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South American Oil & Gas Exploration and Production
ExplorationHigh-Impact
Colombian EnergyExploration & Production
NASDAQ OTC BB: PSEG
Profile
2 PETROSOUTH ENERGY CORP HIGH-IMPACT COLOMBIAN ENERGY EXPLORATION & PRODUCTION 3
PetroSouth Energy Corp. is a publicly traded oil and gas exploration and production company headquartered in Houston, Texas with an operations base in Bogotá, Colombia.
PetroSouth’s mission is to provide new energy solutions for growing global demand through the strategic exploration and development of high-impact energy projects in Colombia.
The Company currently owns participation stakes in two separate Colombian blocks representing over 133,000 total acres, combined potential reserves in excess of 220 million barrels of oil (MMBO), and established oil production.
PetroSouth’s 20% stake in the 108,333-acre Talora Block represents five prospects with combined potential reserves of 209 million barrels of oil (MMBO)1, while its 16% stake in the 25,000-acre Buenavista Block represents one producing field, one prospect, and three leads with combined potential reserves of over 13 million barrels of oil (MMBO).
1 Petroleum Equipment International, 2005
Table of Contents
Company Profile 2
Colombia Today 4
Company Projects 6
International Colombian Producers 8
Leadership 10
Contact Info 11
PetroSouth’s mission is
to provide new energy
solutions through
the strategic exploration
and development of
high-impact energy
projects in Colombia.
Company Profile
PetroSouth Energy is among the wide range of oil and gas production companies already tapping Colombia’s proved resources: 1.5 billion barrels of oil and 4.5 trillion cubic feet of natural gas.
Colombia4 PETROSOUTH ENERGY CORP HIGH-IMPACT COLOMBIAN ENERGY EXPLORATION & PRODUCTION 5
Colombia Today
Investment-Friendly EnvironmentColombia is currently one of the friendliest South American countries in terms of oil and gas regulations and royalties.
In 2003, Colombia’s National Agency for Hydrocarbons (ANH) created a new energy policy, which requires Ecopetrol, the state-owned hydrocarbon company, to compete with other oil and gas companies for exploration and production contracts.
The new policy also allows private companies such benefits as 100% ownership upon exploration success, while incorporating a generous sliding royalty scale starting at 8% on production of 5,000 barrels per day or less. In response, $367 million in oil investment contracts were established between the Colombian ANH and private investors in 20051.
The New ColombiaUnlike the 1980s, there is a new stability and security in Colombia, America’s closest Latin American neighbor. Twice-elected president Álvaro Uribe has created a safe country that attracted over 1.9 million tourists in 2006, a 48% increase over 20052.
CNBC.com points out that Uribe’s policies have also fostered profound economic gains that account for Colombia being called the “extreme emerging market”: lower interest rates, GDP growth of 6.8% in 2006, and the Colombia Stock Exchange Index (IGBC) surge of 1300% since 20013.
Adding to the positive foreign investment atmosphere is the nation’s stable economy, with estimated GDP per capita of $7,900 and $14.96 billion of foreign exchange and gold reserves in 20054, and the spirit of cooperation between the governments of Colombia and the US, as indicated by 40.4% of the country’s exports going to America5.
Best of all, Colombia exports 196,000 barrels of oil to the US every day6.
Tapping Colombia’s ReservesThe combination of Colombia’s investment-friendly environment, national security, and abundant hydrocarbon reserves has attracted small and medium-sized energy companies, such as PetroSouth Energy, as well as major players, such as BP and Chevron.
State and private energy companies in Colombia are currently producing 580,000 barrels of oil equivalent per day (BOED), of which 300,000 BOED is exported. In 2005, exploration efforts produced an additional 19 MMBO of new reserves1, and Colombia’s total proved oil reserves stood at 1.5 billion barrels.
Meanwhile, natural gas production in 2003 amounted to 214 billion cubic feet (BCF), and Colombia’s total proved gas reserves as of 2005 amounted to 4.5 trillion cubic feet (TCF)4.
By 2005, petroleum and petroleum products had grown to represent 26.2% of Colombia’s exports5.
