Report on Exploration Potentialof

Pantera Petroleum Inc. Concessionsin Paraguay

By Energy Consulting International, Inc.June 2007

Pantera Petroleum,Inc. - Summary

• Pantera is U.S company with 2 subsidiaries in Paraguay which together have concessions on 16,000 sq km of land in the Chaco Basin in Northern Paraguay.

• The Chaco Basin covers Southern Bolivia, part of Northern Argentina and Northern Paraguay.

• The Bolivian and Argentine parts of the Chaco Basin have been heavily explored (846 exploration wells) and become major oil and gas producing regions – 2+ BCFD Gas , 50,000+ BOPD and over 80 tcfe of oil and gas reserves discovered.

• But the Paraguay extension is under-explored – only 49 wells in all of Paraguay. Chaco Basin has only 27 wells - one gas field discovered, and 6 wells with oil or gas shows.

• Analysis of the play type, field distribution, performance and geology of the Chaco Basin points to the Paraguayan part of the basin having significant potential. Based on the most likely play type and field analogy the potential is estimated to be 16 tcfe potential oil and gas reserves – and the Pantera concessions have 16% of this – 2.6 tcfe or 433 mmbo.

• Upside potential exists for even higher reserve potential – If the “hydrocarbon richness” is the same as the overall Chaco Basin results, the Paraguayan potential would be 43 tcfe, 6.7 tcfe (1118 mmboe) Pantera share.

• Pantera thus has a large acreage position in a known, but under-explored hydrocarbon basin with the potential for significant new discoveries

Pantera’s Oil and Gas Concessions in Paraguay

100 KM

BRAZIL

BOLIVIA

PARAGUAYARGENTINA

And

ean

Mou

ntai

ns

Gas Field

Oil & Gas Field

CARANDAYTY SUB-BASIN

CHACO BASIN

PIRITY BASIN

CHACO BASIN AND EXTENSIONS INTO PARAGUAY

CENTRAL ARCH

Devonian Outcrop

CURUPAYTY SUB-BASIN

IZOZOG HIGH

APPROX LOCATION PANTERA CONCESSION

HIGHLIGHTS OF REPORT

•BOLIVIAN/ARGENTINE CHACO BASIN EXTENDS TO PARAGUAY

•PARAGUAY UNDEREXPLORED – ONLY 27 WELLS IN CHACO BASIN EXTENSION

•433 MMBO (2.6 TCFE GAS) POTENTIAL PANTERA SHARE RESERVES ; UPSIDE

EVEN HIGHER – 1118 MMBO (6.7 TCFE)

•6 WELL EXPLORATION PROGRAM PROJECTED

•40% CHANCE OF FINDING 8 MMBOE OR MORE

•ATTRACTIVE ECONOMICS

•GAS IMPORT INTO BRAZIL & ARGENTINA EXPANDING

•PRODUCTION COULD START AS EARLY AS 2014

SUMMARY OF REPORT RESULTS•CHACO BASIN CLEARLY EXTENDS TO NORTHERN PARAGUAY

•SHOULD BE ANALAGOUS TO NON-THRUST FAULT FIELDS IN BOLIVIA / ARGENTINA•ONE FIELD ALREADY DISCOVERED (NOT DEVELOPED YET)

•PANTERA CONCESSIONS MORE OIL PRONE, BUT GOOD GAS EXPORT MARKET AVAILABLE IF GAS DISCOVERED

•433 MMBO (OR 2.6 TCFE GAS) POTENTIAL PREDICTED FOR PANTERA CONCESSIONS•UPSIDE POTENTIAL FOR 1118 MMBOE (6.7 TCFE GAS)•FISCAL TERMS REASONABLE

•10 - 15% ROYALTY; 15% DEPLETION ALLOWANCE; 30% INCOME TAX RATE•PROJECTED EXPLORATION PROGRAM

•SEISMIC; 6 EXPLORATION WELLS; 2 APPRAISAL WELLS•6 YEARS ; TOTAL COST $69 MM

•PROJECTED MEAN FIELD SIZE•IF OIL -- 47 MMBO ; 40% SUCCESS CHANCE WITH 6 EXPLORATION WELLS•IF GAS -- 600 BCFE ; 30% SUCCESS CHANCE WITH 6 EXPLORATION WELLS

•DEVELOPMENT PROJECTION•IF OIL -- 22,000 BOPD PEAK RATE ; 13 YEAR LIFE ; $274 MM INVESTMENT•IF GAS -- 150 MMCFD PEAK RATE ; 16 YEAR LIFE ; $357 MM INVESTMENT

•ECONOMIC SUMMARY -- SUCCESS CASE•IF OIL -- 44% ROR ; $1357 MM NET CASH ; $418 MM PV@10%•IF GAS -- 30% ROR ; $1629 MM NET CASH ; $385 MM PV@10%

CHACO BASIN DATA ANALYSIS

GEOLOGY AND RESERVE ANALOGIES

CHACO BASIN EXPLORATION HISTORY IN BOLVIA & ARGENTINA

• First Exploration success in 1924• 846 exploration wells drilled• 475 new field wildcats drilled• 128 fields discovered• 429 mmbo of oil discovered• 1440 mmbc & 73 tcf of condensate and gas discovered• 27% success rate – all time overall rate• 51% success rate in 1997 – 2006 due to improved seismic techniques• Gas export market to Brazil and Argentina beginning late 1990’s has

increased reserves and new discoveries• Mature successful hydrocarbon basin with 14 bboe (billion barrels of

oil equivalent) reserves proved up.

