Operations and Production

The Company’s 2007 operations focused primarily on shallow gas exploration and development.  The focus going forward for 2008 will be to continue to develop & exploit three core areas for the Company. The Medicine River, Berwyn and Peace River fields hold significant potential for continued success and the Company plans to develop the reserves that have been discovered over the past two years. Production growth will also be expanded by internally generated exploration plays in order to diversify the Company’s reserve allocation.

MEDICINE RIVER, ALBERTA

The Company achieved continued success in the Medicine River area during 2007 with the drilling of the 2-25 twin well (88.5% W.I.). The well came on-line at a gross rate of 1,100 mcf/d from the Colony formation and has an estimated 500 mcf/d behind-pipe from the Edmonton and Belly River formations. These upper zones are scheduled for development during the latter half of 2008.

International Sovereign is also reviewing the potential for three high impact sour gas wells within the area along with another 1,300 m gas well targeting the Edmonton and Belly River formations. The area also has potential for Pekisko oil production and the Company is currently investigating a re-entry pilot well project.

BERWYN, ALBERTA

The Berwyn gas discovery in early 2006 remains a major focal point for the Company. The initial 2-11 well Gething formation (100% W.I.) production remains robust, producing over 1,000 mcf/d (166.67 boe/d) with an estimated 1,500 – 2,500 mcf/d (250 – 500 boe/d) behind-pipe from the Bluesky, Notikewin and Paddy zones.

Previously, the Company was unable to produce additional gas from the Berwyn field due to the processing plant being near full capacity. However, in recent months this has changed and additional capacity has become available. Accordingly, the Company plans to drill a 2-11 twin well during the latter half of 2008 in order to produce the Bluesky, which is the primary zone of interest capable of between 1,000 – 2,000 mcf/d (167 – 333 boe/d).

The Company also drilled the 8-13 well (100% W.I.) in Q1 of 2007, which shows gas potential in the Gething formation. This well is scheduled to be completed and tested once the Company has a service rig in the area. In addition, International Sovereign has three more planned seismically defined prospective well locations which would further enhance production from this area based on drilling success.

PEACE RIVER, ALBERTA

The Company saw good success in 2007 with the Peace River well (40% W.I.) coming on-line at a gross rate of over 2,000 mcf/d. This area holds significant potential for the Company with continued development planned for 2008 via a multi-well drilling program.

OTHER PROPERTIES

The Company continues its initiatives regarding potential new properties while maintaining an optimization and overall development strategy in properties such as Grimshaw, which possesses strong potential for a large resource gas play.