Hi Mr. Millan
My question is hypothetical in nature, but curious, to myself, as a shareholder with CIVC. PDIP/ENEGOIL claim that success at Garden Hill would make them self-financing, and I am aware that CIVC will be entitled to some royalty payments.

My question deals with the possibilty of PDIP wanting to take another shot at the Aguathuna at a different location than that drilled by SPE. Do the percentages revert back to (40CIVC/60PDIP)? Mr. Edwards replied to me that CIVC can move ahead at penalty, and I am wondering if SPE has the same rights if the location within 1070 changes from Shoal Point.
Thanks in Advance
Mike

Mike:

EL 1070, for the purposes of the SPE farmin, is divided into 2 blocks. The earning block, approximately, is Port au Port Bay and the non-earning block is the rest, including the Lourdes prospect. Assuming SPE has earned, then further operations are governed by an operating agreement under which any interest holder can propose a well. If a well is proposed, then the non-proposing parties have to elect whether or not to participate financially as to their working interest. A decision not to participate leads to defined penalties depending on the classification of the well and there are generally buy-back provisions after the well has been drilled.

The above is a summary of a complex legal document. While I believe that what I have written is generally correct, I am not a lawyer and I have not reviewed the agreement recently.

Steve.