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09.03.10

Senior Secured Debt Facility of up to $75 million


PetroLatina Energy Plc
(“PetroLatina” or the “Company”)

Senior Secured Debt Facility of up to $75 million

PetroLatina (AIM: PELE), the independent oil and gas exploration, development and production company focused on Latin America, announces that it has entered into a senior secured credit agreement with Macquarie Bank Limited (“MBL”).

In accordance with the terms of the agreement, MBL has committed to provide a loan facility of, in aggregate, up to $75 million to the Company in order to assist with financing the accelerated development and enhancement of its highly promising oil and gas assets in Colombia. An initial $25 million tranche (“Tranche A”) has been made available for drawdown on completion of the facility documentation yesterday.

Highlights:

• Since the original investment made by Tribeca Oil & Gas Inc. in July 2008, the Company has made considerable progress, including:
o Commenced an aggressive drilling campaign with 8 new successful wells being drilled in 2009 increasing production by 259% to 1,004 barrels of oil per day (“bopd”) net from an average 280 bopd net in 2008;
o Announced an updated independent assessment of its reserves, future production and income attributable to its concessions in Colombia as at 30 November 2009. Ryder Scott Company, L.P. (“Ryder Scott”), the independent petroleum consultants, provided an NPV10 value for the Company’s 3P reserves of $247 million;
o Completed a further successful well, the Zoe-1 exploration well, since the beginning of 2010, with two potentially oil-bearing sections identified;
o Plans to drill up to a further 8 new wells over the remainder of this year to increase production and reserves with the expectation of substantially increasing Possible Reserves, identified by Ryder Scott, as well as moving an element of them into the Probable Reserves and Proved Reserves categories;
o Strengthened the operational and management team;
o Reduced General & Administration costs and expenses; and
o Appointed Evolution Securities Limited as a new joint broker.

• MBL has entered into an agreement to provide a four year Senior First Lien Secured Credit Facility of up to, in aggregate, $75 million (the “Senior Facility”) to the Company and its subsidiaries, in order, inter alia, to finance part of the Company’s planned ongoing drilling programme.

• The Senior Facility comprises:
o Tranche A: $25 million of the Senior Facility was made available by MBL on closing yesterday to, inter alia, part-fund the Company’s current exploration and development operations in Colombia; and
o Tranches B/C: up to a further $50 million, in aggregate, available at MBL’s discretion for further pre-agreed development work, potential future approved acquisitions and general working capital purposes.

• In connection with the drawdown of Tranche A of the Senior Facility, the Board has allotted warrants to MBL to subscribe for 8 million new ordinary shares of $0.10 each in PetroLatina (“Ordinary Shares”) at an exercise price of 75.7 pence per share, an approximate 42.2 per cent. premium to the Company’s closing mid market share price on 8 March 2010 of 53.25 pence. The Board has also agreed to allot additional warrants, on a fixed incremental basis, in the event of drawdowns under Tranches B and/or C, further details of which, along with the other key terms of the Senior Facility, are summarised below.

During negotiations in respect of the Senior Facility, MBL has recently provided an interim bridge facility to the Company of $5 million (the “Bridge Facility”). The Bridge Facility has been repaid in full out of the Tranche A proceeds. The remainder of the Tranche A funds will be utilised to repay all of the Company’s other existing short term indebtedness (save for the short-term indebtedness over the Company’s pipeline asset which is fully serviced by revenues generated by the pipeline), reduce the general level of trade creditors and to part-fund the Company’s planned ongoing work programme.

Luc Gerard, Executive Chairman of PetroLatina, commented:
“The Senior Facility provides us with the financial and operational flexibility to enable PetroLatina to take advantage of the current rapid growth in the Latin American energy market. As part of the financing of the growth of the business, the Company will look to have in place an appropriate mix of debt and equity. The Senior Facility signed with MBL is consistent with this strategy, enhancing our liquidity as we continue to execute our long-term exploration and development programme for our extensive asset base in Colombia.

