In Syria, KOV holds a participating interest of 50% in the Syria Block 9 production sharing contract which provides the right to explore for and, upon fulfillment of certain conditions, to produce oil and gas from Block 9, a 10,032 square kilometre (2.48 million acre) area in northwest Syria. The Company has an agreement to assign a 5% in ownership interest to a third party which is subject to the approval of Syrian authorities, and which, if approved, would leave the Company with a remaining effective interest of 45% in Syria Block 9.

The Block is located south of the City of Aleppo, immediately to the east of the City of Latakia, on the north western flank of the hydrocarbon producing Palmyrides Basin and is prospective for crude oil, natural gas and condensate. Block 9 has had minimal exploration in the past with only four wells drilled. Major gas and oil pipelines lie in close proximity to the initial exploration focus area in the southeast part of Block 9.

Drilling of the first exploratory well, Itheria-1, commenced on July 22, 2011. The well was expected to be drilled to 3,256 metres and was expected to take up to 80 days to drill, not including testing. The well was planned to test a large structure with four-way dip closure defined by 3D seismic in an area approximately 200 kilometres due east of the City of Latakia. Primary targets are sandstones of Ordivician age. As part of the farm-out with MENA, MENA funded 60% of the costs to drill Itheria-1. The Company’s share of the costs of Itheria-1 was accordingly reduced to 20%.

The Company announced on October 17, 2011 that the drilling program was suspended at a depth of 2,072 metres. The need to assess the drilling results, together with an increasingly more difficult operating environment, has resulted in a suspension of exploration activity which is presently expected to be temporary.

KOV continues to monitor operating conditions in Syria to assess when, and if, a recommencement of its Syrian operations is possible.