Rex I 230913

Singapore Company Focus
Rex International Holding

Bloomberg: REXI SP | Reuters: REXI.SI
Refer to important disclosures at the end of this report
DBS Group Research . Equity
23 Sep 2013
BUY S$0.85 STI : 3,237.53

(Initiating Coverage) Price Target : 12-Month S$ 1.27 Reason for Report : Initiating Coverage Potential Catalyst: Newsflow on licence awards, successful well hits Analyst Suvro SARKAR +65 6398 7973 suvro@dbsvickers.com
Game changer in the making

Independent E&P player armed with potentially revolutionary exploration technology First mover advantage in seeing oil gives it a head start in cherry picking attractive licences Potential multi-bagger as it buys assets cheap and spins off successful discoveries Initiate with BUY and S$1.27 TP; catalysts to come from licence adds, oil hits
Price Relative
S$ 1 .0 1 .0 0 .9 0 .9 0 .8 0 .8 0 .7 0 .7 0 .6 0 .6 0 .5 J u l-1 3 209 189 169 149 129 109 89 R e la t iv e In d e x
R e x In t e r n a t io n a l H o ld in g s ( L H S )
R e la t iv e S T I IN D E X ( R H S )
Forecasts and Valuation

FY Dec (S$ m) 2012A 2013F 2014F 2015F
More than your average independent oil & gas E&P company. Rex International Holding (RIH) will have access to proprietary oil & gas exploration technologies, including Rex Virtual Drilling (VD), which uses resonance frequency theory to identify and characterise reservoirs in the areas to be drilled, thereby substantially lowering the chances of hitting a dry well. RIH is positioned to capture the highest value in the E&P value chain through successful discoveries and limiting capex requirements in expensive offshore areas. We estimate that the use of Rex VD could yield success rates in excess of 50%, compared to global average of around 15% using traditional methods, thus potentially boosting project ROIs to >100%. Diversified asset portfolio provides strong growth platform. The Group currently has stakes in 15 concession areas in mature oil & gas development areas - the USA, Caribbean, Norway, Oman and UAE - with plans to expand the portfolio further. The trust from partners and governments demonstrates the credibility of the technology, which has recently been further enhanced by validation from Norwegian partner North Energy, who reported an 85% success rate in using Rex VD to predict drilling results in 41 prospects over a 2 year timeframe. Initiate with BUY, expect catalysts from continuous positive news flow. Based on a sum-of-the-parts valuation using conservative chances of success, we arrive at a TP of S$1.27 for RIH, which implies close to 50% upside at current levels. Over the next 2 years, we expect RIH to rapidly add on to its licence portfolio, while also delivering on its drilling programmes at various regions, with the first well results from Oman likely in early-2014.
At A Glance Issued Capital (m shrs) Mkt. Cap (S$m/US$m) Major Shareholders Rex Partners (%) Schroders Plc (%) Free Float (%) Avg. Daily Vol.(000) 1,005 854 / 683 55.4 8.6 36.0 24,579
Turnover EBITDA Pre-tax Profit Net Profit Net Pft (Pre Ex.) EPS (S cts) EPS Pre Ex. (S cts) EPS Gth (%) EPS Gth Pre Ex (%) Diluted EPS (S cts) Net DPS (S cts) BV Per Share (S cts) PE (X) PE Pre Ex. (X) P/Cash Flow (X) EV/EBITDA (X) Net Div Yield (%) P/Book Value (X) Net Debt/Equity (X) ROAE (%) Other Broker Recs:
0 (1) (1) (1) (1) (0.1) (0.1) nm nm (0.1) 0.0 0.0 nm nm N/A nm 0.0 N/A CASH N/A
0 (11) (11) (11) (11) (1.1) (1.1) (824) (824) (1.1) 0.0 12.2 nm nm nm nm 0.0 7.0 CASH (17.8) B: 0
6 19 19 17 17 1.7 1.7 nm nm 1.7 0.0 13.9 49.0 49.0 nm 41.7 0.0 6.1 CASH 13.3 S: 0
22 77 77 72 72 7.1 7.1 310 310 7.1 4.0 17.1 11.9 11.9 nm 10.4 4.7 5.0 CASH 45.9 H: 0
ICB Industry : Oil & Gas ICB Sector: Oil & Gas Producers Principal Business: Rex Int'l Holdings is an oil exploration & production company with concessions in Norway, ME and the US
Source of all data: Company, DBS Vickers, Bloomberg Finance L.P
www.dbsvickers.com ed: JS / sa: YM
Company Focus Rex International Holding
SWOT Analysis
Strengths Access to Rex Technologies to scan prospects. The use of Rex Technologies mitigates exploration risks by increasing the probability of discovery, thereby enabling exploration to be completed in a shorter time frame and reduces costs involved in the exploration process. Access to Rex Technologies also enables RIH to procure concessions and participate in farmins more easily, and at lower costs. Location of assets. Current concessions are located in politically stable countries with well-developed oil & gas infrastructure. Operating in a stable environment reduces any risks from civil wars, coups, guerrilla activities and terrorist attacks. The assets are also in areas like US, Norway and Middle East, close to known reservoirs of oil & gas. Diversified asset base. The Groups portfolio is spread across concessions in the US, Caribbean, Norway and Middle East. No single project is a very significant contributor to valuation. Business model limits financial commitments. Oil & gas prospecting is usually a capital intensive game. Broadly, RIHs model is to farm into concessions with minority stakes at an early stage at low costs in return for using its proprietary technologies. In areas like the ME where it holds majority stakes, it will seek to farm out stakes to partners before the project reaches the development phase. Endorsement by strategic partners. Strong partnerships with existing local and international players give RIH access to funding as well as operational expertise. Weakness Limited track record. The Group has limited track record of only 2 years, and there is no past performance to demonstrate. No oil production as yet. Most of the Groups concessions are in the exploratory or development phase, and no commercial production of oil has started yet. This again limits visibility. Rex Technologies has not led to successful well yet. To date, the Group is yet to drill a well based on location arrived at after using Rex Technologies suite of software, limiting the visibility to an extent. However, we would like to point out that the technology has had 85% success in predicting drilling results in 41 cases over a 2 year time frame, as reported by its Norwegian partner, North Energy. Rex Technologies may not work if data is inaccurate. The accurate use of Rex Technologies depends on the quality of raw seismic data, which may not be always verifiable beforehand. Dependence on success at Oman 50 Block. Given that this is the first offshore well Rex would be drilling with the use of its Virtual Drilling technology, significant failure to find oil here could dampen investor sentiment. No O&G operating expertise. RIH will not be the operator at any of its concession areas. However, it will have significant influence on drilling decisions.
Opportunities Build reputation as a technology leader. The successful use of Rex Technologies to make new oil & gas discoveries within a short time frame should firmly establish RIH as a niche independent E&P player and put more opportunities in its path. Grow by seeking new concessions. RIH aims to continually grow and diversify its portfolio of oil & gas licences. Farm out ownership of concessions. Farming out ownership to strong strategic partners will allow for additional funding while crystallising the value of the concession to an extent. Spin off successful discoveries. If the Group is able to record success through its upcoming drilling schedule in Norway and the Middle East, it will consider selling or spinning off these assets and increase value to shareholders. Acquire complementary technologies. The Group may look to invest or form JVs with other technology providers in the field
Threats Dry wells are a reality in the oil & gas industry. While Rex Technologies likely improves the chance of a successful discovery, failures cant be ruled out, which can lead to significant capital losses. Technology could be replicated by third parties. While use of Rex Technologies could give the Group a head start in securing lucrative concessions, other players may catch up fast if the technology is proved to very successful. Regulatory and environmental risks. Regulations, especially those related to environment and safety are very tight in the industry and vary across countries. Failure to meet norms could result in losses. Risks to oil price sustainability. Any potential decline in oil prices in the future will affect earnings and valuations. Particularly, the successful development of shale gas formations in the US/ Canada over the medium to long term could pose significant risks to oil prices.
Source: DBS Vickers
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Investment Summary
The key lies in use of unique technologies. Rex International Holding Pte Ltd. (Rex International Holding or RIH) will have access to oil & gas exploration technologies developed by the founders of Rex Partners. Rex Partners, founded by industry veterans Dr. Karl Lidgren, Mr. Hans Lidgren and Mr. Svein Kjellesvik, has pioneered the development of innovative exploration technologies (collectively the Rex Technologies), which potentially increases the possibility of finding hydrocarbon reserves and reduces the duration of, as well as the risks and costs involved in the exploration process. RIH holds a portfolio of oil & gas exploration & production (E&P) licences in different geographies like the US, Norway and Middle East and will be applying this set of unique proprietary technologies to extract maximum value from its concessions. Significantly higher success ratios in exploration drilling will improve ROI massively. The use of Rex Technologies suite of products, and especially the Rex Virtual Drilling package, could substantially reduce the costs of exploration (lower probability of dry wells) by identifying and characterising the reservoirs in the areas to be drilled. While most blind tests carried out by Rex and its partners have been 100% accurate so far, management estimates worldwide success ratios in exploration drilling using Rex Technologies to be at least in excess of 50%, which is arguably much higher than the average worldwide success ratio of around 10-15%. In terms of ROI calculations for a drilling programme over time, we estimate that use of Rex Technologies could yield ROIs as high as 150%, compared to breakeven or negative ROI using traditional methods. Visualising the impact of Rex Technologies
Rex Technologies ROI 120-150%
Traditional Methods ROI negative to breakeven
Source: DBS Vickers
The technology has been tested and is deemed credible. One main concern for investors would be the short track record of RIH and the absence of any discovery attributable to RIH so far through the use of these technologies. But we take heart from the fact that the technology has proved 85% accurate in predicting results in a series of 41 live drilling tests studied by its partner North Energy over the last 2 years (including 96% accuracy in determining dry wells). Also, the fact that a small independent oil & gas E&P player like RIH has been able to secure a number of concessions in the Middle East countries, which is not usually a market that we see junior E&P players in, is testament to the credibility of the technology and the team. Renowned geologists like Dr. Rabi Bastia have also turned believers in the technology, which should be a reassuring sign for investors.
RIH will drive higher value addition in the first 2 phases of E&P lifecycle exploration to discovery to development
Source: Company, DBS Vickers
Page 3
RIH is positioned to capture the highest value in the E&P value chain i.e. looking for oil. Due to the speculative nature of the upstream oil & gas industry, E&P companies experience the highest growth in value in the exploration stage if and when discoveries of resources are made. This is exactly where RIH will apply Rex Technologies and this fits in nicely with the fact that most of RIHs current concessions are in the exploration phase, and hence there is significant upside to value as and when actual hydrocarbon discoveries are made. Limited investments required. RIHs business model is to farm in partial stake in concessions where it believes there is potential for a significant reservoir find. By farming in at strategic early stages of the concession, it seeks to minimise investment cost, and only pay for its share of drilling cost in
drilling locations confirmed by using Rex Technologies. Thus, access to this breakthrough technology should help it to farm in to new concessions more easily and at lower costs. Exit strategy in place facilitates quick turns of assets/capex. We reckon RIH will not necessarily be involved in operating the assets once oil is found. Rather, we believe it will focus on what it can do best finding oil. With the use of Rex Technologies, the lead time between investment in concessions and proving up oil reserves will be as low as possible, and once oil is discovered and reserves are proven, we believe RIH will look to farm out its ownership in certain or all of its concessions. The flipping of oil & gas assets will not only crystallise value for shareholders, but also provide RIH the financial muscle to identify and drill more concession areas.
The Rex International Holding business model

Acquire high quality seismic data Screen data with Rex Technologies Take minority stake in concession Pinpoint drill location with Rex Technologies Drill exploration wells
If hydrocarbon find confirmed
Reinvest and reiterate model from beginning
Dividends to shareholders
Spin off new business or farm out concessions
Drill appraisal wells Refine and develop reserves values
Source: DBS Vickers
Diversified asset portfolio provides strong growth platform. The Group currently has stakes in 15 concession areas in mature oil & gas development regions - the USA, Caribbean, Norway, Oman and UAE - with plans to expand each portfolio aggressively. The details of each concession asset and plans for the same are outlined in the table on the following page. US assets close to production. Drilling at the US concessions has commenced with a plan to drill 80 wells within 24 months of commencement of drilling operations in the 2 concession areas in Colorado and North Dakota. The Group is identifying best possible locations to drill these 80 wells using existing geological information coupled with use of Rex Technologies. In our opinion, first oil is likely by end-2013, with ramp up
over the next 3 years. With the US assets coming into production phase, we are of the view that the Group will have a steady recurrent stream of cash flows from 2014 onwards to support its exploration activities in other regions. Drilling programmes in place for other regions. Over the next 2-3 years, the Group has in place an exciting plan of activities, which include identifying and drilling about 3 to 5 wells in Norway in 2013-14, spudding of first well in Oman and Ras al-Khaimah offshore in 2013/14, acquisition of seismic for Ras al-Khaimah onshore in 2014/15, and spudding of first well in Sharjah by 2014, followed by plans to farm out part of its equity interest.
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Snapshot of current concession areas/ assets of RIH Group

Asset Signed/ Awarded 2012 Terms (years) As long as producing 10+20 10+20 10+20 10+20 5 5 3+3+20 1.5+2+20 3+3+20 3+20 Working Interest (%) 20.0% Operator Plans & programs 2Q-2013: 80 well program started Type of reserve/ resource 2P reserves 2C contingent resources Gross reserves/ resources 20.4 0.27
USA: Colorado + N. Dakota Norway: PL503 Norway: PL503B Norway: PL616 Norway: PL498 Norway: PL707 Norway: PL708 Oman: Block 50 UAE: RAK Onshore UAE: RAK Offshore UAE: Sharjah Trinidad & Tobago: Inniss-Trinity South Erin Cory Moruga Block E
Fram Operating
2009 2011 2012 2009 2013 2013 2011 2012 2010 2011
8.1% 8.1% 3.3% 3.3% 10.0% 10.0% 64.0% 100.0% 59.0% 100%
Lotos Lotos Edison S.P.A Lotos Edison S.P.A Lundin Lime Petroleum Lime Petroleum Lime Petroleum Lime Petroleum 2013: 2 wells 2H13: Seismic acquisition 1H14: 1 well 2276.7 Unknown 60.9 426.0 3-5 wells in 2013 and 2014 Net unrisked resources* Unknown
Net unrisked resources*
2013 2013 2013
100.0% 75.0% 51.0%
Rex Caribbean Rex Caribbean Rex Caribbean 2 commitment wells in 2013/14 OOIP OOIP 20.0 40.0
* Net unrisked resources as disclosed by Hibiscus Petroleum, which owns 35% of Lime Petroleum and is RIHs partner in ME/ Norway assets Note: For an insight into the oil & gas reserve classification framework, please refer to Appendix A. OOIP refers to Original Oil in Place. Source: Company, DBS Vickers
Further growth from development of licence portfolio. The Group has further ambitions to farm into new concession areas over the next 3 years. The target is to hold stakes in about 20 licences by end-2013. The Groups JV in South-East Asia, HiRex, has already begun screening potential drilling locations in mature field opportunities in South East Asia, Australia and New Zealand. HiRex expects to participate in 5 to 6 licences in these areas within the next 18 months. A diversified, well financed portfolio at different stages of development means constant news flow. We believe news flow is essential to drive a valuation re-rating for a junior E&P player like RIH. Investors would want to know the progress of RIHs investments. A diversified, well financed portfolio at different stages of development provides for just that. Over the next two years, RIH is poised to deliver constant news flow in relation to drilling of wells, seismic acquisition, addition of new licences and partnerships, some of which are summarised in the table above.
We believe asset sales will be a key earnings driver. In terms of numbers, we estimate that RIH will record steadily growing oil sales revenues from its US assets from 2014 onwards. More significant would be net sales proceeds from potential divestments or farming out of any successful discoveries in Norway and ME assets over 2014-15. We estimate successful discoveries could be in the range of 25 to 40mmbbls reservoir size each, and sale of these assets net of drilling and other exploration costs will be key revenue and earnings drivers from 2014 onwards. For an overview of valuation for RIH, please refer to the next section. Based on our sum of the parts valuation for existing exploration and development assets of RIH, we derive a TP of S$1.27 for RIH. For the US and Caribbean assets, we used a discounted cash flow framework, given that these assets are already under development, with commercial production starting within the next 12 months. For the Lime Petroleum assets in ME and Norway, we did a risked asset valuation of the net unrisked prospective resources contained in the portfolio.
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The History of Rex International Holding