We continue to believe that Latin America, and in particular Colombia, offers attractive consolidation, corporate and new license acquisition opportunities; the upcoming 2010 new open bid round where Colombia’s upstream regulator, Agencia Nacional de Hidrocarburos (ANH) is offering exploration rights to 168 blocks covering more than 50m hectares of territory, 63 Technical Evaluation licences and 74 smaller blocks of between 30,000 and 40,000 hectares, close to existing producing areas, is one such example of these potential opportunites.”

Juan Carlos Rodriguez, Chief Executive Officer of PetroLatina, commented:
“As stated previously, our plan continues to be to convert our Probable and Possible Reserves into Proved Reserves and considerably increase production and cash flow through the ongoing drill programme. Ryder Scott’s latest reserves assessment also reviewed the exploration prospects currently being evaluated by PetroLatina and concluded that our estimate that these could contain approximately 19.24 million barrels of recoverable oil on an unrisked basis was reasonable. These Prospective Resources principally relate to resources potentially recoverable from: (a) the Zoe prospect on the Midas block; (b) potential extensions to the existing PetroLatina operated Santa Lucia field, where development drilling is currently under way; (c) resources potentially relating to a structural prospect known as the Santa Lucia Sur; and (d) the extension to the south of that same Santa Lucia Sur prospect into the La Paloma block.

This facility provides us with the financial and operational flexibility to build on the current drilling momentum and appraise and develop further discoveries without limiting our ability to effectively finance our planned ongoing and future exploration and development programmes.”

Key terms of the Senior Facility

The principal terms of the Senior Facility are as follows:

• The Senior Facility has a committed initial Tranche A of $25 million, with up to a further potential $50 million potentially available for drawdown, in aggregate, under Tranches B and/or C;

• The Company’s total borrowing capacity or base under the Senior Facility will be subject to periodic review and adjustment, principally to fund additional exploration and development activities, with the total funds available for drawdown at any given time subject to a number of factors, including reserve levels and MBL’s internal approvals;

• The Senior Facility may be partially or fully prepaid at the end of any LIBOR period on three business days’ prior notice without penalty to the Company;

• The Senior Facility has a four-year term to 7 March 2014 (the “Final Maturity Date”), with repayment on a quarterly linear amortisation basis of the then outstanding principal balance commencing thirty months prior to the Final Maturity Date;

• The Senior Facility is secured over all of PetroLatina’s exploration and production assets in Colombia (save for the Rio Zulia-Ayacucho pipeline and its revenues which are pledged to an existing third party debt provider);

• Interest is payable monthly on amounts drawndown by the Company at a rate ranging from 3 month US dollar LIBOR plus 7.5% to 3 month US dollar LIBOR plus 9%, depending upon the underlying independently confirmed value of the Company’s proved oil and gas reserves. Current 3 month US dollar LIBOR is approximately 0.25%;

• Under the terms of the Senior Facility, on drawdown yesterday of Tranche A, MBL has been issued with warrants to subscribe for 8 million Ordinary Shares at any time within the next five years. The exercise price per warrant has been fixed at 75.7 pence per Ordinary Share;

• Tranche B of the Senior Facility comprises up to a further $50 million and is available for drawdown within 36 months at MBL’s discretion, for further pre-agreed development work, potential acquisitions and general working capital purposes. On drawdown of further potential amounts under Tranche B, warrants to subscribe for up to 12 million additional new Ordinary Shares are to be issued to MBL on an agreed fixed incremental basis. The exercise price of such additional 12 million warrants will be equal to a 20 per cent. premium to the Company’s volume weighted average share price (“VWAP”) over the 20 consecutive business days immediately prior to the date of MBL committing the additional funds for drawdown. The warrants will be capable of exercise at any time within five years of their date of issue;