Recent Activities in Chaco Basin

•Gas Market for export from Bolivia and toBrazil and Argentina available

•Gas Pipeline to Brazil built in 1998-1999•Currently exporting about 1.2 BCFD•Gas Price as high as $5.00 per mmbtu•Gas Reserves increased from 32 tcf in 1996

to 72 tcf in 2007•Oil reserves increased from 1 BBO in 1996

to about 2 BBO in 2007•Activity level has slowed dramatically in 2006

due to new Bolivian Government fiscal terms•Bolivia will be unlikely to meet demand in Brazil and Argentina

CHACO BASIN OIL & GAS PRODUCTION RATESOil Production

0

10

20

30

40

50

60

70

80

90

1929 1939 1949 1959 1969 1979 1989 1999Year

Oil

Prod

uctio

n (1

000

BPD

)

Gas Production

0

500

1000

1500

2000

2500

1929 1939 1949 1959 1969 1979 1989 1999Year

Gas

Pro

duct

ion

( MM

CFD

)

100 KM

BRAZIL

BOLIVIA

PARAGUAYARGENTINA

And

ean

Mou

ntai

ns

IZOZOG HIGH

Gas Field

Oil & Gas Field

CURUPAYTY SUB-BASIN

CARANDAYTY SUB-BASIN

CHACO BASIN

PIRITY BASIN

MAJOR GAS FIELDS AND PIPELINE SYSTEM

MARGARITA

SAN ALBERTO

SABALO

INCAHUSASI

RIO GRANDE

VUELTA GRANDE

NARANJILLOSCARANDA

YAPACANI

COLPA

ITAU

CAMPO DURAN

RAMOS

TRANQUITAS

SAN PERDITO

Gas Pipeline

CENTRAL ARCH

Devonian Outcrop

Chaco Basin in Paraguay

•Chaco Basin extends from Bolivia into northern Paraguay•Izozog High and Central Arch bisect basin extension into two sub-basins

•Carandayty Sub-basin to west•Curupayty Sub-basin to north

•Carandayty Sub-basin exploration•21 exploration wells drilled between 1949 and 1977•One gas field discovered and tested gas in Devonian and Carboniferous•Lack of gas sales market stopped additional exploration/development•CDS started new exploration program in 2005

•Curupayty Sub-basin exploration•6 exploration wells drilled in Paraguay between 1958 and 1995•4 wells in Bolivia in sub-basin•Many hydrocarbon shows, but no oil or gas tests•Oil exploration only, since no gas sales available

CHACO BASIN PETROLEUM SYSTEM ELEMENTS

Source• Devonian and Silurian shales, equivalent to Sub-Andean source• Thickness of source rock section up to 4000m• Geochemical data shows a rich source - TOC’s up to 2 %• Devonian currently in oil window, Silurian in gas window

Reservoir• Primary, Carboniferous Tarija and Tupambi formations, equivalent to sub-

Andean primary reservoirs• Stratigraphic variability in amalgamated channels and fan lobes, but good

porosity (>20%)• Secondary targets in Devonian Huamampampa sheet sands with lateral

continuity and moderate porosity (10-15%); interbedded with source• Further reservoir opportunities as ‘add-ons’ to above targets - Lower

Devonian, Silurian, Upper Carboniferous

CHACO BASIN STRATIGRAPHIC COLUMN

VIBORA FIELDSARA410-438SILURIAN

SANTA ROSA

CAIGUA FIELD LOS MONOS FIELD

TESTED GAS IN MENDOZA #1-RHUAMAMPAMPA

CAMIRI FIELD TORO FIELD CAMBEITI FIELDIQUIRI

355-410DEVONIAN

RIO GRANDE FIELD SANTA CRUZ FIELD TITA FIELD MADREJONES FIELD

TESTED GAS IN MENDOZA #1-RTUPAMBI

LA PENA FIELD CARANADA FIELD

OIL SHOWS IN GOTO #1 LOW

PERMEABILITYTARIJA

RIO GRANDE FIELD LA PENA FIELD ESCARPMENT

290-355CARBONIFEROUS

VILLAMONTES FIELD

ONLY FAR NORTHERN EDGE OF CONCESSION

PROSPECTIVESAN TELMO251-290PERMIAN

NOT PRESENTNOT

PROSPECTIVE205-251TRIASSIC

NOT PRESENTNOT

PROSPECTIVE145-206JURASSIC

NOT PRESENTNOT

PROSPECTIVE65-145CRETACEOUS

TOO SHALLOWNOT

PROSPECTIVE0-65QUATERNARY - TERTIARY

BOLIVIA/ARGENTINE ANALOG

FIELDS

PARAGUAY COMMENTS

PROSPECTIVE RESERVOIR

NAMEAGE Ma

GEOLOGIC STRATA NAME

Seal• Alternating regional and local shales within the Carboniferous• Devonian Los Monos shale

Trap/Structure• Structural: Carboniferous drape over Devonian low-relief fault blocks,

structural highs reactivated during Mesozoic uplift and extension, or Tertiary inversion of older extensional fabrics.

• Stratigraphic: channels and erosional channel/canyon fill, and truncation/onlap relationships near intrabasin highs and unconformities

Generation/Migration• Devonian in oil window and Silurian in gas window, in basin centers

CHACO BASIN PETROLEUM SYSTEM ELEMENTS

Play and Play Risk Analysis

Play Extension into Paraguay• Oil and gas shows in both the Curupayty and Carandayty sub-basins demonstrate

the existence if an active petroleum system; Play already demonstrated in Carandayty with well test

• Play types similar to sub-Andean play in Bolivia• Source, reservoir, and seal are the same; trap style and generation/migration

history differ

Differences & Risks• Subtle low-relief traps with smaller vertical closure may limit reserve size and

number of possible reservoir zones under trap• Source rocks in basin axes are relatively immature compared to the foldbelt and

may not have generated and expelled equivalent volumes of hydrocarbons, while basin margins have high heat flow and risk overmature source

• Migration pathways are also more limited without the influence of Andean thrusting and depend on the network of basement faults or angular truncation of the Devonian source rock section under the Carboniferous

• Many dry holes in eastern Bolivia and the Curupayty and Carandayty sub-basins; could be explained by drilling depth and lack of gas sales potential in 1970’s

