Iona's Health, Safety and Environmental Policy UK North Sea Kells: A re-development of a proven oil discovery Environmental Statement Environmental Statement - Public Notice In January 2012, the Corporation acquired a 100% operated interest in Block 3/8d containing the Kells Oil Field (formerly Staffa), located in the North Viking Graben area of the UK North Sea, and found due south of the Orlando Oil discovery within Block 3/3b in which a 35% working interest is held by Iona. With its acquisition of Block 3/8d, Iona has also acquired 100% of an additional discovery known as Ossian to the southwest, and a Brent-level exploration prospect called Fingal located immediately west. The Corporation engaged Gaffney, Cline & Associates Ltd. ("GCA"), an independent reserve auditor of oil and gas resources, to provide a reserve audit and production estimate on the Kells asset. The GCA Reserves Report estimates proven reserves of 3.4 MMboe ("1P"), proven plus probable reserves of 6.6 MMboe ("2P"), and proven plus probable plus possible reserves of 9.2 MMboe ("3P"). Furthermore, GCA estimates low-case contingent reserves of 1.4 MMboe ("1C"), best-case contingent reserves of 3.3 MMboe ("2C") and high-case contingent reserves of 5.9 MMboe ("3C"). Iona's initial focus is on the Kells field development, however plans for the re-evaluation of the Ossian Discovery and Fingal prospects with newly reprocessed 3D seismic, and a study on the 3/8d-12 test results, will begin shortly. The Corporation expects to commence drilling in the third quarter of 2012 with production processing planned at CNRL International's Ninian Central platform. Orlando: A proven undeveloped oil discovery In December 2010, the Corporation acquired a 35% equity interest in UKCS License P1606, Block 3/3b (An oil discovery referred to as "Orlando" located in the North Viking Graben area of the UK North Sea). The Orlando drilling program will be operated by MPX North Sea Limited (with a 30% working interest) with Iona and Sorgenia E&P (UK) Ltd. as partners (each with a 35% working interest). The Corporation engaged Gaffney, Cline & Associates Ltd. ("GCA"), an independent reserve auditor of oil and gas resources, to provide a reserve audit and production estimate on the Orlando asset. The GCA Reserves Report estimates proven reserves net to Iona of 2.8 MMbbls ("1P"), proven plus probable reserves of 4.1 MMbbls ("2P"), and proven plus probable plus possible reserves of 6.2 MMbbls ("3P"). The Corporation expects to commence drilling activities on Orlando by the fourth quarter of 2011 with production processing planned at CNRL International's Ninian platform. Trent & Tyne gas production On May 31st, 2011, the Corporation completed the acquisition of a 20% working interest in the Trent & Tyne gas fields from Perenco. Trent & Tyne are located in UKCS Blocks 43/24 (Licence P609) and 44/18a (Licence P685) respectively. As part of the transaction Iona also purchased a share of the ETS gas export pipeline system which transports gas from four fields (including Trent & Tyne) to the UK mainland at Bacton. As with Orlando, the Corporation contracted GCA to assess Trent & Tyne's reserve base and production profile. GCA's Reserve Report estimates 1P reserves of 6.1Bcf, 2P reserves of 12.6Bcf, and 3P reserves of 37.3Bcf, net to Iona. Furthermore, with the successful completion of Tyne North West, a 2C contingent resource, GCA projects 19.6Bcf will be added to the Corporation's net recoverable reserves. Future UK North Sea Exploration: On March 31, 2010, Iona was awarded two offshore exploration blocks in the UK's 25th Seaward Licensing Round. Blocks 112/13 & 14 are owned 100% by Iona Energy Company (UK) Limited and lie within the East Irish Sea and are held under a Promote License through to 2014. The work program includes an obligation to obtain the existing seismic within the blocks and to elect to a well commitment if the company wishes to convert the Promote License to a traditional license in 2012. Alaska In early 2008, Iona Energy participated in Alaska's offshore land sale 193 and was successful in acquiring Block 6767. We believe Block 6767 lies as one of 38 blocks over a large previously drilled gas discovery, known as Burger. We plan to evaluate the prospectivity and work with nearby operators to work to bring this discovery through appraisal and to production.