EXPLORATION

The Company owns three exploratory blocks in the prolific Marañon Basin of Peru. Blocks 135, 137 and 138 are located to the south of the producing Ecuadorian Napo and Colombian Putumayo Basins, and total 1,883,553 hectares. The commitments for the first exploration phase in these blocks include regional studies and the acquisition, processing and interpreting of 2D seismic. Upon the successful completion of the first phase, the company has the option to continue the exploration program with additional seismic acquisition and by drilling one well for each block.

FARMOUT

During 2009, the Company tranferred 45% of its working interests in Block 135 and Block 138 to Petrodorado in exchange for Petrodorado providing 45% of the total investment for the second exploratory phase for both blocks, equal to $16.2 million and to $15.3 million, respectively. The exploration phase for Block 135 requires a minimum investment of $36 million, which will be spent on the acquisition of 704 km² of 2D seismic and the drilling of one exploratory well. The Company will retain a 55% working interest in Block 135. The exploration phase for Block 138 involves a minimum investment of $34 million, which will be spent on the acquisition of 525 km² of 2D seismic and the drilling of one exploratory well. The Company will retain a 55% working interest in Block 138.

MARAÑON BASIN

The Marañon Basin is the largest in Peru and corresponds to the southern extension of the Putumayo and Oriente Basins of Colombia and Ecuador, respectively. The Putumayo–Oriente–Marañon Basin has produced 2.88 billion barrels of oil and 660 bcf of gas from Cretaceous and Tertiary sandstones.

Blocks 135 and 137 are located to the southeast of the Marañon Basin, and the main targets are the Cretaceous Vivian, Chonta, and Cushabatay sandstones.