exploration drilling on the blocks.

Most of the fields are simple four-way dip structural rollover anticlines with significant closure to create multiple oil entrapment horizons. In some areas these anticlines show overturned reservoirs, thereby creating repeated subthrust reservoir intervals capable of trapping oil as shown in (Figure 2) .

Trinidad has produced over 3 billion bbls and currently produces approximately 100,000 bopd with both major and smaller operators. All locally produced onshore oil is acquired by the state owned refinery with logistics already established;

Appointment of corporate advisory firm and Placement

Australian corporate advisory firm Komodo Capital Pty Limited (“ Komodo ”), with the assistance of Wentworth Capital Management, has been appointed as corporate advisor and lead manager to raise the capital required for the Transaction. Marketing by both of these companies has to date attracted significant interest from several International institutions. The capital raising will also include a rights issue at the same prices as the intended placement the details of which will be announced shortly.

Komodo recently completed a Placement for the Company under section 708(A)5 of the Corporations Act 2001 to raise $1.41 million (before costs) by the issue of 470 million shares at AUD$0.003 per share. The funds raised via the Placement will be used to finalise due diligence on the Transaction and future operations on the Company’s existing portfolio of assets and general working capital.

Conditions Precedent

The proposed Transaction is subject to various conditions precedent including:

• the approval of Monitor shareholders at a General Meeting (expected to be held in September 2010);

• any necessary regulatory approvals;

• successful completion of due diligence by each party;

• raising sufficient capital to fund the acquisition and ongoing working capital commitments.

Timetable for completion of transaction

It is anticipated that formal agreements will be entered into during August 2010 and a Notice of Meeting will be issued to shareholders in August, for a September meeting. Based on completion of certain conditions precedent, and subject to change, the outline timetable to completion of the Transaction is:

	Date
Dispatch of Notice of Meeting to shareholders	August 2010
Execution of Formal Documents	August 2010
Shareholders Meeting	September 2010
**Completion of Transaction **	September 2010

Board & Management Changes

On completion of the Transaction, it is proposed that Mr Greg Smith and Mr Mark Patterson will be appointed as Directors of Monitor. In addition, it is anticipated that all current management in Trinidad will be retained.

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The Board and management additions introduce regional operating expertise to the Board and are considered to strengthen and complement the current management structure. The Company is confident the appointments will result in a highly experienced team possessing the financial, operating and technical experience necessary to progress Monitor’s business strategy and deliver value to shareholders.

The profiles of the proposed appointees to the Monitor Board and Management are included in Appendix 1.

For more information please contact:

Jon Roestenburg BSc, GBQ, MLM, CC, MAAPG, MAIG David Tasker Managing Director Professional Public Relations Monitor Energy Limited Tel: +61 8 9388 0944/ +61 433 112 936 Tel: +61 8 9211 1555 Email: david.tasker@ppr.com.au Email: jon@monitorenergy.com.au www.monitorenergy.com.au

Competent Person Statement

This report was completed by Managing Director, Mr Jon W Roestenburg BSc, GBQ, MLM, CC, Member of the American Association of Petroleum Geologists and the Australian Institute of Geoscientists (member 4356) who is a recognised geoscientist with over 33 years operational and managerial experience in oil and gas. He has a paper about to be published on depositional systems including fluvio-deltaics and turbidite systems within thrust regimes. (Special Publication SEPM 95 - Mass Transport Deposits in Deepwater Settings).

The reserves estimates for the 3 Trinidad blocks referred above have been formulated by Forrest A. Garb & Associates, Inc. (FGA). FGA is an international petroleum engineering and geologic consulting firm staffed by experienced engineers and geologists. Collectively FGA staff has more than a century of world-wide experience. FGA have consented in writing to the reference to them in this announcement and to the estimates of oil and natural gas liquids provided. The definitions for oil and gas reserves are in accordance with SEC Regulation S-X.