The technology came first. Since the start of the 1980s, Dr. Karl Lidgren and Mr. Hans Lidgren have utilised satellite altimeter data in oil exploration activities which enabled major oil and gas findings. Surveys produced by them made way for major discoveries such as the Haltenbanken area in Norway and the Bukha field in Oman. Mr Svein Kjellesvik is also an expert in the use of 3D seismic technologies in oil and gas exploration and has more than 30 years of relevant industry experience. Together, they have developed Rex Technologies. Leading to this vehicle for creating value. Rex Technologies is a set of unique proprietary and innovative oil and gas exploration technologies, which can be applied to increase the chances of hydrocarbon discovery. This forms the core principle behind farming into oil & gas concession areas and setting up an independent oil & gas exploration outfit. Rex International Holding Pte Ltd. (RIH) was established to hold the Groups oil & gas exploration and development assets across the Middle East, Norway and USA, and further investments in future.
Key milestones in the short history of Rex Oil & Gas/ Rex International Holding Pte. Ltd.
2010/2011 2012 2013 Entered into HiRex joint venture with partner Hibiscus Petroleum for investments in exploration assets in the Asia-Pacific region Finalised partnership agreement with North Energy to secure 50% of North Energys interest in 6 Norwegian licences Successfully listed on the SGX Catalist Board, raising close to S$90m Entered into term sheet to access three onshore E&P opportunities in Trinidad & Tobago Lime signs onshore RAK south licence agreement Initial farm-in agreement proposed with North Energy making Lime a licence holder in Norway Rex signs agreement with Fram and Loyz Energy to jointly develop concessions in the US with an 80 well drilling campaign Rex together with Loyz purchases two onshore drilling rigs to be deployed in the US Rex acquires offshore licence in Ras al-Khaimah (RAK) offshore block in Oman, and offshore concession off Fujairah (Sharjah, UAE) Lime Plc established to own the 3 existing Middle East Assets (Offshore Oman, Sharjah and RAK) Schroders becomes minority shareholder in Lime Hibiscus Petroleum picks up significant stake in Lime
Source: Company
Sequence of events for RIH Middle East concessions came first. On 10 June 2011, Lime Petroleum Limited (Lime) was incorporated by Rex Oil & Gas under the laws of the British Virgin Islands. Later, Schroder and Co. Banque S.A. became a minority shareholder in Lime. In July-August 2011, Rex Oil & Gas/ Lime secured the concessions for Sharjah, RAK Offshore North, and Oman Block 50, with RAK Onshore concession secured in January 2012. Lime holds majority interests in these Middle East concessions. The detailed ownership structure is shown on the figure in the following page. Partnership with Hibiscus Petroleum followed. On 24 October 2011, Gulf Hibiscus, the wholly-owned subsidiary of Hibiscus Petroleum, a company listed on Bursa Malaysia, entered into an agreement with Rex Oil & Gas, Schroders and Lime Petroleum Plc, for the purposes of acquiring an aggregate of 35.0% of the enlarged issued and paid-up share capital of Lime. Hibiscus Oilfield, a wholly-owned subsidiary of Hibiscus Petroleum, would provide project management and technical services to Lime in relation to its existing and future oil and gas concessions in the Middle East region.
On to the US assets. On 28 August 2012, Rex Oil & Gas entered into the Participation and Exploration Agreement with Fram and Loyz Oil in relation to the US concessions, a portfolio of onshore petroleum leases in the states of Colorado and North Dakota. Based on the agreement, RIH will have a 20% direct participation interest derived from a planned drilling campaign of 80 Commitment Wells. Through a share swap agreement, RIH also has a direct 24% stake in Fram Exploration, which has an effective 60% interest in the US concessions. And finally Norway. On 17 April 2013, Lime entered into a final partnership agreement with North Energy, a company listed on the Oslo Stock Exchange, to secure 50.0% of North Energy's interest in six Norwegian concessions for a purchase consideration of US$4.9m. Limes participating interest in each Norwegian Concession ranges from 3.3% to 10.0%. Caribbean calling post IPO. In August 2013, the Group signed a term sheet to acquire 52% interest in Rex Caribbean for US$9m, which would give it access to 3 interesting onshore E&P opportunities in the island nation of Trinidad & Tobago.
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Structure of Rex International Holding post restructuring exercise
Rex International Holding Pte. Ltd.

100% 24% 52%
1
Rex International Investments

100%
Fram
Rex Caribbean
Rex International BVI
Trinidad & Tobago Concessions

100%
100%
Rex South East Asia Ltd

41% 100%
Rex Oil & Gas

65%2
HiRex
Lime Petroleum PLC

100%
Rex US Ltd
100%
Lime Petroleum Ltd
Rex US Ventures LLC

59% 100% 100% 64%5
Dahan Petroleum Limited

49% 100%
Zubara Petroleum Limited

100%
Baqal Petroleum Limited

100%
Masirah Oil Limited

100%
Lime Petroleum Norway
US 6 Concessions
Loyz Rex Drilling Services LLC
RAK Offshore North Concession
Sharjah Concession
RAK Onshore South Concession
Oman Block 50 Concession
Norwegian Concessions
Notes: 1. Fram is the holding company of companies that own and operate oil & gas assets in the US and in Trinidad & Tobago, including Fram Operating. RIHs interests in Fram may be diluted in future when convertible bonds issued by Fram to other parties are due to be converted into shares in Fram in 2014. 2. Schroder & Co. Banque S.A. holds 8.6% of Lime Petroleum Plc on a fiduciary basis for Rex Oil & Gas. The remaining 56.4% in Lime Petroleum is held directly by Rex Oil & Gas. 3. HiRex is a JV established with Hibiscus Petroleum to explore concessions in SE Asia. 4. Lime Petroleum Plc is a jointly-controlled entity as its shareholders, through their nominee directors, have equal voting rights in respect of certain board reserved matters. Accordingly, the subsidiaries of Lime Petroleum Plc are also jointly-controlled entities. Dahan and Masirah are also jointly-controlled entities as their shareholders have equal voting rights in respect of certain board reserved matters. 5. Upon successful discovery in Oman, the Government of the Sultanate of Oman has an option in the shares of Masirah Oil Limited (Masirah), which would reduce Lime Petroleum Ltds shareholding in Masirah to no less than 48% 6. The participation interests in the US Concessions are held through Rex US Ventures, which is a party to the Participation and Exploration Agreement entered into between Rex US Ventures, Fram and Loyz Oil in relation to the implementation of a drilling plan for 80 commitment wells. RIH will receive 20% direct interest derived from the drilling campaign of the 80 commitment wells. Source: Company
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The Rex Business Model

RIH is principally involved in the business of oil and gas exploration and production. Its concessions are located in the Middle East, Norway and the USA. RIH usually focuses on the exploration operations and thus co-operates with several partners that operate the concessions. To recap, the Middle East and Norwegian operations are carried out by Lime Petroleum Plc, a 65%-owned subsidiary of RIH. In the Middle East, Lime holds between 59% and 100% of four different concessions in the UAE and the Sultanate of Oman. In Norway, Lime holds between 5% and 33.3% in six different concessions in the Norwegian Continental Shelf. RIH is also entitled to a profit-sharing participation of 20% in the exploration and production of the US concessions. Through a share swap agreement, RIH also has a direct 24% stake in Fram Exploration, which has an effective 60% profit-sharing participation in the US concessions. RIH has also recently established a JV with Malaysia-listed Hibiscus Petroleum to explore concession opportunities in South East Asia. Summary of the key value drivers for RIH currently
20% direct interest in US concessions 24% direct equity stake in Fram Exploration 65% stake in Lime Petroleum 52% stake in Rex Caribbean
The key lies in use of unique technologies. As stated earlier, Rex Partners, founded by Dr. Karl Lidgren, Mr. Hans Lidgren and Mr. Svein Kjellesvik, has pioneered the development of innovative exploration technologies, which potentially increases the possibility of finding hydrocarbon reserves and reduces the duration of, as well as the risks and costs involved in the exploration process. In respect of the oil and gas exploration activities at its key concession areas, RIH will apply this set of unique proprietary technologies developed by Rex Partners, which are collectively referred to as the Rex Technologies. RIH will add value in the exploration phase. Due to the speculative nature of the upstream oil & gas industry, companies involved in exploration and development of concession areas will experience the higher growth in value in the exploration stage if and when discoveries of resources are made. As we highlighted earlier, RIH will apply Rex Technologies to increase the chances of success in the exploration phase. This fits in nicely with the fact that most of RIHs current concessions are in the exploration phase, while a part of the US assets are in the early development phase, and hence there is significant upside to value as and when actual hydrocarbon discoveries are made.
Source: DBS Vickers
RIH seeks for value addition in the exploration and development phases
Source: Company
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Technology is a key enabler in the exploration process

