On April 8, 2008 Eurogas announced that the Corporation and the permit operator, Atlas Petroleum Exploration Worldwide (APEX) entered into a farmout agreement on the Sfax Exploration Permit with Delta Hydrocarbons B.V. of Schipol, the Netherlands, whereby Delta committed to spend US$125 million for a 50% participation in the permit. The partners have agreed to a three-well drilling program that began with the Ras El Besh (REB 3) well in June 2008. A success at REB 3 will lead to a development well at the location REB 4. After completion of the Ras El Besh wells, the drilling rig will move to the Jawhara prospect and will drill an appraisal well while the installation of anticipated production facilities is underway at Ras El Besh. The work program also includes the acquisition of facilities as and when required.

Under the transaction and included in the US$125 capital commitment, Eurogas and APEX will be entitled to repayment of past costs, of which approximately US$11 million is net to Eurogas. Upon completion of the work program, Eurogas would own a 22.5% participating interest in the farmout lands. Drilling of the first well in the program, REB 3, will satisfy the permit partners' outstanding work commitment to the Tunisian government.

The farmout agreement with Delta includes the area covered by a recently expired farmout agreement as well as three prior discoveries, including Ras El Besh, which were excluded from the previous transaction. As disclosed in the March 14, 2008 Eurogas Rights Offering Circular, the prior farmee had the option, until April 1, 2008 to commit to drill an exploration well by December 31, 2008. As it did not elect to proceed, it forfeited all rights to conduct work or to receive any interest in the area.

The farmout received approval from ETAP, the Tunisian state oil company, and from the government of Tunisia in May 2008. The drilling of REB 3 will satisfy the commitments of the Sfax exploration permit, and also trigger the formal grant of the Ras El Besh exploitation concession.