Dover Petroleum Corp. (DVPC)
2003 Interview with: Robert Petras Salna CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their 100,000-acre East Wadi Araba oil concession.

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Dover Petroleum-a very profitable 'machine' that processes and sells oil with new discoveries in the Gulf of Suez



Energy
Drilling & Exploration
(Pink Sheets: DVPC)

Dover Petroleum Corp.

10225 Yonge Street
Richmond Hill, ONT L4C 3B2
Phone: 905-884-6958



Robert Petras Salna
Chief Executive Officer

Interview conducted by:
Lynn Fosse
Editor

CEOCFOinterviews.com
January 2003

Bio of CEO,
Robert Petras Salna - Curriculum Vitae

Robert Petras Salna obtained a Bachelor of Science Degree in Ontario Land Surveying from the University of Toronto in 1979. Since 1980, Mr. Salna has been and is currently President of P. Salna Company Ltd., a private Ontario corporation established in 1957, his father’s surveying company of thirty years. From November 1988 to July 1993, Mr. Salna was President of Monte Carlo Gold Mines Ltd., a public junior mineral resource company exploring the potential of the Islands of Aruba, Dutch Antilles and listed on the Alberta Stock Exchange. From September 1994 to January 1996, Mr. Salna was President of Canadian States Resources Inc., a public junior mineral resource company exploring the potential of nickel-copper occurrences in Voisey’s Bay, Labrador and listed on the Canadian Dealing Network (CDN). Canadian States is now known as High North Resources. From February 1996 to April 1998, Mr. Salna was the President of Indocan Resources, Junior mineral resources Company exploring Voisey’s Bay Labrador and Kalimantan, Indonesia listed on the NASDAQ Over the Counter Bulletin Board (OTC-BB), a United States stock listing and quote system.

It was in 1991 that Robert Salna drilled his first oil prospect in conjunction with a reservoir engineer named Bruce Whipple. The property was located in Stafford County, Kansas and was called Prescott # 3. Although it was initially a successful venture, technical difficulties brought production to an early end.

In December of 1998 Robert Salna, together with Mr. Bruce Whipple formed Perial Ltd. The Company was accepted on the Canadian Dealing Network as an Ontario Reporting Issuer in 1999 with symbol “PRAL”. Perial’s assets include 5 oil and natural gas properties in the United States, some with modest oil & natural gas production. The Company is currently undertaking a secondary offering for US $12,000,000 in order that it may engage in an exploration program with Dover Investments Limited and provide capital for some other acquisitions.

Dover Investments Limited is 100 % owned by Robert Salna and in October of 1999 purchased the Ras El Ush oil field from Marathon Oil Company Limited of Houston Texas. The property covers 3 blocks (approx. 2300 acres) and is currently producing at 5,000 barrels of oil per day of which 43.3% is credited to Dover (as the operator) and 56.7% is credited to the Egyptian General Petroleum Corporation; the Governments petroleum division. Dover operates the joint venture company with the Egyptian Government called Gebel El Zeit Petroleum Company with a staff of 210 employees.

Mr. Salna is also involved in real estate acquisition and land development in his home Province of Ontario and overseas. Mr. Salna controls a number of companies with various real estate holdings; from commercial, and residential to recreational-commercial.

Mr. Salna continues to manage and operate P. Salna Company Limited with approximately 40 employees and is directly involved with over a dozen companies, some of which are listed in the following paragraphs.

Digigraph Systems Ltd. is an emerging technology corporation that supplies a new plastic forming system for a concrete wall and roof housing system which is cost efficient, quick and simple to build, withstands earthquakes up to 7 on the Richter scale and is virtually unaffected by hurricanes or typhoons. Its plastic walls, filled with concrete, are both vermin and termite proof. This new technology is being distributed worldwide. Digigraph is based in Boucherville, Quebec.

Millennium Building Systems is an Ontario, Canada corporation that is currently providing construction services using the Digigraph product and is currently constructing 3 model homes in the Bahamas as part of a 210 lot project. In addition units are being set up in Cuba, Portugal, Poland and Canada.