1 U.S Department of State 2 Colombian Ministry of Commerce, Industry and Tourism3 CNBC.com, Investing in Colombia, July 20074 Central Intelligence Agency’s World Factbook5 The Economist (2005 numbers)6 US Energy Information Administration (2005 numbers)
Projects
6 PETROSOUTH ENERGY CORP HIGH-IMPACT COLOMBIAN ENERGY EXPLORATION & PRODUCTION 7
Company Projects
PetroSouth currently has participation stakes in two separate Colombian blocks representing 133,333 total acres, combined potential reserves of 222.01 million barrels of oil (MMBO), and established production on one block.
Talora Block ProjectPetroSouth Energy has a 20% participation stake in the Talora Exploration and Exploitation Contract. The operator and majority partner is Petroleum Equipment International at 60%.
The Talora Block lies just southwest of Bogotá. The 108,333 acre contiguous parcel of land contains five prospects with combined potential reserves of 209 million barrels of oil (MMBO)1.
Nearby Production & OpportunitiesSeveral fields in close proximity to the Talora Block are active oil producers.
For example, Brazil’s state-owned Petrobras has operated the Guando field just southeast of the Talora Block since November 2002. By December 2005, 70 producing wells had been drilled in the field2, which has total recoverable reserves of approximately 117 million barrels, and is currently yielding 33,000 barrels of oil per day (BOPD)3.
Further south, one of PetroSouth’s Talora Block partners recently completed six successful drill stem tests, establishing the presence of a significant oil accumulation with combined production flow rate of up to 5,906 barrels of oil per day (~$354,000 USD @ $60/barrel).
While the 2004 Talora contract has a 6-year exploration period and 24-year production period, PetroSouth is also actively pursuing the acquisition of additional potential oil and gas opportunities within Colombia.
1 Petroleum Equipment International, 20052 Society of Petroleum Engineers, 20063 Petrobras website
Analog Field: Guando at 33,000 BOPD
Operated by Petrobras [NYSE: PBR].
The nearby Guando Field has 70 producing wells, 117 million barrels of recoverable reserves, and produces 33,000 barrels of oil per day.
Talora Block Potential Reserves in MMBOLead/Prospect Potential Reserves* In USD**Lead 1 - Piedras Deep 120.44 MMBO $7,226.4 MLead 2 52.61 MMBO $3,156.6 MLead 3 21.44 MMBO $1,286.4 MLead 4 13.54 MMBO $812.4 MLead 5 0.97 MMBO $58.2 M Total 209.01 MMBO $12.54 B
*Source: Petroleum Equipment International, 2005**Assuming $60 per barrel
Buenavista Block ProjectPetroSouth has a 16% participation stake in the Buenavista Exploration and Production Contract. The operator and majority partner is UTO at 84%.
The Buenavista Block lies just northeast of Bogotá, Colombia. The 25,000-acre contiguous parcel of land contains the currently producing Bolivar field, the Bolivar prospect, and three leads, representing combined potential reserves of over 13 million barrels of oil (MMBO).
The Bolivar Field represents potential reserves of 2.95 million barrels of oil. Included in the field is the La Luna formation, covering an area of 700 acres.
PetroSouth’s Bolivar 1 well is currently in production, tapping the La Luna Reservoir at approximately 3,000 feet, while the Company plans to drill the Bolivar Une Prospect 3,000 feet deeper in the same zone in Q3 2007.
Nearby Fields & ProductionThe Buenavista Block is located 38 miles northwest of Colombia’s largest oil fields, the Cusiana/Cupiagua complex, operated by industry giant BP4.
BP discovered the Cusiana and Cupiagua fields in 1990. Oil from the fields, which reached peak production of 434,000 barrels per day in 1999, is transported by the 500-mile Ocensa pipeline, and represents BP’s main activity in Colombia5.
Colombia’s second largest field, Caño Limón4, lies to the northeast of the Buenavista Block. Caño Limón was discovered by Occidental in 1983, reached peak production of 208,000 gross barrels per day in 1990, and today represents one-third of Colombia’s total production6.