100 KM

ALTO del BOQUERON

ALTO del CHACO CENTRAL

Asu

ncio

n A

rch

Brazilian Shield

BRAZIL

BOLIVIA

PARAGUAYARGENTINA

Boomerang Hills Area

And

ean

Mou

ntai

ns

IZOZOG HIGH

CAIMANCITO

CARANDA

CAMIRI

LA PENA

MONTEAGUDO

PALOMA

YAPACANI

SAN PEDRO

COLPA

PATUJUSAL

TATARENDA

TCV-1ROBERE-1

OTQ-1UTZ-1

PANTERA-1

GOTO-1

TORO-1MADREJON-1

CERRO LEON-1

Devonian Outcrop

Exploration Well

Gas Field

Oil & Gas Field

CURUPAYTUY SUB-BASIN

CARANDAYTY SUB-BASIN

CHACO BASIN

PIRITY BASIN

OIL FIELDS HIGHLIGHTED

LAGERENZA-1

RAVELO-1

MENDOZA 1-R

38.7%3051.425.0336.8TOTAL

91.5%4.88.6TATARENDA

85.9%9.69.7PATUJUSAL

6.7%776.711.010.1COLPA

100.0%16.9SAN PEDRO

14.4%745.47.122.0YAPACANI

44.0%188.524.7PALOMA

73.1%75.80.936.8MONTEAGUDO

72.9%81.10.838.4LA PENA

68.5%139.350.4CAMIRI

25.2%925.45.353.8CARANDA

78.9%104.765.4CAIMANCITO

BCFGMMCMMBO

%OILGASCONDOILFIELD

•80% of all oil reserves•Average 39% Oil / 61% Gas•6 Fields without Non-associated Gas

Top 11 Oil Fields in Chaco Basin: Bolivia & Argentina

100 KM

ALTO del BOQUERON

ALTO del CHACO CENTRAL

Asu

ncio

n A

rch

Brazilian Shield

BRAZIL

BOLIVIA

PARAGUAYARGENTINA

Boomerang Hills Area

And

ean

Mou

ntai

ns

IZOZOG HIGH

TCV-1ROBERE-1

OTQ-1UTZ-1

PANTERA-1

GOTO-1

TORO-1MADREJON-1

CERRO LEON-1

Devonian Outcrop

Exploration Well

Gas Field

Oil & Gas Field

CURUPAYTU SUB-BASIN

CARANDAYTY SUB-BASIN

CHACO BASIN

PIRITY BASIN

GAS FIELDS HIGHLIGHTED

LAGERENZA-1

MARGARITA

SAN ALBERTO

SABALO

INCAHUSASI

RIO GRANDE

VUELTA GRANDE

NARANJILLOSCARANDA

YAPACANI

COLPA

ITAU

CAMPO DURAN

RAMOS

TRANQUITAS

SAN PERDITO

RAVELO-1

MENDOZA 1-R

89.0%60910.61151.3102.9TOTAL

81.0%745.47.122.0YAPACANI

86.0%776.711.010.1COLPA

72.3%925.45.353.8CARANDA

72.9%985.060.90.1CAMPO DURAN

83.3%1164.030.68.2TRANQITAS

91.4%1185.018.70.0VUELTA GRANDE

90.1%1279.023.50.0SAN PERDITO

90.3%2686.040.28.0RAMOS

84.9%2874.085.10.0RIO GRANDE

89.5%7000.0137.00.0INCAHUASI

92.0%7943.0114.70.0ITAU

86.8%10513.0266.80.0MARGARITA

90.8%10854.0184.00.0SABALO

92.3%11980.0166.40.8SAN ALBERTO

BCFGMMCMMBO

%GASGASCONDOILFIELD

•90% of all gas reserves•Average 1% Oil / 99% Gas•7 Fields without Oil

Top 14 Gas Fields in Chaco Basin

•82.7 TCFE RESERVES DISCOVERED,VERY GAS PRONE -- 3% OIL / 97% GAS •LARGEST FIELD – 13 TCFE, AVERAGE FIELD SIZE 661 BCFE, MEDIAN FIELD SIZE 41 BCFE•1.16 FIELDS PER 1000 SQ KM, 0.75 BCFE PER SQ KM•LOG NORMAL DISTRIBUTION•0.58 FIELDS PER 1000 SQ KM•50% of FIELDS ABOVE 40 BCFE ECONOMIC LIMIT

•AVERAGE FIELD SIZE 1279 BCFE ; MEDIAN FIELD SIZE 308 BCFE

Chaco Basin Exploration Results

Reserve Distribution

0.01

0.1

1

10

100

1000

10000

100000

1 7 13 19 25 31 37 43 49 55 61 67 73 79 85 91 97 103 109 115 121 127

Fields

Tota

l Res

erve

s - B

CFE

100 KM

ALTO del BOQUERON

Asu

ncio

n A

rch

Brazilian Shield

BRAZILBOLIVIA

PARAGUAYARGENTINA

Boomerang Hills Area

And

ean

Mou

ntai

ns

IZOZOG HIGH

TCV-1ROBERE-1

OTQ-1UTZ-1

PANTERA-1

GOTO-1

TORO-1MADREJON-1

CERRO LEON-1

Devonian Outcrop

Exploration Well

Gas Field

Oil & Gas Field

CURUPAYTY SUB-BASIN

PIRITY BASIN

EXPLORED AREA475 NEW FIELD WC’S110,000 SQ KM83 TCFE RESERVES0.75 BCFE/SQ KM4.3 WELLS/1000 SQ KM

CURUPAYTY SUB-BASIN(PARAGUAY PORTION)32,000 SQ KM6 NEW FIELD WC’S0.19 WELLS/1000SQ KM

EXPLORATION ANALYSIS

LAGERENZA-1

RAVELO-1

CARANDAYTY SUB-BASIN(PARAGUAY PORTION)25,000 SQ KM TOTAL21 NEW FIELD WC’S0.84 WELLS/1000 SQ KM

TWO PLAY TYPES IN BOLIVIA / ARGENTINE CHACO BASIN•THRUST FAULT FIELDS

•SUB-ANDEAN, RECENT FAULTING•MULTIPLE THRUST (REVERSE) FAULTS•THICK PAY ZONES•MULTIPLE PAY ZONES

•NON-THRUST FAULT FIELDS•FORELAND (EAST OF ANDEAN MOUNTAINS)•STRUCTURES OVER OLDER FAULTS•STRATIGRAPHIC TRAP COMPONENT OFTEN IMPORTANT•THINER PAY ZONES

