Honduras

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Honduras

• An Introduction to Potential Giant Oil Fields in
  Honduras

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Overview

• Rose Dome Energy presents an exciting new play in
  Honduras
• Large Cretaceous basin that has never been
  drilled
• Tela Basin or the Western Honduras Basin
• Covers some 5700 square miles
• Exploration target is Cretaceous and Jurassic
  sediments
• Field work shows 17,000 feet of measured section
  in Mesozoic early Tertiary basin
• Field work indicates some 9-10 anticlines along
  geanticline trend

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Area of Interest
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Geological Map of Honduras Map of Honduras
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Background

• Field work on the area encompassed three to four
  years
• Studies of area continued for several years
• Many academic studies and mapping of the area
• Three large anticlines have been mapped in the
  field.
• Located on the west end of the anticlinorium
• This anticlinorium is referred to in this
  presentation as the Mills Anticlinorium

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Anticlinorium

• Two anticlines surveyed near the town of Atima
  contain 8,000 and 13,000 acres of closure
  respectively
• Effective vertical thickness ranges from 1,000 to
  2,000 feet
• Average dip on the flanks is 25 degrees
• The terrain is very mountainous but the mapped
  anticlines are near a paved road

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Geology - Structure

• The anticlines are simple, large structures
• But, the detailed stratigraphy is complex
• The structures were formed in Late Oligocene or
  early Miocene
• Collectively, the structures are big enough to
  yield major oil fields i.e. hundreds of millions
  or billions of barrels of oil
• With the current price of oil, the smaller
  anticlines would be very profitable
• Most probably, other anticlines will map out as
  targets for exploration

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Anticlinorium

• It is difficult to see the anticlines from
  landsat pictures as the terrain is covered with
  vegetation and severely dissected by erosion
• Field work is necessary for checking of data

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Anticline Trend
Unmapped anticlines
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Geology

• No intrusive or extrusive rocks have been seen in
  the Mesozoic of Honduras
• No sedimentary Paleozoic rocks in Honduras
• Paleontological control is fair to good
• In the Cretaceous section, rudistid and other
  reef forming fossils have been documented
• Good porosity was noted in this part of the
  Cretaceous sediments

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Jimilie Structure
Naranjito Structure
Atima Structure
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Mapped Structures over Digital Terrain Map
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Jimilie Cross-section
Naranjito Cross-section
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Atima Cross-section
Line of cross sections.
Structure Map of three large anticlines
Structure Map of Three Anticlines
Map is actual field Map
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Gilsonite Outcrop
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Plate tectonic elements can be seen on geographic
map
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Tectonics - Chortis Sub-plate

• The Chortis sub-plate contains most of Honduras
  and the northern part of Nicaragua
• Originally located on the Pacific side of
  southwestern Mexico
• It rotated around the southern edge of Mexico and
  became part of the Caribbean Plate
• The American Plate and the Caribbean Plate came
  together in Oligocene time

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Tectonics - Structure

• The plate movements, with some strike slip
  activity, formed the Mills Anticlinorium in upper
  Oligocene or Miocene times
• In addition to the Mills Anticlinorium several
  other anticlines to the northwest have been noted
  but not mapped (see map of area)
• The Chortis Plate is shown as red on next slide

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American Plate
Caribbean Plate
Diagram showing American Plate and Caribbean
Plate. American Plate continues to move westwards.
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Area of interest
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Magnetic Data - Honduras

• The following two slides contain magnetic data of
  Honduras
• The basic recorded digital data of the magnetic
  survey is not available
• Nevertheless, the magnetic data show that the
  Atima Block is on a Magnetic high trend, with the
  highest reading on the Atima Block
• Thus, this data may indicate a basement high with
  younger sedimentary draped over the magnetic
  anomaly, which could result in large deep seated
  structures

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Rose Dome Area of Interest
Aerial magnetic map of Honduras. Red line shows
magnetic high trend that extends across Area of
Interest and on to the southeast.
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Source Rocks - Atima Cross-Section

• The limestone on the surface is gray,
  occasionally black
• Very fossiliferous - rudistids abundant with
  other reefal fauna
• Black shale sections of the Atima limestone
  contain modules of kerogen with very strong
  petroleum odor when fractured

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Source Rocks -Guare Formation

• Located above the Atima limestone in the Lower
  Cretaceous (Kyg)
• Frequently stained with oil
• A brown grease is found within calcite veins
  along bedding planes of black shale
• Very strong petroleum odor

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Source Rocks

• Distillation of oil seep samples from the
  Cantarranas reveals typical heavy paraffin-base
  crude types
• Kerogen has been found in all the limestones of
  the Cantarranas, Atima and Llama formations
• Further reservoir rocks may be found in the
  porous sandstones of the Plan Grande and Victoria
  formations at depth

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Source Rocks

• Shows of oil are scattered throughout the
  geological section
• Formations with oil shows are noted on the cross
  sections
• Gilsonite (asphalt) was sampled in an outcrop
  northeast of the Jimilie structure
• This location is noted on the cross section of
  the Jimilie section

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Reservoir Rocks

• Good porosity is noted in the Upper Cretaceous
  rocks that contain rudistids and other reef
  forming fauna
• Other formations of the Cretaceous have porosity
• Further reservoir rocks may be found in the
  porous sandstones of the Plan Grande and Victoria
  formations at depth

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Paleontological

• A map showing exact areas where fossils were
  collected is available
• A list of fauna from each area is available
• The fauna suggests that reefs will be found in
  the Cretaceous

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Reserve Potential

• Following are rough estimates of the potential of
  the Atima Project.
• We have mapped the surface structures which gives
  us the surface area of the anticlines.
• We put in a thickness of the potential reservoir
  rocks.
• We will complete the surface mapping on the West
  Narranjito structure soon. This will take only a
  day or so.
• These figures show vividly the excellent
  potential of the Honduras project.

