Cupet, Pebercan Prematurely Terminate Production Sharing Contract

Pebercan announced that Cuban authorities, through Cubapetroleo S.A. ("Cupet"), have notified its subsidiary Peberco Limited that Cupet wishes to prematurely terminate the production sharing contract, entered into in 1993 and scheduled to expire in 2018.

In light of this early termination of the production sharing contract and settlement of debts owed to Peberco for the sale of crude oil and in
consideration of Cupet assuming all of Peberco's obligations relating to its activities in Cuba, Peberco will receive a total net lump sum payment of US $140 million.

As well, and given the relationship between Peberco et Sherritt International (Cuba) Oil and Gas, the latter will receive its portion of the
lump sum, equivalent to approximately US $ 60 million. Peberco and Cupet have entered into an agreement that provides for the transfer by Peberco of all of its rights to the benefit of Cupet, conditional to the acknowledgement of receipt by Peberco of the lump sum payment. The agreement stipulates that Cupet will assume all of Peberco's rights and obligations, including taking charge of any Cuban personnel and assets required for oil and gas production, thereby discharging Peberco.

The agreement provides that the transfer and acknowledgement of the lump sum payment will be completed by mid February 2009. The company will recognize the depreciation of its assets in its first quarter financials of 2009.

Pebercan will examine future opportunities upon receiving the lump sum.


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