Primeline Energy Holdings Inc. - Block 25/34

Since the signing of Petroleum Contract for Block 25/34, Primeline has acquired from CNOOC all the regional seismic and well data in and around the Block and has access to 23,000 km of 2D seismic data and data from 12 previously drilled wells. In the Lishui Basin, which is covered by the Block, there are a total of seven wells (in addition to Primeline's discovery) that have encountered various hydrocarbon occurrences (shows or flows). Primeline believes that these wells, together with the Lishui 36-1 discovery, prove the existence of very extensive oil and gas plays in the Basin. Primeline is extremely excited about the remaining potential of the Basin.

During 2008, Primeline continued its regional geological and geophysical evaluation of Block 25/34 and the Lishui Basin with a testing programme for the re-processing of 2D seismic data as the 23,000 km 2D seismic available to the Company is of various vintages spanning over 20 years. In 2008 Hispec, a specialist geophysical data processing company, was contracted to reprocess a total of 3,517 km of 2D seismic data based on parameters derived from the testing programme and this reprocessing was completed in November 2008. Interpretation of the reprocessed data will continue through the first quarter of 2009. Early results show indications of canyon and channel systems which may be analogous to the Lishui Gas Play.

This regional evaluation will identify and document the exploration potential in the Basin, in addition to the Lishui Gas Play, to provide Primeline with prospects and lead inventories that will guide future exploration work programmes in the remainder of Block 25/34 outside the area covered by the existing 3D seismic data.



	Introduction Exploration History Lishui 36-1 Discovery Lishui Gas Play Block 25/34 Petroleum Contract Dynamic Gas Market Gas Agreement Resource Report	Since the signing of Petroleum Contract for Block 25/34, Primeline has acquired from CNOOC all the regional seismic and well data in and around the Block and has access to 23,000 km of 2D seismic data and data from 12 previously drilled wells. In the Lishui Basin, which is covered by the Block, there are a total of seven wells (in addition to Primeline's discovery) that have encountered various hydrocarbon occurrences (shows or flows). Primeline believes that these wells, together with the Lishui 36-1 discovery, prove the existence of very extensive oil and gas plays in the Basin. Primeline is extremely excited about the remaining potential of the Basin. During 2008, Primeline continued its regional geological and geophysical evaluation of Block 25/34 and the Lishui Basin with a testing programme for the re-processing of 2D seismic data as the 23,000 km 2D seismic available to the Company is of various vintages spanning over 20 years. In 2008 Hispec, a specialist geophysical data processing company, was contracted to reprocess a total of 3,517 km of 2D seismic data based on parameters derived from the testing programme and this reprocessing was completed in November 2008. Interpretation of the reprocessed data will continue through the first quarter of 2009. Early results show indications of canyon and channel systems which may be analogous to the Lishui Gas Play. This regional evaluation will identify and document the exploration potential in the Basin, in addition to the Lishui Gas Play, to provide Primeline with prospects and lead inventories that will guide future exploration work programmes in the remainder of Block 25/34 outside the area covered by the existing 3D seismic data.