AN UPSTREAM OIL & GAS

Chairman’s note to shareholders:

On May 29 2018, new management acquired approximately 42% of the shares of the Company. At that time the Company owed its creditors approximately USA$ 23,600,000 which was accruing interest at an unsustainable rate. The debt was purchased and converted into UMC shares which immediately removed the threat of bankruptcy.

The Company owns 30% of the equity of PNG Energy Limited and China Overseas Oil Company (CNOOC) owns the remaining 70%.

PNG Energy Limited owns 100% of Gini Energy Limited which held four, soon to expire, exploration licenses in Papua New Guinea, two offshore and two onshore. Immediate action was taken to review the concessions and renew the most attractive licenses for a further six years.

An 80% interest in the two offshore licenses PPL 374 and 375, were farmed out to Exxon/Oil Search which dramatically reduced the Company’s risk. Onshore PPL 378, which is highly prospective, was retained but, after careful consideration, the second onshore license, PPL 405, was abandoned on the grounds of unacceptable risk versus potential reward.

Therefore, by Q4 2018 the Company’s balance sheet showed a dramatic improvement and, with the licenses secured, Management was free to pursue other opportunities which are reported in the future planning section of this website.