The typical oil and gas exploration process is divided into three main stages, namely, detection, prospect definition and characterisation and verification of the reservoir. Steps to come to an exploration decision
Detection: Data acquisition (gravimetric, infrared, seismic) Detection: Raw data processing Detection: Review by geological and geophysical experts
According to management, the following chart sets out the workflow involved in the stages stated above in coming to a decision to explore a certain area.
Reservoir Verification: Exploration decision
Prospect Definition and Characterisation: Detailed data processing
Prospect Definition and Characterisation: Area selection for further detailing
Source: Company
This is where Rex Technologies come in. Developed by by Dr. Karl Lidgren, Mr. Hans Lidgren and Mr. Svein Kjellesvik, it comprised the following key technologies: Rex Gravity. This is used to detect possible hydrocarbon accumulations through use of satellite altimetry and bathymetry to map out hydrocarbon prospects. Rex Gravity relies on density differences between hydrocarbons and the surrounding crust to detect anomalies. It is beneficial over traditional imaging technologies as it provides a potential anomaly map based on satellite gravity data, compensates for water depth, has a high correlation with known hydrocarbon accumulations and is cost efficient. Rex Seepage. This is used to verify hydrocarbon presence at sea surface through the use of thermal imagery satellite information. Oil seepage is a natural occurrence and an analysis of thermal infrared spectrum emitted from the top ocean layer can indicate the likelihood of the presence of hydrocarbon reservoir in the seabed below the ocean. As thin oil layers absorb and emit solar energy differently from sea water without oil sheens, this difference can be detected by satellite infrared sensors and the information can be used to create maps of hydrocarbon leaking areas offshore. The advantage of Rex Seepage as compared to traditional imaging technologies is that it produces high resolution
images and these images are obtained through a much larger set of satellite images taken at frequent intervals and over many years, unlike traditional seepage imaging technologies which typically only capture oil seepages in one or a few images per area of interest. This allows Rex Seepage to be more accurate than many similar technologies in use today. Rex Virtual Drilling. This is used to locate liquid hydrocarbon accumulations using seismic data interpretation techniques. Seismic responses are characterised and the exact location and formation of oil reservoirs can be pinpointed. The results provide information about the location of the oil reservoir, quality of oil and acts as a base for volumetric calculations. Rex Virtual Drilling's advantages over traditional imaging technology lies in its ability to use regular seismic data to carry out advanced seismic data analysis to accurately visualise and predict the location of liquid hydrocarbons in the sub-terrain and thereby accurately pinpoint reservoir locations, formations and size. This in turn leads to a significantly reduced need for exploration and appraisal drilling and shortened exploration time, thereby reducing the duration of, as well as the risks and costs involved in the exploration process. The use of Rex Virtual Drilling provides RIH the ability to "see the oil in the ground" which is a clear differentiation from other seismic interpretation products presently available in the market.
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RIH holds a licence to the right to use Rex Technologies, which has been granted by Rex Technology Management under the IP Licence Agreements (see Appendix B). Rex Technology Management will provide the use of Rex Technologies to RIH for as long as Rex Partners and its associates and Dr. Karl Lidgren and Mr. Hans Lidgren and their associates hold in aggregate, a direct or deemed controlling interest in the issued and paid-up capital of RIH. The provision of Rex Technologies by Rex Technology Management to RIH is on terms that are more favourable than normal commercial terms and not prejudicial to the interests of RIH and its minority shareholders. Detection is done with Rex Gravity Detection of a hydrocarbon reserves in a concession occurs in three main steps, namely, anomaly detection, oil presence identification and geological outlining. With data which the Group acquires from third parties, it will process the raw data and carry out anomaly detection through the use of Rex Gravity. Rex Gravity relies on density differences between hydrocarbons and the surrounding crust to detect anomalies.
and Rex Seepage. Oil presence identification is done with Rex Seepage, which verifies hydrocarbon presence at sea surface through the use of thermal imagery satellite information. Traditional imaging is difficult to interpret due to factors such as currents or man-made oil leaks and the satellite must capture the oil slick before it is spread out over a large area. Rex Seepage is advantageous as it is unaffected by timing and is highly sensitive and as a result, is more effective than traditional imaging. Key features of Rex Gravity technology Based on satellite gravity data Water depth compensation High correlation with known hydrocarbon accumulations Highly cost efficient
Source: Company
Overview of Rex Gravity technology
Source: Company
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Advanced offshore seepage measurements using Rex Seepage
Source: Company
Next step is prospect definition. Prospect definition is carried out through detailed data processing with the use of seismic surveys in more specific areas for further detailing. Sound waves are sent into the ground and depending on the different rock layers, these sound waves are reflected back at different time intervals. This helps determine how deep the reflecting layers of rock are. The recorded seismic data will be processed real- time and interpreted by programmes which map out estimated images of the underlying surveyed rock layers which may reveal oil and gas prospects. The science behind Rex Virtual Drilling
Finally, we come to reservoir characterisation and the drill-ordrop decision using Rex Virtual Drilling technology. After prospect definition, we come to the reservoir characterisation process, and this is where RIH has the advantage of using the Rex Virtual Drilling tool, which, as we have highlighted earlier, can accurately visualise and predict the location of liquid hydrocarbons in the sub-terrain. We believe this is the crucial step in the whole exploration process, where the concession owner must decide whether to invest in the expensive process of drilling at all, and if so, where to drill.
Source: Company
Page 11
Key features of Rex Virtual Drilling technology Detects the presence of hydrocarbon accumulations as well as migration paths Provides information about the fluid type (oil/ brine) Provides volumetric reserve information Adds valuable information to the probability of success estimation method Works on both onshore and offshore seismic data
Source: Company
Quality of raw data is important. Raw data acquired is processed with Rex Technologies and after analyses carried out, the results entail information such as the depth of the reservoir from sea level, the volume present in the reservoir and the exact location of these reservoirs. Rex Technologies are able to analyse and obtain such results with 2D or 3D data. If 3D data is made available, the amount of information it is able to obtain from the data would be in greater detail. Additionally, the results will be able to accurately indicate where drilling should take place. Precision is of utmost importance and should the drilling location be inaccurate, the underlying reservoir would not be detected even if drilling takes place. With this information, RIH or the concession owner can then make a decision whether exploratory drilling should be undertaken.
An example of Traditional vs. Rex Virtual Drilling - higher Technical to Commercial Chance of Success using Rex Technologies
Application of Rex Virtual Drilling shows hydrocarbon accumulations undetected by conventional methods
Source: Hibiscus Petroleum (company presentation dated 21st March 2013)
Partner Hibiscus Petroleum points out that Rex Virtual Drilling can improve probability of finding oil. In the charts above, as extracted from a recent investor presentation from partner Hibiscus Petroleum, we can see an example of seismic representation of geological stratigraphy as derived from conventional methods as well as Rex Virtual Drilling technology. As evident from the charts, conventional analysis may result in a low probability of discovery. However, Rex Virtual Drilling provides an additional attribute of data which significantly improves the probabilities associated with the majority of the risk factors. This increased probability is mathematically expressed on the following page, by highlighting a specific example as in the
above case. Note that these probabilities are not exactly representative and cannot be extrapolated, but rather shows that Rex Virtual Drilling can potentially increase the chances of discovery significantly. Usually, conventional analysis delivers a geological chance of success (GCoS) of between 10 and 35%. Anything less than 10% is generally not drilled, while higher probabilities may be drilled based on factors like the expected size of reservoir, cost of drilling, geography etc. While using the Rex Virtual Drilling software, however, elements used to calculate GCOS are better defined leading to an improved geological assessment, thus increasing the chance of commercial success if hydrocarbons are detected or saving of the risk capital employed to drill a well if hydrocarbons are absent.
Page 12
Example of Traditional vs. Rex Virtual Drilling higher Technical to Commercial Chance of Success using Rex Technologies
Risk Category P trap P reservoir P source P discovery Risk Factor P trap geometry P seal P reservoir presence P reservoir quality P charge Risk Weight 0.60 0.80 0.80 0.80 0.60 0.16 P source P discovery P reservoir Risk Category P trap Risk Factor P trap geometry P seal P reservoir presence P reservoir quality P charge Risk Weight 0.95 0.99 0.99 0.80 0.99 0.74
Note: This is an example and these numbers are not representative of actual results obtainable in future using Rex Technologies Source: Hibiscus Petroleum (company presentation dated 21st March 2013)
Rex will participate in the exploratory drilling phase. Once an exploration decision has been made, reservoir verification is done through exploration drilling. An exploratory well is drilled to determine whether oil or gas exists underground. Various instruments are then used to collect data on the rocks and fluid layers beneath ground level for further analysis. This is done by way of running a core through selected portions of the exploration well. If the core reveals presence of a good quality reservoir along with evidence of hydrocarbons, the prospective zone is then perforated and tested. This step requires significant capex commitments as oil rigs are required for drilling. Drilling costs could range from US$1m per well in onshore USA to US$100m per well in offshore Norway.
Most of the value creation in the upstream E&P space will be captured in the aforementioned steps. Upon the completion of all these steps, RIH will then determine, along with its partners, whether extraction of the available oil and gas at a reservoir is commercially viable. If so, the locations to commence oil and gas production are determined, along with a plan to optimise production rates efficiently and economically. Oil wells are drilled, and extraction, separation, storage and transportation facilities are connected. RIH may or may not participate in the production phase of the assets, and we believe RIH could look to farm out or divest its stakes in producing or mature assets in the future, to recycle capital and invest in more exploratory assets.
To summarise this is the basic business model of Rex International Holding PRE - ENTRY ENTRY RIH will look to farm-in to concessions or seek licences in areas where there is high quality of data available, preferably 3D seismic data, so that it can make efficient use of Rex Technologies. We believe RIH will only take positions in licences where it believes there is potential for significant hydrocarbon findings. If the area has potential, RIH will take equity stakes in these concessions, while considering other risks like environmental, regulatory, financial, political etc. RIH will not be involved in the operatorship. RIH will focus on what it does best finding oil. Drilling and related services is a commodity that can be outsourced. RIH will hence, focus on partnership with well established players who can operate the fields. RIH will endeavour to establish exploration hubs in different parts of the world by partnership with local players like North Energy in Norway and Hibiscus Petroleum in South East Asia. RIH will try to reduce financial burden on itself as local partners take on the cost of Rex Technologies as well provide substantial deal-flow and operational experience. The lead time between investment and proving up reserves will be as low as possible, and once oil is discovered and reserves are proved, RIH will look to farm out the ownership in these concessions. RIH will consider spinning out assets as new businesses. The flipping of assets not only crystallises value for minority shareholders, but will also provide RIH the financial muscle to take on more concession areas.
EXIT
Page 13
Virtual Drilling screening analysis by North Energy enhances credibility of Rex Technologies
In the second quarter results presentation, partner North Energy recently shared that they had screened and analysed 59 prospects in the North Sea region using Rex Virtual Drilling maps over the past two years. This is part of North Energys strategy to save drilling costs by using the Virtual Drilling technology and eliminating the possibility of dry wells to a large extent. Out of the 41 live wells which have been drilled since (by North Energy and other operators), 35 predictions arrived at by using Rex Virtual Drilling were spot on. We believe this 85% success rate (96% success in predicting dry wells in 24 out of 25 drillings and 69% success in predicting presence of commercial oil in 11 out of 16 drillings) is strong validation of the effectiveness of Rex Technologies. Out of the 18 remaining positive predictions yet to be drilled, 5 lie in North Energys acreage and it remains to be seen whether RIH picks up a stake in those concessions. North Energys implementation plan of Rex Virtual Drilling
Source: North Energy 2Q13 results presentation
Success rate of 85% over 41 data points so far No of prospects analysed over 2 years: No of prospects predicted positive by North Energy using Rex VD maps: No of prospects predicted positive by North Energy using Rex VD maps: No of prospects drilled to date: No of positives drilled to date: No of wells hit commercial oil: Rex VD success rate: No of negatives drilled to date: No of dry wells: Rex VD success rate: No of positives yet to be drilled: In 3rd party acreage In North Energy acreage In open acreage Overall success rate of Rex VD screening:
Source: North Energy 2Q13 results presentation
59 34 25 41 16 11 69% 25 24 96% 18 6 5 7 85%
Page 14
The technology has already received the thumbs up from partners and experts
The technology has many believers already. As we have seen so far, the use of Rex Technologies suite of products, and especially the Rex Virtual Drilling package, could substantially reduce the risks of exploration (probability of dry wells) by identifying and characterizing the reservoirs in the areas to be drilled. Now, the key concern for investors may be the short track record of RIH, and the lack of any discovery attributable to RIH to date through the use of these technologies. But we take heart from the results of both live tests (as shown in preceding page) and blind tests (where only seismic data was provided with no information about the location) carried out by its partners and the belief that some of the experts in the E&P field have already shown in this technology. The accuracy of Rex Technologies is reflected in the blind tests carried out for North Energy and other partners. During 2012 and early 2013, North Energy designed eight controlled blind tests in order to assess the accuracy of the use of Rex Technologies. Anonymous seismic information was provided for the tests, which utilised Rex Technologies to draw conclusions based on the available data. Based on the eight controlled blind tests set out by North Energy, Rex Technologies showed 100% accuracy in its predictions, which included whether a certain area was a dry well, and if not, the exact location of the reservoirs and the depth of such reservoir and the volume present in the reservoir. Rex had also successfully carried out blind tests for Hibiscus Petroleum and Fram in the past, pursuant to which the Group subsequently entered into the current partnerships with them. Rex Technologies has been used during four live tests for North Energy on wells that were about to be drilled and to which no party had access to the final data as such data was not yet available. After actual completion of drilling carried out by North Energy on these four wells, the predictions from the use of Rex Technologies were proven to be100% accurate. Thus, though the Group has not yet drilled a successful well using Rex Technologies, we believe it has already saved significant capex by deciding not to participate in unsuccessful wells. Following the positive results of these blind and live tests, North Energy entered into a strategic long-term partnership with Lime Petroleum Norway. The support of governments and experts is crucial as well. The fact that a small independent E&P player like RIH has been able to win concessions in ME countries, which is not usually a market that we see junior E&P players in, is testament to the credibility of the technology. Also, renowned experts like Dr. Rabi Bastia and Dr. Kenneth Pereira have turned believers in the technology, which is a reassuring sign for investors. Significantly higher success ratios in exploration drilling using Rex Technologies. While most blind tests carried out so far have been 100% accurate, management estimates worldwide success ratios in exploration drilling using Rex Technologies to be in excess of 50%, which is arguably much higher than the average worldwide success ratio of around 10-15%. Visualize this advantage of Rex Technologies in the ROI calculations over time that we have shown in the following page.
Results of 18 external tests carried out using Rex Virtual Drilling over the last 24 months show 100% accuracy
Test No 1 2 3 4 5 6-13 14 15 16 17 18 Type of Test Blind Test Blind Test Blind Test Blind Test Blind Test Blind Tests Live Test Live Test Live Test Live Test Live Test Test Location Norway Norway New Zealand India USA (onshore) Norway Ras al-Khaimah Norway Norway Norway Norway Prediction Hydrocarbon Find Hydrocarbon Find Hydrocarbon Show Hydrocarbon Find Hydrocarbon Find Various Hydrocarbon Show Dry Well Dry Well Hydrocarbon Show Dry Well Results Correct and verified by testing party Correct and verified by testing party Correct and verified by testing party Correct and verified by testing party Correct and verified by testing party Correct and verified by testing party Correct and published information Correct and published information Correct and published information Correct and published information Correct and published information
Page 15
Visualise the potential value added by Rex Technologies over a period of time
Example of success rates with Rex Technologies and traditional methods
Source: DBS Vickers
Impact on ROI with and without the use of Rex Technologies an example
Traditional methods Minimum size of reservoir (mmboe) Price of oil in the ground (US$/boe) Value of discovery (US$m) Drilling capex/ investment (US$m) Chance of success No of wells drilled Successful well per 10 wells drilled Total value of discovery (US$m) Total investment (US$m) Net returns ROI (%) 50 5 250 50 10% 10 1 250 500 (250) -50% Rex Technology Minimum size of reservoir (mmboe) Price of oil in the ground (US$/boe) Value of discovery (US$m) Drilling capex/ investment (US$m) Chance of success No of wells drilled Successful well per 10 wells drilled Total value of discovery (US$m) Total investment (US$m) Net returns ROI (%) 50 5 250 50 50% 10 5 1,250 500 750 150%
Source: DBS Vickers
Page 16
Current assets of RIH details and growth prospects

Where are RIHs current concessions located?
Note: See Appendix C for a description of the oil & gas fiscal regimes in each of these geographies Source: Company
The US Participation Rights

Fram's aggregate net interests in the Colorado Concession and the North Dakota Concession span approximately 60,102 acres. The Colorado Concession comprises Fram's oil and gas interests in Colorado, which is located in the Whitewater Federal Production Unit in Mesa and Delta counties, geologically situated in the Uinta-Piceance Basins. The US Concessions have both reserves and contingent resources and the current drilling programme is already fully funded. Overview of RIHs oil & gas interests in the US
Concession Whitewater Federal Production Unit, Piceance Basin, Mesa and Delta counties Williston Basin, Renville and Ward counties Location Colorado, USA North Dakota, USA Type Onshore, oil & gas Onshore, oil Lime Stake 20% direct interest in 80 commitment wells 20% direct interest in 80 commitment wells Operator Date of initial investment Fram Operating 28-Aug-12
Extensive work had been previously undertaken to understand the sedimentary evolution, structural setting, and the distribution of reservoir properties of the Dakota Formation. RIH is responsible for providing the drilling locations. Pursuant to the Participation and Exploration Agreement with Fram, RIH and Loyz Oil are responsible for the implementation of a drilling plan for the 80 Commitment Wells, which are to be drilled within a period of 24 months commencing from the date the first well was drilled, being 7 May 2013.
Fram Operating
28-Aug-12
Source: Company
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RIH also has a direct 24% stake in Frams assets in the US

Location Whitewater, CO Coury Ranch, CO Hamilton Ranch, CO South Greene Field, ND Culver Area, ND Other ND Type Lease Lease Lease Lease Lease Lease Area (acres) 47,294 1,848 1,306 695 709 8,250 Minimum NRI (%) 81.25% 87.50% 87.50% 80.00% 75.00% 80.00% Expiry Date Held by production Mar-16 Sep-16 530 HBP, 160 exp 4/2014 Various Various
Source: Company
The Dakota Formation is the main reservoir in the Whitewater area and is estimated to hold 20.4mmbbls of 2P reserves. Studies carried out include regional surface mapping and outcrop reservoir section logging, analyses of cores and cuttings from wells and the interpretation of electric and image logs of wells. This approach allows the definition of the dimensions and stacking patterns of channel sands that are the main reservoir rocks. It has been observed that three types of channel systems exist, namely stacked channels, channel systems with lateral accretion and incised valley channels, eroding into the current formation. In the Dakota Formation, systems with lateral accretion are seen to be dominating. Individual channels with rippled beds are also observed. The Whitewater (Colorado) reserves
Reserve Classification 1P 2P 3P Gross 14.9 20.4 26.5 Net to RIH 4.1 5.7 7.4
The table below sets out the tentative drilling plan in the US concessions, which may be subject to change over the course of operations. The proposed 80 well drilling programme in the US
Drilling programme Whitewater Williston Basin Total 2013 26 4 30 2014 35 5 40 2015 9 1 10
Source: OPK Resources
As per independent geologists report, the forecast end-ofyear production per day estimates are shown below. End-of-year production estimates for US concessions
Production (bpd) Whitewater Williston 2013 1,320 209 1,529 2014 2,928 410 3,338 2015 2,936 328 3,264
The Williston Basin (North Dakota) contingent resources