• In order to provide maximum funding flexibility to the Company, MBL has also agreed to make available - at its discretion - an alternative Tranche C facility of up to $50 million (“Tranche C”) for the development of the Company’s existing assets. In the event that any drawdown was to occur under Tranche C, as well as allotting up to 12 million warrants on the same fixed incremental basis as for Tranche B above, the Company will be required to issue additional warrants to MBL. The quantum of such additional warrants is to be determined by reference to a pre-agreed formula based on the amount drawndown divided by the figure which represents a 15 per cent. discount to the Company’s VWAP over the 20 consecutive business days immediately prior to the date of MBL committing the additional funds for drawdown. The exercise price of such additional warrants will be equal to a 15 per cent. discount to the VWAP over the 20 consecutive business days immediately prior to the date of MBL committing the additional funds for drawdown and they will be capable of exercise at any time within five years of their date of issue. The Board does not currently anticipate having to utilise Tranches B or C, but does expect to achieve an appropriate mix of debt and equity to fund the Company’s planned ongoing and future drilling programmes;

• The documentation governing the Senior Facility contains usual and customary affirmative financial, operational and corporate covenants for a credit facility of this nature, including but not limited to the Company’s: continuation of business and maintenance of existence; compliance with relevant laws; maintenance of appropriate insurance; delivery of financial statements, reports, accountants’ letters, projections, officers’ certificates and other information requested by MBL; maintenance of financial ratios within certain defined ranges; use of proceeds; compliance with environmental laws and preparation of environmental reports. Further provisions cover notices of defaults; litigation, maintenance of books and records and the right of MBL to inspect property and records;

• The documentation also contains usual and customary representations and warranties for facilities of this type, negative covenants and appropriate additional covenants in the context of the proposed use of funds, including but not limited to: indebtedness; liens; investments; mergers; consolidations; material sales of assets and acquisitions; change of control; dividends; distributions and other restricted payments;

• In addition, PetroLatina has hedged an agreed percentage of its production attributable to its proved developed producing reserves for a period through to one year beyond the Final Maturity Date and agreed to maintain appropriate levels of currency and interest rate hedging; and

• PetroLatina has agreed to pay MBL a commitment fee of 1.75% of the aggregate amount committed for drawdown under the Senior Facility from time to time.

MBL had a pre-existing interest in 1,494,817 Ordinary Shares representing approximately 3.24 per cent. of the Company’s issued ordinary share capital, and holds 1,400,000 warrants to acquire, in aggregate, a further 1,400,000 Ordinary Shares. Immediately following completion of the Senior Facility and the Company’s drawdown of Tranche A yesterday, MBL is now interested in 1,494,817 Ordinary Shares, and holds 9,400,000 warrants to acquire, in aggregate, a further 9,400,000 Ordinary Shares


Enquiries:

PetroLatina Energy Plc
Juan Carlos Rodriguez, Chief Executive Officer
Tel: +57 1627 8435
Pawan Sharma, Executive Vice President - Corporate Affairs Tel: +44 (0)20 7766 0081

Strand Hanson Limited
Simon Raggett / Matthew Chandler Tel: +44 (0)20 7409 3494

Evolution Securities Limited
Rob Collins / Chris Sim Tel: +44 (0)20 7071 4304

Financial Dynamics
Ben Brewerton / Susan Quigley Tel: +44 (0)20 7831 3113

Additional Information on PetroLatina Energy Plc:
PetroLatina Energy Plc (AIM: PELE) is presently focused on Colombia where it currently holds 45% and 20% interests respectively in the Los Angeles and Santa Lucía fields on the Tisquirama licence, and a 100% interest in the Doña María field. In November 2007 the Company secured the extension of the Tisquirama licence for the economic life of the fields. In April 2006 the Group acquired an interest in two exploration blocks: an 85% interest in Midas and an 80% interest in La Paloma. PetroLatina also owns the Río Zulia-Ayacucho pipeline in the prolific Catatumbo basin which transports crude oil. Present exploration/exploitation activities in this area should increase the volume of crude oil transported resulting in an increased cash flow. Having sold its assets in Guatemala it retains a 20% interest in the first three wells and a 20% working interest in future wells. Further information is available on the Company’s website (www.petrolatinaenergy.com).

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