1. Review of Operations Despite the dramatic recovery and improvement of crude oil price, international oil companies adopted a cautious stance and focused their resources on proven hydrocarbon provinces of the world. The trend towards mergers and acquisitions continued unabated as major players sought to rationalize investment portfolios and to optimize operational efficiencies. On the local scene, risk capital was scarce as the economy remained sluggish at the tailend of the Asian financial crisis To encourage domestic petroleum exploration, The Department of Energy launched in mid-2000 a three-year Window of Opportunity timed with the development and initial production of the Malampaya field. Special incentives and lenient terms awaits companies exploring areas in offshore Palawan, the Sulu Sea and offshore Mindoro proximate to the Malampaya infrastructure and the proposed Trans-Asean gas pipeline route. Amidst the slowdown in its core business, Trans-Asia selectively pursued its interests in operated and priority areas in anticipation of a turnaround in the near term. North Matinloc - 2 Wellhead PETROLEUM PRODUCTION Service Contract 14 Block B-1 Northwest Palawan Production at the North Matinloc field continued on a cycle basis. Cumulative production from the North Matinloc-2 well since resumption of operations in June 1998, reached 95,417 barrels as of September 2000. PETROLEUM EXPLORATION Service Contract 6 Northwest Palawan Service Contract 6 is the oldest, existing service contract awarded by the Philippine Government. For a decade beginning 1981, oil was produced from the Cadlao field. SC 6 Block A is also the site of the Octon discovery. Block A (7.0%equity) Interpretation and evaluation of 1,317 sq km of 3D seismic data which acquired over the entire block in mid-1997 were completed in May 2000. Results confirmed previous findings that reserves of Octon structure are insufficient to justify field development on a stand alone basis. Further studies to reduce technical risks associated with the remaining prospects in the block were recommended. Block B (9.0%) Nido Petroleum and Philodrill earned 5% participating interest each following their submission of interpreted 3D seismic data procured from a non-exclusive survey conducted in 1998. Service Contract 41 Sulu Sea (2.71%) Service Contract 41 covers the Sandakan basin, the only deltaic basin originating from the island of Borneo that is unproductive to this date. Unocal acquired 15% interest in the Service Contract effective 24 March 2000 and assumed operatorship vice Arco effective 01 July 2000. Partners elected to drill the Wildebeest prospect in Block B where Trans-Asia is not a participant, as work commitment under Year 4 of the Service Contract. Unocal spudded Wildebeest-1 on 9 July 2000 in fulfillment of its farm-in obligations. The well reached a total depth 3710 meters (12,170 ft) and was plugged and abandoned on 20 July 2000 as a dry hole with gas shows. Reprocessing of 3D seismic data over the Rhino prospect in Block A commenced in July 2000. This prospect is adjacent to the site where the Hippo-1 well encountered oil and gas shows in 1998.

2. GSEC 91 Southwest Palawan (15.42%) Partners obtained a one-year suspension of work obligations until 13 June 2000, thus moving the GSEC expiry date to 04 September 2000. During the suspension period, Shell, the Operator, completed regional gravity and seismic studies, and a geochemical assessment of exploratory wells in the area. Technical evaluation confirmed that hydrocarbons have been generated in much of the acreage. However, trap definition and reservoir prediction carry significant risks in view of poor seismic imaging of complex structures found in the block. Partners relinquished the GSEC on 4 September 2000 and notified the Department of Energy of their intent to apply for a replacement GSEC covering essentially the GSEC 91 block. Specialized geological and geophysical studies, and possibly a new acquisition program, are planned for the new GSEC. GSEC 93 East Visayas (33.34%) The consortium focused exploration in the onshore portion of the block in Northwest Leyte where an active petroleum system has been identified in previous studies. This area is characterized by widespread oil and gas seeps and wells which encountered hydrocarbon shows. Trans-Asia, as Technical Operator, spudded the San Isidro SX-1 well on 28 April 2000 in the town of San Isidro, northwest Leyte. The stratigraphic hole with a programmed total depth of 1030 meters (3378 feet), is the consortium’s commitment under the Renewed Term of GSEC ending 03 August 2000. The drilling operations experienced significant delays due to logistical, financial, and management problems of the turnkey drilling contractor. The well attained a depth of 298 meters (977feet) on 10 July 2000 and progressed no farther more than two months thereafter To protect the borehole from imminent collapse, Trans-Asia cemented the well for future reentry and, subsequently, terminated the drilling contract. Upon request of the partners, the Department of Energy granted a six-month extension of the GSEC term to 04 February 2001 to enable completion of the drilling program. A bid round for the replacement turnkey drilling contractor is in final stage. In the offshore sector of the block, Trans-Asia obtained promising results from specialized seismic studies on the potential direct hydrocarbon indicators found in two prospects. Drilling of Stratigraphic Well in San Isidro, Northwest Leyte GSEC 94 West Palawan (65%) Trans-Asia, as operator, completed a 510-km seismic reprocessing program and additional geophysical profile modeling during the one year ended 24 July 2000 wherein contract obligations were suspended. Technical work yielded interest prospects and leads particularly in the northeast sector of the block. The consortium requested and obtained a further nine-month suspension of work obligations from 25 August 2000 to 24 May 2001 in order to continue farmout activities.

3. Non-Exclusive Geophysical Permit Offshore North Mindoro (100%) The area of interest strategically straddles the route of the Malampaya pipeline in Tablas Strait east of Mindoro island to its endpoint in the southern coast of Batangas province. To the south it is flanked by the Maniguin oil discovery and to the north, by the Manila Bay-1A well which recorded gas shows. Trans-Asia completed aeromagnetic data reprocessing and interpretation over the 1.15 million hectare block under the NEGP which expired on 12 January 2000. To follow up the interesting results obtained from the studies, the Company secured another six-month NEGP which became effective on 15 June 2000. Geophysical profile modeling and tectonic interpretation are ongoing. GSEC Application Bancauan Basin, Sulu Sea (100%) Trans-Asia applied for a Geophysical Survey and Exploration Contract over a 984,000-hectare block in the Sulu Sea, close to the international border off Sabah, Malaysia. The Bancauan basin is one of the three prospective sedimentary basins in the southwest end of the Sulu Sea. It is adjacent to the Sandakan basin where oil and gas shows have been encountered by exploration wells. It is the site of the Sulu Sea A-1 well which was drilled by Triton in 1972. The hole bottomed at 2618 meters (8586 feet) where it encountered very high pressures believed to have been caused by natural gas. Due to technical difficulties, the well was eventually abandoned without testing the abnormally-pressured section. A seismic reprocessing project to enhance structural mapping is proposed to be undertaken under the GSEC when awarded.