Pursuing and developing exploration project opportunities in Latin America

Corporate Business

Company History

Since 2007, the Company’s primary purpose has been the identification, acquisition and development of oil and natural gas projects in Paraguay.


The Company holds a 36 percent working interest in the Pirity Concession, which is approximately two million acres in size and located in western Paraguay’s underexplored Pirity Sub-basin, near the Argentinian-Paraguayan border. The Pirity Sub-basin is a contiguous extension of Argentina’s prolific Olmedo Sub-basin, which has demonstrated production, and is structurally positioned similar to the nearby Palmar Largo fields with reported reserves. The Pirity Concession is one of only eight exploration concessions granted under the laws of Paraguay.

In the event the Company fails to complete the Asset Acquisitions related to Brazil and Guyana, the Company’s only asset will be its 36 percent working interest in the Pirity Concession.

Cretaceous Rift Basin Showing the Pirity Concession


The Pirity Concession

In 2003, the MOPC, pursuant to Resolution No. 433/03, granted two Paraguayan citizens a permit for the 2,331,600 hectare prospecting and superficial recognition of hydrocarbons (the “Prospecting Permit”) in an area within what later became the Pirity Concession. The Prospecting Permit was extended in 2004 by MOPC Resolution No. 447/04.

On August 12, 2004, one of those citizens, together with another shareholder, organized PHSRL. On November 4, 2005, MOPC issued Resolution 793/05, approving an assignment agreement whereby the two holders of the Prospecting Permit assigned all of the rights under the Prospecting Permit to PHSRL. On December 30, 2005, pursuant to Resolution 1073/05, MOPC adjudicated to PHSRL an exploration lot of 40,000 hectares within the area of the Prospecting Permit.

In 2007, the Government of Paraguay and PHSRL entered into a concession agreement relating to the concession of rights for the exploration of hydrocarbons in the Pirity Concession (the “Concession Agreement”) in respect of a 800,000 hectare area (1,976,840 acres). The effectiveness of the Concession Agreement was subject to approval by Paraguay’s legislature, as required by Paraguay’s constitution.

On April 18, 2008, the Paraguayan Senate approved the bill, or project of law, submitted to it by the Paraguayan Chamber of Deputies, pursuant to which the Pirity Concession would be granted.

The aforementioned Paraguayan Senate approval was a condition to the closing of the purchase of the shares of PHSRL by Petro-Victory, LLC and Richard F. Gonzalez, pursuant to the terms of a purchase agreement (the “Purchase Agreement”) dated April 18, 2008. Accordingly, Petro-Victory, LLC (indirectly through PHSRL) and Mr. Gonzalez obtained all of the rights under the Concession Agreement thereby.

Law No. 3,479 (the “Concession Law”) was promulgated on May 13, 2008, following due approval by the Paraguayan Congress of the Concession Agreement. The Concession Law granted the Pirity Concession to PHSRL and made the Concession Agreement effective. The Concession Law incorporates the Concession Agreement in its entirety, without any modification.

In May 2009, the MOPC annulled (the “MOPC Annulment”) resolution 583/08 (which resets PHSRL’s exploratory stage from December 30, 2005, to begin on May 13, 2008) which resulted in PHSRL’s exploration rights being set back to such earlier date. In addition, and as a consequence of the MOPC Annulment, on September 15, 2009, the Executive Branch of Paraguay declared via decree (the “Executive Decree”) the Concession Agreement to have lapsed. PHSRL challenged the MOPC Annulment and the Executive Decree in front of the Administrative Tribunal of Paraguay (“Tribunal de Cuentas”) and the Constitutional Chamber of the Paraguayan Supreme Court. 
While the case was being adjudicated, the MOPC issued a one year prospecting permit to the Pirity Concession to LCH. Additionally, the Paraguayan Executive Branch, via decree, granted LCH a concession contract for LCH.

On March 25, 2011, the Administrative Tribunal revoked the MOPC Annulment and the Executive Decree against PHSRL and reinstated PHSRL’s four-year exploratory period together with the option to renew for an extra two years. The Administrative Tribunal also held that such four year exploratory period was to begin on the date that the Supreme Court of Paraguay had declared the Administrative Tribunal’s decision as final and not appealable.

The MOPC and LCH each filed a final appeal before the Administrative Chamber of the Supreme Court. While this appeal was in progress, the MOPC, LCH, and PHSRL entered into an out of court settlement agreement whereby the MOPC and LCH agreed to abandon their respective appeals and release PHSRL of any further claims, and whereby PHSRL assigned a 5 percent carried working interest in the Pirity Concession to LCH.

On August 10, 2012, the Administrative Chamber of the Supreme Court, due to the inactivity of the appellees, declared the decision of the Administrative Tribunal to be final and not appealable, in favor of PHSRL.

On October 4, 2012, the Executive Branch of Paraguay, consistent with the foregoing judicial decisions, declared that the exploration period under concession Law 3,479/08 for PHSRL was to be computed as beginning on September 12, 2012. No further challenges, by the government or otherwise, have been made alleging that PHSRL does not own the Pirity Concession or that it has failed to satisfy the required work program.

Gross Overriding Royalty Agreement

Concurrently and in connection with the Purchase Agreement, PHSRL entered into the GORA with the PHSRL Founders, as representatives of the sellers of the equity shares of PHSRL. The PHSRL Founders, together with their respective spouses, were the only shareholders of PHSRL prior to the sale of the shares pursuant to the Purchase Agreement. Under the GORA, PHSRL granted the PHSRL Founders a royalty equal to 5 percent of all of the gross proceeds received by PHSRL from the sale of oil, gas and associated hydrocarbons from the Pirity Concession, net of those deductions specified in the GORA. The GORA is governed by the laws of Paraguay.