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07.06.10

Update re La Paloma field


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

Update re La Paloma field

Colon-3 well drilled and Colon-1 and Colon-2 pump installation

PetroLatina (AIM: PELE), the independent oil and gas exploration, development and production company focused on Latin America, announces an update on its Colon-3 development well and the installation of electrical submersible pumps in the Colon-1 and Colon-2 production wells on the La Paloma field.

The installation of electrical submersible pumps (“ESPs”) has recently been completed in both Colon-1 and Colon-2. These wells had previously been on natural flow at a total combined gross production rate of approximately 500 barrels of oil per day (“bopd”) (425 bopd net). The Colon-2 ESP has been on production for one week at a rate of approximately 515 bopd gross with essentially no water at a relatively low pumping rate. That rate will be increased gradually to avoid sand problems and a production rate of 600 bopd gross is anticipated. The Colon-1 ESP has also been installed in the past few days and is currently producing approximately 320 bopd at a low pump speed to prevent sand entry. The rate of production for this well is also expected to reach 600 bopd gross when the pump rate has been optimised. The total gross La Paloma field production rate from the current two wells is, in summary, expected to increase from the current rate of 500 bopd to 1,200 bopd as a result of the installation of the ESP’s. This increase of 700 bopd gross will result in a net rate to PetroLatina of 546 bopd.

The Colon-3 development well was drilled to a final total measured depth of 9,433 feet at a location 1.0 km south of the producing Colon-1 discovery well. The Colon-3 well was logged, cased and cemented. Petrophysical evaluation indicates that the well found the same oil bearing sand, currently productive in the Colon-1 and Colon-2 wells, approximately 185 feet structurally lower to Colon-1 as expected and apparently oil bearing but thinner than in the previous wells. That is a positive result from a reserves perspective in that the data strongly suggests that the oil extends considerably deeper than that seen in the previous wells and further downdip than that assumed in the Proven and Probable cases in the recently released Ryder Scott Company L.P. report.

At the same time, the fact that the sand has thinned from the 25 to 30 feet of net pay found in Colon-1 and Colon-2 to 8 feet in Colon-3 suggests that the reservoir thins and then potentially pinches out to the south. Such a pinch out could create a hydrocarbon trap to the south, which was previously thought to be open and form a structural spill point for migrating hydrocarbons. Such a southern trap could support larger than expected reserves to the north, east and west where the productive sands are mapped to be within structural closure based on the 2008 3D seismic survey data. The relatively thin sands at Colon-3 however, despite their probable oil content, are thought to be unlikely to support the high sustained production rates seen in Colon-1 and Colon-2. That consideration together with mechanical problems experienced in the well subsequent to running casing and cementing, has lead to a decision to sidetrack the well to a location about 400 metres south of the producing Colon-1 well. Amplitude analysis of the 3D seismic data indicates that the sidetrack location is likely to lead to sands similar in thickness and quality to those found in Colon-1 and accordingly a high rate productive well.

In addition to the main producing sand outlined above, the Colon-3 well found, an interpreted oil bearing sand with 12 feet of net oil pay some 200 feet above the main sand. Furthermore, two thinner interpreted oil bearing sands (8 ft each), were found below the main oil pay zone. These will be further evaluated in the planned sidetrack which is expected to take approximately 3 weeks to complete. The completion and testing of the Colon 3 sidetrack combined with the integration of the Colon 3 data into the geological model will allow the Company to remap the Colon field and provide an updated reserves assessment. That project is expected to be completed within 90 days.

The Querubin-1 well, which is located within the mapped Los Angeles field, was spudded on 28 May 2010 and is currently at 1,244 feet where casing is being set. This well is located near the Los Angeles-2 well which produced oil from the Lower Lisama formation, the primary producer in the Los Angeles field, from March 1984 to June 1987. The Los Angeles-2 well produced 22,064 barrels of 19 to 21 degree API oil and was eventually shut in due to sand production problems, however it is expected that modern completion methods will resolve that problem. The Lower Lisama target sand is thick (greater than 300 feet) in this area and occurs at approximately 5,900 feet which is approximately 1,500 feet updip of the same sand in the area of current production in the field. The Company operates and holds a 50% interest in this area subject the right of Ecopetrol to back in for half of that interest by paying its share of the well cost.

The Company will give a further update on this well and the Colon-3 sidetrack in due course.

Juan Carlos Rodriguez, Chief Executive of PetroLatina, said:

“The significant production uplift expected from the Colon / La Paloma field following the installation of the electrical submersible pumps is a pleasing result. The Colon-3 well, although experiencing thinner sands and mechanical problems, has provided much valuable information suggesting that the oil extends considerably deeper and further downdip than assumed in the recent Ryder Scott reserves report. The planned sidetrack operation should enable sands of similar thickness and quality to those found in Colon-1 to be encountered and ultimately a high rate productive well.”

Mr Menno Wiebe, a Non-executive director of the Company, has reviewed and approved the technical information contained within this announcement in his capacity as a qualified person, as required under the AIM rules. Mr Wiebe is a Petroleum Geologist and has been a Member of the American Association of Petroleum Geologists for more than 25 years and a Member of the Geological Society for more than 5 years.

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 April 2006 the Group acquired an interest in two exploration blocks: an 85% interest in Midas and an 80% interest in La Paloma. In November 2007 the Company secured the extension of the Tisquirama licence for the economic life of the fields. In February 2009, the Group acquired the Putumayo-4 block in which it has a retained 50% interest. 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, PetroLatina 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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