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EXPLORATION POTENTIAL IN THE PIRITY SUB-BASIN

The Operator and Petro-Victory, LLC have now completed the interpretation and special processing of all new seismic data acquired during 2013 as well as re-reprocessing and re-interpretation of all historical data in the Pirity Basin, including over 1,000 km of old 2D seismic data. The Operator’s and Petro-Victory’s assessment of the overall level of exploration potential in the Pirity Sub-Basin, considering both Blocks (Pirity and Demattei) located in the Pirity Sub-Basin, has increased since the time of the Company’s 2012 Farm-out deal with President Energy.

As a consequence of the completion of this Pirity Sub-Basin-wide evaluation it has become clear that there are three independent petroleum systems, each one of which is potentially capable of yielding giant field discoveries (probably each of them over 100 MMboe). The three independent petroleum systems in the Pirity Sub-Basin are the following:

Cretaceous

The initial petroleum system identified at the time of the farm-out during 2012 with President Energy was the Cretaceous Yacoraite, which is a direct extension of the productive Palmar Largo oil field trend in Argentina. This play provides a high chance of success to discover multiple new light oil fields in Paraguay as described in the independent audit reports of Prospective Resources (Pre-drill) carried out by RPS initially for the Operator as well as lately for Petro-Victory LLC as published in May 19, 2014. The Cretaceous play will be tested by the Jacaranda X-1 well and the Tapir X-1 well both part of the present two-plus-one well exploration program, with overall estimated Cretaceous gross mean unrisked Prospective Resources (Pre-drill) respectively in excess of 376 MMboe.

Carboniferous/Upper Devonian

The second petroleum system identified is the Carboniferous/Upper Devonian “Los Monos” which extends into Paraguay from the adjacent productive areas of Bolivia and NW Argentina and becomes structured in very large fault blocks along the northern flank of the Pirity Rift. The “Los Monos” play was described in the independent audit of Prospective Resources (Pre-drill) carried out by RPS initially for the Operator as well as lately for Petro-Victory LLC as published in May 19, 2014. The Carboniferous/Upper Devonian will be tested by the Jacaranda X-1 well being drilled in the present exploration program, with estimated gross mean unrisked Prospective Resources (Pre-drill) in the Jacaranda X-1 of 248 MMboe.

Lower Devonian/Silurian

The third independent petroleum system is the deeper Lower Devonian/Silurian Santa Rosa, which has now been identified Sub-Basin-wide and is the subject of the independent audit of Prospective Resources (Pre-drill) within the “Lapacho” prospect carried out by RPS initially for the Operator as well as lately for Petro-Victory LLC as published on July 28, 2014. To date some 11 large structural prospects and leads have been identified in the Santa Rosa play in the Pirity Block and Demattei Block Concessions which offer giant gas-condensate potential at this deeper stratigraphic level. Combined with the 25 prospects and leads previously identified in the shallower plays in both Blocks, the Operator and Petro-Victory LLC now see a total of 36 potentially drillable features in the Pirity Sub-Basin. The largest single prospect is the Santa Rosa feature known as “Lapacho”, with estimated gross mean unrisked Prospective Resources (Pre-drill) of 5.2 Tscf gas and 157 MMbbls condensate, in total over 1 billion boe, which is a very large geological feature developed as a sub-crop over the crest of a regional structural high and very well located to trap regional hydrocarbon migration. As a consequence, the Operator and Petro-Victory LLC now anticipate the inclusion of the Lapacho X-1 well on the Pirity Concession within the two-plus-one well exploration program. The Tapir X-1 well may also potentially be deepened to test the Santa Rosa at that location. The follow on potential in the Santa Rosa play is very significant and although still a Frontier Play, a success at “Lapacho” would open the door for Paraguay to develop as a very significant gas-condensate producer in the Region in addition to the oil potential previously identified.