OPERATIONS REVIEW As a result of Mermaid’s efforts in establishing the Broome Base, Inpex Browse Ltd., BHP Petroleum and Woodside have used Broome as their base for drilling a total of four (4) offshore wells. It is presently expected that at least six (6) exploration wells will be drilled in the area during 2001. The Base now employs as many as ten (10) staff up from the three (3) who commenced in February 2000. Excellent management and staff competence are the prime factors, which have delivered the smooth start up and continued success at Broome. The Mermaid Broome Supply Base certified Impex, Woodside  and BHP Petroleum exploration program during 2000. The base is currently secured on a come and go lease arrangement, located on Port premises adjacent to the wharf gates. Although convenient, with an excellent cyclone proof building, the site has limitations in terms of size and slope. An area more suitable for our long term needs has been optioned from Port authorities and discussions will proceed with our clients this year to determine their precise needs. The success of Browse Basin wells drilled this year, strong developments in the energy sector and the intention of operators to base their 2001 operations in Broome, have encouraged the Board to consider further investment to ensure that capability keeps pace with demand and that we leave no reason for competitors to offer more or better. The offshore waters of the Northern Territory, the Zone of Co-Operation (ZOCA) between Australia and Timor, and the Commonwealth Territory of Ashmore and Cartier host approximately 35% of the Mermaid Marine services base at the Port of Broome (Broome Base) commenced operations on 1 February 2000 when the first ship containing drill pipe for Inpex Browse Ltd arrived from Japan. BROOME SUPPLY BASE Two large projects are under study or implementation in these waters; the Phillips Petroleum Bayu-Undang Project and the Woodside Sunrise Troubador Project. Two large petrochemical projects are under study for the Darwin area based upon pipelines from the Timor Sea gas resources of the projects above. Darwin will within 3 years be the northern terminus of the Australian national rail system with the completion of the Alice Springs Darwin rail link, further expanding its role in Australia’s economy. exploration and development budgets of Australian offshore oil and gas industry. D ARWIN BASE Gap 18