Rocksource invests in technology company

The portfolio has been established to secure long-term superior exploration results based on application of technology, with emphasis on electromagnetic (CSEM) technology. Rocksource has today four operating units:

* Rocksource Energy Corporation, Houston - onshore production
* Rocksource ASA - Activities on NCS
* Rocksource ASA - International E&P activities (including Rocksource UK Ltd)
* Rocksource Geotech AS - Geophysical services

To further strengthen the technological platform for Rocksource Geotech AS (Geotech), a wholly owned subsidiary of Rocksource ASA, the Board of Directors in Geotech has decided to invest up to USD 5 million in TechnoImaging LLC (TechnoImaging). TechnoImaging is a Salt Lake City, Utah, US-based company that develops advanced 3D algorithms for modelling, inversion and migration of CSEM data. Geotech will enter into a Research and Development contract with TechnoImaging as part of the transaction. On completion of the investment, Geotech will have an ownership of 36% in TechnoImaging.

The investment will secure further development of algorithms considered critical for advanced handling of CSEM data. These, and existing algorithms owned by TechnoImaging will be made available to Rocksource to be used in its decision making process via Geotech's proprietary software Rocksource Discover. The algorithms will expand the scope for use of Geotech's technology and increase the speed of analyses. Furthermore, TechnoImaging has developed algorithms to handle time-domain EM data that are particularly suitable for analyses in shallow marine and onshore settings.

Rocksource Geotech:
Rocksource Geotech has developed knowledge and proprietary software tools to enable processing and interpretation of CSEM data, as well as integration of CSEM data with all other geological and geophysical data. Geotech strongly believes that continued application and further development of this technology offers game-changing potential to the oil and gas industry.

A key aspect to this is the application of CSEM technology to de-risk prospectivity, drive efficient exploration and thereby prove more barrels, quicker and at lower cost than conventional exploration. Rocksource has positioned the group to accelerate technology development and maintain a leading position in the application of CSEM technology.

TechnoImaging:
TechnoImaging was established in 2005 by Dr. Michael Zhdanov, who has been a member of Rocksource's advisory board since 2005, and is an early phase company associated with the University of Utah. TechnoImaging has carried out numerous research projects for Geotech over the past several years. Dr. Zhdanov is considered a leading authority within the field of CSEM technology and has published numerous books and articles on the topic as well as developed leading algorithms and codes for modelling, inversion and migration of CSEM data.

TechnoImaging holds several patents and has an exclusive license with the University of Utah relevant for the development of advanced 3D CSEM algorithms.

The current owners of TechnoImaging are Dr. Michael Zhdanov (80%) and GeoContrast (20%). The Board of Directors in TechnoImaging consists of Dr. Michael Zhdanov, Dr. Olga Zhdanov and Mrs. Dianne Walker. The parties have agreed to elect a new Board of Directors in TechnoImaging consisting of Dr. Michael Zhdanov, Dr. Olga Zhdanov, Mrs. Dianne Walker, two appointed members from Geotech and one appointed member from GeoContrast.

TechnoImaging is as a Limited Liability Company. Operations in the company have so far been focussed on research and development rather than commercial operations. Geotech's investment will enable TechnoImaging to scale up its commercial operations. The revenue for 2007 and 2008 was respectively USD 340,032 and USD 256,860. The profit for 2007 and 2008 was respectively USD 248,366 and USD 82,128. TechnoImaging has so far utilised academic resources on project basis and will now create a full commercial organisation.

Dr. Zhdanov is Professor of Geophysics at the University of Utah and Director of the International Consortium for Electromagnetic Modelling and Inversion (CEMI - http://www.mines.utah.edu/~wmcemi/index.shtml). Prior to joining the University of Utah in 1993, Dr. Zhdanov was the founder and Director of the Geoelectromagnetic Research Institute of the Russian Academy of Sciences. Dr. Zhdanov is a renowned scientist in the field of electromagnetic theory and theoretical and applied geophysics. He has developed the foundations of electromagnetic methods of geophysical exploration for energy resources, invented principally new methods of electromagnetic imaging of the Earth's interior, and new geophysical techniques for mineral exploration and hydrocarbon reservoir characterization, based on electromagnetic methods.

The results of Dr. Zhdanov's research have found a wide application in industry through the industry sponsored CEMI Consortium. The members of the Consortium represent major energy resources-, petroleum- and mining corporations, geophysical exploration companies and research centres, and agencies from around the globe (including BP, EMGS, ExxonMobil, Halliburton, Schlumberger, Shell, StatoilHydro, Petrobras, and many others). His work helped to promote theoretical and applied energy research and development, and international co- operation in this field of geophysics. Dr. Zhdanov is the author of more than 300 papers, including more than fifteen monographs published in English, Russian and Chinese, and six patents.

The transaction:
Geotech, TechnoImaging and Dr. Zhdanov have entered into a Securities Purchase Agreement and an Operating Agreement related to Geotech's investment in TechnoImaging. Geotech's shall, pursuant to the agreements, invest USD 5 million in TechnoImaging and will receive a 36% ownership interest in TechnoImaging. Geotech will make its investment by payment from existing funds.

The investment will be made in tranches. Payments of the tranches are conditioned on the completion of certain milestones related to the business development of TechnoImaging. The parties intend to complete the investment within 12 months.

Dag Dvergsten AS and Jonny Hesthammer AS have during 2008 earned subscription rights to 1.9% and 2.6% in TechnoImaging as compensation for services provided outside of the scope of their Rocksource engagement. Dag Dvergsten AS and Jonny Hesthammer AS have given Geotech, pursuant to a call option, a right to acquire their subscription rights in TechnoImaging. Geotech may, in its sole discretion, choose to exercise the option until 31 December 2009. The strike price shall be 5% lower than the subscription price to be used pursuant to the Securities Purchase Agreement. The consideration may be paid in cash or by issuing shares, or in a combination of cash and shares.

SUMMARY:
This transaction will enable Rocksource to further develop a leading position in the application of CSEM data and extend the existing technology platform. The scope of the application of the technology will increase in terms of accuracy and speed, and will enable a greater range of prospectivity to be tested, including expansion of areas to be evaluated. Rocksource Geotech will be in an excellent position to further provide high quality analysis to Rocksource and its joint venture partners.

Rocksource will provide a further update regarding the geophysical operating unit, Rocksource Geotech, shortly.

Oslo, 21.4.2009
Rocksource ASA

Trygve Pedersen
CEO

+47 90 09 77 41