Peak Discovery Capital Ltd V.PEC

Question about industry interest in Porto acreage

[Fernando2010]

Dear Sirs:
I´m new to the board, trying to performe a due diligence of the business before deciding to buy a few shares.
I´m worried about the farm track record of the company, and the seemingly lack of interest in the industry to farm into Porto´s hydrocarbon prospects, as follows:

- Aljubarrota 3 farm out agreement with GALP: The standard practice in the industry is for the farmor to pay 100% of the cost of drilling the first well (in addition to the reimbursement of past costs to the farminee), in order to get a 50% interest in a concession.
Instead of that, GALP got a 50% interest by agreeing only to reimburse past costs to Porto, and to pay their share of costs going forward (not carrying Porto on their first well).

- Other concessions: GALP decided not to execute their option to acquire a 25% interest in Porto Energy´s remaining concessions. In addition to that, in May 2012 Porto announced that an undisclosed party decided not to enter into a JV agreement, after signing a letter of intent to participate in the exploration of several of Porto´s license areas.

- Lias JV:  Porto´s partners decided not to proceed to fase II after paying around US$ 1 millon in exploration costs in phase I.

Looking at the whole picture, it seems that the industry is not very interested in participating in the exploration of Porto´s acreage.  The continuous delays in the currently ongoing farm out process point to the same conclusion.

Am I right on this? is it reasonable to think that, so far, oil and gas exploration companies are not very excited about the potential of Porto´s portfolio? (and hence the poor results of the farm out activity)

I would like to hear your thoughts on the subject.

Thanks in advance

Fernando