Petrobank's Orito-116 Well Confirms Extension to Orito Field

Petrobank Energy & Resources and its Colombian subsidiary, Petrominerales Colombia Ltd., report the preliminary results of the Orito-116 well. The well has confirmed our interpretation of a significant southwest extension to the main producing zone of the Orito field.

Petrominerales is finalizing plans to install down-hole pumping equipment targeting initial productive capability of approximately 1,000 barrels of oil per day by June. At this production rate, under our incremental production sharing contract, Petrominerales will receive 79% or approximately 800 barrels per day, subject only to an 8% royalty. Equipment has also been ordered to facilitate drilling two to three additional wells from the Orito-116 pad during 2005. The next well is expected to spud in the third quarter.

Using a jet pump system, the initial Orito-116 well tests have yielded results of 1,250 barrels of total fluid per day with an average water cut of 80%, but with a drawdown of only 8%. Bottom hole data indicates a stable flowing pressure of 1,530 psi, and estimated reservoir pressure of 1,650 psi. The productivity index on the well is higher than any other well drilled to date in Orito and has necessitated a modified final completion design with larger pumping equipment than previously planned.

Over the short term, we will continue to produce the well with existing testing equipment. A large electrical submersible pump (ESP) will be installed within the next two weeks. With an appropriately configured ESP, the drawdown on the reservoir will be increased significantly with initially designed total fluid rates in the range of 5,000 to 7,000 barrels of fluid per day.

Drilling of Orito-116 commenced on March 17th, achieving a final total depth (TD) of 8,150 feet. The well reached TD ahead of schedule and under budget; however, problems encountered during logging operations and the subsequent isolation of a lower zone delayed well-test results. Due to the redesigned ESP and the delays in testing and completing the well, total well costs are expected to be approximately US$5.5 million or US$1.1 million over budget. After an extended test with the high volume ESP, a further update on the Orito-116 well will be provided.

These initial testing results confirm our interpretation of a significant resource to be developed in the southwest portion of the Orito field. Our next well, Orito-117, is expected to spud in September and will further delineate the ultimate potential of this extension. A 3D seismic program is also planned for the summer, which will further refine our future drilling plans.

Petrominerales is also advancing plans to acquire a number of exploration blocks in certain targeted basins in Colombia. One of these blocks directly offsets the Orito field, adjacent to the Orito-116 well. Once we have finalized the execution of our four new exploration blocks and our exploration Technical Evaluation Area, Petrominerales will be one of the largest exploration landholders in Colombia. These exploration lands will provide further investment opportunities to complement our significant existing development opportunities at Orito and Neiva.