OPERATIONS

• Average daily production increased by 49% to 20,300 boepd¹ (2009: 13,600 boepd)
• Phase 4 of Bualuang development completed, improved crude pricing
• South Sembakung field development underway
• Disappointing H1 2010 exploration results, finished year with important Angklung discovery

FINANCIALS

• Revenue increased by 106% to $323 million (2009: $157 million)
• EBITDAX increased by 102% to $177 million (2009: $87.6 million)
• Loss before tax of $114 million (2009: $3 million)
• Profit before tax, adjusted for non-cash items, of $31 million (2009: $8 million)
• Year-end cash balance of $99.2 million (including restricted bank deposits of $9.4 million)
• Net debt of $190.2 million (2009: $119.3 million)

OUTLOOK

• 2011 average daily production rate forecast to be 22,000-23,000 boepd
• 13 E&A wells targeting 312 MMboe of net unrisked resource (95 MMboe of net risked resource)
• South Sembakung field development continues with production expected on stream in 2012
• Testing of Dao Ruang-2 appraisal well commenced

Chief Executive James Menzies commented:

“Entering 2011, Salamander has passed several key milestones. Group production has grown to over 20,000 boepd, delivering cash flows that permit the Group to comfortably self-finance its extensive capex programme. Having built an extensive portfolio of acreage across South East Asia, Salamander is now positioned to focus on selected regional plays, each offering reserves & production growth opportunities, near-term development and good exploration potential. In particular, the recent Angklung discovery has revealed the potential of the Northern Kutei basin and we will be pursuing this as part of our E&A programme for 2011.”

Key Performance Indicators

KPI	2010	Comment	Outlook
Working Interest Production	20,300 boepd	Production increased by 49% compared to the previous year. The increase was driven by a first full year of production from the Kambuna field, an increased equity interest in the Bualuang field and higher than expected production from ONWJ, where a new operator invested to increase production.	A further phase of development drilling in 2011 will drive production from the Bualuang field up to c. 10,500 bopd. Group production is expected to increase to between 22,000 and 23,000 boepd in 2011.
Finding, Development & Acquisition Cost per barrel (3 yr average)	$24.29 per boe	Represents an all in cost of the reserves base. 2010 was a disappointing year for exploration.	Low cost acquisitions such as the Bangkanai asset will see figure lowered as low cost reserves are added.
Operating Costs	$15.11 per boe	Opex per bbl was up slightly on 2009. The main cause of this was the acquisition of an additional 40% interest in the Bualuang field. Bualuang has an FPSO and therefore the highest operating cost of the Group’s assets.	Unit operating costs should be reduced in 2011. Production from Bualuang is expected to increase which should lead to a reduction in unit operating costs as higher volumes pass through the FPSO. Production from Kambuna has now switched to permanent as opposed to rental facilities which will reduce unit operating costs on this asset.
Operating Cash Flow	$29.63 per boe	Operating cash flow per barrel grew strongly as a result of increasing gas realisations, higher oil prices and an increase in the proportion of oil in the production mix	With production from the Bualuang oil field, the most cash generative asset, expected to increase and gas prices across the region continuing to rise operating cash flow is expected to increase.
Reserves Replacement (3 year average)	279%	The Group increased reserves during 2010 as a result of an upgrade on the Bualuang oil field, and the acquisition of an additional 40% interest in the same asset.	With a Gas Sales Agreement for the Kerendan gas field expected to be signed during 1H 2011 the Group has visibility on significant reserves additions from its development activity and will continue to seek additional resources through its E&A drilling programme.
Lost Time Injury Frequency	0.4 injuries per million man hours	The Group reported its first LTI in 2010 when a contractor on a drilling support vessel slipped over.	The Group target zero Lost Time Injuries every year and has an active HSE plan to help try to achieve this.

¹ On a proforma basis counting the acquisition of 40% in B8/38 licence from the effective date of 1 January 2010. Counting Bualuang production from the closing date of 20 September 2010 then Group daily production for 2010 would average 18,000 boepd.