The consortium signed a production sharing contract (PSC) with the Government of India (GOI) in December 2008. In the first year of the four-year agreement, Bengal Energy and its partners plan to undertake an exploration campaign consisting initially of 2,300km of airborne magnetometry and reprocessing 1,700km of 2D seismic data.

Subsequent design and acquisition of a large area 3D seismic program will follow. Exploratory drilling targets have already been identified from a variety of different play types at drilling depths ranging from 500mt to 2,000mt.

Two untested basement highlands cover nearly one-third of the block. These highlands are believed prospective for granite wash oil targets, an established play type in the Cauvery basin. The existing and additional new exploration targets are anticipated to be mature enough for drilling beginning in 2011.

The Indian oil and gas regulatory body, the Directorate General of Hydrocarbons, has reported two new oil discoveries immediately adjacent and northeast of the Cauvery block CY-ONN-2005/1. In addition to CY-ONN-2005/1, Bengal Energy was provisionally awarded 340,000 acres on block CY-OSN-2009/1 in the shallow offshore area of the southern Cauvery basin in October 2009.

Bengal Energy expects to execute a PSC with the GOI on this block in the next four weeks, at which time exploration activity is expected to commence. The Cauvery basin is an active producing basin in the southern part of the east coast of India. The basin covers approximately 250,000sqkm and has 28 producing oil and gas fields.