Kappa Sees Excellent Production Results from Colombian Wells

Kappa Energy Colombia Ltd. reports that with the recent drilling of its Ventilador No. 1 (exploratory) and Abanico No. 6 (development) wells it is now producing in excess of 2000 BOPD from its core Colombian oil properties in the Upper Magdalena Valley. Both wells are located in the 100% held Abanico Association Contract. According to the company president Mr. Nelson Briceno "This excellent result more than meets our short-term expectations, and Kappa is now poised for significant expansion". The wells were drilled by Kappa Resources Colombia Ltd., a 100% held subsidiary, using a company owned and operated rig. In addition to the oil production, Kappa operates the Cerrito Gasfield in northeast Colombia as well as 580,000 acres of exploration acreage in the Middle (Las Quinchas Block) and Upper Magdalena Valleys (Abanico and Chipalo Blocks).

The 3130' Ventilador No. 1 Sixth Year commitment well was spud on May 19th, 2004. Since this exploratory well successfully extended the proven northern and western limits of the company's Abanico Oilfield, the well has officially been re-named Abanico No. 7. Initial testing has confirmed 93' of net oil pay within the primary Guadalupe (Upper Cretaceous) reservoir target. Another 65' of shallower net gas pay was encountered in massive sands at the top of the Oligocene aged Barzalosa Formation. Studies are now underway to assess the feasibility of tying the gas into an existing pipeline located only 3km away.

Abanico No. 6 was spud on July 19th, 2004 and reached its 2904' TD on July 29th. It was also targeting the Guadalupe sandstone reservoir, and encountered 121' of net oil pay. Reservoir development is much better than anticipated. Due to the massive highly permeable nature of the sands the well appears to have superior production characteristics. Long-term testing is now underway to confirm a stabilized flow rate.

Based on the excellent results to date, Kappa will accelerate its 2004 drilling program focusing on the delineation of the Abanico play fairway, which extends for 50km across its contiguous Abanico and Chipalo blocks. Both the Giralda Prospect located 4km north of the Abanico Field, and the Abanico Sur Prospect located 7km to the southwest are currently being permitted.