PLAY TYPE ANALYSIS

NO THRUST FAULTS IN PARAGUAY•THEREFORE ONLY NON-THRUST FIELDS ANTICIPATED

THRUST FAULT FIELD NON-THRUST FAULT FIELD

PLAY TYPES

137111.94.50TITA

180169.42.00EL DORADO

20020000CERRO TUYUNTI

222204.33.120NUPUCO

278262.82.740AGUARAGUE

30281.30.738.4LA PENA

341239.3180KANATA

647581.111.70VIBORA

65456515.70LA PORCELANA

727613.61010.07COLPA

1015798.95.332.9CARANDA

12331131.818.00VUELTA GRANDE

13671164.830.65.3TRANQUITAS

3224275882.60RIO GRANDE

BCFGMMCMMBO

BCFEGASCONDOILFIELD

Top 14 Non-Thrust Fault Fields in Chaco Basin•45 FIELDS TOTAL (OUT OF 128 TOTAL FIELDS)•TOP 14 FIELDS CONTAIN > 90% OF RESERVES•SIMILAR GEOLOGICALLY TO PARAGUAY•BOTH OIL AND GAS FIELDS

100 KM

ALTO del BOQUERON

ALTO del CHACO CENTRAL

Brazilian Shield

BRAZILBOLIVIA

PARAGUAY

ARGENTINA

Boomerang Hills Area

And

ean

Mou

ntai

ns

IZOZOG HIGH

TCV-1ROBERE-1

OTQ-1UTZ-1

PANTERA-1

GOTO-1

TORO-1MADREJON-1

CERRO LEON-1

Devonian Outcrop

Exploration Well

Gas Field

Oil & Gas Field

CURUPAYTU SUB-BASIN

PIRITY BASIN

NON-THRUST FAULT FIELDS45 FIELDS40,000 SQ KM1.12 FIELDS PER SQ KM11.4 TCFE RESERVES0.28 BCFE/SQ KM

CURUPAYTY SUB-BASIN(PARAGUAY PORTION)32,000 SQ KM36 FIELDS PROJECTED9.1 TCFE RESERVES PROJECTED

NON-THRUST FAULT EXPLORATION ANALYSIS

LAGERENZA-1

RAVELO-1

CARANDAYTY SUB-BASIN(PARAGUAY PORTION)25,000 SQ KM TOTAL1 FIELD DISCOVERED – RESERVES UNKNOWN28 FIELDS PROJECTED7 TCFE RESERVES PROJECTED

VIBORA

KANATA

RIO GRANDE

TITA

LA PENA

EL DORADO

COLPA

CARANDA

VUELTE GRANDE

NUPUCO

CERRO TUYUNTI

TRANQUITAS

AGUARAGUE

LA PORCELANA

•45 FIELDS, LOG NORMAL DISTRIBUTION, 0.5 BCFE TO 3.2 TCFE, 11.4 TFCE TOTAL•SMALLER THAN THRUST RELATED FIELDS•40,000 SQ KM AREA ; 1.12 FIELDS PER 1000 SQ KM ; 0.285 BCF PER SQ KM•21 FIELDS > 8 MMBOE (50 BCFE) (ECONOMIC LIMIT IF OIL) ;47% OF TOTAL FIELDS•MEAN FIELD SIZE – 47 MMBOE•15 FIELDS > 170 BCFE (ECONOMIC LIMIT IF GAS) ; 33% OF TOTAL FIELDS•MEAN FIELD SIZE – 600 BCFE

NON-THRUST FAULT RELATED FIELDS

FIELD SIZE DIST - NO LIMIT

0.1

1.0

10.0

100.0

1000.0

10000.0

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45

FIELD RANK

RES

ERVE

S - B

CFE

Summary of Chaco Basin Fields in Bolivia & Argentina

• Mature basin with well established reserves averaging 0.75 bcfe per sq km and 1.16 fields per 1000 sq kms

• Good quality reservoirs -- often enhanced by fractures• Thick Devonian source rock – in gas window• 83 thrust fault related traps – 1.19 fields per 1000 sq km and 1.02 bcfe

per sq km• 45 structural/stratigraphic related traps (non-thrust) - 1.12 fields 1000

sq km and 0.28 bcfe per sq km• Fields typically 5 – 100 sq km• Multiple pays – up to 7 stratigraphic levels per field• 128 fields in total - 47 fields contain both gas and oil• Very gas prone – 97% gas to 3% oil

CONCESSION POTENTIAL ANALYSIS

CHACO BASIN - PARAGUAYCARANDAYTY & CURUPAYTY SUB-BASINS

PANTERA OIL & GAS CONCESSIONS

CURUPAYTY AND CARANDAYTY SUB-BASIN

•VERY LIGHTLY DRILLED – 0.19 COMPARED TO 0.84 WC’S PER 1000 SQ KM

•HYDROCARBON RICHNESS OF SOURCE SIMILAR

•THRUST FAULTS NOT ANTICIPATED

•RESERVOIR QUALITY GOOD IN CARBONBIFEROUS,

BUT PROBABLY NOT ENHANCED WITH NATURAL FRACTURES

•FEWER STRATIGRAPHIC LEVELS PROSPECTIVE

•LESS FAULTING – MORE DIFFICULT MIGRATION PATHWAYS

•GOOD GAS SHOWS – BUT ONLY ONE WELL TESTED HYDROCARBONS

•MORE OIL PRONE IN CURUPAYTY – SOURCE ROCK IN OIL WINDOW

COMPARISON TO BOLIVIAN – ARGENTINE CHACO BASIN

•LOG-NORMAL DISTRIBUTION EXPECTED•45 BOLIVIA / ARGENTINA CHACO BASIN NON-THRUST

FAULT FIELDS IN 40,000 SQ KM EVALUATED•ACTUAL N0N-THRUST FIELDS YIELDED 0.28 BCFE PER SQ KM•CURUPAYTY SUB-BASIN (PARAGUAY PORTION)