4 U.S. Energy Information Administration5 BP website, May 20076 Occidental website, May 2007
Buenavista Block Activity & Evaluation
In 2005-2006, existing 2D seismic was reprocessed and interpreted, allowing the existing Bolivar-1 Well to be evaluated and re-entered to establish Petro-South as both a Colombian explorer and producer.
Buenavista Block Potential Reserves in MMBOField (F) Potential Reserves In USD*Prospect (P) (P50)Lead (L) Bolivar LL (F) 2.95 MMBO $177.0 MBolivar Une (P) 4.21 MMBO $252.6 MWest 1 (L) 2.79 MMBO $167.4 MWest 2 (L) 2.23 MMBO $133.8 MEast 1 (L) 0.95 MMBO $57.0 M Total 13.13 MMBO $787.8 M
*Assuming $60 per barrel
HIGH-IMPACT COLOMBIAN ENERGY EXPLORATION & PRODUCTION 9
International Colombian Producers ProducersColombia’s foreign investment-
friendly environment and extensive
production infrastructure has
resulted in over 70 independent
energy companies operating in the
country, making oil the country’s
leading export and source of
foreign income1.
Exxon-Mobil Corp.NYSE: XOM Market Cap: $511.73 B
ExxonMobil’s operations in the Americas accounted for roughly 33% of the company’s 2005 net oil and gas production, and about 39% of upstream earnings. The company owns a 40% interest in the 11 million acre Tayrona block off Colombia’s north coast in the Caribbean Sea. Activity in 2005 consisted of technical evaluation in preparation for acquisition of 3D seismic data planned for 20062.
Total S.A.NYSE: TOT Market Cap: $366.10 B
Total is an integrated oil and gas company with operations in over 130 countries. The company has been active in Colombia over the years through its subsidiary, TEMPA, which holds interests in the Cusiana and Cupiagua fields. Oil from the fields is exported by pipeline to the coast, while gas is sold domestically, mainly in Bogotá. The company acquired additional Colombian exploration rights in Q3 20063.
British Petroleum (BP plc)NYSE: BP Market Cap: $232.45 B
BP’s main Colombian activity is within a few hundred kilometers of Bogotá, at two major oil finds the company made in the early 1990’s a few years after arriving in the country. To date, BP has drilled over 125 wells in Colombia, reaching peak production in 1999 of 434,000 BOED. Today, the company employs 480 people in the country, and partners with Ecopetrol and TEMPA4.
Talisman Energy Inc.NYSE: TLM Market Cap: $20.31 B
Talisman Energy is active in over 16 countries with average production of 470,000 BOED at year-end 2005. Talisman’s subsidiary, Talisman (Colombia) Oil & Gas Ltd., is participating in an exploration program in a known hydrocarbon basin, and holds interests in the Upper Magdalena Valley region; in the El Conchal and El Caucho Blocks; and in the Llanos Foothills region of north-central Colombia9.
Nexen, Inc.NYSE: NXY Market Cap: $16.79 B
Nexen is an independent Canadian-based global energy company with total proved reserves of 843 million barrels of oil equivalent (MMBOE) as of year-end 2004. The company’s 20% partnership with Petrobras in Colombia’s Guando Field yielded 5,000 BOED after royalties in 2005, or roughly 2% of the company’s approximately 250,000 BOED production rate10.
Chevron CorporationNYSE: CVX Market Cap: $193.11 B
Chevron’s energy activities in Colombia began in the late 1920s, and include significant oil and gas discoveries in the 1960s and 70s. Currently, the company operates three gas fields in northern Colombia. The company’s total daily average production of natural gas in 2005 was 465 million cubic feet per day, or approximately 75% of Colombia’s total production5.
