Offshore Gabon

The Company entered into a sixth exploration period extension during November 2009 and is required to spend $5.3 million for its share of two exploration wells and to acquire and process 150 square kilometers of 3-D seismic on the Etame Marin block by July 2014. One of the two exploration commitment wells was drilled in 2010 on the Omangou prospect at a cost of $8.6 million ($2.6 million net to the Company). The seismic obligation was met with the acquisition of 223 square kilometers of 3-D seismic in 2011. The remaining obligation is the drilling of one exploration well by July 2014, which is expected to be drilled in 2013.

As part of securing the second ten year production license with the government of Gabon, the Company agreed, in January 2012, to a cash funding arrangement for the eventual abandonment of the offshore wells, platforms and facilities. The agreement calls for annual funding for the next seven years at 12.14% of the total abandonment estimate per year and 5.0% per year for the last three years of the production license. The amounts paid will be reimbursed through the cost account. The funding is expected to begin in the fourth quarter of 2012 after the final details are agreed with the government of Gabon. The abandonment costs for this purpose are estimated to be approximately $9.6 million net to the Company on a discounted basis. The obligation for abandonment expenses related to the Gabon offshore facilities is included in the asset retirement obligation shown on the Company’s balance sheet. The Company also agreed to a fixed royalty rate of 13% effective July 17, 2011, replacing the sliding scale royalty provided for in the production sharing contract.

In July 2012, the Company shut-in two of its three producing wells in the Ebouri field as a precaution after detecting the presence of hydrogen sulfide (H2S) on the Ebouri platform. The contamination is isolated to two wells in the Ebouri field and the Company continues to maintain production from the rest of the Etame complex including one well at Ebouri at approximately 19,000 barrels per day. Investigations are underway to ascertain the root cause of the H2S and develop a plan to produce the remaining reserves in a timely manner. Although the investigative work and recommendations were not complete by the end of the third quarter of 2012, it appears that additional capital investment will be required to produce the impacted reserves. The additional capital investment required may include re-working the wells with upgraded metallurgy, including well head replacement, and installing H2S processing equipment on the platform. The amount of such investment is not estimable at this time.

Onshore Gabon

In October 2010, the Company signed a second exploration period extension for the Mutamba Iroru block which was to expire in May 2012. The Company was obligated to reprocess 400 square kilometers of 2D seismic and drill one exploration well. An agreement with Total Gabon (“Total”) was completed in August 2010, which established a joint operation on the block whereby Total acquired a 50% working interest in the block effective November 1, 2010. The terms of the agreement provided for Total paying 75% of the seismic reprocessing costs and the exploration well drilling costs. The seismic reprocessing has been completed. The Company commenced drilling of the exploration well in late September 2012, which satisfies the drilling obligation.

In April 2012, the Company signed a third exploration period extension for the Mutamba Iroru block, which expires at the end of February 2013. In addition, the latest extension requires the Company to reprocess an additional 350 kilometers of 2-D seismic by the end of February 2013. The additional seismic reprocessing required by the third extension is underway and expected to be completed in the fourth quarter of 2012 with the cost being equally split between the Company and Total.

Angola

In November 2006, the Company signed a production sharing contract for Block 5 offshore Angola. The four year primary term with an optional three year extension awarded the Company exploration rights to 1.4 million acres offshore central Angola. The Company’s working interest is 40%. Additionally, the Company is required to carry the Angolan national oil company, Sonangol P&P, for 10% of the work program. During the first four years of the contract, the Company was required to acquire and process 1,000 square kilometers of 3-D seismic data, drill two exploration wells and expend a minimum of $29.5 million ($14.8 million net to the Company). The Company fulfilled its seismic obligation when it acquired 1,175 square kilometers of 3-D seismic data at a cost of $7.5 million ($3.75 million net to the Company) in January 2007 and 524 square kilometers of 3-D seismic data during the fourth quarter of 2008 at a cost of $6.0 million ($3.0 million net to the Company).

The government-assigned working interest partner was delinquent paying their share of the costs several times in 2009 and consequently was placed in a default position. By a governmental decree dated December 1, 2010, the former partner was removed from the production sharing contract, and a one year time extension was granted for drilling the two exploration commitment wells. Following the decree, the Company and the government of Angola have been working together to obtain a replacement partner. In early 2012, the Angolan government granted a further one year extension to November 30, 2012 for drilling the two exploration commitment wells in accordance with the production sharing contract. In July 2012, the Angolan government granted an additional two year extension until November 30, 2014 to drill the two exploration commitment wells.

