IB Daiwa Announces Funding Arrangements for Lodore Drilling.

Tokyo, Japan, Mar 11, 2006 - (JCN Newswire) - IB Daiwa Corporation (JASDAQ: 3587), one of the few pure Japanese natural resources company, today announced that its Board of Directors had approved an agreement for funding for the on-going drilling operations for its Lodore Resources ("Lodore") subsidiary in Louisiana and Texas.

Lodore is scheduled to drill a number of exploration wells in its Big Mouth Bayou, North West Kaplan, and Endeavour prospects in Louisiana, as well as in its Padre Island prospects in Texas. In order to secure access to drilling rigs and other operational equipment for the drilling of these prospects, Lodore needed to put into place financing arrangements. As is common in the exploration industry, IB Daiwa and Lodore have arranged this financing through a "Farm-out" Agreement.

Louisiana Funding

IB Daiwa and Lodore approached a number of upstream oil and gas companies, as well as a number of financial institutions regarding the potential farm-out by Lodore of an interest in the Big Mouth Bayou, North West Kaplan and Endeavour prospects (the "Three Prospects"). The remaining ten additional Louisiana prospects, in which Lodore has an interest are not part of this farm-out arrangement.

As a result of these discussions with potential partners, the IB Daiwa Board has now approved a proposal for a farm-out of an interest in these assets. In this proposal, Coniston International Capital Ltd., a wholly-owned subsidiary of Techpacific Capital Ltd., (a company listed on the GEM market in Hong Kong and the controlling shareholder of Crosby Capital Partners Inc.) has agreed to take a minority interest in the Three Prospects subject to obtaining any necessary regulatory approval. All the IB Daiwa directors associated with Crosby refrained from voting on this proposal.

Under the farm-out agreement, Coniston will fund Lodore US$42.5 million in exchange for a 35% working interest in each of the Three Prospects. Based on the latest estimate of the budgets for the Three Prospects, provided by Pel-Tex, the exploration partner of Lodore and operator, the US$42.5 million will be sufficient to cover 100% of the total drilling costs for the Three Prospects, as well as contributing to the costs of completion, in exchange for a 35% working interest in the Three Prospects. Lodore, meanwhile, will hold a 40% working interest(1) in the Three Prospects; however they have no exposure to the cost of drilling and associated risks.

Commenting on this proposal, IB Daiwa President, Seiki Takahashi, said "This is an excellent outcome for IB Daiwa and Lodore. We can now proceed with the drilling and completion of these three exciting prospects in Louisiana; however we bear no exposure to the costs and risks related to the drilling process, whilst retaining the largest interest in the prospects. The terms we have been able to negotiate in this deal clearly reflect the quality and potential of Lodore's Southern Louisiana prospect portfolio. We received expressions of interest from a number of parties, however we believe the Coniston offer is the most attractive to Lodore. We will continue discussions with other interested parties, and will look for opportunities to bring in other partners in the future to develop the remainder of our portfolio of assets."

Texas Funding

IB Daiwa has also agreed that Lodore should enter into farm-out agreements for the drilling and completion funding for its Texas Padre Island prospects arising as a result of discussions that commenced prior to the acquisition of Lodore by IB Daiwa. Together with its partner at these prospects, Golden Gate Petroleum Ltd., ("Golden Gate") Lodore has entered into a more standard "third for a quarter"(2) farm-out agreement with Pantheon Resources ("Pantheon"), a UK-based private company. Under this agreement, Pantheon has agreed to take a 25% interest in the Padre Island leases, owned equally by Lodore and Golden Gate. This leaves both Lodore and Golden Gate with a 37.5% interest in the jointly owned prospects.

The Padre Island prospects are:

1. Plum Deep, from 9,500 to 15,000 feet;

2. Manzano Deep, from 10,500 to 16,500 feet;

3. Murdock, all depths from surface;

4. Lemonseed, all depths below 9,100 feet;

5. Wilson, all depths from surface; and

6. Kingsway, all depths from surface.

As part of this agreement, Pantheon paid a deposit of US$200,000 and will pay a lease payment of US$1,054,025 following the execution of the farm-out agreement. Pantheon will pay 33.333% of the costs of drilling an exploration well down to the planned total depth for each of the Padre Island prospects. Once a well has reached its planned total depth, and casing has been run, Pantheon will then be required to bear further costs in proportion to its 25% interest.

Seiki Takahashi added, "These farm-out arrangements now mean that Lodore's planned drilling schedule for 2006 is fully funded. With the recent announcement by Golden Gate of the securing of a drilling rig for Padre Island, we are pleased to confirm that rigs have now been secured to ensure that all of immediate prospects to ensure that drilling can take place."

1) The remaining interest is a 25% interest, held by Lodore's exploration partner and operator, Pel-Tex.

2) See definition in appendix under "Farm-out Agreements"

About "Farm-out" Agreements in the Oil and Gas Industry

A farm-out is a very common contractual arrangement within the upstream oil and gas industry that enables companies to diversify exploration risk across a broader portfolio. Under a Farm-out Agreement the holder of a working interest in an exploration prospect, or portfolio of prospects, agrees to transfer part of its interest in that prospect to a new partner in exchange for that partner agreeing to reimburse a portion of the sunk costs and bear a disproportionately larger share of the future drilling costs.

The benefit to the party "farming-out" is that it reduces its capital exposure to a particular prospect by a greater amount than the reduction in its working interest. It effectively gains an element of free carry in the prospect.

The benefit to the party "farming-in" is that it is able to gain exposure to exploration prospects that are often ready to drill or may have already commenced drilling and to spread its capital resources across more prospects and thereby reduce its overall exploration risk.

Typical US market farm-out agreements are "third for a quarter" whereby an investor pays a third of the drilling and completion costs, for a quarter of the interest in the prospect.

About IB Daiwa

IB Daiwa was incorporated in Japan in September 1947 and was engaged in the manufacture and sale of industrial use machine sewing thread and twisted yarns. The Group was also involved in the property business and the import and sale of high brand kitchenware. On June 24, 2005, the shareholders of IB Daiwa elected and approved a new board of directors. The new board has begun to restructure the management and operations of IB Daiwa and has signified its intention to supplement the existing business with investments in the natural resources, particularly the oil and gas sectors. IB Daiwa announced on December 27, 2005 the disposal of non-core subsidiaries to further concentrate on natural resources businesses. For further information please go to: www.ibdaiwa.co.jp

Source: IB Daiwa

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