North Lake Estates Inc. is a diversified company currently developing over 500 single family lots in southern Ontario, Canada and constructing houses on a portion of those lots to provide upscale housing to Ontario’s rising population.

Penny Tech Inc. is a real estate holding company with a large number of residential and commercial income properties in Ontario. It also is engaged in the redevelopment of some of its oversized income properties.

Robert Salna Holdings is a real estate holding company with a number of large commercial income properties that are well situated in the growing municipality of Richmond Hill, many of which front onto Toronto’s best known main Street; Yonge Street.

Bennet Developments and Sylvan Estates are jointly developing a 500 lot residential subdivision in the town of Clarington, on the shores of Lake Ontario. Its close proximity to Toronto and its scenic location will allow this project to develop profitably over the next 5 years.

1231674 Ontario Ltd. is a holding company for stocks and real estate throughout the southern Ontario area, mostly York Region. It also holds a number of large stock positions in various public companies.

Elm Grove Limited holds lands in the city of Vaughan Ontario, Canada. It is currently drafting a development proposal to facilitate the needs of adjacent landowners.

These are the active corporations in the Salna group of companies. Mr. Salna’s experience in overseas markets has proven to be an asset to his many of these companies and will likely prove the same for Dover Investments.

Company Profile:
Dover Petroleum Corp. (DP) is a new publicly traded company that is presently focused on developing the East Wadi Araba Concession in the Gulf of Suez, Egypt. DP is the operator with a 56.50% joint-venture interest in the 100,000-acre East Wadi Araba oil concession. The company's corporate offices are in Richmond Hill, Ontario and Cairo, Egypt.

There are several producing fields adjacent to DP's property in Egypt. There are 40 producing fields in the Gulf of Suez, with the 5 largest fields producing more than 5 billion barrels of oil. There are producing oil fields to the east and northeast of DP’s property. They include the October field with 1.5 billion barrels of recoverable oil; and several oil fields to the south of the concession (including Assran, Rahmi and Amir) contain an estimated 700 million barrels of recoverable oil.

Seismic data shows 14 targets with potentially large oil reserves. Drilling will commence in 2002 with estimated capital expenditures of $4 million for 2 exploratory wells. The Gulf of Suez Sedimentary Rift Basin is rated as having the most potential of any basin in the world considering the recoverability of hydrocarbons, that is, the amount of oil actually recovered from the probable recoverable hydrocarbons per cubic meter of sediments. The thickness of the sediments in the main depositional centers often reach 30,000 feet of several excellent and widely distributed source rocks and many potential reservoirs of great petrophysical characteristics at all levels of different geologic times.

CEOCFOinterviews: Mr. Salna, where was Dover Petroleum when you became its CEO and what changes did you orchestrate?

Mr. Salna: “Dover Petroleum was created to go forth and raise money to do a project in Egypt (the Gulf of Suez). Our East Wadi Araba property is a very large offshore oil concession of 110 square kilometers with about fourteen drill targets. British Gas did about 10 million dollars worth of seismic in 1991, continuing up until about 1996. In 1999, when the price of oil was quite low, we were fortunate enough to pick up this concession. Dover Petroleums’s sole purpose in life was to raise enough money to meet some of the financial commitments that were required by the government of Egypt and that was to drill two holes on the property for a cost of 4 million dollars.”

CEOCFOinterviews: Why this particular project; what was it that appealed to you?

Mr. Salna: “What appealed to me was the fact that I already have a personal infrastructure in Egypt producing from oil wells at a location called the Ras El Ush which has an infrastructure with two hundred and thirty employees. That gave me a good solid base to do some further exploration in Egypt. We have a very profitable ‘machine’ that processes oil and sells it to British Petroleum. Since we have been quite successful and profitable, we thought it would be a good idea to do some exploration and find some additional reserves to keep the ‘machine’ running. We thought we could find additional reserves by drilling the East Wadi Araba targets that we have identified from about three years work on the seismic which cost  British Gas 10 million dollars, which we were fortunate to obtain with this concession."

CEOCFOinterviews: What is involved in looking for oil and what is the process?