Reserve Classification 1C 2C 3C Gross 0.16 0.27 0.38 Net to RIH 0.044 0.074 0.105
Total
Drilling at the US Concessions has commenced as of 7 May 2013 and the plan is to drill 80 wells within 24 months of the commencement of the drilling operations in Colorado and North Dakota. The Group will be continually identifying and optimising best possible locations for the 80 wells through geological and geophysical information coupled with the use of Rex Technologies.
The expected capital expenditure for drilling and other activities in the US Concessions attributable to RIH is approximately US$18.4m over the 24-month drilling project period. These sums will be used primarily for drilling and well completion activities as well as tank battery installations. Capex estimates attributable to RIH for US concessions
2013 Capex (US$m) 6.4 2014 8.9 2015 3.1
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The Caribbean concessions

First transaction since IPO shows intent. In August 2013, the Group signed a term sheet with Norwegian Private equity investor Pareto Staur to access three new E&P opportunities in the island nation of Trinidad & Tobago. Rex International Holding will invest US$9m for a 51.99% stake in Rex Caribbean Oil Company Ltd (Rex Caribbean) while Pareto Staur will invest USD 6.5 million for a 34.76% stake. Other institutional shareholders will hold 12.18% and Mr Geoffrey Leid, CEO-designate of Rex Caribbean, will hold 1.1% in his personal capacity. Transaction involves 3 onshore blocks. The transaction will involve the initial investment into three E&P licences in the proven prolific hydrocarbon basin of Trinidad & Tobago, namely, the Inniss-Trinity field, the South Erin Block and the Cory Moruga Block E. These assets already have producing discoveries and Rex Caribbean will, after completion of the farm-in activities, hold 100% of the Inniss-Trinity field and working interest of 75% in the South Erin Block and 51% in the Cory Moruga Block E. The transaction is expected to be completed in the coming weeks, subject to regulatory due diligence. The Inniss-Trinity field was initially developed as two neighbouring fields - the Innis field first drilled by Shell in 1946 and put on production in 1961 while the Antilles-Trinity field was drilled by Texaco in 1956. Both fields were taken over by Petrotrin in the early 1980s, and were part of several of Petrotrins onshore assets put up for bidding in the 2009 as a production service contract. The Inniss-Trinity field is currently producing an average of 45 bopd with no new wells being drilled since 2009. Cumulative oil production has exceeded 16.5 million barrels of oil. The South Erin Block is located in south-west Trinidad, which is part of the highly productive Southern Basin that geologically represents the eastern prolongation of the Eastern Venezuelan Basin. The South Erin Block has a current production average of about 80 bopd from four shallow wells. The 1,350-acre block, reportedly under-explored, is estimated to have a large potential. The 1ER98 Area which constitutes only a small part of the South Erin Block, is estimated to hold more than 20 million barrels of Oil in Place and continuous exploration of the block will likely increase that number significantly. The South Erin Block lies adjacent to the producing Erin/Palo Seco oilfields. An ambitious drilling campaign is planned to start in December 2013. The Cory Moruga Block E field is located in the southern basin, onshore Trinidad. The 7,442-acre block (gross) had 15 wells drilled in the 1950s. The current operator spudded a new well in 2010, drilled to an approved depth of 8,600 feet. The well penetrated and encountered hydrocarbon bearing zones in both the primary and secondary objectives in the Herrera formation. The well produced 37 degree API gravity oil at a rate stabilising above 500 bopd. The well is currently locked in, but will be put on production soon. Progress on track. As per latest updates, initial due diligence has been completed at the assets, and a drilling programme has been firmed up. Management estimates that a multi-well campaign will start at the end of 2013 or early-2014.
Selected details of key concession assets in Trinidad & Tobago held under Rex Caribbean Oil Company Ltd
Concession Inniss-Trinity South Erin Cory Moruga Block E Size (sq km) 5 5 30 Signed/ Awarded 2013 2013 2013 Working Interest (Rex Caribbean) 100.0% 75.0% 51.0% Operator Rex Caribbean Rex Caribbean Rex Caribbean Reserves/ resources N/A 20mmbbl OOIP 40mmbbl OOIP
Source: Company
Page 19
The Middle East concessions

The Middle East Concessions are held through Lime Petroleum Plc in which RIH holds a shareholding interest of 65%. The RAK North Concession is located on the west coast of Ras al-Khaimah, an emirate of the UAE in the east of the Persian Gulf. It covers an area of 1,200 sq km and encompasses the Saleh field, which has been producing oil and gas for the past ten years. The RAK Onshore Concession covers an area of 886 sq km in the southern region of Ras al-Khaimah. The Sharjah Concession spans 1,600 sq km on the east coast of Sharjah, an emirate in the UAE. The Block 50 Oman Concession covers an area of 16,903 sq km and is situated in the south east coast of the Sultanate of Oman.
Selected details of key concession assets held by RIH through its 65%-owned JV Lime Petroleum
Concession Oman Block 50 UAE: RAK Offshore North UAE: RAK Onshore South UAE: Sharjah Central Size (sq km) 16,903 Signed/ Awarded 2011 Term (years) 3+3+20 Working Interest (Lime) 64.0%* Operator Hibiscus Oilfield Remarks Preparation for drilling during 2013
1,200
2010
3+3+20
59.0%
Hibiscus Oilfield
Interpretation of acquired seismic Preparation of seismic campaign to commence 2013 Interpretation of acquired seismic and preparation of farm-out
886
2012
1.5+2+20
100.0%
Hibiscus Oilfield
1,600
2011
3+20
100.0%
Hibiscus Oilfield
* Upon successful discovery in Oman, the Government of the Sultanate of Oman has an option in the shares of Masirah Oil Limited (Masirah), which would reduce Lime Petroleum Ltds shareholding in Masirah to no less than 48% Source: Company
The Middle East Concessions are governed by exploration and production sharing agreements and a concession agreement, which sets out the rights and obligations of the parties under the respective agreements. The Middle East Concessions are managed by Hibiscus Oilfield under the terms of the PMTSA. Hibiscus Oilfield is a whollyowned subsidiary of Hibiscus Petroleum, which holds the remaining 35% interest in Lime Petroleum Plc. Pursuant to the PMTSA, Lime Petroleum Plc shall pay project management fees to the project manager on an actual cost basis plus a margin of 7% on a monthly basis. Plans for exploratory drilling in the Middle East Concessions are in place for 2013 and 2014. The Group has planned to drill two wells in the Block 50 Oman Concession in 2013. Contingent upon positive well results from the drilling operations, it may consider drilling additional exploration or appraisal wells in 2014 and 2015 in Oman. It also intends to drill its first exploration well in the Sharjah Concession by June 2014. Contingent upon positive well results from the drilling operations, it may consider drilling additional exploration or appraisal wells in 2014 and 2015.
In respect of the RAK North Concession, the plan is to drill the first well in the offshore areas of Ras al-Khaimah by early 2014. In case of a discovery, the Group will undertake a commercial evaluation and decide and implement further exploration and development plans. We believe these plans may include immediate commercial development or an appraisal well in 2015. Additionally, seismic information will be obtained on the RAK Onshore Concession, and should there be positive findings, the plan is to spud the first onshore well in Ras al-Khaimah by the end of 2014. The Group intends to farm-out part of its equity in the Middle East Concession companies in turn for funding to progress with further drilling, and it has entered into discussions with some potential investors. The Group intends to carry out the aforementioned scheduled spudding with such additional funding. Some capital expenditure may also be required for in the acquisition of new seismic information for the Middle East Concessions.
Page 20
The Norway concessions

On 17 April 2013, Lime Petroleum entered into a partnership agreement with North Energy, a company listed on the Oslo Stock Exchange, to secure 50.0% of North Energy's interest in 6 Norwegian licences for a purchase consideration of about US$4.9 million. The purchase consideration was based on the proportional share of the exploration costs incurred up to date by North Energy in the Norwegian Concessions with a slight premium. Lime Petroleum's participating interest in each Norwegian Concession ranges from 3.3% to 10%, as shown below in the table. The Norwegian Concessions cover an aggregate area of approximately 3,509 sq km. The Group will utilise Rex Technologies on the Norwegian Concessions to enhance the chances of successful drilling operations.
Selected details of key concession assets held by RIH through its 65%-owned JV Lime Petroleum
Concession PL503 (Valberget) PL503B Valberget) PL616 (Skagastol) PL498 (Skagen) PL707 (Seiland West) PL708 (Seiland East) Location North Sea North Sea North Sea North Sea Barents Sea Barents Sea Size (sq km) 977 432 333 278 982 507 Signed/ Awarded 2009 2011 2012 2009 2013 2013 Term (years) 10+20 10+20 10+20 10+20 5 5 Working Interest (Lime) 8.1% 8.1% 3.3% 3.3% 10.0% 10.0% Operator Lotos E&P Lotos E&P Edison S.p.A Lotos E&P Edison S.p.a Lundin Petroleum
Source: Company
Norway is an attractive market for E&P activities. E&P activities in Norway are subject to a reimbursement in respect of development costs which amount to approximately 78% of total expenses, which provides further support to RIHs effort to minimise its financial risk in the Norwegian Concessions. The long-term objective for RIH is also to co-operate with prominent and established partners in the Norwegian market such as Grupa Lotos SA, Edison S.p.A and North Energy in the development, management and operation of the Groups Norwegian Concessions, so that operational risk is minimised. Potential to farm-in stakes in other existing concessions of North Energy. Rex extended its collaboration with North Energy in 1Q 2013, whereby it has the right to 50% of any of the 35 concessions which North Energy has title to, pursuant to screening of these concessions with the use of Rex Technologies. RIH will have the discretion to decide which concessions it wishes to participate in, further to which it will invest in the drilling operations of these concessions. The use of Rex Technologies has been agreed between Rex Technology Management and North Energy, and will be at no cost to RIH. Current concessions in proven areas. Of the six licences in which RIH has an interest, two are located in the southern region of the North Sea, with Ekofisk and Valhall as the best known oil fields in that area. Two of the licences lie 45 km
south-east of the famous recent discovery of Johan Sverdrup at the latitude of Stavanger. The last two licences are located in the Barents Sea, in close proximity to the coast on the Finmark east platform and are part of the 6 licences awarded to North Energy in the 22nd licensing round recently concluded by the Norwegian Oil & Energy Department in June 2013. Will start drilling soon. RIH, through its subsidiary, Lime Petroleum Norway, intends to participate in the drilling of three to five new offshore wells within the next 18 months, such locations to be determined by the results of screening of various locations, as discussed earlier. North Energy will be the operator for the drilling operations. As such, Limes operations in the Norwegian Concessions are in the preliminary exploration stages and it has not commissioned an independent assessment of the resources in the Norwegian Concessions. Intends to bid for more licences in Norway. The Groups subsidiary, Lime Petroleum Norway, has on 8 February 2013 obtained pre-qualification status as a licencee in Norway. It intends to participate in a greater number of screenings of potential licences, and apply for an additional eight to 12 licences over the next 2 years. The first well in Norway is estimated to be drilled in 2014.
Page 21
Strong management team adds further credibility

The Board of Directors is led by Mr Dan Brostrm as Chairman and Executive Director. Mr. Bostrom has been with the Rex Group since 2011. Prior to that, Mr Brostrm was a senior partner at MVI Holdings Ltd between 1993 and 2005, where as a consultant, he was assisted Swedish companies that intended to set up business in Singapore through fund-raising activities and sourcing for suitable business partners for these companies. Mr Brostrm has also held senior positions in the real estate and shipping industries in the past. The Board will also include Dr. Karl Lidgren, one of the founders of controlling shareholder Rex Partners. Dr Karl Lidgren is the brother of Mr Hans Lidgren, another controlling shareholder of Rex Partners. He is also the father of CEO Mr. Mans Lidgren. Dr Karl Lidgren is a nominee of Rex Partners and Mr Bernt sthus is a nominee of Fram on the Board of RIH. There will also be three Independent Directors nominated to the Board of Directors. The day-to-day operations will be carried out by a team of executive officers, as outlined below.
Composition of Board of Directors

Name Mr. Dan Brostrm Dr. Karl Lidgren Mr. Bernt Osthus Mr. Sameer Khan Mr. Abderahmane Fodil Age 70 65 42 60 39 Resident Singapore Monaco Norway Singapore Saudi Arabia Position Chairman & Executive Director Non-Executive Director Non-Executive Director Independent Director Independent Director Rex Partners nominee Fram nominee Remarks
Source: Company
The day-to-day operations of the Group are carried out by a team of key Executive Officers headed by CEO Mr. Mans Lidgren, who is the son of Rex Partners co-founder Dr. Karl Lidgren and the nephew of Mr. Hans Lidgren. Mr. Hans Lidgrens daughter, Mrs. Lina Berntsen, is the Rex Technologies expert on the management team of RIH. The Group has a flat management structure and there are many other officers working closely together with the Executive Officers. The particulars of the key Executive Officers of RIH are set out in the following page.
Rex International Technology Committee (RIT Committee) provides management oversight. The RIT Committee is in charge of, among others, monitoring the work programme of the Groups various concessions, including the Middle East Concessions. The founders of Rex Partners, Mr. Hans Lidgren and Mr. Svein Kjellesvik, who is also the chief executive officer of Lime Petroleum Plc, and RIHs Chief Technology Officer, Mrs. Lina Berntsen, are on the RIT Committee. The committee will meet on a bi-monthly basis to assess the conditions and work progress of the concessions, and reports directly to RIHs CEO, Mr. Mans Lidgren. The minutes of the RIT Committee meetings are circulated to the Board of Directors.
Management Reporting Structure of RIH

Chief Executive Officer
Chief Operating Officer
Chief Financial Officer
Chief Technology Officer
Source: Company
Page 22
Key Executive Officers

