TrueStar Petroleum Corporation’s owns 94% of a Guatemalan corporation, Ceiba Petroleo SA, that was formed specifically to enter a Production Sharing Agreement for oil and gas exploration, development, and production on 554,000 acres in the Guatemalan portion of the Peten Basin. A test well drilled on the license in the early 1980’s discovered oil and produced over 145,000 barrels of oil on various tests and production periods.  A confirmation well produced over 85,000 barrels on tests.  Geologically, the area is in the southern extension of the same Basin from which most of the oil and gas in Mexico is produced. 

Although political instability, low oil prices, and lack of infrastructure at the time constrained field development and large-scale exploration and production work in Guatemala at that time, the political climate is now stable, oil prices are high, and infrastructure is in place.  The Guatemalan government has let the world know that the country is now open for business and has been recruiting foreign investment actively for their oil and gas industry.  A small, but functioning industry is in operation, producing from several fields and exporting oil from a Guatemalan port on the Caribbean to US Gulf Coast refineries.  Good infrastructure, including pipelines, paved roads, upgrade plants, storage terminals, and ports are in place and operating.  Service companies and drilling rigs are available in the country.  Additional services and supplies can be imported from Mexico. 

Several years ago, TrueStar farmed out 90% of the license to an Argentinean company, CGC, in exchange for CGC’s committing to a work program that included certain seismic surveys and well drilling. CGC carried out their obligations for seismic studies in good form, using state-of-the-art 2D methods and equipment.  Financial upheaval in Argentina resulted in bankruptcy of  CGC’s parent company, CGC was not able to complete its work commitment.  The 90% interest was assigned back to the Company. TrueStar is currently in very productive talks with the Guatemalan Ministry and is awaiting approval of this assignment.  TrueStar hopes to begin development of the license area in 2008

Seismic studies indicate three possible exploration targets on the license area.  TrueStar’s plans to drill a twin well to the discovery well and 4 to 6 additional development wells in the discovered field to establish substantial revenue.  TrueStar would then drill exploratory wells on the other structures.  Initial production from wells drilled on other structures in the area over the last few decades range from approximately 2500 to 10,000 barrels of oil per day. 

In summary:

• TrueStar is the original licensee on a large, 554,000-acre block in Guatemala. 
• The license area has a discovered, but undeveloped, field on it.
• The license area has three undrilled structural targets identified by seismic work
• TrueStar has an assignment back to it for a 90% interest in the license it farmed out.
• A pipeline leading to an export port crosses the license area and the initial target structure. 
• TrueStar has opened an office in Guatemala City and hired the former Director of Hydrocarbons in the Ministry as General Manager and is in active discussions with the Ministry of Energy and Mines for approval of the assignment.