RESOURCES

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Trinidad, South Erin Block

In May 2006, Maxim Resources negotiated an arm’s length deal with New Scotland Oil & Gas Inc. of Bridgewater, Nova Scotia to acquire a 69 percent working interest before payout and a 41 percent net revenue interest (after payout) in the South Erin Block, Trinidad.  In exchange for the working interest, Maxim paid New Scotland CDN $450,000 for this 1,350 acre block.

The South Erin Block is comprised of approximately 1,350 acres in southwest Trinidad, which is about 40 miles southwest of the Port of Spain and approximately 18 miles southwest of San Fernando. This largely unexplored farm out block is west of and adjacent to the Erin/Palo Seco oilfield, which has produced over 200 million barrels of oil.  This new 1,350-acre block is part of the productive Southern Basin of Trinidad that forms part of the prolific Eastern Venezuelan Basin.

On July 9, 2006, the partners announced the drilling of the first discovery well on the South Erin Block, Trinidad.  The well, F.25 CH-7, was targeted to drill into the Middle Cruse Prospect and to test two other secondary targets, the Lower Forest ‘A’ and ‘C’ sands.

On August 8, 2006, after three weeks of discovery drilling the project operator, Jasmin Oil notified the partners that the F25CH-7 well in the South Erin Field was successfully drilled to a depth of 6,000 feet and that several potential pay zones were encountered.

On October 6, 2006, the partners received notification the F25CH-7 well had been logged, production casing was run and that the completion rig had arrived on-site.  The operator informed the partners that the testing would take two or three weeks for results to determine the flow rates.

On November 21, 2006, the operator released flow rates for the three oil bearing sand pay zones discovered.  When individually tested, these zones had a cumulative total of 722 BOPD.  The flow rates per zone was as follows:

Zone 1 The Lower Forest A Sand
At 3100 ft – 80 ft of net pay 12/64 choke – 620 PSI
Flowing Tubing Head Pressure – 320 BOPD

Zone 2 The Lower Forest B Sand
At 3200 ft – 100 ft of net pay 12/64 choke – 500 PSI
Flowing Tubing Head Pressure  - 282 BOPD

Zone 3 The Middle Cruse Sand
At 5000 ft – 30 ft of net pay 1/4 choke – 420 PSI
Flowing Tubing Head Pressure  - 120 BOPD

Total Cumulative Flow Rate for all three zones - 722 BOPD

On November 28, 2006, Maxim and its partners received permission from the Ministry of Energy & Energy Industries, Republic of Trinidad & Tobago including Petrotrin, the Petroleum Company of Trinidad and Tobago to produce an amount not exceeding 500 BOPD from the Discovery well. This production rate is based on the Environmental (EMA) requirement of maximum of 500 BBLS temporary storage conditions.

The well went into production using the top zone, the lower Forest A.  The well was choked back to a production rate of +/- 200 BOPD. The crude is being transported 7 days per week to a designated storage tank at Petrotrin’s point-of-sale facility at Point Fortin.

In December 2006, Maxim signed a letter of intent and a stand still agreement with New Scotland Oil and Gas to purchase its percentage in the Trinidad Erin Block.  In the terms of the deal, Maxim would acquire 100 percent working interest before pay out and would retain an 80 percent net revenue interest.  The other 20 percent interest in the South Erin Block, Trinidad remains with the operator - Jasmin Oil. 

In September 19, 2007, the operator updated the partners on the Trinidad operations.  The operator reported that they are free flowing production from the Lower Forest B Sands (3194’ – 3294’) as of July 28, 2007, and the average flow for August was 120 BOPD.  The latest test performed on August 17, 2007, indicates the well is free flowing on a 4/32” bean @ 490 PSI.  

The gas to oil ratio (GOR) is 300 CF/BOE, which is extremely low and is a good indicator that gas breakout is not being experienced.

On March 6, 2008 Maxim received notice that the project in Trinidad was granted a certificate of environmental clearance (CEC) on March 3, 2008, from the Environmental Management Authority (EMA) to drill 47 development wells, installation of a tank farm and interconnecting pipeline.

FORWARD DRILLING PROGRAM

Maxim is looking forward to participating in the next phase of the project, which consists of drilling four development wells and completion of associated infrastructure. The wells will be drilled from the existing surface location to a depth of approximately 3,500 feet. The updated geological report on the project indicates each well is expected to produce 150 to 250 barrels per day. Completion of this phase is expected during the second or third quarters of 2008.

Art Brown, president and chief executive officer of Maxim, stated: "We are very pleased to have the environmental approvals behind us, we can now move forward on developing the new discovery. I am very excited about the current fundamental position of Maxim and the future prospects for growth."