CEPSA Farms into Loon's Maranon Basin, Block 127 in Peru

CEPSA Peru and Loon Peru have entered into a farm-in agreement whereby CEPSA Peru will acquire a working interest in a hydrocarbon exploration and exploitation license contract that Loon Peru holds in Block 127, in the Maranon Basin area of northeast Peru.

The exploration and exploitation license contract, signed by and between Loon Peru and Perupetro in August 2007, grants Loon Peru the right to explore for and produce hydrocarbons in Block 127, measuring 9,675 square kilometers. According to the terms of the contract, Loon Peru undertakes, in the initial phase of the contract, to acquire, process and interpret 390 kilometers of 2D seismic survey, reprocess existing seismic data on an additional 2,000 kilometers and prepare the corresponding technical studies.

Under the terms of the farm-in agreement, CEPSA Peru will repay to Loon certain costs already incurred and disproportionately fund the first and (if it remains a partner) second exploration period work commitment in order to earn an 80% working interest in Block 127.

Pursuant to the farm-in agreement with Loon, CEPSA Peru will be the operator of the block and acquire an 80% working interest in the license, which involves a work commitment that includes an initial phase of 24 months and four subsequent periods until completing an exploration term of 7 years.