Our Business and Corporate Responsibility Challenges

PetroLatina Energy aims to provide strong economic returns to its shareholders in a manner that is environmentally sound and fulfils individual potential. The Company’s activities are focused on the exploration, transportation, and extraction of oil, while minimising any environmental impact and maintaining constructive relationships with the local community - ‘being a good neighbour’. Currently, the Company has exploration and development operations in Las Casas, Haupac, Tortugas and Atzam in the Peten Basin of Guatemala. In addition, it has exploration and development operations in the Los Angeles, Santa Lucia and Dona Maira fields of the Cesár region, Colombia. The Company also operates a pipeline situated in the region of Norte de Santander, Colombia.

Guatemala

Guatemala is a relatively under-explored region, with a high level of prospectivity. The southern margin of the south of Peten Basin has a similar geology to the highly productive oil and gas fields of southern Mexico. Seismic and sub-surface data suggest that the geological trend of southern Mexico extends to the southern Peten Basin. The lithological profile of southern Peten Basin displays rock formations favourable to the production of oil. There is a strong demand for oil and gas energy as a result of the growing economy of Guatemala. The government is keen to promote inward investment by companies such as PetroLatina Energy.

Guatemala is roughly the size of England and Wales together. It is a multicultural country, with a population of around 13 million of whom almost half are of Mayan origin. Some 23 languages are spoken by the different indigenous peoples. Guatemala is a middle income country with a GNP of about US$ 30 billion per annum. However, there are great disparities of wealth and inequalities of income distribution. Poverty is widespread especially in rural areas. Around half the population live in poverty and some 16% in extreme poverty. Guatemala is highly complex. It suffered from a terrible civil war for almost 40 years and this was marked by atrocious abuses of human rights particularly in its latter stages. The Peace Accords of 1996 generated optimism and hopes of a national renewal. These have been at least partially disappointed for many reasons, including institutional weakness, corruption and widespread impunity which erodes the rule of law. Above all, Guatemala today is disfigured by serious levels of criminal violence. It is therefore a difficult country in which to operate. Environmental problems are widespread including extensive deforestation in many of the areas where exploration is taking place. For all the problems of Guatemala, PetroLatina Energy believes that little by little real progress is being made. Regional integration and the climate for investment have benefited from the signing of the Central American Free Trade Agreement with the United States in 2005. The economy is growing strongly. The long-term prospects are good and will repay making a commitment to the country today.

Colombia

Colombia is a region with a proven hydrocarbon system with an established oil and gas industry. The Middle Magdalena Valley is considered to have ‘world class’ source rock and good quality sandstone reservoirs; and also a potential source in the unexplored deeper fractured carbonate reservoirs. Production in Colombia over recent years has declined and the government is keen for foreign investment in the hope of boosting production. Although safety has improved greatly in Colombia over the last few years, security is still a concern for PetroLatina Energy. As with Guatemala, deforestation is a major problem in Colombia.