Petrolifera Finds Black Gold in Sierras Blancas

Petrolifera Petroleum Limited

Petrolifera Petroleum Limited said Monday that the RN. PM. a-1024 well, situated southeast of the excellent 1013 oil well on the Puesto Morales/Rinconada Concession in the Neuquen Basin onshore Argentina, encountered a thick Sierras Blancas sand during drilling. The encountered sand exhibited excellent reservoir characteristics and appeared to be in pressure communication with nearby wells.

Log analysis indicated that a significant portion of the zone was wet, consistent with the postulated oil/water contact from prior wells. On test, the lower portion of the Sierras Blancas yielded formation water, confirming the log analysis. Also, on test the upper portion of the main Sierras Blancas zone yielded both oil and water, again confirming the oil/water contact had been established in this region.

Petrolifera then ran a removable bridge plug and tested a thin, upper Sierras Blancas sand not previously tested in offsetting wells. Light gravity crude oil flowed from this zone at a calculated rate of approximately 250 bbl/d.

The 1024 well has thus provided the first reliable data for the field's oil/water contact. While it will initially be completed for production, importantly the 1024 well may also be an early candidate for conversion to injector status for pressure maintenance purposes. In this regard, Petrolifera has initiated studies to determine the optimum method of introducing a low-cost pressure maintenance scheme in order to optimize well performance and recovery factors. This could be initiated once full productive capacity is determined at Puesto Morales and would enable the company to maintain higher sustainable production volumes than would otherwise be achievable.

The company is currently producing over 11,000 bbl/d of light gravity crude oil and production reached 11,650 bbl/d on October 30, 2006. Petrolifera anticipates that with current trucking capacity and the near term completion of its new production facilities, the company could process and sell up to 25,000 bbl/d of crude oil. A further increase of this handling capacity to 30,000 bbl/d by mid-2007 is also envisaged with modest additional capital investment.

The RN.PM. x-1019 well, situated approximately two miles east of the 1014 well, was spudded on October 24, 2006 and is drilling ahead. Drilling and test results will be communicated when available.

Petrolifera Petroleum Limited is a public Canadian oil and gas company active in Argentina and Peru. Its current crude oil production exceeds 11,000 bbl/d and the company is planning an active drilling program on its Puesto Morales/Rinconada Concession in Argentina during the balance of 2006 and in 2007. A new pipeline and new production facilities are nearing completion at Puesto Morales. This is expected to enable Petrolifera to further increase production and sales from this area as additional wells are drilled and completed.