Petroamerica Confirms Significance of Balay Discovery

Petroamerica Oil Corp. on Monday announced that the Balay-2 ST1 appraisal well flowed from two perforated intervals in the Upper Mirador, 2,620 barrels of 26 degree API oil per day with 9.3% bulk sediment and water ("BS&W") that is probably mainly completion fluid, under electro-submersible pump.

The Balay-2 ST1 well also defined a deeper oil-down-to in the Upper Mirador reservoir. Additionally, 145 barrels of heavy oil (13 degree API, waiting on laboratory confirmation) and water (10-16% BS&W) was recovered from the Barco Formation. No hydrocarbons were recovered from tests carried out in the Une and Gacheta reservoirs.

Nelson Navarrete, President and CEO, commented on the Balay-2 ST1 drilling result, "this is significant in terms of proving up recoverable oil volumes in the Balay structure, and more importantly, moving the project one step closer towards a commercial development."

The Balay discovery was announced on March 11, 2010 and the Balay-1 discovery well has been on long-term production test since July 14, 2010, producing more than 285,000 barrels of 28 degree API oil from the Upper Mirador Formation, with no measurable water (0.22% BS&W). The forward plan is to put the Balay-2 ST1 well on long-term test together with the Balay-1 well. A third well, Balay-3, is planned for the fourth quarter 2011 to appraise the northern extent of the Balay discovery.

Petroamerica Oil Corp., through its wholly owned subsidiary, Petroamerica International Corp., holds a 15% participating interest in the Balay block for which it received its approval from the ANH (Colombian National Hydrocarbon Agency) earlier this year. Petrobras is the operator with a 45% participating interest and the other partners are CEPSA COLOMBIA S.A. and Sorgenia, each holding a 30% and 10% participating interest, respectively.


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