The Directors support the principles of good governance and have implemented, where practicable for a company of this size and nature, the many and main provisions of the principles of good governance and codes of best practice under the New Combined Code. The Board has also considered the guidance published by the Institute of Chartered Accountants in England and Wales concerning the internal control requirements of the Combined Code, in line with the Turnbull Report. The Board regularly reviews key business risks, via a number of properly constituted committees, in addition to the financial risks facing the company in the operations of its business.

The Board

The Board currently has five directors, two of whom are non-executive.

The Board has determined and formalised matters reserved for its consideration and where appropriate have delegated certain matters under a chart of authority to Board appointed committees. The Board meets on a regular basis to review the performance and the business of the Company, ensure that funding needs are appropriate and consider production, development and acquisition opportunities and progress.

The Directors have full access to the Company Secretary and independent professional advice at the Company's expense. The Company has in place appropriate insurance cover in respect of any legal action against its Directors and Officers. The Directors undertake a self assessment review of the Board and Committees from time to time.

Audit Committee

The Audit Committee consists of three Directors; Mr George Cole, Mr Boyd Bishop and Mr Brian Savage (Committee Chairman).

The Audit Committee meets three times a year to consider the annual, interim financial statements and the audit programme. The Terms of Reference of the Audit Committee are reviewed by the Board at least once a year and are available at the Annual General Meeting. It is responsible for ensuring that the appropriate financial reporting procedures are properly maintained and reported upon, reviewing accounting policies and for meeting the auditors and reviewing their reports relating to the accounts and internal control systems.

The Audit Committee also considers budgets and has agreed an authorisation and expenditure policy. The Audit Committee is responsible for monitoring key risks and has implemented through the internal audit department, a process for reporting on, and monitoring, those risks.

The Audit Committee members meet with the management and Auditors on a regular basis.

Remuneration Committee

The Remuneration Committee consists of Mr Boyd Bishop and Mr Brian Savage (Committee Chairman). It is responsible for reviewing the performance of the senior executives, where appropriate and for determining their appropriate levels of remuneration.

The Committee makes recommendations to the Board, within agreed terms of reference, which the Board review at least annually, regarding the levels of remuneration and benefits including participation in the Company's share plan. The Committee also examines fees in relation to non-executive remuneration and committee Chairman.

Internal Controls

The Directors have overall responsibility for the Company's internal control and effectiveness in safeguarding the assets of the Company. Internal control systems are designed to reflect the particular type of business, operations and safety risks, and to identify and manage these risks, but not all risks to which the business is exposed. As a result internal controls can only provide a reasonable, but not absolute, assurance against material misstatements or loss.

The processes used by the Board to review the effectiveness of the internal controls are through the Audit Committee, internal audit function and the executive management reporting to the Board on a regular basis where business plans, budgets and authorisation limits for the approval of significant expenditure, including investments are appraised and agreed.

The Board also seeks to ensure that there is a proper organisational and management structure with clear responsibilities, accountability and succession plans. The Board also engages independent professional advice on risk assessment matters. It is the Board's policy to ensure that the management structure and the quality and integrity of the personnel are compatible with the requirements of the group.