Forward Looking Statements

Certain statements contained in this announcement, including information as to the future financial or operating performance of Monitor Energy ‐ ‐ Limited and its projects, are forward looking statements. Such forward looking statements:

• are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Monitor Energy Limited,

• are inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies;

• involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from estimated or ‐

• anticipated events or results reflected in such forward looking statements; and

• may include, among other things, statements regarding targets, estimates and assumptions in respect of production and prices

• operating costs production prices, and results, capital expenditures, reserves and resources and anticipated flow rates, and are or may be based on assumptions and estimates related to future technical, economic, market, political, social and other conditions.

‐ Monitor Energy Limited disclaims any intent or obligation to update publicly any forward looking statements, whether as a result of new information, future events or results or otherwise.

The words “believe”, “expect”, “anticipate”, “indicate”, “contemplate”, “target”, “plan”, “intends”, “continue”, “budget”, “estimate”, “may”, “will”, ‐ “schedule” and similar expressions identify forward looking statements.

All forward ‐ looking statements made in this presentation are qualified by the foregoing cautionary statements. Investors are cautioned that forward ‐ looking statements are not guarantees of future performance and accordingly investors are cautioned not to put undue reliance on forward ‐ looking statements due to the inherent uncertainty therein.

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Appendix 1 - Background on Proposed Board and Management Appointees

Mr Greg Smith

Mr Smith has over 20 years’ experience in the minerals and energy sectors encompassing investigation, analysis, conceptual planning, exploration, development, financing (equity and debt), environmental aspects, governmental relations, high level negotiations, acquisitions, executive management and corporate governance. He has a wide breadth of senior management and executive experience through his association with natural resource companies across the globe, including coal-bed methane in Wyoming; onshore oil and gas in Guatemala and Colombia; underground and open pit zinc mines in Canada; and corporate finance and advisory services throughout the world.

Mr Mark Patterson

Mr Patterson has over 25 years’ experience in the oil and gas industry in both North and South America. During his 13 years with Maxus Energy Corporation and its predecessor company Diamond Shamrock, he occupied positions of increasing responsibility including Offshore Exploration Manager, Exploration & Development Manager for North America, and General Manager for Maxus Bolivia, Inc. Prior to joining Diamond Shamrock, Mr Patterson worked as Offshore Exploration Geophysicist for Getty Oil Company and was Engineering Geophysicist for Fairfield Industries.

Mr Jon Roestenburg

Mr. Roestenburg Graduated from Curtin University in 1976 with an applied degree in geology and has since graduated from the Curtin Graduate School of Business with degrees in Leadership, Management and Business. He is a qualified geoscientist with over 35 years of Oil, Gas and Resources exploration and development experience around the globe and has had career postings with large and small companies. Mr. Roestenburg has extensive petroleum experience throughout Central Asia, South East Asia, China, Japan, Korea, Papua New Guinea, Australia and New Zealand. He has held senior technical and managerial positions in Hudbay Oil Australia Ltd, Schlumberger Oilfield Services International, Ampolex Ltd, Mobil Oil International as well as with Shell Minerals. He has published numerous technical papers and projects and is well regarded in his profession.

Mr Scott Spencer

Mr Spencer has a long history in the oil and gas industry and in particular is very experienced in corporate affairs, capital raising and business development strategies. Mr. Spencer was an Executive Director of Hardman Resources Ltd during the time the company rose from market capitalisation of A$ 5 million to A$ 1.4 billion. The company was taken over by Tullow Oil plc. Mr. Spencer has participated in many capital raisings in Australia, the UK and elsewhere, up to $A167 million in a combined placement and rights issue in early 2004. Mr Spencer has strong language skills and worked on international political and economic issues with the Australian Government for over 15 years. He is well versed in doing business throughout the globe.

Mr Mark Gwynne

Mr. Gwynne has 17 years experience in senior and corporate management of resource companies registered and listed in Australia and the United Kingdom, with operations in Australia, Africa, South America and the Former Soviet Union. Mr. Gwynne has extensive experience in project acquisition and development in precious and base metals and oil and gas and has undertaken extensive capital raising and marketing for several companies.

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