Name Mr. Mans Lidgren Position Chief Executive Officer Key Experience / Position Mr. Lidgren graduated from Lund University in Sweden with a Bachelor of Science and a Master of Science, both in Business Administration and Economics in 1999 and 2000 respectively. From 2002 to 2007, he joined his family business in private investments, and from 2005 to 2007, he assumed the position of senior investment manager in his family's business, and carried out portfolio management, liaison with partner banks and private equity transactions. Mr. Lidgren subsequently joined Credit Suisse in January 2008 as a vice president of business development. After leaving Credit Suisse in August 2009, he re-joined his family's business where he was chief financial officer until August 2011. He later joined Lime Petroleum Plc from August 2011 to December 2012, and took on the roles of interim chief executive officer and director. Mr. Lidgren joined RIH in January 2013 as Chief Executive Officer. Mr. Kristofer Skantze Chief Operating Officer Prior to joining RIH, Mr. Skantze was the head of sales and marketing at HeiQ Materials AG from 2007 to 2012, a privately-owned textile chemical company, where he forged partner alliances with well-known textile brands. From 2000 to 2007, Mr. Skantze held various positions within the Anoto Group AB, a Swedish high-tech company. Mr. Skantze was the business development manager of Anoto Inc. at Boston from 2005 to August 2007, where he managed the partner network and was responsible for all new North American customers. Before his stint in the United States of America, Mr. Skantze held positions of key account manager, technical project manager and project manager in sales and business development at the headquarters of the Anoto Group AB in Lund in Sweden from 2000 to 2005. Mr. Skantze obtained a Master's degree in Engineering Physics from the Faculty of Engineering of University of Lund in Sweden. Mr. Ake Knutsson Chief Financial Officer Mr. Knutsson joined the Group in 2011 as the Chief Financial Officer of subsidiary, Lime Petroleum Plc, and was subsequently appointed RIHs Chief Financial Officer in 2013. Prior to joining the Group, Mr. Knutsson was the Chief Financial Officer of the Prestando Group since 2009, a supplier of pressed high-grade steel parts to the automotive industry in Europe and the USA. Before that, Mr Knutsson held senior management positions in A Clean Partner International AB and Biomet Cementing Technologies AB. Mr Knutsson had earlier worked in various entities as a financial manager. Mr Knutsson graduated from the University of Lund in Sweden with a degree in Business Administration with International Orientation. Mrs. Lina Berntsen Chief Technology Officer Mrs. Bernsten obtained a Master of Science in Chemical Engineering from the University of Lund in Sweden in 2007. She started work with a biotechnology company, Chemel AB, from 2004 to 2006. She was the marketing coordinator in Chemel AB and also worked on product development. From 2008 to 2010, Mrs. Bernsten worked as a development engineer in Gambro Lundia AB, a global medical technology company, where she was responsible for product development and design control relating to dialysis technology. After her stint at Gambro Lundia AB, Mrs. Bernsten joined Rex Oil & Gas as the Rex Virtual Drilling specialist and oversaw the operations and coordinated analyses in relation to the use of Rex Virtual Drilling, until 2011. She later left to join Equus Consulting AB which she partly-owns. Equus Consulting AB is in the business of advanced mathematical analysis and Mrs. Bernsten provided consultancy services to the RexGroup as a technology specialist from 2011 to 2012. In 2012, Mrs. Bernsten re-joined the Rex Group where she continued working as the Rex Virtual Drilling specialist to Lime Petroleum Norway.
Source: Company
Page 23
To summarise, competitive strengths of the RIH Group are as follows:

Access to Rex Technologies to scan prospects. The use of Rex Technologies mitigates exploration risks by increasing the probability of discovery, thereby enabling exploration to be completed in a shorter time frame and reducing costs involved in the exploration process. The likelihood of drilling a dry well is reduced and as such, the Group can acquire equity stakes in exploration assets/ concessions cheaply in return for offering the benefits from such cost savings. The average cost of drilling a well in the areas where the US Concessions are located is approximately US$1m, approximately US$50m in areas where the Middle East Concessions are located, whereas it could be as high as US$100m in Norway. Thus, the potential advantages of drilling the well at the right location using Rex Technologies are a potential deal clincher for the Group. Rex Technologies is an important factor in securing more concessions to drive the Groups future growth. Rex has so far been successful in procuring concessions in the Middle East, Norway and participating interests in the USA mainly because of the use of Rex Technologies. Rex Technologies currently has the capacity to screen and process geological data, and RIH can select potential bids for new licences or farm-in to existing exploration permits based on this data. Locations of existing portfolio of assets provide comfort. Current concessions are located in politically stable countries with well-developed oil & gas infrastructure. Operating in a stable environment reduces any operating risks stemming from politically instability, including civil wars, coups, guerrilla activities and terrorist attacks. In addition, the existing concessions have access to well-developed oil and gas infrastructures including oil and gas pipelines. These are also areas with potential. The aggregate area in which the Group holds rights to explore in the ME, Norway and US is approximately 24,422.6 sq km. These concessions are located in areas where there are known reservoirs of oil and gas. The United Arab Emirates and Oman are among the largest crude oil producers in the Middle East. Further, the US Concessions are proven to have oil and gas resources, and the Norwegian Concessions are located in a region in Norway where several oil and gas discoveries have already been made. Thus, there is potential for successful explorations in the current exploration areas. This belief is further enhanced with positive results obtained from the use of Rex Technologies in certain of the concession areas. Location of ME assets on map
Source: Hibiscus Petroleum Annual Report
Location of Norway assets on map
Source: Hibiscus Petroleum Annual Report
Diversified asset base. The Groups portfolio is spread across concessions in the US, Norway and Middle East. While the concessions are currently located in politically stable countries, a geographically diversified portfolio spreads out any potential political or jurisdiction-related risks further. Also, the current diversification across development assets in the US and exploration assets in the ME and Norway provides a potential structure of a recurrent earnings base plus value creation from oil & gas discoveries.
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Business model limits financial commitments. Oil & gas prospecting is usually a capital intensive game. Broadly, RIHs model is to farm into concessions at an early stage at low costs in return for using its proprietary technologies. In Norway, the operations are supported by the Norwegian petroleum fiscal system with the reimbursement of 78% of exploration expenses every year, regardless of production. In areas like the ME where it holds majority stakes, it will seek to farm out stakes to partners before the project reaches the development phase. Lime Petroleum Plc, has already, by attracting investors, raised approximately US$90 million to be used toward exploration activities in the ME Concessions. Lime Petroleum Plc will not require any additional financing in the near term as it has sufficient funds for its current purposes in 2013. Over the longer term, sale of stakes to strategic partners will help raise funds for drilling capex.
The activities in the USA also require minimal additional financial commitments due to the partnership with Fram and Loyz Oil. In terms of operations, the Group is able to limit risks by provision of drilling services through its joint venture with Loyz USA. Strong commitment from strategic partners. As discussed earlier, RIH has partnered with Fram and Loyz Oil in relation to the US Concessions, and with Hibiscus Petroleum and Petroci Holding in relation to Lime Petroleum Plc, and also North Energy in relation to the Norwegian concessions. These partnerships allow RIH to build an international network to source for new investment opportunities and work with funding made available from partners who are financially strong, which in turn reduces the Group's risk exposure. The Group is also able to tap into deep operational expertise of these local partners and management of the concessions is carried out efficiently with requisite experience and personnel.
Selected strategic partners of Rex International Holding

Partner Fram Exploration ASA Loyz Energy Involvement Partner in US leases Partner in US leases and drilling JV Business Fram exploration Is a Norwegian oil company with mature assets in the US and in Trinidad. Loyz Energy is a Singapore-based company on its way to establishing itself as a junior independent oil & gas player across the Asia-Pacific region. Petroci Partner in Oman Petroci is the national oil company of Cote DIvore (Ivory Coast) active in the whole value chain of the O&G industry from exploration to production. North Energy ASA Partner in Norway North Energy is a Norwegian oil company focusing on assets located on the Norwegian Continental Shelf. North Energy is quoted on the Oslo Stock Exchange. The company is partner in more than 20 offshore licences in Norway. Hibiscus Petroleum Strategic investor in Lime Hibiscus Petroleum is a listed Special Purpose Acquisition Company (SPAC) targeting low risk Exploration and Production onshore and shallow water offshore opportunities that have high upside potential. Schroders Investor Schroders is a private bank which manages US$327bn on behalf of institutional and retail investors, financial institutions and high net worth clients from around the world. BGP Seismic data provider BGP is a leading seismic company providing seismic acquisition and processing. Lime and BGP have cooperated on complex marine surveys in Oman, Sharjah and Ras al-Khaimah in the Middle East.
Source: DBS Vickers
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Key Risks
Limited track record. The Group has limited track record of only 2 years, and there is no past performance to analyse and extrapolate for investors. No oil production as yet. Most of the Groups concessions are in the exploratory or development phase, and no commercial production of oil has started yet. This again limits future visibility to an extent. Validation of Rex Technologies still has some way to go. While the technology has a lot of believers already and to date has delivered 100% accurate blind and live test (where the Group decided not to invest) results, the Group is yet to invest its own money to drill a well based on location arrived at after using Rex Technologies suite of software. Though blind tests on existing well locations and no go on live tests have proved very accurate, a concrete track record of successful wells using the proprietary technology is yet to be demonstrated. Rex Technologies may not work if data is inaccurate. The accurate use of Rex Technologies depends on the quality of raw seismic data, which may not be always verifiable beforehand. Technology could be replicated by third parties. While use of Rex Technologies could give the Group a head start in securing lucrative concessions, other players may catch up fast if the technology is proved to very successful. No operating expertise. RIH will not be the operator at any of its concession areas, and hence, there is no control as such over operations. Dry wells are a reality in the oil & gas industry. While Rex Technologies likely improves the chance of a successful discovery, failures cannot be ruled out. Though this may lead to capital losses in future, the fact that RIH typically has a small stake in its licence areas means that it is not exposed to the full investment costs of drilling a well. Near term catalysts dependent on success at Oman 50 Block. . Given that this is the first offshore well Rex would be drilling at its own concessions with the use of its Virtual Drilling technology, significant failure to find oil here could dampen investor sentiment, and potentially impact valuations. However, we would like to point out that even a 50% success rate of hitting oil will be a strong validation of Rex Technologies and investors should not read too much into the success or failure of one well in Oman. Risk of renewal of IP licence agreements. Pursuant to the IP Licence Agreements, the Group is granted an exclusive licence by Rex Technology Management, the owner of Rex Technologies, to utilise Rex Technologies for the purposes of oil & gas E&P activities in all areas barring a few mentioned below. The term of the licence, however, is initially 5+3 years, with an automatic renewal clause. So investors should note that the Rex Technologies suite is not owned by RIH, but rather licenced for use from Rex Technology Management, which is in turn owned by Rex Partners. While the licence should automatically roll over every 5 years, it will lapse if the parent cos stake in RIH falls below 15%. Thus, there remains an element of uncertainty in the long term use and access of Rex Technologies by the RIH Group. Conflicts of interest with parent company. RIH may face conflicts of interest with Rex Partners, as the parent company also has interests in oil and gas E&P assets in certain areas. Rex Partners is currently involved in E&P activities in the West Africa region. In addition, Dr Karl Lidgren, non-executive Director of RIH, is a nominee of Rex Partners and a controlling shareholder of Rex Partners. To mitigate the risks of potential competition between RIH and Rex Partners, Rex Partners has, on behalf of itself and the companies in its group, undertaken to provide a right of first refusal to RIH in respect of exploration asset opportunities in any territory in the world save for Morocco, Mauritania, Senegal, Cape Verde, Guinea Bissau, Gambian, Sierra Leone, Liberia, Guinea, Ivory Coast, Ghana, Togo, Benin, Nigeria, Cameroun, Equatorial Guinea, Gabon, Congo-Brazzaville, the Kingdom of Saudi Arabia and the offshore areas associated with these countries. These excluded regions are jurisdictions where Rex Partners currently operates. Risks to oil price sustainability. Any potential decline in oil prices in the future will affect earnings and valuations. Particularly, the successful development of shale gas formations in the US/ Canada over the medium to long term could pose significant risks to oil prices. However, it must be mentioned that we see RIH as not so much a play on the oil price environment but rather in its ability to deliver value through better ROI over time in the E&P value chain. For an overview of the oil market and oil price outlook, please refer to Appendix D and E. Regulatory and environmental risks. Regulations, especially those related to environment and safety are very tight in the industry and vary across countries. Failure to meet norms could result in losses. For country-related risks, see Appendix F.
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Forecasts & Assumptions

Earnings largely derived from sale of successful wells. As discussed earlier, RIH will be embarking to drill exploration wells in Norway and the ME assets from 2H13 onwards, and we expect them to hit pay in about 1 of every 2 exploratory wells drilled, given that RIH will only be drilling in locations determined by use of Rex Virtual Drilling tools. The complete schedule of estimated drilling programme, as well as likely earnings contribution is shown in FY13-15 is given below. The sale of oil in the ground in case of successful wells will contribute to associate earnings after netting off for related operating costs, exploration costs and capex. RIHs 24% stake in Fram will also contribute to earnings, net of the annual amortisation of the value of the stake on RIHs books. Note that RIH will also be booking revenue and earnings from the 20% direct interest in Frams assets in the US, production assumptions for which are also given below.
Summary of drilling and production plans and key assumptions of success at the Groups various assets
Whitewater (Colorado) Williston Basin (North Dakota) USA-total Oman Block 50 Wells drilled Wells drilled Peak Production (bopd) Exploration well Appraisal well Exploration well Appraisal well Partial farm-out Seismic No of successful wells Exploration well Appraisal well No of successful wells 1 3 1 3 1 2 2013F 26 4 1,309 2 1 2 1 2 1 1 3 2 2 2014F 35 5 3,338 2015F 9 1 3,398
Production Assets
RAK Offshore Exploration Assets
Sharjah RAK Onshore Middle East total Norway
Norway total
Source: DBS Vickers
Revenue breakdown recurrent revenues from US and Caribbean + contribution from Norway and ME + stake in Fram
FY Dec (US$m) Revenue 20% net revenue interest in US assets Rex Caribbean revenues Total Assoc/ JV income Lime Norway Lime ME Fram US - net of amortisation Total -3.3 -0.4 -0.8 -4.5 6.3 20.4 -0.1 26.5 24.4 48.5 0.4 73.4 0.0 0.0 0.0 3.5 2.5 6.1 9.9 12.1 22.0 2013F 2014F 2015F
Source: DBS Vickers
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Drilling costs differ across regions. Exploratory and appraisal wells in Norway are expected to cost around US$90m per well, but all prequalified exploration companies in Norway, including Lime, receive a 78% tax refund on exploration and drilling costs. Hence, the net outlay for RIH is limited as Lime holds about 20% stake on average in the Norway assets, so RIH will have to fork out only US$90m x 22% x 20% x 65% or less than US$3m per well. While drilling costs in ME are much lower than Norway around US$20-22m per well in Oman and around US$50-60m in Ras al-Khaimah - there is no government support and the
larger effective stake of Lime means that RIH has a bigger part to play in terms of future funding requirements. Conservative assumptions on size of discoveries and sale valuations. We believe the reservoir sizes in Norway are likely to be about 40mmbbls each, while that in Oman around 25mmbbls and RAK Offshore around 50mmbbls. We are assuming price of oil in the ground in Norway of around US$4/ bbl, and in Oman and RAK, about US$5-6/ bbl. The lower assumption for Norway is due to the higher 78% tax rate in Norway. In terms of ROI, we believe both the Norway and ME assets should provide more than 100% returns.
Assumptions for Norway drilling programme