PetrobrasNYSE: PBR Market Cap: $148.03 B
The Brazilian-owned Petrobras has been active in Colombia since 1972, with current production in the country of 51,000 barrels of oil equivalent a day (BOED). In 2000, the company was responsible for one of the largest Colombian discoveries in fifteen years: the Guando Field, 110 kilometers southwest of Bogotá. Petrobras is partners in the field with Colombian state-owned Ecopetrol, and Nexen, Inc.6
Petrominerales Ltd.TSX: PMGMarket Cap: $969.0 M
Petrominerales is a Bogotá, Colombia based hydrocarbon company, 80.7% owned by Petrobank Energy and Resources Ltd. With a 2.5 million acre exploration land base in two of Colombia’s most prolific basins, the company’s oil production in Q3 2006 averaged 2,420 BOED, a 126% increase over the comparative 2005 period. The company plans for significant exploration expansion in Q1 2007.1
LUKOIL ADR London Stock Exchange: LKOD Market Cap: $141.80 B
LUKOIL Overseas, a fully affiliated company of LUKOIL, signed a Colombian exploration and production contract in April 2002 on the Condor contract block. LUKOIL holds 70% in the project with the remaining 30% held by the Colombian state oil company ECOPETROL. Situated in the Llanos basin, the Condor block has estimated recoverable reserves of roughly 2 billion barrels of oil equivalent.7
Pacific Stratus Energy Ltd.TSX: PSE Market Cap: $754.9 M
Pacific Stratus is a Canadian-based oil and gas company focused on Colombia, with a total land base exceeding one million acres, and proved producing resources of 6.4 MMBOE. The company has interests in three producing Colombian oil fields – Guaduas (90.6%), Rio Ceibas (27.27%), and Puli-7 (50%) – with cumulative production of 5,000 BOED.11
8 PETROSOUTH ENERGY CORP
1 Petrominerales website, Dec. 20062 Exxon-Mobil website, Dec. 20063 Total website, Dec. 2006
4 BP website, Dec. 20065 Chevron website, Dec. 20066 Petrobras website, Dec. 2006
7 LUKOIL Overseas website, July 20078 Occidental website, Dec. 20069 Talisman website, Dec. 2006
10 Nexen website, Dec. 200611 Pacific Stratus website, Dec. 2006
Occidental Petroleum Corporation NYSE: OXY Market Cap: $49.34 B
Occidental discovered the billion-barrel plus Caño Limón oil field in northeast Colombia’s Llanos Basin in 1983. The field reached peak production of 208,000 gross barrels per day in 1990, still accounts for a third of Colombia’s total production, and transformed Colombia from an oil importer to oil exporter. The Llanos Basin itself has yielded almost 5 billion BOE to date 8.
HIGH-IMPACT COLOMBIAN ENERGY EXPLORATION & PRODUCTION 11
PetroSouth Energy
benefits from a
seasoned leadership
team with extensive
Colombian energy
industry experience.
Leadership
Fred B. Zaziski – Chairman
Fred leverages 29 years of work experience to provide PetroSouth Energy Corp. with the knowledgeable leadership necessary for developing assets and minimizing overhead.
Fred’s energy industry background includes years of international assignments in management and executive positions for companies such as Falcon Natural Gas Corp., Halliburton, National Petroleum Technology Company, and ComOxy.
During his years in the industry, Fred has been involved in the majority of aspects of the oil and gas business including land acquisition, exploration, drilling, completion, production, remediation and marketing.
While having worked in West Africa, the Middle East, Europe, and the United States, Fred is currently a resident of Houston, Texas.
A member of The Society of Petroleum Engineers and The American Petroleum Institute, Fred holds a Petroleum Engineering degree from the University of Pennsylvania and an MBA obtained while on assignment in Cairo.
Contact InfoFor additional information on PetroSouth Energy, please contact:
PetroSouth Energy Corp. – USA HQ20333 State Highway 249Suite 200 - 113Houston, TX77070
Tel: +1-281-378-1563Fax: +1-281-271-8600
E-mail: [email protected]: www.petrosouthcorp.com
Leadership
10 PETROSOUTH ENERGY CORP
Juan Carlos Robles – Chief Executive Officer (CEO)
Juan joined the PetroSouth leadership team in 2007, bringing with him a 20-year background as a proven oil executive and geologist in exploration, drilling, and production activities in Colombia. As CEO, he will be responsible for the strategic and technical direction of the company.
