4. Restricted Deposits

The Company's PSCs relating to exploration blocks onshore and offshore India contain provisions whereby the joint venture participants must provide the Government of India a bank guarantee in the amount of 35% of the participant's share of the minimum work program for a particular phase, to be undertaken annually during the budget period April 1 to March 31. These bank guarantees have been provided to the Government of India and serve as guarantees for the performance of such minimum work programs and are in the form of irrevocable letters of credit. Historically, these irrevocable letters of credit were secured by restricted term deposits of the Company in the same amount. Commencing in the second quarter of 2011, Export Development Canada (EDC) commenced providing the performance security guarantees on behalf of the Company against the bank guarantees provided to the Government of India for the period of April 1, 2011 to June 30, 2012.

The Company, on behalf of the Myra and Sara Joint Venture has provided a letter of credit for $16,000,000 regarding the use of the Noble Homer Ferrington rig. The expiry date of this letter of credit is May 17, 2012 which is secured by a restricted term deposit from the Company of $11,518,000 (December 31, 2010 - $nil). The balance amount in the letter of credit of $4,482,000 is secured by a restricted term deposit pledged from a partner in the Myra and Sara Joint Venture which is included in the Company's consolidated accounts receivable.

The Company, on behalf of the Myra and Sara Joint Venture has provided a letter of credit for $38,350,000 for rig rental. The expiry date of this letter of credit is July 17, 2012 which is secured by a restricted term deposit from the Company of $27,592,000 (December 31, 2010 - $nil). The balance amount in the letter of credit of $10,758,000 is secured by a restricted term deposit pledged from a partner in the Myra and Sara Joint Venture which is included in the Company's consolidated accounts receivable.

Pursuant to Israeli Customs Authorities, the Company, on behalf of the Myra and Sara Joint Venture, is required to post bank guarantees which represents an 8% to 12% Israeli Custom Duty which is necessary to be posted for all imports of oil and gas equipment and supplies in order to release them from Customs. Upon providing the Custom Authorities the proper required documentation, such that these goods and supplies are exempt from Custom Duties under the Israeli Petroleum law, these bank guarantees are refundable. These bank guarantees have been secured by term deposits of the Company in the same amount. As of December 31, 2011 term deposits amounting to $534,000 (December 31, 2010 - $nil) have been provided against the bank guarantees of $482,000 which is expected to be released on or before December 31, 2012.

The restricted term deposits provided by the Company securing these bank guarantees are as follows:

	December 31, 2011			December 31, 2010
	$			$
Exploration Blocks - India
Sanand/Miroli		--			1,300,000
Ankleshwar		734,075			734,000
DS 03		--			330,000
DS 04		--			1,247,000
KG Onshore		--			900,000
RJ 20		--			1,100,000
RJ 21		--			1,441,000
Exploration Licenses - Israel
Myra and Sara		39,644,000			--
		40,378,075			7,052,000
Less: current portion of restricted deposit		(40,378,075	)		(2,034,000	)
		--			5,018,000

The following term deposits are classified as current restricted deposits:

	December 31, 2011		December 31, 2010
	$		$
Exploration Blocks - India
Sanand/Miroli		--		1,300,000
Ankleshwar		734,075		734,000
Exploration Licenses – Israel
Myra and Sara		39,644,000		--
		40,378,075		2,034,000

Subsequent to December 31, 2011, the term deposit amounting to $734,075 securing the Ankleshwar bank guarantee has been released.

The performance security guarantees provided by EDC on behalf of the Company against these bank guarantees are as follows (see note 17):

	December 31, 2011		December 31, 2010
	$		$
Exploration Blocks – India
DS 03		599,000		--
DS 04		728,000		--
KG Onshore		458,500		--
RJ 20		1,374,500		--
RJ 21		897,500		--
		4,057,500		--