Mr. Salna: “Basically, there is a lot of oil that has been discovered in many parts of the world and it is a matter of technology. There is newer technology these days, with 3D now being the better technology. In the past, they used 2D and in areas where there is very little obstruction such as salt or anhydrates, you can get a clearer picture of what is below the surface. Once the seismic is done, it is up to a geophysicist to interpret the structures and try to identify something that would have the shape of an upside-down pie plate that can trap oil that is migrating in the system.

The Gulf of Suez is a very old basin and the plankton, algae that sink to the bottom of the basin are covered with salt and sedimentsand  they sink down to about seven thousand feet. At that point the oil gets cracked out from these little organisms and the oil starts to migrate because oil has a natural tendency to float on water so it try’s to migrate up out of the basin and whenever it is intercepted by a structure that is sealed, the oil will be trapped. That is what we had to identify and we identified 14 or 15 structures that we believe have the ability, with good seals and have the proper shape to trap the oil that we understand has been migrating during the last 40 million years.”

CEOCFOinterviews: For the geophysicist, how much is technology and how much is knowledge when looking for oil?

Mr. Salna: “We are using a geophysicist with 35 years of experience in the Gulf of Suez, a fellow by the name of Dr. GARIB AWAD. Most of his experience is in the Gulf of Suez; it is his observant eye that determines which targets we drill first.  In fact, we have already finished drilling the first hole. We hit a total depth of 5,300 feet and we are currently logging our first hole; we have gone through three very different high porosity zones. We have identified that the structure is old and high. It is important that the structure is high in order to trap the oil migrating through the system. We have nine out of ten of the requirements needed to have an oil discovery; the only thing we have left to do is finish the logging, which will be done in about twenty-four hours and that will tell us if we do have oil. We are looking at the Warda and Nubia zones for the best chance of success because nearby drill logs indicate that there was oil in the Warda and Nubia.  At the same time, once we do determine from our logs that we do have oil, we will be able to do a drill stem test, and flow the oil just to see what kind of flows we can obtain and what the caliber of the oil will be.”

CEOCFOinterviews: Assuming the oil is there and the tests go well, what happens next?

Mr. Salna; “If we are successful to find oil and we are successful to prove that we have commercial quantities we will likely drill a second hole from the same location in order to try to delineate the size of the structure. Then we will try to put the property into production by building a pipeline to shore about three kilometers. By putting the property into production, we will be able to make this company a success. We believe that we can sell about 10 thousand barrels a day from this field. That would be significant oil and potential reserves up to 200 million barrels.”

CEOCFOinterviews: Would the production all be done through Dover Petroleum or are there partners involved?

Mr. Salna: “There are some partners; the EGPC (Egyptian General Petroleum Corporation) is one of our partners.  They actually have 52 and-a-half percent of the property or at least the flow of oil. Dover Investments, a private company, holds the interests from the government, and has 47½ percent,this includes a floating cost recovery interest which is considered the operators interest. Dover Petroleum has about 56 and-a-half percent after spending 4 million dollars on exploration.”

CEOCFOinterviews: I know there was a bit of a delay getting started, is that significant for you at all?

Mr. Salna: “Actually, the delay helped us because it put us into a time when the Gulf of Suez is very calm and quiet, and it got us to be able to organize ourselves better, making sure that all the different steel components threaded themselves together and that we could go forward and drill without a hitch. We were able to drill 5,300 feet on budget and under time that we had predicted. Often when you drill, you can become over budget very easily because you never know what can happen.”

CEOCFOinterviews: Are there things that you can do as a company to prevent possible problems?

Mr. Salna: “We have done everything within our power to prevent any possible problems, even going so far as to insure the company’s interest by purchasing an interest in the United States of America, in the coal bed methane gas, in Moffat County, Colorado and in Carbom County, Wyoming where Phillips 66 Petroleum (ConocoPhillips – NYSE: COP) made twelve discovery wells.  We are currently sizing a pipeline out there to bring that into production. That can offset any possible downside in the company. Not only are we in Egypt making sure that we don’t have any downside, we are also buying a discovery in Wyoming and Colorado. This will allow us to bring significant income into the company by producing coal bed methane gas, where in that particular area of the country, is in high demand.”

