Pan American Energy LLC - Argentine Branch (II)

completed

_x000C_PAE is the second largest oil and gas producer in Argentina and has blocks located in the four major hydrocarbon basins - Golfo San Jorge, Austral, Neuquina and Northwest. The most significant block in terms of both reserves and production is the Cerro Dragon block in the Golfo San Jorge basin, located in the South of Argentina. The company holds interests in 10 oil and gas production blocks in Argentina and 13 oil and gas production and development blocks in Bolivia, twelve of which are held through its indirect Bolivian subsidiary Empresa Petrolera Chaco S.A. (Chaco) and its direct Bolivian subsidiary, PAE E&P Bolivia Ltd. PAE operates most of its assets. In addition, PAE holds interests in ten exploration blocks, five in Argentina and five in Bolivia. IFC has been requested to provide financing of up to $550 million for Pan American Energy LLC, Argentine Branch, to help finance its total 2007 and first half of 2008 capital expenditure program (Capex Program) for the continued development and production of the Cerro Dragon block in the Golfo San Jorge basin, which represents approximately half of the company’s total production. The Cerro Dragon Capex Program contemplates: - drilling of over 120 new oil wells, 55 new gas wells and 122 new waterflood wells; - completion of 5 waterflood projects (started in 2006), 6 new waterflood projects in 2007 and 2 new waterflood projects in 2008; - an increase in the power supply system through the addition of two new gas turbines of 40MW each; - expansion of the oil treatment plants; - expansion of the existing water injection capacity; and - approximately 80 well workover interventions.