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October 2010

Argos Resources Limited

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History of Argos Resources

• Management involved in the Falklands for 22 years

• Incorporated in the Falklands in 1995

• Awarded PL001 license in 1996 as part of theAmerada Hess consortium

• Acquired 1,400km of 2D seismic data in 1997

• Two exploration wells on licence in 1998 encounteredoil shows indicating a working hydrocarbon system

• Consortium transferred their 95% interest in the license to Argos by 2004, resulting in Argos owning 100%

• Phase 1 of the license continued to November 2008

• Phase 2 approved to November 2015

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The North Falkland BasinLicences and Prospects

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1998 Drilling History

• 6 wells drilled in 1998, all in the northern half of the North Falkland Basin

• 5 of the 6 wells encountered oil and gas shows. Both Argos wells had oil shows

• The 2 wells in the adjacent Shell licence (now operated by Rockhopper), recovered 27o API oil to surface

from one well and recorded strong gas kicks from the other (Johnson discovery)

• Well Results & Subsequent Conclusions All encountered a thick, rich source rock between 80m and 1,000m thick World class oil source rock Higher organic carbon content than North Sea oil source rocks Lower half of source rock mature for oil generation Estimate over 70 billion barrels of oil generated No prospects tested within or below source rock Potentially a bypassed major oil province

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Main Structural ElementsNorthern North Falkland Basin

WEST EAST

Apollo ZeusHermes

JohnsonBoreasMorpheus

Demeter

Post-rift sag

Late post-rift

Middle post-rift

Early post-rift

Late syn-rift

Pre-rift

Early syn-rift

Seabed

Sea Lion

ARGOS ROCKHOPPER

Approx 35km

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2010 Drilling Campaign

Slot Prospect Timing (2010) G.P.R.R.*

(Mmbo) Operator Result

1 Liz Feb 281 Desire Non commercial gas discovery

2 Sea Lion April 170** Rockhopper Oil discovery

3 Toroa May 1,700 Falkland O&G P&A Dry Hole

4 Ernest July 156 Rockhopper P&A Dry Hole

5 Sea Lion September 170** Rockhopper Tested 2304 bopd

6 Rachel October 249 Desire Sidetracking

* Gross Prospective Recoverable Resources  

** Updated estimate      

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1

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Argos 2D Prospect Summary

Prospect P90 (mmbo) P50 (mmbo) P10 (mmbo) Mean (mmbo) GCOS

Zeus – Jurassic 56 152 348 182 14%

Zeus – Aptian 10 29 64 34 17%

Zeus – Campanian 9 35 86 42 17%

Demeter – Jurassic 19 48 105 57 8%

Demeter – Aptian 2 5 10 6 17%

Boreas – Valanginian 52 145 346 177 10%

Apollo – Jurassic 47 176 454 221 10%

Istros – Jurassic 11 47 106 52 12%

Glaucos – Jurassic 15 49 108 57 10%

Hermes – Jurassic 15 42 87 47 10%

Hermes – Aptian 8 19 39 22 13%

Total risked exploration 244 747 1,753 897

Source: Senergy

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The Value of 3D Seismic

Stratigraphic Prospects

Gross Mean

Speculative Resource

(Mmbo)

Pre-3D Post-3D

Desire Nil 954

Rockhopper 103 949

Argos 177* TBD

* This represents the Boreas prospect

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Apollo

Glaucos

Istros

Demeter

Zeus Boreas

MorpheusHermes

Johnson

10km

RockhopperSea Lion

PL 001 PL 032

Lead 2

Lead 1

Chronos

W.Graben

Leads to be Matured with 3D SeismicEastern Graben, Leads 1, 2 & Morpheus

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Acquire 3D seismic

Q4 2010/ Q1 2011

Q2 2011

Q4 2011/ 2012

Report on prospect inventory

Q3 2011

High-grade drilling targets, design well,

submit environmental

impact statement

Drilling campaign commences

Forward Plan

Process / interpret 3D seismic data

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Summary

• An active petroleum system in the North Falkland Basin now proven

• First 2 wells in 2010 drilling campaign are discoveries– Liz well encountered 3 separate oil and gas zones, but poor reservoirs– Sea Lion is a significant oil discovery close to PL001 in the adjacent license

• The Directors believe Sea Lion is potentially world class in size, and extremely valuable in low tax regime

• At least 4 more wells to be drilled by RKH and DES in the current campaign, further de-risking Argos licence

• A 3D seismic programme in PL001 will improve detail on existing prospects, and should identify new prospects

• Contract signed for MV Polarcus Asima, a state-of- the-art vessel, to acquire a 3D seismic survey over all of PL001, commencing by early January 2011

• Experienced management team with 22 year history in the Falklands with unrivalled local knowledge and presence

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MV Polarcus Asima