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Reserve Potential

• The following estimates are based on 18 porosity
  and 70 oil saturation at a reservoir depth of
  6500 feet. They also assume 45 recovery by
  water drive
• Atima Structure (13,000 acres - 300 pay)
• 3,812,000,000 bbls of oil in place
• 1,715,000,000 bbls of oil recoverable
• Narranjito Structure (9,000 acres - 400 pay)
• 3,519,000,000 bbls of oil in place
• 1,583,000,000 bbls of oil recoverable
• Narranjito West Structure (8,000 acres - 250
  pay)
• 1,955,000,000 bbls of oil in place
• 880,000,000 bbls of oil recoverable
• Jimile Structure (5,000 acres - 300 pay)
• 1,466,000,000 bbls of oil in place
• 660,000,000 bbls of oil recoverable

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Business Environment

• Honduras is friendly to America and would be a
  good place for a foreign operation
• The Petroleum contract in Honduras is negotiable
• Based on production or financial criteria, a
  sliding scale of royalty might be attainable
• It is believed that the highest royalty would be
  20
• Income tax is 30
• Acreage price is .25 cents/acre

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General

• Good geological literature, and good
  topographical maps are available
• The area of interest is extremely rugged with
  rivers and streams dissecting the area
• The area is totally green and is covered by
  trees, shrubs and grass

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Conclusions

• Large field-mapped anticlines are present
• The anticlines are big enough for world class oil
  fields
• The geological section has structure, source
  rocks, reservoir rocks
• A rank wildcat area with great potential

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Current Status/ Next Steps

• Local Honduras company, Rose Dome Energy, S.A.,
  was formed
• Local office established
• Application for the Atima block was submitted
• Application reserves the 741,000 acre Atima block
  for Rose Dome Energy, S.A.
• Negotiations will take several months
• Commence field checking as soon as possible

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Recommendations

• Start effort to locate seismic crew
• A portable crew appears best
• Start effort to locate suitable drilling rig
• Plan reconnaissance trip to scout drilling
  locations

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Exploration Program

• Phase 1
• Acquire three 100,000 hectare blocks (741,000
  total acres, or 3,000 square kilometers)
• Field checking of mapped structures and possible
  additional mapping on west end of Naranjito
  structure
• Field work on unmapped anticlines located north
  of Atima structure
• Review of magnetic data

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Budget Phase 1

• Honduras Block (NW Honduras)
• Purchase acreage 1.25 MM
• Field work .30 MM
• General/Administrative .10 MM
• Total Phase 1 1.65 MM

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Exploration Program

• Phase 2
• Seismic work by portable seismic crews
• Seismic lines over Naranjito and Atima structures
• Prepare first drilling site

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Budget Phase 2

• Honduras Block (NW Honduras)
• Seismic acquisition 4.50 MM
• Acquisition, processing
• and interpretation
• General/Admin .25 MM
• Total Phase 2 4.75 MM

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Exploration Program

• Phase 3
• Drill first well
• Prepare drilling location for second well
• Drill second well

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Budget Phase 3

• Honduras Block (NW Honduras)
• Drill Two Wells 13.6 MM
• Drilling operations
• Road building site prep
• Includes overhead GA
• Total Phase 3 13.6 MM

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Total 12 Month Budget

• Honduras Block (NW Honduras)
• Phase 1 1.65 MM
• Phase 2 4.75 MM
• Phase 3 13.60 MM
• Total Budget 20.0 MM

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Tropical Wet
Area of interest
Tropical Wet and Dry
Map of climate in Central America
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Honduras-General

• Petroleum infa-structure is non-existent
• But, road building and related equipment is
  available and inexpensive
• Labor is plentiful and inexpensive
• Good hotels are available in San Pedro Sula and
  Tegucigalpa
• Climate is both tropical and sub-tropical

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U.S. Investment Relations

• U.S. nearly 2/3 of foreign investment in Honduras
• CAFTA Free Trade Agreement signed 2006,
  eliminates tariffs and barriers to trade and
  investment
• 2005 signed Millennium Challenge with U.S.
• Approx. 100,000 U.S. citizens visit annually, and
  15,000 U.S. residents
• Over 150 U.S. companies operate in Honduras
• No tourist visa required for U.S. citizens
• Work and resident visas are easily arranged

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Honduran Economy

• One of poorest and least developed Latin American
  countries
• 2/3 living in poverty
• Per capita income less than 900
• Economy has diversified over past 20 years with
  non-traditional exports and tourism
• 2006 GDP estimated at 9.3 billion
• 54 of exports to U.S., 37 imports from U.S.

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Geography People

• Population 7.3 million
• Area 43,278 sq. miles
• Capital Tegucigalpa (1.15MM pop.)
• Terrain Mountainous
• Climate Tropical/subtropical
• People 90 Mesitzo (mixture of Indian and
  European)
• Literacy Over 76
• Language Spanish, English (2nd language)
• Religion Roman Catholic, Protestant minority

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Government

• Politically very stable
• Democratic Constitutional Republic
• Three branch government
• Executive, Legislative, Judicial
• President elected to single 4 year term
• Legislative - 4 year terms
• Judicial - U.S. style with Supreme Court
• Current President from Liberal Party, Manuel
  Zelaya, elected in 2005
• Seventh democratically elected president

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History

• Originally Mayan civiliazation
• Christopher Columbus landed in 1502 and named
  Honduras
• Spain colonized Honduras
• Gained independence from Spain in 1821
• Series of dictators and military coups, until
  mid-1980s when began elections
• Devastated by Hurricane Mitch in 1998
• 5,000 dead and 1.5 million displaced