In the first quarter of 2012, the Company provided the Angolan government with a written offer that would allow the Company to proceed with exploration activities without obtaining a new partner, subject to certain criteria including changes to the work commitment and working interest percentages. In the second quarter of 2012, the Company identified a potential partner to acquire the available 40% working interest and submitted the name of the interested party to the Angolan government for approval. In November 2012, the government advised the Company that it has entered into negotiations with the potential partner. The company is unable to estimate when or how the negotiations will conclude with the potential partner or determine what the Angolan government’s response will be to our written offer.

The remaining obligation is a two well exploration commitment. Each well is subject to a $5.0 million penalty ($10.0 million in aggregate for both wells) if not drilled during the contract term. The $10.0 million is currently recorded as restricted cash and is held at a financial institution located in the United States.

Because of the continuing uncertainty with the Angolan government approving a replacement partner, the Company has recorded a full allowance totaling $5.4 million as of September 30, 2012, against the accounts receivable from partners for the amounts owed to the Company above its 40% working interest plus the 10% carried interest. The allowance recorded in the nine months ended September 30, 2012 totaled $1.0 million with the remainder having been recorded in 2011. The Company expects the reserved amounts will be paid to the Company if a new partner in the block is approved.

United States – Roosevelt County, Montana

In September 2011, the Company acquired a 65% working interest in approximately 22,000 gross acres (14,300 net acres) in the East Poplar Dome field in Roosevelt County, Montana. The primary objective for this field is the Bakken/Three Forks formation. Pursuant to the terms of the acquisition, the Company is required to drill three wells at its sole cost, one of which must have been drilled by June 1, 2012, with the remaining two wells by the end of 2012. A vertical exploration well, which met the time requirement for drilling the first well, was completed in June 2012 after discovering oil shows in the Bakken/Three Forks formation. However, the well did not initially discover commercial quantities of hydrocarbons in the formations below the Bakken/Three Forks formation and has been temporarily suspended to consider further stimulation and completion options. The Company recorded dry hole expense of $2.9 million in the second quarter of 2012 for drilling costs associated with the deeper formations. A second well, EPU-133, was spudded in June 2012, and was hydraulically fractured. This well is being considered for installation of electrical submersible pumps (“ESPs”) in an effort to establish production during the fourth quarter of 2012. Using ESPs to obtain production has been successfully utilized on other wells in this area. The Company plans to drill the third obligation well during the fourth quarter of 2012.

United States – Sheridan County, Montana

In May 2011, the Company acquired a 70% working interest in approximately 5,200 acres (3,640 net acres) in Sheridan County, Montana in the Middle Bakken formation. The Company’s interest in the field is made up of various mineral leases with expiration dates ranging from September 2013 to October 2019. The primary objective of this property is the Bakken/Three Forks formation.

The Company drilled two wells in the field. The Bolke 11-01H well was drilled and hydraulically fractured whereas the Bolke 7-01H well was drilled, but is awaiting hydraulic fracturing scheduled to begin in November 2012. Following the installation of electrical submersible pumps, the Bolke 11-01 well is currently undergoing a 30 day test to determine commerciality. The results of this test are expected in the fourth quarter of 2012. The Company has capitalized $4.6 million associated with the costs attributable to the Bolke 11-1H well and $2.7 million associated with the costs attributable to the Bolke 7-01H well in accordance with the criteria contained in ASC Topic 932.

United States – South Dakota

In September 2012, the Company acquired a 100% working interest in approximately 10,000 acres in Harding County, South Dakota. The primary objective for this property is the Red River formation. Pursuant to the terms of the acquisition, the Company is obligated to drill and complete a well, or reenter and complete an existing well within twelve months of the acquisition date. Once this obligation is met and within sixteen months of the acquisition date, the Company must elect to proceed or withdraw from the transaction. Should the Company elect to proceed, it must pay an additional amount of approximately $3.6 million and commit to drill and complete an additional well, or reenter and complete another existing well within twelve months of the date the Company elects to proceed with the transaction. The Company expects to drill the initial well on the property in the fourth quarter of 2012.