PROSPECTIVE AREA 32,000 SQ KM•CURUPAYTY RESERVE POTENTIAL EXPECTED TO BE 9.1 TCFE•CARANDAYTY SUB-BASIN (PARAGUAY PORTION)

PROSPECTIVE AREA 25,000 SQ KM•CARANDAYTY RESERVE POTENTIAL EXPECTED TO BE 7.0 TCFE•SIMILAR TO USGS ESTIMATE FOR NON-THRUST RELATED FIELDS•UPDISE POTENTIAL FOR HIGHER “HYDROCARBON RICHNESS” ; IF SAME AS

OVERALL BOLIVIA / ARGENTINA CHACO ACTUALS, THEN RESERVE POTENTIAL INCREASED FROM 16.1 TCFE TO 42.8 TCFE

Field Size Distribution – Extrapolated into Paraguay

TITA

RIO GRANDE

TECHI

ABEJA

TCV-1

UTZ-1

ROBERE-1

OTQ-1

IZOZOG HIGH

NARANJILLOSPALMAR

LA PENA

RIO SECO

ARGENTINA

PARAGUAY

BOLIVIA

ALTO del CHACO CENTRAL

ALTO del BOQUERON

PIRITY BASIN

CARANDAYTYSUB-BASIN

PANTERA-1

CURUPAYTYSUB-BASIN

Prospective Limits of Basin

Devonian Outcrop

BRAZIL

Gas FieldOil & Gas Field

GOTO-1

TORO-1

MADREJON-1

CERRO LEON-1

LAGERENZA-1

EL DORADO

TACOBOEL ESPINO

TATARENDA

LAGUNILLAS

TAJIBOS

CAMBEITI

CAMIRI

PORVENIR

VUELTA GRANDE

NUPUCO

MARGARITA

SABOLO

SAN ALBERTOMADREJONES

VILLAMONTES

GUAIRUY

Exploration Well

MONTEAGUDO

AGUARGUE

IBIBOBOLA VERTIENTE

SUPUATICAIGUA

SANROQUE

ESCONDIDOLOS SURIS

PALO MARCADO

RAVELO-1

Pantera Concession

PANTERA

TORO

BAHIANEGRA

CERROCABRERA

TAGUA

MENDOZA 1-R

CURUPAYTY SUB-BASIN PROJECTIONS

•USE NON-THRUST ANALOGY

•OIL MORE LIKELY HYDROCARBON, BUT GAS POSSIBLE

•36 FIELDS ANTICIPATED

•PREDICT 9.1 TCFE (1517 MMBOE)TOTAL RESERVE POTENTIAL

•PANTERA PORTION ABOUT 27% OF TOTAL – 2.5 TCFE ( 416 MMBOE)

•UPSIDE POTENTIAL 24 TCFE (4000 MMBOE) – PANTERA PORTION 6.5 TCFE (1080 MMBOE)

•OIL CASE•17 FIELDS > 50 BCFE (8 MMBO)•FIELD SIZE RANGE OF 50 BCFE (8 MMBO)TO ± 2 TCFE (333 MMBO)•MINIMUM DEVELOPABLE FIELD SIZE APPROX 3 SQ KM•MEAN – 280 BCFE (47 MMBOE)

•GAS CASE•12 FIELDS > 170 BCFE (ECONOMIC LIMIT FOR GAS)•MINIMUM DEVELOPABLE FIELD SIZE APPROXIMATELY 10 SQ KM•FIELD SIZE RANGE 170 BCF TO ± 2 TCFE•MEAN – 600 BCFE

•SEISMIC ANALYSIS NEEDED TO DEFINE STRUCTURES•ADVANCED DRILLING / COMPLETION NEEDED WHEN

RESERVOIR QUALITY POOR

CARANDAYTY SUB-BASIN PROJECTIONS

•USE NON-THRUST ANALOGY

•GAS IS LIKELY HYDROCARBON

•28 FIELDS ANTICIPATED, 1 ALREADY DISCOVERED

•PREDICT 7.0 TCFE (1167 MMBOE)TOTAL RESERVES

•PANTERA PORTION ABOUT 1.2% OF TOTAL – 0.1 TCFE

•UPSIDE POTENTIAL 18.8 TCFE (3125 MMBOE) – PANTERA PORTION 0.2 TCFE (38 MMBOE)

•Gas Case

•9 FIELDS > 170 BCFE

•FIELD SIZE RANGE OF 170 BCFE TO ± 2 TCFE

•MEAN – 600 BCFE

•SEISMIC ANALYSIS NEEDED TO DEFINE STRUCTURES

•ADVANCED DRILLING / COMPLETION NEEDED WHEN

RESERVOIR QUALITY POOR

•SMALL CONCESSION INDICATES PARTNERSHIP DRILLING

EXPLORATION AND DEVELOPMENT PROGRAM STRATEGIES

•DRILL WITH EXISTING SEISMIC WHEN POSSIBLE•ADDITIONAL SEISMIC WHEN NECESSARY•SEISMIC GRID SHOULD BE SMALL ENOUGH TO BE ABLE TO IDENTIFY