Juan gained valuable major player experience first at BP and then Shell’s Hocol S.A. He then expanded his executive experience with the giant Amoco Colombia Petroleum Company. Moving through roles such as Operations Geologist, Chief of Exploration Operations, and Exploration Coordinator, he continued to explore the country’s on-shore and off-shore basins.
In 1999, Juan became Hupecol’s Colombian representative. While in charge of the formation of the company and the discovery of the Tambaqui and Jaguar oil fields, Juan also managed the company’s E&P activities in the Llanos Basin within budget and time schedule.
By 2003, he was managing his own company promoting new Colombian E&P projects with 50 MMBO of potential reserves sold to various investors. Juan also played a key role in the discovery of Colombia’s Ocumo, Carupana, Toruno, Careto, and Arauco oil fields working as an independent geologist.
Juan earned his geologist title at the Universidad Nacional de Colombia, and a postgraduate degree in digital image processing and pattern recognition from the International Institute for Geo-Information Science and Earth Observation (ITC) in The Netherlands. A certified geologist with the Professional Geological Board of Colombia, he is also an active member of the Colombian Association of Petroleum Geologists and Geophysicists.
Felipe Pimienta Barrios – Chief Financial Officer (CFO)
Felipe Pimienta draws on his formal education and range of experience in optimizing allocation of resources and generating revenue growth.
Felipe formerly held senior analyst and executive account manager positions at Bansuperior, where his responsibilities included, among other things, budget management and auditing.
Most recently at Citibank, Felipe acted as an asset management executive, where he built and developed an exclusive portfolio of profitable wealth management accounts while leveraging key leads and his local knowledge to further expand the bank’s business.
Felipe studied business English at University of California, Los Angeles; Finance and International Business at Universidad Sergio Arboleda, Bogotá, Colombia; and earned an MBA from San Pablo CEU, Madrid, Spain.
Gustavo Suárez Camacho – Legal Counsel
Gustavo Suárez Camacho has over 25 years legal experience and has represented the Colombian interests of some of the world’s largest oil and gas companies.
Currently a Partner in Bogotá, Colombia’s Zuleta & Partners Legal Group, Gustavo formerly acted as Legal Director of BP Exploration Company (Colombia) Ltda. from 1992 to 2000. Other BP-related posts include Political Advisor to foreign affairs and communications in Latin-American issues of BP International in London, England, and Political Advisor to BP Gas Marketing Limited in London, England.
As well as legally representing Chevron Texaco’s interests in Colombia, Gustavo was among the group of attorneys that elaborated Colombia’s new hydrocarbon exploration and exploitation agreement, and has acted as external consultant to Colombia’s National Agency for Hydrocarbons (ANH) since 2004 in affairs related with oil contracts and the administration of State reserves.
Gustavo received his law degree from Universidad Colegio Mayor de Nuestra Señora del Rosario, Bogotá D.C., and an MBA for executives from INSEAD, Fontainebleau, Francia. His additional studies include Political Science and Public Administration as well as Arbitration.
Ernst & Young – Auditors
Ernst & Young is an international corporate services leader active in 140 countries. The firm has been established in Colombia since 1963, and currently has over 300 professionals across four Colombian offices.
The firm’s Global Oil & Gas Center is a worldwide network of energy professionals representing one of the largest providers of professional services to the oil and gas sector, with 16% of the industry’s most important companies as clients, including BP, ConocoPhillips, and Brazilian state-owned Petrobras.
Ernst & Young provides a wide range of services, from accounting and auditing to tax reporting and operations, tax advisory, business risk services, technology and security risk services, transaction advisory, and human capital services.
Colombian Operational Office
Torre Ultrabursatiles
Cra 7 No. 73 – 55 Piso 7
Bogotá
Colombia
Tel: +57-1-3138337
Fax: +57-1-3138355
Oil and Gas
PetroSouth Energy Corp. – USA HQ20333 State Highway 249Suite 200 - 113Houston, TX77070
Tel: +1-281-378-1563Fax: +1-281-271-8600
E-mail: [email protected]: www.petrosouthcorp.com
INVESTOR RELATIONS:TOLL FREE: [email protected]
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