Options for crude oil marketing:

• A number of opportunities exist

• Exports – varying options exist

• Refining – new refinery will buy crude at field

At present PetroLatina have not finalised any marketing agreements. However, the Company believes that it has a number of options available to it to achieve this. The Company currently has storage facilities at the Las Casas well 1x site of approximately 7,000 bbls.

Export

The map opposite shows the routing of a pipeline from XAN Field, in the northwest corner of Guatemala, to Piedras Negras on the Gulf of Honduras. The pipeline and the storage facility at Piedras Negras are operated by the owner and operator of the Xan Field. Under the laws of Guatemala, access to the pipeline is available to other producers. Subject to securing the relevant contracts, the Company believes that spare capacity exists in the pipeline.

Initial assays of the Las Casas crude indicate that this has an API of 39º - 40º whereas that of the XAN Field has an API of 16º. In the absence of a quality adjustment factor, should the two crudes be mixed in the pipeline, the Las Casas crude would suffer a decline in value. Due to the differing crude qualities, representatives from the Government of Guatemala have stated, in principle, that should Taghmen wish to use the pipeline, they will allow batch shipments. In so doing, the higher value of the Las Casas crude will be preserved.

The pipeline passes close to Las Casas field and the nearest tie in point to the pipeline is approximately 3.5 kms from the Las Casas field. As an alternative to the pipeline, the crude could be trucked by road to Piedras Negras. This is an approximate distance of 120 kms. Depending on the prevailing conditions at the relevant port, tankers of between 250,000 and 300,000 bbls can be handled. We are currently negotiating with the MEM for usage of tank space at the port to allow accumulation and shipment of oil to receive credit for quality.

Refining of crude

As an alternate or an additional option, the directors believe that the company may be able to sell crude to the newly built refinery at El Rancho (San Agustin Acaguaslan), which is 300km from the Las Casas Field. The refinery is in a start up phase, programmed to commence operations within three months. The crude oil can either be delivered to the refinery by truck or sold at Las Casas. The refinery has indicated that it might be willing to purchase the oil at the Las Casas well sites.

Power Generation

Talks are ongoing with Duke Energy for the use of our production in their power generation facilities on the west coast. Duke is currently burning between 6,000 and 7,000 bbls of imported crude and bunker fuel.