The Company holds the exploration and production licence to the 6-93 concession covering the discoveries at Las Casas and Huapac and which allows for the exploration and development of the property covering a total of 323,000 acres. Additionally, the Company was notified of the award of Licence A7-2005 (Tortugas/Atzam) on 14th September 2005 though formal signing of the licence did not occur until late December 2005. This licence covers approximately 77,717 acres.

Both licences are located in the Peten Basin. The 6-93 Licence was granted in October 1993 for a 25 year period. The 2006 work programme was aimed at maximizing production and to confirm reserves. Specifically, 150 km of 2D seismic were shot in the first quarter of 2006. Interpretation of these data provided a bottom hole location for the sidetrack of Las Casas 1X and confirmed that Huapac 1 had been drilled on the crest of the structure. Since the original Huapac well was drilled a village has been built around the well head making access to the original well reliant on MEM relocating the village. The MEM technical department has approved the interpretation of the seismic shot over Huapac area as a fulfilment of all outstanding work programme obligations in respect of Huapac. This is currently being reviewed by the MEM legal department.

Licence 6-93 contains two areas in which hydrocarbons have been discovered. These are known as Las Casas and Huapac. In addition to these, nine other leads have been identified. View Large Map ››

The estimated potential reserves on the licence are as set out in the table below.

The estimated potential reserves of Las Casas were estimated at the floatation to be 26.3 million barrels, approximately 8.7 million barrels of this was contained in a 'carbonate build-up' interpreted on seismic in the 3X area. This 'build-up' was not proven when the 3X well was drilled and consequently the estimate of potential reserves has been changed. The Company estimates that the nine leads have the total potential of unrisked reserves of 55 million barrels.

The A7-2005 licence had an initial work programme which required the acquisition of 150 km2 of 3D seismic, 50 km of 2D seismic, the workover of three existing wells and the drilling of four new wells in the first three years of the licence. Following negotiations with MEM, the seismic shoot has been amended to be solely a 2D shoot covering of 437 kilometres.

Licence A7-2005 (Tortugas/Atzam) is an exploration contract located in the north-western corner of the department of Alta Vera Paz, Guatemala. The area is approximately 20km west of the Rubelsanto field discovered by Hispanoil in the early 1970's in which in excess of 30 million barrels have been recovered. Tortugas is accessible by road and is 375km from Guatemala City or by air. By air, the closest serviceable airstrip is at Playa Grande.

The licence has two areas of interest. The first is around the Tortugas salt dome and the second is an area to the south of Tortugas, known as Atzam. The original exploration of the region was for sulphur, specifically in the Tortugas area. However, every well drilled on the flanks of the salt dome contained live oil shows. Three of the wells drilled on the north flank of the salt dome flowed 28-32º oil from the top of the Coban C17 from depths of 1300 feet to 1800 feet.

Once oil was discovered, 13 wells were drilled on the area now covered by the licence. Eight of these were on the Tortugas structure, two on the Atzam structure and three elsewhere on the licence. The Tortugas wells and one of the Atzam encountered hydrocarbons. Initial indications are that this has an API of 35º.

Reserves at Tortugas are estimated to be 3.8 million barrels (3P). The Company estimates the potential reserves of the Atzam structure to be between 5 and 15 million barrels.

Both licences are issued as production sharing agreements with royalty based on the API of the crude and profit shares governed by the production levels.