CEOCFOinterviews: What attracted you to that particular item as a back-up option?

Mr. Salna: “It is just a matter of who you know and the different opportunities that arise. We saw this as a good opportunity and we were involved with Phillips, and another company called Skyline Resources; we have a 33% interest and they have a 66% interest after Phillips 66 Petroleum made the sale to us. Basically, it was a little bit small for Phillips, but it is a nice big ‘gas for cash’ deal for us.”

CEOCFOinterviews: It sounds like experience in the industry is very relevant to potential success!

Mr. Salna: “Definitely! Most of the people that we have on staff have in the area of 20-35 years experience. We actually have right now an infrastructure of 315 people working in Egypt on this project.”

CEOCFOinterviews: What is it about Dover that is attracting the quality people that you have?

Mr. Salna: “Money! If you pay a decent rate, you can get decent people and some of the salaries that we pay are equal to some of the salaries paid to some of the majors in the world. We attract good people that way. I think that we have outperformed many majors in what we have done so far.”

CEOCFOinterviews: How does the atmosphere of the Middle East affect your business?

Mr. Salna: “Because I am a producer on the private side, my interest is in a field that produces four thousand barrels of oil a day. With regards to the unrest in the Middle East, I would like it to go on forever just as long as they don’t fight each other. Let them talk about it, because talking about fighting keeps about a four or five-dollar oil premium in the price of oil and it helps with our revenue substantially. It also doesn’t hurt that Venezuela shut their production down and reduced the three million a day to the market; all of those things combined make for a very profitable situation. I personally don’t believe that Egypt will become involved in a war in the Middle East; it will probably be a war between Iraq and the US and as long as they don’t fight and they just keep talking about fighting; it is a good thing for us.”

CEOCFOinterviews: Once that you get in production, how will you sell the oil?

Mr. Salna: “We will be having a pipeline connected to the Egyptian Petroleum Corporation and they would purchase the oil as it comes in and payment is within sixty days of delivery.”

CEOCFOinterviews: Do you have sufficient funding going forward?

Mr. Salna: “We have funding for two wells. Should there be a problem I am personally able to loan money to the company to overcome any dilemma that the company may have.”

CEOCFOinterviews: Is there anything else that people should know that may not be readily apparent to someone looking at the company?

Mr. Salna: “Something that is not apparent is the fact that the Egyptian government, because they take the fifty two and-a-half percent,  pays your taxes for you. Because of the tax treaty between the countries the money can flow through on a tax-free basis, basically giving an up-lift on the bottom line, so that is one substantial benefit that most people do knot know about.”

CEOCFOinterviews: What was the purpose of your recent trip to Egypt?

Mr. Salna: “To view hands on our drill program, we have a 65 million dollar rig, and with 85 people on board working three eight hour shifts, I talk to everybody and get their opinion; we sit down  with our staff of geologists and  geophysicists. We talk about ways to drill and we found the cheapest way to drill down to total depth. We have various meetings and we began to negotiate crude sales contracts for the future.”

CEOCFOinterviews: What sets you apart from other development companies, and why should people be looking at you for investment possibilities?

Mr. Salna: “The reason that people should look at us is because we are a small company, not a large company with high potential oil and gas properties and relatively few shares in the market. We have just under 50 million shares, so a discovery of 200 million potential barrels in the Gulf of Suez, would equate to about 5 million dollars of oil. That would translate to a very healthy share price, even when you start to take the forty-seven-and-a-half percentages, and the fifty-six-and-a-half of Dover Petroleum. There is a lot of leverage per share on the amount of oil that could be found.”

The company now, trades at about 45 cents a share and I think that it will be safe to say that if we have a discovery, and it is a commercial discovery, we can easily put that into production and pay off dividends and the shares should trade ten times the value that the dividends are paid out. Our cash flow will be quite substantial with production rates anywhere from 25 thousand to 50 thousand barrels a day if we drill six wells on the property. That could mean after tax profit to the company about 4 million US a month, which is fairly substantial.”

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