Regarding what I learned from the AGM, it was not much. Most of what was in their presentation was already known.

Speculation about Rigs

It is all “up in the air” until the deal is done. We know from the PRE presentation http://www.pacificrubiales.com/images/stories/pacificrubiales/archivos/presentations/2013/ingles/130422%20Investor%20Open%20House%20-%20Consolidated%20-%20Bogota%201.0%20High%20Resolution.pdf that they budgeted for 3 wells this year and 7 wells next year. It is clear that they will not get 3 wells drilled this year since half the year is already gone. An IOC spokesman did confirm that PRE is very interested in the Raptor prospect. I think additional seismic data will be required to mature this prospect and pick a location. I believe acquisition of that data may be in progress. According to the agreement PRE is to drill six wells at Triceratops and four other wells in PPL 237. It is not clear if the first PRE well will be at Triceratops or at Raptor. Let’s assume that PRE will bring in at least one rig this year and begin drilling at least one well before year end.

We do not know what the agreement will require IOC to do with our two rigs. It sounds like Exxon wants more wells drilled at Antelope. An IOC spokesman could not tell me if the IOC rigs would or would not remain in the Elk/Antelope Field or even if Rig 3 will drill Elk 3 where the rig is presently located. I would not be surprised if both rigs stay at Elk/Antelope Field until the desired number (four?) of delineation wells are drilled at Antelope. Since Rig 3 can only be moved by land it may be that Elk 3 will be drilled by Rig 3 while they are preparing the new location and the road to access it. Let’s assume both rigs stay at Elk/Antelope and begin drilling after the Exxon deal is consummated. So two rigs drilling at Elk/Antelope before year end.

In answer to a question about the expiring PPL’s , Phil did say that there have been precedents for new licenses being granted to a license holder after the expiration of the second (5 yr) term of a PPL. The PPL’s have a primary 6 year term followed by 5 year extension for half of the original acreage. I wrote a post about this subject at   http://shareholdersunite.com/mybb/showthread.php?tid=3568&pid=23666#pid23666

 Post #15 dated 6-18-2013 where IOC was granted such a new license in 2002.

In answer to a question in a private discussion with one of the management team I was told that IOC will meet their commitment to drill Tuna and Wahoo before the PPL’s expire, so at the end of the term, or before, IOC will still be able to say “we have always met our commitments” to the Government regarding the PPL’s. So they clearly believe that they will be granted new licenses. I expect that they will farm-out some percentage of all of these licenses to an “internationally recognized” company. Hopefully that will be done before expiration and perhaps upon the issue of the new licenses. Getting a good farm out partner involved before the expiration and an extensive work program with the associated monetary commitments would probably go a long way in convincing the government to issue the new licenses.

If the above assumption about Rigs 2 and 3 staying at Elk/Antelope is correct, then at least one additional rig will be required to drill Tuna and Wahoo before March 2014 and, with one rig, they will need to begin before yearend 2013. So they will need to bring in an additional contract rig.

So, my speculation is that we will have four rigs running by yearend; Rig 2 and 3 at Elk/Antelope, 1 rig operated by PRE in PPL 237 or PRL?, and one rig drilling either Tuna or Wahoo.

This is pretty fuzzy so don’t put too much faith in it. Just my best guess at present.