No of wells - exploratory No of wells - appraisal Cost of well - exploratory (net) Cost of well - appraisal (net) Total capex (US$m) Lime share (US$m) Capitalised (US$m) Released (US$m) No of successful wells Total discovery size (mmbls) Value per bbl (US$) Value of discovery (US$m) Lime share (US$m) Lime stake sale revenues (US$m) Exploration costs (US$m) Exploration costs capitalised (US$m) Earnings attributable to Lime (US$m) Earnings attributable to RIH (US$m) 7.1 -2.1 -5.0 -3.3 2013F 3 2014F 3 1 19.8 19.8 79.2 15.8 -11.9 15.8 2 80 4.0 320.0 64.0 32.0 6.5 0.0 9.7 6.3 2015F 3 2 19.8 19.8 99.0 19.8 -11.9 19.8 2 80 4.0 320.0 64.0 64.0 6.6 0.0 37.6 24.4
19.8 19.8 59.4 11.9 -11.9
1 40 4.0 160.0 32.0
Source: DBS Vickers
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Assumptions for Oman Block 50 Opening Balance No of wells - Oman Exploratory well Appraisal well Cost of well - exploratory Cost of well - appraisal Total capex (US$m) Capitalised/released Lime share (US$m) RIH share (US$m) Other costs (US$m) Size of Discovery (mmbls) Value per bbl (US$) Value of discovery (US$m) Revenue from sale (US$m) Net earnings (US$m) Earnings attributable to Lime (US$m) Earnings attributable to RIH (US$m) 10.8 -10.8 6.9 4.5 0.5 2013F 2 2 0 22.0 20.0 44.0 -44.0 28.2 18.3 0.8 25 5 125.0 125.0 49.7 31.8 20.7 0.0 0.0 0.0 0.0 2014F 1 0 1 22.0 20.0 20.0 54.8 12.8 8.3 0.5 2015F 0 0 0
0.0
-0.8 -0.5 -0.3
Source: DBS Vickers

Assumptions for RAK Offshore Opening Balance No of wells RAK Offshore Exploratory well Appraisal well Cost of well - exploratory Cost of well - appraisal Total capex (US$m) Capitalised/released Lime share (US$m) RIH share (US$m) Other costs (US$m) Size of Discovery (mmbls) Value per bbl (US$) Value of discovery (US$m) Revenue from sale (US$m) Net earnings (US$m) Earnings attributable to Lime (US$m) Earnings attributable to RIH (US$m) 6.0 -6.0 3.5 2.3 0.2 2013F 0 0 0 2014F 2 2 0 60.0 44.0 120.0 -120.0 70.8 46.0 0.8 50 6 300.0 0.0 -0.8 -0.5 -0.3 300.0 126.5 74.6 48.5 2015F 1 0 1 60.0 44.0 44.0 129.0 26.0 16.9 0.5
3.0 -3.0 1.8 1.2 0.1
-0.1 -0.1 0.0
Source: DBS Vickers
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Financials Income Statement

Positive earnings likely from FY14 earliest. Earlier, we have discussed that the topline only relates to oil revenues from 20% participation stake in US assets and the newly acquired stakes in Rex Caribbean assets, while contributions from other assets flow through the associate/ JV line. We do not foresee any significant revenues in FY13, since the drilling programme in all geographies will be at a preliminary stage and hence, we expect a loss in FY13. Proceeds from sale of oil in the ground from successful wells should contribute to positive earnings in FY14/15, as shown below, but will eventually depend on actual timing of sale of assets. Time lag between discovery of oil and revenues from sale could affect earnings. As apparent from the assumption sheets earlier, we estimate that once RIH hits oil, the sale of asset can only happen over the next 12 months or so, given that appraisal wells have to be drilled to determine the size of finding and sale process has to be initiated and completed. However, we do acknowledge that the time lag between drilling of exploratory well, successful discovery of oil and eventual sale of asset could vary widely and may lead to earnings (as shown below) getting deferred to subsequent time periods. Costs incurred to secure future growth. Exploration and evaluation expenses relate to costs incurred in acquiring and processing seismic data before bidding for licences in future. As to administration expenses, key components include staff expenses, legal and professional fees, consultancy fees including fees for Rex Technologies, and other overheads. Taxes only relate to the net revenue contribution from US participatory rights at the US federal tax rate of 35%.
Income Statement
FY Dec (US$ m) Sales Cost of Goods Sold Gross Profit Other Operating Income 2013F 0.0 0.0 0.0 0.0 (0.6) (5.9) (6.5) (6.5) 0.0 0.0 0.0 (4.5) 0.0 (10.9) 0.0 0.0 (10.9) 2014F 6.1 (0.8) 5.3 0.0 (4.4) (8.4) (12.8) (7.5) 0.0 0.0 0.0 26.5 0.0 19.0 (1.6) 0.0 17.4 2015F 22.0 (3.8) 18.2 0.0 (5.2) (9.7) (14.9) 3.3 0.0 0.0 0.0 73.4 0.0 76.6 (5.1) 0.0 71.5
Exploration & evaluation expenses Administration Expenses Others

Other Operating Expenses Operating Income Non-Operating Income Interest Income Interest Expense Share of Associates' or JV Income Exceptional Gains/(Losses) Pretax Profit Tax Minority Interests Net Profit
Source: DBS Vickers (forecasts)
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Financials Balance Sheet

Drilling programme and working capital likely financed by additional equity. RIH raised close to about US$70m of equity during its recent IPO to help finance its drilling programme across various geographies. There was also a share swap with Fram shareholders worth US$33m pre-IPO. There is no debt on the balance sheet currently and neither do we forecast any debt as E&P activities are usually high risk high return projects undertaken with equity investments. . Balance Sheet
FY Dec (US$m) Cash & Bank Balances Current Assets Intangibles Investment in JCEs/other assets Non Current Assets Total Assets Tax Provision Current Liabilities Non Current Liabilites Total Liabilities Share Capital Reserves Total Equity Total Shareholders' Equity Total Liabilities and Equity Gross Debt Net Cash (Debt) Net Debt to Equity 2013F 32.9 32.9 9.0 60.6 69.6 102.5 0.0 0.0 0.0 0.0 113.4 -10.9 102.5 102.5 102.5 0 32.9 Cash 2014F 40.7 40.7 9.0 71.8 80.8 121.5 1.6 1.6 0.0 0.0 113.4 6.5 119.9 119.9 121.5 0 40.7 Cash 2015F 34.1 34.1 9.0 113.5 122.5 156.6 5.1 5.1 0.0 0.0 113.4 38.0 151.4 151.4 156.6 0 34.1 Cash
The Groups investments in Lime Petroleum (65% stake) and Fram (24% stake) are recorded on the balance sheet as investments in JVs/ associates respectively. The investment in Fram also includes intangible assets worth about US$20m, which will be amortised over time. The Group also has 49% stake in 2 onshore drilling rigs in the US (partner Loyz has 51% stake), which will be used in the US drilling programme.
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Financials Cashflow Statement

Capex is at the JV/associate level. Since the Groups revenues from its 20% participation rights in US is net of operating expenses and capital expenditure, and contribution from Lime assets is also net of exploration expenses and drilling costs, Group capex is not visible on the cash flow statement and thus we rather choose to list the capital commitments attributable to RIH at the asset level separately in a table below. Majority of capex commitments relate to ME projects. As can be seen below, limited funds are required for US and Norway assets. If Oman drilling in FY13 is a success, that will partly help fund the RAK Offshore drilling scheduled for FY14/15. The other option is to farm out stakes in the ME projects at a later stage or by external funding at Lime level. If all goes well, special dividends likely in FY15. If things go as we predict, the Group would have built up enough cash by end-FY15 to reinvest in more projects as well as distribute excess cash to shareholders.
Cash Flow Statement

FY Dec (US$m) Pre-tax Profit Tax Paid Depreciation & Amortization Associates & JVs Inc Other Non-Cash Adjustments Changes in Non-Cash Work Cap Cash From Operations Net Change in Capex Net Change In Investments Net Change in Invmts in Assoc & JVs Dividends rec'vd from Associates & JVs Cash from Investing Activities Dividends Paid Net Change in Gross Debt Capital Issues Other Financing Activities Cash from Financing Activities Net Changes in Cash Cash at beginning of period Cash at end of period 2013F (10.9) 0.0 0.0 4.5 0.0 (6.5) (9.0) (32.0) 2014F 19.0 (1.6) 0.0 (26.5) 0.0 0.0 (9.1) 2015F 76.6 (5.1) 0.0 (73.4) 0.0 0.0 (1.8)
(9.7) 26.6 16.9 0.0 0.0 0.0 7.8 32.9 40.7
(37.7) 72.9 35.2 (40.0) 0.0 (40.0) (6.6) 40.7 34.1
(41.0) 0.0 80.3 80.3 32.9 0.0 32.9
Net estimated capex commitments

Capex (US$m) net to RIH interests US assets Norway Assets ME Assets Total 2013F 6.2 7.7 19.5 33.4 2014F 9.0 10.3 54.3 73.6 2015F 6.8 12.9 16.9 36.5
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Valuations
Based on our sum of the parts valuation for existing exploration and development assets of RIH, we derive a TP of S$1.27 for RIH. As we will examine in more detail later, the Group has 4 key sources of income (current or future) i) its 20% direct interest in 2 concession areas in the US, ii) a 24% stake in its partner, Fram, which holds 60% interests in the same US concessions, iii) a 65% stake in Lime Petroleum, which holds several exploratory licences in the Middle East and Norway, and iv) the recently acquired stakes in 3 fields in Triniadad & Tobago in the Caribbean. We derive the NAV of the US and Caribbean assets using a discounted cash flow framework, given that these assets are already under development, with commercial production starting within the next 12 months. Summary of valuation for Rex International Holdings
Sum of the Parts Valuation 20% Interest in US Assets 24% direct stake in Fram Value of 65% stake in Lime Petroleum Value of 52% stake in Rex Caribbean Overall No of shares (m) Equity Value (US$m) 67.7 48.7 765.6 122.1 1004.0 1004.7 Equity Value (S$m) 85.9 61.9 972.3 155.1 1275.1 Value per Share (S$) 0.09 0.06 0.97 0.15 1.27
For the Lime Petroleum assets, our valuation methodology is two-pronged i) a risked asset valuation of the net unrisked prospective resources contained in the Lime Petroleum portfolio as disclosed by Hibiscus Petroleum and ii) a relative valuation approach taking into consideration the average EV/ net unrisked resource multiple implied by trading valuations of its peer group comprising largely of pure exploration players listed on various exchanges around the world. We discuss the valuations in more detail in the following pages. Traditional valuation metrics like P/E, P/BV or EV/EBITDA hold little or no relevance in valuing an almost pure exploration company like RIH, since there are no significant recurring cash flows or earnings. Most of the value lies in the Groups ability to make oil & gas discoveries in its current licence areas and to secure more licences/ concessions in future.
Source: DBS Vickers Estimates
Valuation breakdown between production/ development and exploration assets of RIH

Development Assets 23.8%
Exploration Assets 76.2%
Source: DBS Vickers Estimates
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Valuations US and Caribbean assets

Key assumptions for valuing US assets. As stated above, we value the US and Caribbean assets on a DCF method, based on the following global, as well as concession specific assumptions for the 2 key concession areas to be developed in the US Whitewater in Colorado and Williston Basin in North Dakota. The valuations under different future oil price scenarios is also summarised in a table on the following page. Global assumptions are as follows: WACC of 10% (global O&G industry standard) Oil price as per scenarios below Oil price discount US$10 to Brent Crude Reserves basis 2P (Proved and Probable) Chance of success 100% Whitewater key assumptions: Ramp up 3 years Plateau 1 year Decline 5 years Opex US$5/bbl Capex US$1m per well, 70 wells over 3 years Infrastructure costs US$3m Williston Basin key assumptions: Ramp up 1 years Plateau 1 year Decline 3 years Opex US$3.5/bbl Capex US$2m per well, 6 wells over 3 years Infrastructure costs US$0.6m
Different oil price scenarios considered in deriving risked technical asset value of US assets of RIH
2013 Forward Curve and Flat Forward Curve and Escalating EIA Reference Case 100 100 100 2014 97 97 102 2015 97 97 102 2016 97 99 105 2017 97 101 109 2018 97 103 113 2019 97 105 117 2020 97 107 122 2021 97 109 126 2022 97 111 132 2023 97 114 137
Source: Bloomberg Finance L.P, EIA, DBS Vickers
Graphical representation of different oil price scenarios

US $/bbl 140 130 120 110 100 90 80 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Forward Curve and Flat Forward Curve and Escalating EIA Reference Case
Source: Bloomberg Finance L.P, EIA, DBS Vickers
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Valuation of US assets net to RIH under base case oil price scenario (Forward Curve and Escalating)
US$m Forward Curve and Escalating 20% Interest in US Assets 67.7 24% direct stake in Fram 48.7 Total 116.4
Note: We value the 24% stake in Fram as 24% x 60% Interest in US Assets, or an effective 14.4% interest in US Assets Source: DBS Vickers
Valuation of Caribbean assets net to RIH under base case oil price scenario (Forward Curve and Escalating)
US$m Original oil in place Recovery factor Assumed 2P reserve base NPV Valuation South Erin Block 20.0 19.5% 3.9 Cory Moruga Block E 40.0 20.0% 8.0 11.9 234.8 6.2 122.1 Rex Caribbean Oil 60.0 52% stake in Rex Caribbean 31.2
Source: DBS Vickers
Secnario analysis - valuation of US and Caribbean assets net to RIH under different oil price scenarios
US$m Forward Curve and Flat Forward Curve and Escalating EIA Reference Case US Assets 106.5 116.4 136.7 Rex Caribbean stake 92.8 122.1 177.9 Total 199.3 238.5 314.6
Source: DBS Vickers
Our valuation is roughly in line with value per barrel metrics of US producing companies. As seen in the table below, E&P companies listed in the US are trading at a EV/ reserve multiple of close to 19x on average. There is however some variance Implied EV/ reserve valuation of US assets
US$m US Assets Rex Caribbean Total 116.4 122.1
observed in terms of this trading multiple, as a result of allowances for a range of factors like phase of production, geological factors, opex and capex differences etc.
Net 2P reserves attributable to RIH (mmboe) 5.7 6.2
Implied EV/ reserve 20.4 19.7
Source: DBS Vickers
EV/ reserve valuation comparison of selected listed US oil & gas producers
Mkt Cap (US$m) 240 3263 794 3619 13340 25987 24287 Net Debt (US$m) 123 373 1861 2957 1615 3492 4664 Reserves (mmboe) 30 201 30 288 670 1100 3000
Price (Local $) Abraxas Petroleum Rosetta Resources Forest Oil Newfield Exploration Southwestern Energy Pioneer Natural Resources Devon Energy Corporation US average* 2.6 51.7 6.48 26.05 37.71 184.6 58.86
EV (US$m) 363 3636 2655 6576 14955 29479 28951
EV/Reserve 12.1 18.1 87.2 22.8 22.3 26.8 9.7 18.6
* average excludes outliers Source: Bloomberg Finance L.P, Prices as of 18th September 2013
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Valuations Lime Petroleum assets

