Kappa Energy Colombia Ltd. has begun its 2004 Colombian drilling campaign. The program is being operated by its Kappa Resources Colombia Ltd. subsidiary. This will be Kappa's most aggressive program to date, and could include as many as 10 wells. Currently, drilling is underway in both the Middle and Upper Magdalena Valley basins.

The 3200' Arce No. 2 exploratory well was spud on March 14th. It is located in Kappa's 100% controlled Las Quinchas Block (Middle Magdalena Valley), 5 km south of the analogous Chicala Oilfield. The well is targeting an 80' gross oil column (56' net) encountered in the Arce No. 1 offset drilled in 1984. Arce No. 1 tested oil from just 16' of perforations, and was declared sub-commercial at the time. Kappa believes that economic production rates will be achieved by completing the entire oil column. The shallow 2800' Abanico No. 5 development well was spud on March 19th. It is located in Kappa's 100% held Abanico Block (Upper Magdalena Valley), 600m northeast of the company's successful 2003 Abanico No. 4 stepout (650 BOPD). Depending on the test results Kappa plans on drilling at least another 2 Abanico Field development wells this year. Upon completion of Abanico No. 5, the rig will be mobilized to Kappa's Ventilador No. 1 exploratory well location, which is currently under construction.