CHANGES IN VENEZUELA

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May 2005
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• Advisory
• In the interest of providing PetroFalcons
  shareholders and potential investors with
  information regarding the company, including
  managements assessment of the companys future
  plans and operations, certain statements and
  graphs throughout this presentation are
  forward-looking statements and represent the
  companys internal projections, expectations or
  beliefs concerning, among other things, future
  operating results and various components thereof
  or the companys future economic performance.
• The projections, estimates and beliefs contained
  in such forward looking statements necessarily
  involve known and unknown risks and uncertainties
  which may cost the companys actual performance
  and financial results in the future period to
  differ materially from any estimates or
  projections. These risks, uncertainties and other
  factors are described in PetroFalcons Annual
  Report to Shareholders and Annual Information
  Form.

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The Company

• Listed PFC - TSX
• Shares outstanding
• 75.4 million (basic)
• 82.6 million (fully diluted)
• Oil and gas in Venezuela
• Vinccler Oil and Gas, C.A. (100)

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Area Map
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La Vela Field
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La Vela Field - New Oil Tests
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Cumerabo Field
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Exploration
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La Vela Exploration
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Cumarebo Exploration
Gas Development Well
Monte Oscuro
Seismic Line
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Exploration Upside (Unrisked)(Under new
Contracts)
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Agua Salada Basin
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Offshore Block Map
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Impact of Contractual Changes

• Near Term (negative)
• Delays in operations
• Period of uncertainty
• Possible reduction in NAV
• Long Term (positive)
• More fields, reserves under PFC control
• Interest to produce oil aligned with PDVSA
• Clear ownership of oil, gas and right to market
• Long term contracts 20 years oil, 25 years gas

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Current Contract

• Operating Service Agreement
• Per Barrel Fee 61 WTI, 11/BBL Flat After
  Capital Recovery
• No Royalty
• 34 Tax Rate
• Contract to 2015

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Legal Structure

• Gas Law
• (1999)
• Gas License

• Organic
• Hydrocarbon Law
• (2000)
• Empresa Mixta

15,000 GOR
Oil and Associated Gas
Free Gas and liquids
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Legal Structure - Oil

• Organic Hydrocarbon Law (2000)
• Oil and Associated Gas

• Empresa Mixta
• 20 Years
• 51 PDVSA, 49 PFC
• 30 Royalty
• 50 Tax Rate
• Oil Sold at Market Value
• PDVSA to buy position

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Legal Structure - Gas

• Gas Law (1999)
• Free Gas

• Gas License
• 25 years
• 100PFC
• 20 Royalty
• 34 Tax
• Gas Price Negotiated

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What this Means to PFC

• Proven and Probable Reserves
• Model Assumptions
• Oil and associated gas sold through EM (44/BBL
  oil)
• Free gas sold under GL (1.33/MCF) net

(1)-Conversion only/no compensation (2)-PDVSA
compensates for 51 of proven
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Exploration Upside (Unrisked)(Under new
Contracts)
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Capital Expenditure Program
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2005-2006 Projections

• 2005
• Revenue US 15 million
• Cash Flow US 8 million
• Exit Rate Q4 20MMCFD 2000 BLS
• 2006
• Revenue US 40 million
• Cash Flow US 28 million
• Exit Rate Q4 40MMCFD 4000 BLS