Our August 2007 acquisition of Reach Exploration North Sea Limited brought us an interest in the Dee discovery and in an attractive Inner Moray Firth drilling programme. The first Dee well 13/26a-2 was drilled by Talisman in 1998 and discovered oil in Jurassic Fulmar sands. In 2005 PetroCanada and Reach drilled 13/27a-4 and proved that the discovery extended into 13/27a. An appraisal well was drilled in early 2007 and was the basis for an equity swap giving First Oil 7.5% in block 13/27a and 2.1% in 13/26a. The results of the well are still tight. First Oil has a full carry on all costs through to first production.

In the Inner Moray Firth the acquisition brought a 5% interest in an eight block position in Quads 12 and 13. The blocks were awarded to Reach, Petrocanada and Samson in the 23rd licensing round. The licence commitment is to shoot 3D seismic and drill four exploration wells. 1,775 km2 of seismic was acquired during 2006 and two wells are planned for Q4 2007. First Oil has a full carry on all costs. (August 2007)