MINIMUM DEVELOPABLE FIELD SIZES (3-10 SQ KM)•3-D SEISMIC UNLIKELY TO BE NEEDED FOR EXPLORATION•DRILL BEST PROSPECTS IN PRIORITY ORDER•PARTNER WITH OTHER OPERATORS WHEN POSSIBLE•SPACE DRILLING OUT TO TAKE ADVANTAGE OF

LESSONS LEARNED FROM EARLY DRILLING•AFTER 2-3 WELLS REEVALUATE IF ALL PLANNED WELLS SHOULD

BE DRILLED OR CONCESSIONS RETURNED TO GOVERNMENT•DRILL APPRAISAL WELLS TO CONFIRM RESERVES

BEFORE DEVELOPMENT COMMITMENT

PANTERA OIL & GAS EXPLORATION PRIORITIES

•PANTERA LICENSE BEST•CARBONIFEROUS DOWNDIP TO PHILLIPS PANTERA WELL•MULTIPLE STRATIGRAPHIC PROSPECTS LIKELY•MOST LKELY OIL PROSPECTS•DEVONIAN AND SILURIAN ALSO SHOULD BE EVALUATED

•TAGUA LICENSE•CARBONIFEROUS AND DEVONIAN PARGETS•MONITOR OFFSET DRILLING•MAY NEED ADVANCE DRILLING/COMPLETION TECHNIQUES•HIGHEST CHANCE OF GAS

•TORA AND BAHIA NEGRA LICENSE•CARBONIFEROUS OFFSETTING TORO AND GOTO WELLS•POSSIBLE UPPER DEVONIAN PROSPECT•POSSIBLE CARBONIFEROUS / DEVONIAN PROSPECT DOWNDIP TO

MADEREJON WELL•CERRO CABRERA

•POSSIBLE HIGH RISK PROSPECTS ON NORTHERN EDGE OF LICENSE

PROJECTED EXPLORATION PROGRAM

•COLLECT AND REPROCESS EXISTING DATA IMMEDIATELY•MODEL ROCK AND WELL DATA TO DETERMINE SEISMIC REQUIREMENTS•1300 KM FOR NEW AREAS AND INFILL BETWEEN EXISTING LINES•SPECIALITY PROCESSING AS INDICATED BY MODELLING•DRILL 5 EXPLORATION WELLS AND 2 APPRAISAL WELLS IN CURUPAYTY SUB-BASIN•DRILL 1 EXPLORATION WELL IN CARANDAYTY SUB-BASIN

PROJECTED EXPLORATION SCHEDULE & COST

9.01.50.57.0201227.01.50.57.018.0201114.01.50.512.020109.81.52.36.020097.51.56.020081.51.00.52007

Total(MM$)

Overhead(MM$)

Seismic(MM$)

Appraisal Wells(MM$)

Expl Wells(MM$)

EXPLORATION COST ASSUMPTIONS

•WELLS - $50 MM TOTAL COST•2500 METER AVERAGE•EXPLORATION - $6 MM PER WELL •APPRAISAL - $7MM PER WELL ; MORE TESTING

•SEISMIC – $10.3 MM TOTAL COST•1300 KM AT $6000 PER KM FOR ACQUISITION AND

INITIAL PROCESSING•$2.5 MM FOR SPECIALITY PROCESSING OVER 6 YEARS

•OVERHEAD – $8.5 MM TOTAL COST•OFFICE RENTAL, SUPPLIES, COMMUNICATIONS•ADMINISTRATIVE COSTS (ACCOUNTING, FINANCE, HR, ETC)•TECHNICAL WORK (GEOLOGY, GEOPHYSICS, ENGINEERING)•DRILLING MANAGEMENT•GOVERNMENT RELATIONS•GENERAL MANAGEMENT, TRAVEL, ETC

EXPLORATION – DEVELOPMENT CYCLE

•2007 : REPROCESS EXISTING SEISMIC, MODELLING•2008 : ACQUIRE 1000 KM 2D SEISMIC. INTERPRET, MAP PROSPECTS•2009 : ACQUIRE ADDITIONAL 300 KM 2D SEISMIC WHERE NEEDED

DRILL FIRST EXPLORATION WELL•2010 : DRILL 2 EXPLORATION WELLS•2011 : DRILL 3 EXPLORATION WELLS

DRILL 1 APPRAISAL WELLDESIGN FIELD DEVELOPMENT – ISSUE CONSTRUCTION CONTRACT

•2012 : DRILL 1 APPRAISAL WELLBEGIN CONSTRUCTION OF OIL, GAS FACILITIES, PIPELINESDRILL FIRST 1/3 OF DEVELOPMENT WELLS

•2013 : COMPLETE CONSTRUCTION OF OIL, GAS FACILITIES, PIPELINESDRILL SECOND 1/3 OF DEVELOPMENT WELLS

•2014 : START PRODUCTIONDRILL FINAL 1/3 OF DEVELOPMENT WELLS

DEVELOPMENT OF OIL FIELD EXPLORATION SUCCESS

•DISCOVER 47 MMBO IN CARBONIFEROUS (MEAN FIELD SIZE)•75’ PAY, ±20 SQ KM PRODUCTIVE AREA•DEVELOP WITH 44 WELLS, 500 BOPD PER WELL•REINJECT GAS (GAS RESERVES TOO SMALL TO SELL)•CONSTRUCTION/DRILLING STARTS 2012•PRODUCTION STARTS 2014

66.01.075.02014

101.51.53.05.07.017.070.02013

100.51.53.05.08.018.075.02012

6.51.55.02011

TOTAL

(MM$)

OVERHEAD

(MM$)

ENGR DESIGN(MM$)

OIL STORAGE(MM$)

GAS FACILITIES(MM$)

OIL FACILITIES(MM$)

WELLS

(MM$)