Valuing the unrisked prospective resources of Lime. As per information contained in the annual report of Malaysia-listed Hibiscus Petroleum, which holds the remaining 35% interest in RIHs 65% owned subsidiary, Lime Petroleum, the net unrisked prospective resources attributable to the licences in Middle East and Norway amount to about 2,990mmboe. Using a geological chance of success (GCoS) of finding oil of about 20% - which is higher than usual range of 10-15% used by traditional geologists to account for the higher success rate attributable to use of Rex Technologies and a chance of commercialisation of 40%, and a conservative US$4-5/bbl price of oil in the ground in Norway and ME, we arrive at a valuation for the 100% enterprise value of Lime at US$1,178m. This implies a value of about US$766m for RIHs 65% stake in Lime. Oil in the ground valuation for ME & Norway assets
Lime - net unrisked resources* GCoS^ Lime - net risked resources (mmboe) Chance of Commercialisation Value of oil in the ground (US$/boe) Implied valuation of assets (US$m) Total Lime EV (US$m) RIH 65% stake valuation (US$m) Norway 226.1 20% 45.2 40% 4.0 72.4 1,177.8 765.6 ME 2763.6 20% 552.7 40% 5.0 1,105.4
* Data obtained from Hibiscus Petroleum annual report ^ Higher than traditional estimate but still much lower than Rex Virtual Drilling success rate of 85% published by North Energy Source: DBS Vickers
Sensitivity of above valuation to changes in chance of commercialisation and value of oil in the ground in the ME
Chance of commercialisation (%) Geological Chance of Success (%) 20% 10% 20% 30% 226.7 406.3 585.9 30% 316.5 585.9 855.4 40% 406.3 765.6 1124.8 50% 496.1 945.2 1394.3 60% 585.9 1124.8 1663.7
Source: DBS Vickers
Financial market pricing of unrisked prospective resources acts as a benchmark. Again, As per information contained in the annual report of Hibiscus Petroleum, the net unrisked prospective resources attributable to Limes licences in Middle East and Norway amount to about 2990mmboe. If we look at valuations of pure oil & gas exploration companies listed on
various exchanges in the world, we see an average EV/ bbl of unrisked resource of about US$0.4/bbl. If we apply this metric, we can derive a valuation of US$1196m for Lime, implying a valuation of US$777m for RIHs 65% stake in Lime. However, we believe this method may not fully reflect the advantage that Rex Technologies brings to the table for RIH.
EV/ bbl net unrisked resource valuation comparison of listed exploration companies listed in different exchanges
Company BowLeven Afren Falkland Oil & Gas Gulf Keystone Hardy Oil & gas Tower Resources UK Average Rocksource Hibiscus Petroleum Mirach Energy Area of operation Africa Africa South Atlantic Iraq India Africa Price (local $) 59.25 143.1 28.5 217.75 98 1.25 Mkt Cap (US$m) 281 2564 146 3031 120 51 Net Debt (US$m) -142 795 -174 -19 -29 -4 EV (US$m) 138 3360 -28 3013 91 46 Net Unrisked Resources 203 7127 5000 13700 82 458 EV/ bbl Unrisked Resource (US$) 0.7 0.5 nm 0.2 1.1 0.1 0.4 0.2 0.2 1.7
Norway Norway, ME Indonesia
1.11 1.46 0.48
17 234 355 -36 7
17 198 362
105 1046 214
Source: Bloomberg Finance L.P; Prices as of 18th September 2013
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Appendix A: Classification of Reserves and Resources

Resources Classification Framework
Source: Society of Petroleum Engineers
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Resources Classification Terms

Term Total Petroleum Initially In Place Description That quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes the quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production plus those estimated quantities in accumulations yet to be discovered (equivalent to total resources). That quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. Production is the cumulative quantity of petroleum that has been recovered at a given date. While all recoverable resources are estimated and production is measured in terms of the sales product specifications, raw production (sales plus non-sales) quantities are also measured and required to support engineering analyses based on reservoir voidage (see Production Measurement, section 3.2). Multiple development projects may be applied to each known accumulation, and each project will recover an estimated portion of the initially-in-place quantities. The projects shall be subdivided into Commercial and Sub-Commercial, with the estimated recoverable quantities being classified as Reserves and Contingent Resources respectively, as defined below. Those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must further satisfy four criteria: they must be discovered, recoverable, commercial, and remaining (as of the evaluation date) based on the development project(s) applied. Reserves are further categorised in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterized by development and production status. Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but the applied project(s) are not yet considered mature enough for commercial development due to one or more contingencies. Contingent Resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality. Contingent Resources are further categorised in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterized by their economic status. That quantity of petroleum estimated, as of a given date, to be contained within accumulations yet to be discovered. Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated chance of discovery and a chance of development. Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity. That portion of Discovered or Undiscovered Petroleum Initially-in-Place quantities which is estimated, as of a given date, not to be recoverable by future development projects. A portion of these quantities may become recoverable in the future as commercial circumstances change or technological developments occur; the remaining portion may never be recovered due to physical/chemical constraints represented by subsurface interaction of fluids and reservoir rocks.
Discovered Petroleum Initially In Place
Reserves
Contingent Resources
Undiscovered Petroleum Initially In Place Prospective Resources
Unrecoverable
Source: Society of Petroleum Engineers
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Appendix B: The IP Licence Agreements

The RIH Group has entered into the following agreements with Rex Technology Management in respect of the use of Rex Technologies. Pursuant to the IP Licence Agreements, the Group is granted a licence by Rex Technology Management, the owner of Rex Technologies, to utilise Rex Technologies for the purposes of exploring and producing oil and gas. Rex Technology Management will provide use of Rex Technologies to RIH for as long as Rex Partners or any of its associates, and Dr. Karl Lidgren and Mr. Hans Lidgren or any of their associates, hold in aggregate, whether directly or through a deemed interest, a minimum of 15% of the total voting rights in the company.
The IP licence agreements of the Group and its key subsidiaries with Rex Technology Management
the licence agreement dated 4 April 2013 entered into by RIH (RIH IP Licence Agreement); the licence agreement dated 21 March 2013 entered into by Lime Petroleum Norway (Lime Norway IP Licence Agreement); the licence agreement dated 21 March 2013 entered into by HiRex (HiRex IP Licence Agreement); and the licence agreement dated 24 October 2011 entered into by Lime Petroleum Plc (Lime Petroleum IP Licence Agreement)
Information on the key terms of each of the IP Licence agreements

Key Terms Territories RIH IP Licence Any territory in the world save for Morocco, Mauritania, Senegal, Cape Verde, Guinea Bissau, Gambian, Sierra Leone, Liberia, Guinea, Ivory Coast, Ghana, Togo, Benin, Nigeria, Cameroun, Equatorial Guinea, Gabon, Congo-Brazzaville, the Kingdom of Saudi Arabia and the offshore areas associated with these countries US$312,500 for FY2013, and an aggregate of US$625,000 for the next 12-month period. US$75 per sq km and such charges shall be subject to the same annual increment as the cost for the use of Rex Virtual Drilling US$75 per sq km and such charges shall be subject to the same annual increment as the cost for the use of Rex Virtual Drilling Lime Petroleum IP Licence Middle East which includes Bahrain, Egypt, Iran, Iraq, Jordon, Kuwait, Lebanon, Oman, Palestine (Gaza strip and West Bank), Qatar, Saudi Arabia, Syria, Turkey, United Arab Emirates, Yemen and offshore areas associated with these countries HiRex IP Licence Brunei, Myanmar, Malaysia, Indonesia, Thailand, Vietnam, Cambodia, the Philippines, Australia, New Zealand and Papua New Guinea and offshore areas associated with these countries Lime Norway IP Licence Norwegian Continental Shelf
Licence Fees for Rex Virtual Drilling (subject to annual inflation adjustments) Licence Fees for Rex Seepage
Hourly rate of US$150 for project engineers and US$300 for the project manager Hourly rate of US$150 for project engineers and US$300 for the project manager Hourly rate of US$150 for project engineers and US$300 for the project manager
US$1.25m for the first 12 months from the date of the Licence Agreement, and US$2.5m for the second 12-month period Charged separately on a case by case basis, where such charges will be pre-approved by HiRex in writing Charged separately on a case by case basis, where such charges will be pre-approved by HiRex in writing
US$625,000 for FY2013, and subsequently for every half year period until 31 December 2014 Charged separately on a case by case basis, where such charges will be pre-approved by Lime Petroleum Norway in writing Charged separately on a case by case basis, where such charges will be pre-approved by Lime Petroleum Norway in writing
Licence Fees for Rex Garvity
Source: Company
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Appendix C: Oil & Gas Fiscal Regimes Oman

Oman Fiscal Terms
Category Licence Terms Equity Participation Bonuses, Rentals & Fees Comment The exploration period of PSCs is typically between 3-6 years. The exploitation period of PSCs is typically 20 years. None. Bonus are payable upon making a commercial discovery, which is generally less than $2m. Production bonuses payable at negotiated levels of production, advancing in equal increments, typically from US$1m to US$7m. Annual rental payable until commencement of regular exports from contract area. Royalty PSC Cost Recovery None. Cost recovery ceiling typically of 40% for oil developments and60% for gas developments. Negotiated: Oil 50% Gas 60% All legitimate operating and capital costs employed in exploration, development and production are cost recoverable. Bonus payments, Omani and foreign taxes and interest charges on funds borrowed are explicitly non-recoverable. Capital expenditure assumed depreciated on a straight-line basis over 5 years. Unlimited cost carry forward. PSC Profit Sharing Production remaining after cost recovery is divided between the contractor and government with rates normally fixed at a single level. Oil Rate (m bpd) Contractor Government 10> 30% 70% 20 25% 75% 20< 20% 80% Gas - 35% share applies until production exceeds 150mm cfpd, when a 15% share applies. Corporate Income Tax Ring Fencing Product Pricing 55% paid on behalf of the contractor by the Government. Production sharing is calculated at the PSC level. In November 2006, the Ministry of Oil and Gas and Dubai Mercantile Exchange (DME) announced that Oman would adopt forward pricing of its crude oil based on the daily settlement price of the DMEs Oman Crude Oil Futures Contract The Government retains the right to off-take non-associated gas for domestic consumption under a separate gas sales agreement at fair market value.
Source: Fox-Davies
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Appendix C: Oil & Gas Fiscal Regimes United Arab Emirates

UAE Fiscal Terms
Category Licence Terms Comment Negotiations for exploration and production acreage conducted directly with the Governments of the individual Emirates or with the Petroleum Councils where they exist. Detailed fiscal terms are negotiable on a case-by-case basis The contract term varies by Emirate. Recent agreements in Abu Dhabi, Sharjah and Dubai have had terms of 35 years, while agreements in Umm Al Qaiwain and Ajman have had terms of 25 and 40 years, respectively. The term of exploration phases can also vary. Recent contracts in Abu Dhabi have ranged from 8 to 10 years with a company having the right to relinquish all or any part of the concession area at any time. Equity Participation Direct state participation option is limited to Abu Dhabi and Sharjah where the State can exercise a participation option of up to 60%. To date, this option has only been exercised on three occasions. In Abu Dhabi, signature bonuses have ranged from US$1m to US$5m while in other Emirates they generally range from US$0.2m to US$0.5m. Production bonuses are commonly payable upon commercial production start-up and at tiered production levels, typically 100m, 200m and 500m bpd. Bonuses in Abu Dhabi have ranged from US$2m to US$10m whilst other Emirates range from US$1.5m to US$5m. Discovery bonuses range from US$2m to US$5m in Abu Dhabi and from US$1m to US$2m in other Emirates. Annual rentals are generally payable up until first production with annual payments typically in the US$0.1m to US$0.3m range. They are commonly increased during the interval between commercial discovery and first production. Royalty Varies by emirate. Negotiated: Ra's al Khaimah 0% Sharjah: 12% for first 10mbpd, increasing to 20% above 200mbpd The UAE does not generally provide for cost recovery. Emirate Contractor Ra's al Khaimah 40% Sharjah 100% Government 60% 0%
Bonuses, Rentals & Fees
PSC Cost Recovery PSC Profit Sharing
Corporate Income Tax
Income tax is levied on gross revenue, less royalty, operating costs and depreciation. The tax rate varies between 55% and 85% and may be linked to production rates. Tangible capital costs are depreciated on a straight-line basis over ten years for oil and over five years for gas Losses may be carried forward indefinitely. Negotiated: Ra's al Khaimah 47% Sharjah 50% for the first 10mbpd, increasing to 80% beyond 50mbpd Royalty and tax are calculated at the concession level. For liquids, royalty and tax calculations are commonly based on the posted price for the crude. The Government Sales Price is generally fixed at 93% of the posted price.
Ring Fencing Product Pricing
Source: Fox-Davies
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Appendix C: Oil & Gas Fiscal Regimes Norway

Norway Fiscal Terms
Category Licence Terms Comment Non-exclusive exploration licence 3 years. Exclusive exploration licence period 3-6 years + a possibility of a 4 year extension. Production licence 15 years. Equity Participation The State reserves the right to take direct participation, at varying rates, through state entity Petoro, which manages the States Direct Financial Interest (SDFI). Average SDFI interest ~20% (where is has elected to participate), paying its full share of costs from day one. The State also has a major, indirect participation through its majority ownership of Statoil, the NOC. Statoil has no mandatory right to participate in licences. Bonuses, Rentals & Fees No signature or production bonuses are payable. Annual rentals are NOK4,000 ($667) per sq km in the exploration phase, increasing annually during the production phase to a maximum of NOK121,500 (US$20,250) per sq km. Royalty PSC Cost Recovery PSC Profit Sharing Corporate Income Tax None payable for fields approved after 1 January 1986. Royalty was previously payable on older fields but has now been abolished. Corporation Tax (CIT) is levied at 28% of revenue less operating costs and depreciation. Offshore production assets depreciated straight line over 6 years, measured from date of purchase. Leased assets may be capitalised according to a deemed purchase price. Exploration costs can either be expensed or capitalised without uplift. Tax value of exploration losses are reimbursable in the tax year that expenses are incurred, even if the explorer has no taxable income that year. Losses are carried forward with interest at after-tax risk free rate. Levied at 50% of taxable income for CIT purposes, with an additional 30% uplift on capital expenditure over 4 years (i.e. 7.5% p.a.). CIT is not deductible for Special Tax and vice versa. Minor CO2 and NOx levies are payable on gas flared, gas or oil/condensate used for power generation and nitrous oxide emissions. Companies can consolidate their upstream activities for income tax and special tax purposes. Onshore losses may not be set against offshore income. Norm prices are used to calculate revenue for tax purposes, which are fixed by government taking account of market conditions and reference transactions.
Additional Profits Tax Other Taxes Ring Fencing Product Pricing
Source: Fox-Davies
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Appendix C: Oil & Gas Fiscal Regimes USA

