President's Message

Indonesia expansion continued with four blocks being added during the quarter.  The Company's net acreage in Indonesia is now about fifteen times greater than its India acreage.  Niko now has an interest in twenty deepwater blocks and intends to continue to add additional prospective blocks by applying the science of SeaSeep™ technology.  This fiscal year the company has completed almost 300,000 square kilometres of new multibeam data and has cored 394 sites with up to 500 additional sites planned.  Joint studies are in the process of being obtained over most of the prospective areas.  This program almost doubles the original program that underpins the Company's current acreage.  In short, Niko's strategy of adding more prospective acreage continues in Indonesia and will extend beyong Indonesia next quarter when the Company plans to use Seaseep™ technology to survey approximately 290,000 square kilometres in five basins along the equatorial margin of Northeastern Brazil extending west to the French Guayana-Brazil border.

At the 5c block in Trinidad, a development plan that is awaiting Government approval is expected to add reserves and produce at a plateau rate of 250 MMcf/d (63 MMcf/d net to Niko).  The Stalin-1 offshore well was drilled in the 2ab block.  Although numerous encouraging gas shows were encountered the Oligocene reservoir sands were found to be poorly developed at this location.  A second well, Shadow-1 is expected to be spudded next quarter and will also target the Oligocene reservoir.  Shadow-1 is 17.5 kilometres east of the Stalin location and 4.7 kilometres north of an existing well that had 1,900 feet of gross Oligocene sands.  Offshore seismic was completed at the Guayaguayare and NCMA blocks setting the stage for a large drilling campaign during the fiscal year.  At the Central Range block the Company is currently completing and testing Cribo-1 well and the Mapepire-1 well is currently being logged.  A third well, Tigre-1 is planned later this year.  Acreage expansion also continued in Trinidad with the addition of MG block where 2D seismic has already been completed.  The Company's land base in Trinidad is now larger that its land base in India.

In India, plans were approved for the development of the first four satellite discoveries.  In addition, further development is expected at D6 when the "R" complex and three additonal satellite discoveries are added.

On behalf of the Board of Directors,

Edward S. Sampson
Chairman of the Board, President and CEO
December 31, 2011