DYGOIL CA. LTDA.

PROJECT: PURCHASE OF RIGS TO PROVIDE WORKOVER SERVICES

DYGOIL Dygoil Ca. Ltda., is an Ecuadorian company that has become pioneer in providing oil services, consulting, and representation for the national hydrocarbon sector. It was founded in March 1986, with the business vision of two young petroleum engineers, Mauro Davalos and Cesar Guerra, whose surnames derive the name Dygoil. Commercial activities have been varied and are centered on the provision of the following services:

Drilling of Wells, Workover Services, Wireline/Slickline Services, Specialized Technical Services Integrated Services for the Exploration and Exploitation of Oil Fields

Dygoil has provided oil services to the State Oil Companies, Petroproduccion, Petroamazonas, and most of the private operating and services companies in the country, among which we can mention:

Dygoils Experience in the execution of the Integrated Services with Financing: For the first time, in 2001, an Ecuadorian Services company signed contracts with Petroproduccin under the modality of Integrated Services with Financing (Operative Alliances) for the Atacapi Parahuacu and VHR Field.

Atacapi Parahuacu Field Contract: The committed investment was for USD $ 69.3 MM.
The investments for the Atacapi Parahuacu Field were carried out by Dygoil with the financial support from the Chinese company CPEB, subsidiary of the State Company CNPC, and later, with the approval of Petroproduccin, Dygoil transferred this contract to CPEB.

VHR Field Contract: The committed investment was for USD $ 23.27 MM. The activities carried out were:

3D Seismic Prospection, Construction of roads and platforms Drilling of vertical and directional wells, Installation of production systems with electrosubmersible pumps, Production Facilities, Electric Generation Systems and Automated Control Systems, SCADA. etc.

The investments for the VHR Field were carried out by Dygoil with the financial support of the local bank, Banco Pichincha. The investments for the VHR Project were paid in full by Petroproduccin in a period of 2.5 years. The payment for the investments carried out by the Contractor was carried out through a Trust in the Banco Central del Ecuador (Ministerial Agreement No. 069), which was fed monthly and only during the payment period of the investments, with 40-45% of the sales of the incremental production reached in this field. Complementary Contract for the VHR Field The excellent results obtained were the reason that a complementary contract was signed on April 12, 2005, for a value of USD $ 27.88 MM to perform the following additional jobs:

Registration and interpretation of 560 km2 of 3D seismic activities Drilling of 2 vertical wells Workover of 3 wells Drilling of one injector well of formation of water

This project was financed with resources of each of the companies that participated in the Alliance formed by DYGOIL, and was paid in full by Petroproduccin, in a period of TWO years with the resources in the Trust previously described.

The results obtained were very satisfactory and allowed the discovery of a new structure in the northern part of the VHR Field, with probable reserves of 24.34 MM Bls., recommending the drilling of various advanced and developing wells with an expectation of 6000 bls/day of additional production. Dygoil Ca. Ltda. Infrastructure: To carry out the required activities by the DIFFERENT Operating and Services Companies, Dygoil counts on the following infrastructure:

A main office in Quito, Av. Republica de El Salvador 309, Dygoil Building Branch office in Lago Agrio, via the airport, Amazon Region Base Camp for personnel, storage facility, workshops in Coca, Amazon Region Base Camp for personnel, storage facility, workshops in Shushufindi, Amazon Region Base Camp for personnel, storage facility, workshops in Guarumo, Amazon Region

All of the base camps are in constant communication by telephone, and radio systems. ANALYSIS AND JUSTIFICATION OF THE PROJECT: The Ecuadorian State production is formed by the State Companies, PETROECUADOR, PETROAMAZONAS, and the private companies. The actual oil production of Ecuador ascends 526,000 barrels per day, (Prod. to Sept. 2012), according to the following table:

ECUADOR: DAILY PRODUCTION OF OIL (Thousands Bls per day) January 2012 Petroecuador Petroamazonas Ro Napo 157.3 150.7 54.3 Sept. 2012 160.8 161.0 63.1 142.0 526.9

Contribution of Private Cos. 141.8

TOTAL NATIONAL PROD.

504.1

It is imperative for the Ecuadorian State to increase the national production, and for this reason the companies, Petroecuador, Petroamazonas, Rio Napo, as well as private operators and consortiums are developing various projects to achieve this goal, basically involving drilling and Workover of wells.

In addition, the Ecuadorian State has subscribed with the Shushufindi Consortium (which is composed by Schlumberger and others) and Pardalis (integrated by Tecpetrol, Schlumberger, and others) the Services Contracts with the goal to increase production in two of the major oil fields of Ecuador referred to as Mature Fields (Campos Maduros) Shushufindi and Libertador, respectively. DESCRIPTION AND PARTICIPATION IN THE PROJECT: The Project consists in the provision of Workover services to State and/or Private companies through the formation of a Consortium (Joint Venture), where the participation of Dygoil and the partner will be 50% for each of the parties. The Investing Partner must provide 100% of the capital for the purchase of the Workover Rigs required, and Dygoil will provide the know-how, infrastructure, technical, operational, and logistical support needed for the operation of the rigs for which Dygoil will provide the personnel and all the necessary services. In order to provide Workover Services, it is necessary to have TWO or more Workover rigs, whose cost is estimated at USD $ 5 million each. Dygoil is qualified in various State and private companies to provide Workover services, therefore will participate in the different bids that are convened for the provision of these services. A detail of the rates and Project performance is indicated in the attached table. Further details will be provided as soon as the partner expresses his interest in participating in this Project. In order to guarantee the investments made by the Investing Partner; attached please find a draft of the Mercantile Trust scheme that will be implemented.