La Cortez All Smiles over Colombian Activities

La Cortez provided the following operational update on the activities being conducted in the Maranta and Putumayo-4 blocks located in the Putumayo Basin and the Puerto Barco field located in the Catatumbo Basin.

Andres Gutierrez, CEO and President of La Cortez commented, "We are very pleased with the results obtained from the Mirto-2 well, and the successful work-over activity conducted on the Mirto-1 well during the third quarter of 2011. Based on the performance of these wells, we anticipate drilling a third exploration well, Agapanto-1, to further develop the field. We are currently finalizing the development timeline for 2012 with the operator, but we anticipate that the Agapanto-1 will be drilled at the end of the 2nd quarter of 2012.

I am also pleased to report that during the month of October we were able to secure the final required consents from the local communities on the Putumayo-4 block, clearing the way for commencement of the seismic acquisition program. The data from the seismic shoot will allow us to finalize the drilling location for our first exploration well on the block, which we expect to spud during the third quarter of 2012.

Finally, we have made considerable operational progress in the Puerto Barco field in preparation for the anticipated work-over activity in the Puerto Barco-2 & 3 wells, which is expected to commence in early December, with initial production expected in late December. This work-over activity is a very important milestone that will give Ecopetrol the opportunity to evaluate our ability to successfully implement exploration and development activity in the block beyond 2013."

Maranta Block – Mirto Field

As previously announced, the work-over activity on the Mirto-1 well initiated a long-term production test on the Villeta N sand beginning on August 23, 2011 . The well was producing at an average rate of 341 bopd gross before royalties (68 bopd net to the company) until October 5, 2011 when the Electric Submersible Pump (ESP) experienced technical difficulties. On October 26th, a service rig was transported to the site and a well service operation to replace the pump was conducted. This operation was completed on November 1, and was successful in re-initiating production from the well, which is now producing at a rate of 322 bopd gross (64 bopd net before royalties) with a Base Sediment and Water (BS&W) of 0.71%. Both production and BS&W from the Mirto-1 well are expected to reach the same levels achieved prior to the ESP failure of 340 bopd gross and BS&W 0.40%.

As of November 10th, combined production from the Mirto-1 and Mirto-2 wells is 691 bopd gross before royalties, or 138 bopd net to the company. It is our expectation, that total net production will reach the previously sustained level of 150 bopd achieved prior to ESP failure in the Mirto-1 well.

In conjunction with Emerald Energy Plc., operator of the block, we are in the final stages of developing the final activity plan for 2012. Given the favorable performance post work-over of both the Mirto-1 and Mirto-2 wells, we intend to drill at least one additional exploration well (Agapanto-1) in the Mirto field during 2012, which will fulfill the minimum exploration commitment in front of the Agencia Nacional de Hidrocarburos Agency (ANH). The Agapanto-1 well will target the same producing sands of the Mirto field, the Villeta formation N, U, and T sands.

Putumayo-4 Block

In conjunction with Petroleos del Norte S.A . (Petronorte), operator of the block, we completed the community consultation process in October for seismic acquisition in the north part of the block, which clears the way for us to initiate seismic acquisition during December 2011. The vendor bidding process is currently underway, where more than 10 seismic service companies were invited to participate in the acquisition of 104.8 km of 2D seismic in the area. This seismic acquisition is part of the mandatory work commitment in front of the ANH. An additional 45-50 km of 2D seismic will also be acquired as part of the additional investment commitment of $1.6 million (gross) made to the ANH during the 2008 bidding round. We expect to finalize the bidding process for seismic acquisition during November and initiate acquisition activities in December. Seismic acquisition and processing should take approximately three months.

Pending initiation of seismic acquisition, we continue the community consultation process to secure consents for drilling of the first exploration well and are finalizing preparation of the Environmental Impact Study (Estudio de Impacto Ambiental – EIA), which is required in order to obtain the exploration well drilling license. It is expected that we will present the application for the environmental permit during December 2011, and we currently anticipate that the Ministry of Environment will take between 6 to 8 months to process the permit for drilling operations. We will be prepared to initiate drilling operations promptly upon granting of such permit, which we currently anticipate receiving during the third quarter of 2012. The initial Putumayo-4 exploration well will also be targeting the Villeta formation N, U, and T sands as well as the Caballos formation. Other companies are currently producing from these sands in fields within close proximity to the Putumayo-4 block.

Puerto Barco Field – Catatumbo Basin

Through its subsidiary Avante Colombia Inc., La Cortez has initiated operating activities in the Puerto Barco Field. On August 15th, 2011, Phase I road upgrades were initiated from the town of La Gabarra to the Puerto Barco Field / Timbas Station. To date, the work has advanced in this sector, and is expected to be complete in less than 3 weeks. Phase II road upgrades to the critical points along 23 kilometers between the town of Tibu and La Gabarra has not been initiated pending final agreement with the central government, which is expected to be complete in the next two weeks. Completion of the Phase II road upgrades are not necessary for execution of the well service activities on the Puerto Barco-2 and Puerto Barco-3 wells since the well service equipment can be transported to the field by upgrading specific points on the road. Primary activities on the road are required for community assistance as well as for crude oil transport in the near future.

Additional field information has been gathered and field-inspection of the existing Puerto Barco wells has been conducted. It is now planned to conduct well service operations in the Puerto Barco-2 and Puerto Barco-3 wells during early December, with rig mobilization expected to begin shortly thereafter if continued well testing results are favorable. We have approved the initial Authorization for Expenditure (AFE) for the work-over and related activities (civil work, social work, facilities upgrading and security), which is estimated to cost $1.87 MM net to the company. Initial production is expected in late December, with production rates estimated to reach 100 – 150 bopd gross (50 - 75 bopd net before royalties). Historical production in the Puerto Barco field has yielded high quality, light crude oil exceeding 40 degrees API.

We continue to be actively engaged with Ecopetrol regarding opportunities to amend the existing contract terms, though the final outcome of such discussions remains unknown at this point. The first well intervention in Puerto Barco-2 and Puerto Barco-3 wells is considered to be a strategic milestone that will give Ecopetrol the opportunity to evaluate our ability to successfully implement exploration and development activity in the block beyond 2013, which we believe to be a condition to any determination by Ecopetrol of any amendment to the existing contract terms.


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