USA Fiscal Terms
Category Licence Terms Comment Onshore leases in the US are owned by federal government, state governments and private landowners. Federal onshore leases are awarded via competitive bidding rounds held by the state Bureau of Land Management every quarter. Federal leases are awarded for an initial term of five years. Most states have their own lease sales normally held via competitive bidding rounds. The lease terms and regulations for state leasing vary by state. A cash bonus bid is required to secure a lease during a state lease auction round. Some leases are as short as two years, while others require operators to maintain a certain level of drilling or production in order to hold the lease. In many states, much of the mineral rights are leased by private landowners, who rarely hold formal auctions or publish lease terms. Equity Participation Bonuses, Rentals & Fees None Most federal and state leases are awarded to the highest bonus bidder. Leases issued on federal and state owned leases incur annual area rental fees and most states also levy drilling permit fees. Royalty State Oil Colorado 12.5% North Dakota 6.5% Gas 12.5% $0.1143/mcf
Property Tax PSC Cost Recovery PSC Profit Sharing Federal Income Tax
Most states also levy an ad valorem property tax on the book value of assets (i.e. tangible capital expenditure less depreciation (calculated on a straight line basis over the economic life of the asset). Federal Income Tax (FIT) is levied at 35% on gross revenue less royalty, State taxes, E&A costs, operating costs and depreciation. Development costs are depreciated using the double declining balance method, switching to straight line as soon as that allowance is greater. Alternatively, development costs may be depreciated using the unit of production method and taxpayers may elect to expense drilling and other intangible development costs. In 2009, the government announced the removal of accelerated depreciation of drilling costs but at the time of writing this had not been enacted.
State Income Tax Ring Fencing
State Income Tax (SIT) is levied on taxable income for FIT purposes (before state income tax deductions). Royalty and severance tax are levied at the lease level. Companies consolidate their activities in the state for state income tax and globally for FIT purposes.
Product Pricing
Free market pricing.
Source: Fox-Davies
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Appendix D - The oil market demand and supply outlook

Oil is used in a wide range of applications, but its principal use is as a transportation fuel, accounting for approximately 63% of demand in OECD nations and 50% in non-OECD nations, as can be seen below. Uses of Crude OECD Nations Total oil demand in 2012 was ~89mm bpd, up 2.0% on 2011s demand of ~87mm bpd. As can be seen in table on the following page, the US is the largest single consumer of crude oil (~21%), followed by China (~11%) and Japan (~5%). Uses of Crude Non-OECD Nations
Source: OPEC World Oil Outlook 2012, Fox-Davies
Global Oil Demand Trends
Source: EIA
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Major oil consuming countries

Country USA China Japan India Russia Brazil Saudi Arabia Germay Canada South Korea Consumption (mmbpd) 18.9 9.8 4.5 3.4 3.1 2.7 2.6 2.4 2.3 2.2 % of overall consumption 20.9% 11.0% 5.3% 3.9%
Source: EIA
While oil demand is dependent on GDP, the extent of that dependence is limited. Based on historical data, indusry expert Fox Davies Consultants (FDC) estimates that oil demand has varied only between ~-5% to ~+4% compared to GDP growth, which varies between ~-6% to ~+18%. There have only been 3 years since 1980 that GDP and oil demand have been negative, and the maximum decline in oil demand observed is ~-5%. Thus, while there is a correlation between GDP and oil demand, it is noticeable that oil demand is not just driven by GDP but other effects. The impact of the 2008 Financial Crisis on oil demand was not as extensive as had been observed in the First Oil Crisis (1972 1975) and Second Oil Crisis (1979 1980). Oil demand declined from 86mm bpd (2007) to 85mm bpd (2009) and didnt last as long as demand returned to levels above those in 2007, to 87mm bpd by 2010. Demand from emerging economies has been key in recent years. In previous oil crises, demand from OECD countries was the key driver, which resulted in more volatility as there was a higher discretion content to oil demand. Over the last decade, growth in the Non-OECD nations has been the key demand driver for oil, driven by growing economic activity, as well as rising affluence of the middle and working classes. This is demonstrated by the fact that specific oil demand, measured as barrels per capital (bbl/capita), for OECD nations, has fallen by 14% to ~14bbl/capita, while for Non-OECD nations it has grown 3% to 2.7bbl/capita.
Demand in the neat term may be sluggish though. In the February Oil Market Report, the IEA revised its 2013 demand estimates downwards to 90.7mm bpd citing downward revisions in the International Monetary Fund (IMF) forecast of economic activity. The IMF trimmed its global GDP growth to 3.5% for 2013; growth is expected to exceed 4.5% from 2014 onwards. Commensurately, the IEA expects demand to grow annually at between 0.7 1.3mm bpd between now and 2017 (MediumTerm Oil Market Report 2012), with demand driven by growth in transport fuels from the continued growth in Asian markets. But Asian demand will contiue to offset weakness in US/ Europe. Demand in OECD countries is expected to continue its decline, from highs in 2005. However, this is expected to be more than offset by growth in Non-OECD countries, especially those in Asia, which is expected to account for 70% of that increase. The transportation sector is the key to future oil demand growth as there are limited options to switch out of existing liquid fuels switching possibilities in this sector. This is expected to be exacerbated by the increased gentrification of the Non-OECD nations, as higher disposable incomes result in greater demands for mobility. The low price elasticity, together with, in many countries, the presence of a large tax buffer, limits the impact upon demand of the higher oil price.
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Total global oil production grew 2% in FY12, amounting to 89.0mm bpd, up from 2011. While there were a number of countries that increased production, the single largest contributor to the rise was Libya, which recovered from the shutdowns enforced by political tensions earlier in 2011 to accountfor 13.1% of the increase in production. Global oil production trend (mmbpd)
Based on 2012 preliminary production estimates Saudi Arabia, the US and Russia produce ~37% of the worlds overall supply. Of this total, OPEC accounts for 41%. Of the countries that currently comprise RIHs portfolio of assets, the United Arab Emirates produces 3.6%, Norway 2.1% and Oman 1%of world total.
Source: EIA
Increasing trend so far in 2013. The IEA reported that global oil production in February 2013 increased by 90m bpd to 90.8mm bpd, led principally by a 150m bpd increase in OPEC production; increased Iraqi supply was the main factor behind the growth in OPECs production gain. Amongst Non-OPEC members, there is expected to be a mixed outlook. In mature regions such as Africa, Europe and Asia, investment in new production facilities is expected to only partially counterbalance the impact of declining fields, especially in Europe, where higher costs and a stricter regulatory framework could hamper production growth. Unconventional oil coming to the fore in the US and Canada, though the impact of new production will be offset to some extent by declines in production from existing fields. the recent trend of production increases driven by growth in unconventional resources, is expected to continue in th US and Canada and could be further bolstered by new ultra-deep
water projects which are either being developed or are planned to come on-stream between now and 2016. Brazil leading the way for offshore development in South American waters. Latin Americas production of crude is expected to grow strongly as a significant number of fields in Brazil are all under development and set to add to existing production by the end of 2013. Over the medium-term, however, the most significant uncertainty in supply outlook is US shale oil production. While there are significant resources associated with shale oils such as Bakken, Eagle Ford and Niobrara, there continues to be significant questions regarding the extent to which these resources can be converted to sustainable production at current oil prices, given the high decline rates as well as the higher costs associated with mediating the environmental concerns and the development technology required to access this production.
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Appendix E - Oil prices - where do we go from here?

. Historical oil price trend (US$/bbl, adjusted for inflation)
Source: EIA
The recent trend in oil prices suggests that the global oil market has entered a period of increased scarcity. The origins of this scarcity can be traced to the increase in new demand, which has been driven by growth in Non-OECD nations, against a backdrop of flat to modestly declining production. Historically, this had been deemed as acceptable by the oil markets, due to fact that there was believed to be sufficient spare production capacity in the global system. However, at current levels, there is believed to be limited spare production capacity, as refining technology (such as upgrading heavier fractions to lighter fractions) and production capacity are approaching their respective limits. Non-fundamental factors contributing as well. In addition to the supply/demand balance, the rise in oil price has been exacerbated by a number of additional factors, such as the rising geopolitical tensions in the Middle East and Syria, the increasing costs of production as well as the increased participation of commodity traders and speculators in the marketplace. But near term outlook may not be too rosy. The immediate outlook is dominated by the aftermath of the financial crisis and the on-going struggles related to the global economic recovery. The main focus is currently on the Euro-zone debt crisis. While debt levels and budget deficits are generally falling, growth expectations are being repeatedly revised downwards and doubts remain as to the ability of the region to manage its sovereign debt, even amidst austerity measures.
Growth prospects in western countries hampered by austerity measures. The severe austerity measures put in place have also adversely impacted growth prospects, with the risk of entering into a vicious circle and snowballing effect. It should also be noted that the debt crisis in the Euro-zone has negative implications for growth prospects elsewhere, in particular through strong trade interlinkages. Spare capacity exists in near term. As has been highlighted previously, OPEC crude oil spare capacity is expected to rise markedly as 2013 progresses, a trend that will continue into 2014. Given that OPEC regulates its supply on the basis of demand and supply, as well as price, demand for OPEC crude is expected to decline. Oil prices are sensitive to excess capacity, hence the probability that oil prices will weaken from these levels has been elevated. The fundamental supply / demand balance will, however, be counter balanced to some extent by heightened geopolitical tensions. In the absence of any significant changes, in the near-term, prices are expected to decline as 2015 approaches. EIA estimate that the oil price will decline to ~$95/bbl by 2015. In the longer-term, however, all industry commentators point towards declining production from existing fields, being replaced by higher cost production, as the main reason for its assertion that prices will then steadily climb to levels of around $165/bbl beyond 2015 in a blue skies scenario.
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Appendix F: Country Risks

Norway
Category Sovereign Risk Currency Risk Rating AAA AA Description The stock of public debt is moderate, forecast at 44% of GDP in 2013 and 42% of GDP in 2014, and more than offset by Norways large sovereign wealth fund, in which it invests petroleum earnings. The krone can be volatile, fluctuating according to oil prices and risk appetite. Given Norways large external surplus, the krone is fundamentally a strong currency and will continue to be considered a safe haven in 2013. The impact of the petroleum sector on the exchange rate makes the non-hydrocarbon economy less competitive, although this is mitigated by keeping much petroleum revenue in offshore investments.
Political Risk
AA
Oman
Category Sovereign Risk Rating A Description Oman's public debt as a proportion of GDP is much lower than the median of other A-rated countries, as the government primarily uses oil revenue for project financing (rather than contracting debt). High oil prices will ensure fiscal and current-account surpluses, thereby supporting the rating. Foreign-exchange reserves provide comfortable import cover (equivalent to around five months). The Central Bank of Oman will maintain the riyal's peg to the US dollar during the forecast period. The political situation in Oman has stabilised following the implementation of political reforms and economic measures to boost employment, but the risk of further unrest cannot be ruled out if the reform process grinds to a halt.
Currency Risk Political Risk
A BB
UAE
Category Sovereign Risk Rating BB Description The score for sovereign risk is underpinned by fiscal-account surpluses and the large stock of foreign assets held by the UAE's sovereign wealth funds. Dubai entities have around US$9.4bn in debt maturing in 2013 but should be able to avoid refinancing problems, although the euro zone crisis poses a risk. The UAE dirham will be susceptible to fluctuations in the US dollar, to which it is pegged. However, with the dollar not expected to suffer major weakness in 2013, especially as the euro zone crisis continues, there is no risk of the dirham being de-pegged. The UAE's location presents considerable political risk. Geopolitical tensions involving Iran's nuclear programme will remain high despite the restart of talks.
Currency Risk
BBB
Political Risk
BB
USA
Category Sovereign Risk Rating AA Description The US will run large but declining fiscal deficits. For now, US Treasuries remain a safe-haven asset, and borrowing costs are near record lows (owing partly to Fed purchases). The short average maturity of Treasuries will eventually leave the US exposed to rising yields. The public finances are unsustainable in the long term without far-reaching reforms to healthcare financing. Extraordinarily loose monetary policy would ordinarily be negative for the dollar, but the currency will be supported in 2013 2014 by its safe-haven status and increasingly by the US economy's relatively stronger prospects. The political atmosphere in Congress will remain deeply partisan, especially over fiscal issues. Nonetheless, the country's fiscal path for the coming years has now largely been defined. A moderate fiscal tightening will proceed, and there are signs that the economy is resilient enough to withstand this, helped by a reviving housing market.
Currency Risk
Political Risk
BB
Source: Economic Intelligence Unit, Fox Davies
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Share price appreciation + dividends

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ANALYST CERTIFICATION The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of 23 Sep 2013, the analyst and his / her spouse and/or relatives who are financially dependent on the analyst, do not hold interests in the securities recommended in this report (interest includes direct or indirect ownership of securities, directorships and trustee positions).
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COMPANY-SPECIFIC / REGULATORY DISCLOSURES DBS Vickers Securities (Singapore) Pte Ltd and its subsidiaries do not have a proprietary position in the company mentioned as 1. of 19 Sep 2013 2. DBSVR, DBSVS, DBS Bank Ltd and/or other affiliates of DBS Vickers Securities (USA) Inc ("DBSVUSA"), a U.S.-registered brokerdealer, may beneficially own a total of 1% or more of any class of common equity securities of the company mentioned as of 23 Sep 2013. Compensation for investment banking services: i. DBSVR, DBSVS, DBS Bank Ltd and/or other affiliates of DBSVUSA may have received compensation, within the past 12 months, and within the next 3 months receive or intends to seek compensation for investment banking services from the company mentioned. DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.
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Rex I 230913

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Rex I 230913

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Singapore Company Focus

Rex International Holding

Refer to important disclosures at the end of this report

DBS Group Research . Equity

BUY S$0.85 STI : 3,237.53

Game changer in the making

Forecasts and Valuation

Source of all data: Company, DBS Vickers, Bloomberg Finance L.P

www.dbsvickers.com ed: JS / sa: YM

Company Focus Rex International Holding

Source: DBS Vickers

Company Focus Rex International Holding

Traditional Methods ROI negative to breakeven

Source: DBS Vickers

Source: Company, DBS Vickers

Company Focus Rex International Holding

The Rex International Holding business model

If hydrocarbon find confirmed

Reinvest and reiterate model from beginning

Spin off new business or farm out concessions

Drill appraisal wells Refine and develop reserves values

Source: DBS Vickers

Company Focus Rex International Holding

Snapshot of current concession areas/ assets of RIH Group

Net unrisked resources*

2013 2013 2013

100.0% 75.0% 51.0%

Company Focus Rex International Holding

The History of Rex International Holding

Company Focus Rex International Holding

Structure of Rex International Holding post restructuring exercise

Rex International Holding Pte. Ltd.

Rex International Investments

Rex International BVI

Trinidad & Tobago Concessions

Rex South East Asia Ltd

Rex Oil & Gas

Lime Petroleum PLC

Lime Petroleum Ltd

Rex US Ventures LLC

Dahan Petroleum Limited

Zubara Petroleum Limited

Baqal Petroleum Limited

Masirah Oil Limited

Lime Petroleum Norway

Loyz Rex Drilling Services LLC

RAK Offshore North Concession

RAK Onshore South Concession

Oman Block 50 Concession

Company Focus Rex International Holding

The Rex Business Model

Source: DBS Vickers

Company Focus Rex International Holding

Technology is a key enabler in the exploration process

Reservoir Verification: Exploration decision

Prospect Definition and Characterisation: Detailed data processing

Prospect Definition and Characterisation: Area selection for further detailing

Company Focus Rex International Holding

Overview of Rex Gravity technology

Company Focus Rex International Holding

Advanced offshore seepage measurements using Rex Seepage

Company Focus Rex International Holding