PROJECTED DEVELOPMENT COST & SCHEDULE

OIL DEVELOPMENT COST ASSUMPTIONS

•WELLS - $220 MM TOTAL COST•2500 METER AVERAGE, 44 WELLS, 500 BOPD PER WELL•$5 MM PER WELL – INCREASED EFFICIENCY

•OIL, GAS FACILITIES, FLOWLINES, STORAGE– $60 MM TOTAL COST•22,000 BOPD SEPARATION, PROCESSING•GAS PROCESSING AND COMPRESSION FOR INJECTION•500,000 BO STORAGE AND PUMPING STATION•$7/BO FOR TRANSPORTATION TO MARKET

•OVERHEAD – $5.5 MM TOTAL COST ; SAME AS EXPLORATION

•ENGINEERING DESIGN - $11 MM TOTAL COST•PREPARE DESIGN, SPECIFICATIONS, CONTRACTS•INCLUDES PROJECT MANAGEMENT•DRILLING ENGINEERING, SUPPORT

PRODUCTION AND EXPENSE PROFILES

•PRODUCTION STARTS 2014 AT 22,000 BOPD•GAS-OIL RATIO RISES OVER TIME•REINJECT GAS TO REDUCE RESERVOIR PRESSURE DECLINE RATE•NO SIGNIFICANT WATER PRODUCTION ANTICIPATED•NO WATER INJECTION PLANNED•OPERATING EXPENSES 16-18 MM$ PER YEAR•PRODUCTION DECLINES BEGINNING 2016 AT ABOUT 20% PER YEAR DUE TO

INCREASING GAS OIL RATIO•13 YEAR PRODUCING LIFE•30 MM$ ABANDONMENT COST IN 2027

OIL RATE

0.0

5.0

10.0

15.0

20.0

25.0

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

YEAR

OIL

RA

TE -

TBD

INTERNAL RATE OF RETURN = DISCOUNT RATE WHICH YIELDS 0% PVIRR

NET PROFIT CASH FLOW DISCOUNTED @10% DISCOUNT RATEPV@10%

NET REVENUE – COST - TAXESNET PROFIT

INCOME TAXESTAXES

OPEX (EXPL & DEV) + CAPEX (EXPL & DEV)COST

OIL (OR GAS) X PRICE – TRANSPORTATION COST - ROYALTYNET REVENUE

EXPLANATION OF CASH FLOW ECONOMIC CALCULATION

ECONOMIC ANALYSIS ASSUMPTIONS AND RESULTS

•MEAN SIZE OIL FIELD DISCOVERY CASE•FULL EXPLORATION COST BURDENED BY SINGLE FIELD•$58 OIL PRICE ($65 WTI MINUS $7 TRANSPORTATION COST)•NO PRICE OR COST ESCALATION•ROYALTY PER PARAGUAY TERMS (10/12/14%)•15% DEPLETION ALLOWANCE•30% INCOME TAX RATE•EARLY YEAR LOSS TAX CREDITS TAKEN WHEN PRODUCTION BEGINS

44.5%IRR (%)$417.6PV@10% (MM$)$1357.5NET PROFIT (MM$)$439.0TAXES (MM$)$624.9COSTS (MM$)$2421.3NET REVENUE (MM$)

SUCCESS CASE ECONOMICS

OIL SUCCESS CASE ANALYSIS – PER BARREL OF OIL PRODUCED

COMMENTS

OIL SALES LESS TOTAL DEDUCTS$28.98 / BONET PROFIT

TOTAL OF ABOVE 6 ITEMS$36.02 / BOTOTAL DEDUCTS

INCOME TAX PAYABLE TO GOVERNMENT$9.34 / BOTAXES

COST TO ABANDONMENT WELLS AND FACILITIES AFTER DEPLETION

$0.64 / BOABANDONMENT

ONGOING OPERATING COST$4.93 / BOOPEX

TOTAL EXPLORATION AND DEVELOPMENT CAPITAL COST

$7.61 / BOEXPL & DEV

PAYMENT TO GOVERNMENT$6.50 / BOROYALTY

ALLOWANCE FOR 3RD PARTY COST TO TRANSPORT OIL TO MARKET

$7.00 / BOTRANSPORTATION

OIL SALES PRICE DELIVERED TO MARKET$65.00 / BOOIL SALES

DEVELOPMENT OF GAS FIELD EXPLORATION SUCCESS

•DISCOVER 600 BCF IN CARBONIFEROUS (MEAN FIELD SIZE)•75’ PAY, ±40 SQ KM PRODUCTIVE AREA•DEVELOP WITH 30 WELLS, 5 MMCFD PER WELL•PEAK GAS SALES 150 MMCFD•LAY 300 KM, 20” GAS SALES LINE TO EXISTING LINE IN BRAZIL, $20 MM FOR

COMPRESSION, $40,000 PER INCH-MILE PL COST•CONSTRUCTION/DRILLING STARTS 2012•PRODUCTION STARTS 2014

51.01.050.02014

149.01.52.090.017.08.550.02013

151.01.52.090.018.09.550.02012

6.51.55.02011

TOTAL

(MM$)

OVERHEAD

(MM$)

ENGR DESIGN(MM$)

GASPIPELINE(MM$)

GAS FACILITIES(MM$)

OIL FACILITIES(MM$)

WELLS

(MM$)

DEVELOPMENT EXPENDITURE SCHEDULE & COST

GAS DEVELOPMENT COST ASSUMPTIONS

•WELLS - $150 MM TOTAL COST•2500 METER AVERAGE, 30 WELLS, 5 MMCFD PER WELL•$5 MM PER WELL – INCREASED EFFICIENCY

•GAS, OIL FACILITIES, FLOWLINES, STORAGE– $53 MM TOTAL COST•150 MMCFD SEPARATION, PROCESSING, COMPRESSION•3,000 BPD CONDENSATE PROCESSING•100,000 BO STORAGE AND PUMPING STATION•$7/BO FOR TRANSPORTATION TO MARKET

•OVERHEAD – $5.5 MM TOTAL COST ; SAME AS EXPLORATION

•ENGINEERING DESIGN - $9 MM TOTAL COST•PREPARE DESIGN, SPECIFICATIONS, CONTRACTS•INCLUDES PROJECT MANAGEMENT•DRILLING ENGINEERING, SUPPORT

