Rocksource Geotech positions for technology expansion

The expansion strategy includes focus on:
* Improved accuracy and higher speed of analyses, leading to further increase in chance of success post-CSEM analyses
* Increased range of prospectivity to be tested, including increased depth range, more geologically complex settings, very shallow water settings and onshore
* Increased scope of application within the E&P value chain, including appraisal and production

All of the above will strengthen the core E&P business of the Rocksource group (Rocksource) and give Rocksource and Geotech additional commercial and strategic options. Geotech has so far been exclusively delivering services to Rocksource and its joint venture partners. A further expansion of the technology platform will enable the creation of potentially new business models, including the opportunity for Geotech to deliver services to a broader range of customers if and when that is seen as strategically desirable and important for Rocksource.

Over the last months Geotech has matured the following positions:
* A further increased focus on electromagnetic (EM) operations and R&D
* Investment in TechnoImaging LLC (TechnoImaging)
* Position in GeoContrast AS (GeoContrast)

Geotech’s increased focus on EM operations and R&D, combined with the investment in TechnoImaging and position in GeoContrast give Rocksource an improved capability to further develop the core business in terms of increased exploration efficiency. It furthermore allows Rocksource to move the technology into more challenging settings, as well as into appraisal and production in both onshore and offshore settings, thus enabling Rocksource to expand the areas suitable for the application of the CSEM technology. Ultimately it gives Rocksource added optionality in how the technology is applied and commersialised in the future.

A further increased focus on EM operations and R&D:

By early 2009, Geotech has carried out real data CSEM analyses for around 60 prospects, of which 11 are drilled (6 discoveries and 5 dry wells). Six wells were drilled post-interpretation (all successfully predicted), 1 was a successful blind test and 4 are test cases where the results were known pre-interpretation. These results provide convincing statistical evidence, both proving that the technology works and demonstrating the game-changing potential of the technology.

Geotech has developed knowledge and proprietary software tools (Rocksource Discover) to enable processing and interpretation of CSEM data, as well as integration of CSEM data with all other geological and geophysical data to de-risk prospectivity, drive efficient exploration and thereby prove more barrels, quicker and at lower cost than conventional exploration. Geotech has positioned itself to accelerate technology development to maintain a leading position in the application of CSEM technology.

The combined investment in TechnoImaging and the position taken in GeoContrast is considered strategically important for Rocksource’s existing and future business activities within hydrocarbon exploration, appraisal and production. Rocksource experience shows that CSEM analyses requires an advanced integrated approach, mainly due to depth of investigation and geological complexity. Rocksource realises that future success of the technology will to a large extent be defined by the ability to correctly interpret CSEM datasets using such an advanced approach. The investment into TechnoImaging and the strategic position taken in GeoContrast is a step forward to secure Rocksource's ability to further increase the post-CSEM chance of success for mapped prospects, to utilise the CSEM technology in more challenging settings, and to move the technology into appraisal and production, thus enabling the company to expand the areas suitable for the application of the CSEM technology. It makes it possible for Geotech to expand and further develop its CSEM technology in both offshore and onshore settings. TechnoImaging and GeoContrast hold several patents considered important for this strategic focus. Further, the investment in TechnoImaging and the position taken in GeoContrast provide attractive strategic alternatives for Rocksource.

Investment in TechnoImaging:

As announced in stock exchange notice of 21 April 2009, Geotech has invested up to USD 5 million in TechnoImaging. TechnoImaging is a Salt Lake City, Utah, US-based company that develops advanced 3D algorithms for modelling, inversion and migration of CSEM data. Furthermore, TechnoImaging holds several patents that are considered important for Rocksource’s current and future activities related to hydrocarbon exploration, appraisal and development, and has an exclusive patent license agreement with the University of Utah.

More information on TechnoImaging and details of the transaction are provided in the above mentioned stock exchange notice.

Position in GeoContrast:

Geotech has granted GeoContrast a convertible loan in the amount of NOK 7 million and has also obtained options from a majority of the shareholders in GeoContrast. The loan can until 31 December 2009 be converted to 33.4% of the shares in GeoContrast.The loan and options give Geotech the opportunity to take a strategic position in GeoContrast.

GeoContrast is a Norwegian based company, established in 2004. The company focuses on the application of CSEM related to hydrocarbon appraisal and production (enhanced recovery), as well as monitoring of CO2 for storage purposes. GeoContrast holds a patent related to injection of contrast fluids to map unproduced volumes of hydrocarbons (4D EM).

Geotech’s experience with CSEM data has clearly demonstrated the potential of the technology for exploration purposes. Geotech further believes that the technology related to appraisal and production has a very significant value potential. GeoContrast is thus considered an exciting company for the future development of the technology into hydrocarbon appraisal and production in onshore and marine settings.

GeoContrast has a 20% ownership interest in TechnoImaging, which will be reduced to 12.8% subsequent to Geotech's investment of USD 5 million in TechnoImaging. The main owner of TechnoImaging, Dr. Michael Zhdanov, has through a directed share issue in GeoContrast obtained an ownership interest of 24% in GeoContrast. Dr. Zhdanov is thus the largest shareholder of both TechnoImaging and GeoContrast.

The convertible loan agreement entitled Rocksource to appoint members to the Board of Directors in GeoContrast, and Rocksource has appointed John Howell as Chairman (CTO of Rocksource ASA) and Trygve Pedersen (CEO of Rocksource ASA) as member of the Board of Directors. Dr. Michael Zhdanov and Jan Sjølie are also members of the Board of Directors.

Further, Geotech has a call-option to acquire 3,344,000 shares (of a total of 5.263.158 shares in GeoContrast) at a strike price of NOK 14,3 per share, including shares owned by related parties to Rocksource. Geotech has not paid or given any consideration for the call-option. Geotech may, in its sole discretion, choose to exercise the option until 31 December 2009. Should Geotech decide to exercise the option, the consideration may be paid in cash or by issuing shares, or in a combination of cash and shares. The remaining shares of GeoContrast (that are not part of the option agreements with Rocksource) are owned by Dr. Michael Zhdanov (1,263,158) and Sector Speculare IV (656,000).

GeoContrast's operations have so far been focussed on research and development rather than commercial operations. The development of GeoContrast's technology and the process of obtaining patent protection has been in particular focus. GeoContrast has not had revenues in the period 2006 to 2008. The annual result in the aforesaid period was respectively NOK -89,301, NOK -119,760 and NOK -4,681,615 . The balance value of GeoContrast's assets in the period 2006 to 2008 was respectively NOK 231,388, NOK 1,601,839 and NOK 5,955,073. The sum of equity and debt in the period 2006 to 2008 was respectively NOK 78,913/NOK 152,475, NOK 159,153/NOK 1,442,686 and NOK -4,522,462 (uncovered loss)/10,477,535 (including the convertible loan, ref above).

Oslo 24.4.2009
Rocksource ASA

Trygve Pedersen
CEO

+47 90 09 77 41