Lansdowneoilandgas.com

Extract from 2006 Annual Report and Financial Statements.

Lansdowne, as an AIM listed Company, is not required to comply with the July 2003 Combined Code on Corporate Governance. However, the Board recognises the importance of sound corporate governance and has ensured that, following Admission, the Company adopted policies and procedures which reflect such of the Principles of Good Governance and the Code of Best Practice as published by the Committee on Corporate Governance (commonly known as the “Combined Code”), as are appropriate to the Company’s size.

Directors
The Board comprises a Chairman, two Executive Directors and two Non-Executive Directors. John Greenall is the senior Non-Executive Director and Chairman.

Relationship with Parent Company
Two of the Directors of the Company, C G Moar and S R Bertram are also Directors of the parent Company, Ramco Energy plc. Under a Relationship Agreement dated April 2006 the parent Company has undertaken that the relevant members of the Ramco Group will exercise their voting rights so as to ensure (so far as they are able by the exercise of such rights) the continued independence from Ramco of the majority of the Board, that any transactions between persons or companies controlled by Ramco (to the extent that there are any such transactions in the future) will be at arms’ length, and that they will not vote (as shareholder or Director) in relation to any such transaction. Ramco has also undertaken that neither it nor any member of the Ramco Group shall, for so long as Ramco has a controlling interest in the Company, compete with the Group in the sector and geographic area in which the Group operates. In addition Ramco has undertaken not to dispose of any Ordinary Shares in which they have a beneficial interest or which are registered in their names save in the event of a takeover becoming or being declared unconditional or where the disposal is being made pursuant to a scheme of arrangement under section 425 of the Act, for a period of 12 months following Admission and for a further period of 12 months on an orderly market basis except with the prior written consent of the Company’s broker and nominated adviser.

The Board is responsible for setting overall Group strategy, policy, monitoring Group performance and authorising significant transactions.

The Board meets not less than four times a year and has adopted a schedule of matters reserved for its decision. All Directors have full and timely access to information and may take independent professional advice at the Group’s expense.

The Board has two standing committees with terms of reference as follows:

Audit and Remuneration Committees
These committees are comprised solely of Non-Executive Directors who take no part in the discussion of their own remuneration. Both are chaired by John Greenall and the other member is Tim Torrington.

Audit Committee
The Audit Committee determines the terms of engagement of the Company’s auditors and determines, in consultation with the auditors, the scope of the audit. The Audit Committee receives and reviews reports from management and the Company’s auditors relating to the interim and annual accounts and the accounting and internal control systems in the Company. The Audit Committee has unrestricted access to, and oversees, the relationship with the Company’s auditors. The Audit Committee meets at least twice a year and meets with the Company’s auditors at least once a year. Directors may attend by invitation.

The External Auditors are engaged to express an opinion on the financial statements. They review and test the systems of internal financial control and data contained in the financial statements to the extent necessary to express their audit opinion. They discuss with management the reporting of operational results and the financial position of the Group and present their findings to the Audit Committee.

The Audit Committee reviews the independence and objectivity of the External Auditors. The Committee reviews the nature and amount of non-audit work undertaken by PricewaterhouseCoopers LLP each year to satisfy itself that there is no effect on their independence. Details of this year’s fees are given in note 3 on page 25. The Committee is satisfied that PricewaterhouseCoopers LLP are independent.

The Group does not have an internal audit function but the need for such a function is reviewed at least annually. It is the current view of the Board that an internal audit function is not considered appropriate given the size and nature of the operations and the Group.

Remuneration Committee
The Remuneration Committee reviews the scale and structure of the Executive Directors’ remuneration and the terms of their service or employment contracts, including share option schemes and other bonus arrangements. The remuneration and terms and conditions of the Non-Executive Directors are set by the entire Board. No Director or manager of the Company may participate in any meeting at which discussion or any decision regarding his own remuneration takes place. The Remuneration Committee also administers any share option schemes or other employee incentive schemes adopted by the Company from time to time.

Risk Management and Internal Control
The Board has established an ongoing process for identifying, evaluating and managing the significant risks faced by the Group. Management from each business area and major project identify their risks, the likelihood of those risks occurring, the impact if they do occur and the actions being taken to manage and mitigate those risks to an acceptable level. This process is reviewed by the Board annually and accords with the Turnbull guidance on internal control. It has been in place throughout the year under review and up to the date of this report.

The Board of Directors has overall responsibility for maintaining a sound system of internal financial control to safeguard shareholders’ investment and the Group’s assets. Such a system can provide reasonable but not absolute assurance that assets are safeguarded, transactions are authorised and correctly recorded, and that material errors and irregularities are either prevented or would be detected within a timely period. The system, which has been in place throughout the year and up to the date of this report, comprises the following main elements, all of which are reviewed by the Board:

• An organisation structure with clearly defined lines of responsibility and delegation of authority.
• Appointment of employees of the necessary calibre to fulfil their allotted responsibilities.
• Established procedures for budgeting and capital expenditure.
• Monthly reporting of actual performance compared to budget, reviewed by the Board quarterly.
• Rolling monthly forecasts for the financial year.
• The Group reports to shareholders on a half yearly basis to ensure timely reporting of financial results.

Investor Relations
Communications with investors are given high priority. The Company keeps its institutional shareholders up to date with its business and objectives, and obtains their views on the Company, by means of periodic presentations. Additionally the Company is ready to respond appropriately to particular issues or questions that may be raised by investors. All shareholders are sent the Annual Report and financial statements, the Interim Report and can also elect to receive all press releases, many choosing to receive this information
by e-mail.

The Company has a website, www.lansdowneoilandgas.com, which is regularly updated and contains a wide range of information about the Company including the AIM admission document and press releases. The Board views the AGM as an opportunity to communicate with private investors and encourages them to attend. The Board aims to ensure that the Chairman of the Audit and Remuneration Committees is available to answer questions. Shareholders are invited to ask questions and are given the opportunity to meet the Directors informally following the meeting. The Company complies with best practice in ensuring that the Notice of the AGM is dispatched to shareholders at least 20 working days ahead of the meeting.

Directors’ Responsibilities
Company law requires the Directors to prepare the financial statements for each financial year that give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year, and of the profit or loss of the Group for that period.

The Directors confirm that suitable accounting policies have been used and applied consistently. The Directors also confirm that reasonable and prudent judgments and estimates have been made in preparing the financial statements for the year ended 31 December 2006 and that applicable accounting standards have been followed.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The maintenance and integrity of the Lansdowne website is the responsibility of the Directors. The work carried out by the Auditors does not involve consideration of these matters and, accordingly, the Auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.