Hungary

The Company holds a long-term Mining Plot (the “Production License”) granted by the Hungarian Mining Authority. The lands within the Production License were formerly part of the Company‟s two petroleum and natural gas exploration licenses – the Tisza License and the Makó License (collectively, the “Exploration Licenses”). The Production License, covering approximately 245,700 acres, gives the Company the exclusive right to explore for and appraise petroleum and natural gas on properties located in south central Hungary near the town of Szolnok. The Production License further gives the Company the exclusive right to commercially develop petroleum and natural gas within the area covered by that license. The Production License incorporates depths beginning at 7,546 feet (2,300 meters) from the surface, and extends to the basement of the Makó Trough, Pannonian hydrocarbon accumulation.

Makó’ Production License Letter of Intent

On June 9, 2011, the Company‟s wholly owned Hungarian subsidiary, TXM, entered into a Letter of Intent with Naftna Industrija Srbije, j.s.c. Novi Sad (“NIS”), for the earning by NIS of an interest in producing the Algyö play within the Makó‟ production license in Hungary in an area of approximately 995 square kilometers, from a depth of 2,300m down to the base of the Algyö Formation (the “Agreement Area”). TXM will retain all rights within the entire production license deeper than the base of the Algyö Formation such as the Szolnok and Endröd formations. Under the terms of the agreement, NIS will make a $1,500,000 payment to TXM upon signing of a Participation Agreement. NIS shall then, at its sole cost, drill, test and complete three wells in the Agreement Area. These wells, to be drilled and tested before December 31, 2012, shall be located such that each well tests an independent Algyö prospect. NIS will earn a 50 percent interest in production from each prospect if the discovery well is tied in and placed on production at the sole cost of NIS. After the drilling of the three wells is completed, NIS has the right to acquire a 50 percent interest in production from the entire Agreement Area by paying to TXM an additional $2,750,000 (the “earn-in”). If NIS does not fulfill their drilling obligations under the Participation Agreement, TXM will retain 100 percent interest in the Agreement Area.

If the NIS earn-in is completed, NIS and TXM will share future exploration, appraisal and development costs and production in the Agreement Area in accordance with their participating interests held under a Joint Operating Agreement. TXM shall be the Operator under both the Participation Agreement and the Joint Operating Agreement.

The transaction as a whole is subject to receipt of all governmental and regulatory consents, including the TSXV.