Vinccler Oil & Gas Begins Operations on East Falcon Block

PetroFalcon subsidiary, Vinccler Oil and Gas, has commenced drilling on the East Falcon Block in northwestern Venezuela on the LV-9 well in the La Vela field utilizing Pride International's 1200 horsepower rig # 528. The well is planned for a total depth of 10,941 feet and will test numerous prospective reservoirs including the recently discovered Agua Clara reservoir which was successfully re-completed in the LV-8X well by Vinccler in November 2004.

Vinccler has contracted the Pride rig for twelve months and plans to drill up to ten wells in its La Vela and Cumarebo fields and surrounding acreage. The focus of Vinccler's drilling program will be the development of the natural gas reserves at the La Vela and Cumarebo fields for delivery into PDVSA's Interconexion Centro-Occidente (ICO) pipeline.

Vinccler has also commenced a seismic survey of approximately 86 kilometers to delineate further development locations and prospects on the East Falcon Block. The seismic contractor, PGS Onshore, expects to complete seismic data acquisition in February and Vinccler will begin to evaluate the new information immediately.

The company is also pleased to announce that the Board of Directors of the World Bank Group and PetroFalcon have approved the US$ 36 million financing by way of loan to be provided by the International Financial Corporation (IFC, the commercial arm of the World Bank). Final documentation of the loan is expected to be completed within 45 days, subject to receipt of any required regulatory approvals. Proceeds from IFC financing, along with existing cash and cash flow, will be used for Vinccler's capital expenditures including seismic, drilling and facilities construction.