•PIPELINE - $180 MM TOTAL COST•300 KM, 20” AT $40,000 PER INCH-MILE•2 COMPRESSOR STATIONS AT $10 MM PER STATION

PRODUCTION AND EXPENSE PROFILES

•GAS SALES START 2014 AT 150 MMCFD•PRESSURE DEPLETION DRIVE MECHANISM – COMPRESSION REQUIRED•NO SIGNIFICANT WATER PRODUCTION ANTICIPATED•CONDENSATE (OIL) PRODUCTION PROCESSED AT GAS PROCESSING PLANT•OPERATING EXPENSES 16 MM$ PER YEAR•PRODUCTION DECLINES BEGINNING 2020 AT ABOUT 20% PER YEAR DUE TO

PRESSURE DEPLETION•16 YEAR PRODUCING LIFE•30 MM$ ABANDONMENT COST IN 2030

GAS SALES

0

20

40

60

80

100

120

140

160

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

YEAR

GA

S SA

LES

- MM

CFD

GAS CASE - ECONOMIC ANALYSIS ASSUMPTIONS AND RESULTS

•MEAN SIZE GAS FIELD DISCOVERY CASE – 600 BCFE•FULL EXPLORATION COST BURDENED BY SINGLE FIELD•$5.00 PER MCF GAS PRICE DELIVERED TO EXISTING BRAZIL PIPELINE•$58 OIL PRICE ($65 WTI MINUS $7 TRANSPORTATION COST)•NO PRICE OR COST ESCALATION•ROYALTY PER PARAGUAY TERMS (10/12/14% FOR OIL, 15% FOR GAS)•15% DEPLETION ALLOWANCE•30% INCOME TAX RATE•EARLY YEAR LOSS TAX CREDITS TAKEN WHEN PRODUCTION BEGINS

33.3%IRR (%)$414.8PV@10% (MM$)$1691.6NET PROFIT (MM$)$552.8TAXES (MM$)$833.6COSTS (MM$)$3078.0NET REVENUE (MM$)

SUCCESS CASE ECONOMICS

GAS SUCCESS CASE ANALYSIS – PER MCF OF GAS PRODUCED

COMMENTS

GAS SALES INCOME LESS TOTAL DEDUCTS$2.81 / MCFNET PROFIT

TOTAL OF ABOVE 6 ITEMS$3.08 / MCFTOTAL DEDUCTS

INCOME TAX PAYABLE TO GOVERNMENT$0.92 / MCFTAXES

COST TO ABANDONMENT WELLS AND FACILITIES AFTER DEPLETION

$0.05 / MCFABANDONMENT

ONGOING OPERATING COST$0.50 / MCFOPEX

TOTAL EXPLORATION AND DEVELOPMENT CAPITAL COST

$0.78 / MCFEXPL & DEV

PAYMENT TO GOVERNMENT$0.84 / MCFROYALTY

INCLUDED IN DEV COST AND OPEX$0 / MCFTRANSPORTATION

$5.00 / MMBTU ADJUSTED UPWARD FOR CONDENSATE PRODUCTION AND BTU VALUE

$5.89 / MCFGAS SALES

RISK ANALYSIS

•PLAY SUCCESS CHANCE (Pp)•Probability that one well in entire play tests hydrocarbons •Not necessarily in commercial quantities•Estimated to range between 50-100% based on geologic analysis factors

•PROSPECT SUCCESS CHANCE (Pg)•Average probability of all individual prospects testing some hydrocarbons•Not necessarily in commercial quantities•Estimated range of 20%-50% based on Bolivian/Argentine analogy•Play will be tested with multiple wells testing different prospects (#tests)

•PERCENTAGE OF TIME DISCOVERY SIZE EXCEEDS ECONOMIC THRESHOLD (Pt)•Use non-thrust field size distribution analogy•8 MMBOE for oil field discovery – 47%•170 BCFE for gas field discovery – 33%

•PROGRAM CHANCE OF ECONOMIC SUCCESS (Pe)•Chance of one economic discovery in exploration program•Drill multiple wells before “walking away”•Function of Pp, Pg, #tests, Pt

Pe = Pp x [ 1 – (1 – Pg x Pt)#tests ]

Pe X SUCCESS CAST PV@10% + (1 - Pe ) X [PV@10% OF AFTER TAX EXPL COST]

÷Pe X PV@10% OF CAPEX + (1 - Pe ) X [PV@10% OF EXPL COST]

NPVR

IRR OF RISKED CASH FLOW [Pe X SUCCESS CASE NET PROFIT – (1 – Pe) AFTR TAX EXPL COST]IRR

Pe X [SUCCESS CASE PV@10%] – (1 – Pe) X [PV@10% OF AFTER TAX EXPL COST]NPV@10%

Pe X [SUCCESS CAS NET PROFIT] – (1 – Pe) [AFTER TAX EXPL COST]NET PROFIT

EXPLANATION OF RISKED CASH FLOW ECONOMIC CALCULATION

EXPLORATION PROGRAM ANALYSIS

•6 WELL EXPLORATION PROGRAM•Pp = 90%•Pg = 20%•Pt = 47% (OIL PLAY), 47 MMBO MEAN OIL RESERVES DISCOVERED

•Pe = 40.2%

1.36RISKED NPVR

32.7%RISKED IRR

$147.2 MMRISKED NPV@10%

$517.2 MMRISKED NET PROFIT

EXPLORATION PROGRAM ANALYSIS

•6 WELL EXPLORATION PROGRAM•Pp = 90%•Pg = 20%•Pt = 33% (GAS PLAY), 600 BCFE MEAN GAS RESERVES DISCOVERED

•Pe = 30.2%

0.92RISKED NPVR

23.6%RISKED IRR

$101.3 MMRISKED NPV@10%

$478.1 MMRISKED NET PROFIT