Aviva Signs Adjacent Prospects Contract with Ecopetrol

Aviva Petroleum Inc. reported that Argosy Energy International (in which Aviva has a 30% interest) has signed the GUAYUYACO Association Contract with Ecopetrol, the Colombian State oil company. The Guayuyaco contract overlays the 52,000 acres in the existing Santana Risk Sharing Contract in the Putumayo Basin, on which the Toroyaco, Linda, Mary and Miraflor oil fields have been discovered and developed.

This new contract sets forth more favorable sharing terms (initially 70% Argosy, 30% Ecopetrol) and a recent royalty law change provides for sliding scale royalties commencing at 8% up to 5,000 barrels per day of production from new discoveries. Based on analysis and reinterpretation of existing 2D and 3D seismic, geological studies, well logs and ten years of production data from the four existing fields, Argosy, the venture operator, estimates that the new terms will apply to a range of potential recoverable crude oil reserves between 170 and 230 million barrels, of which 60 to 90 million barrels are represented by 5 currently defined prospects. Aviva said disclosure of these potential reserves is not permitted in reports filed with the Securities and Exchange Commission because of the risks associated with their evaluation, and further stated that this disclosure is prompted by inclusion of such estimates in an Argosy press release to be released in the near future. No assurance of the existence of such reserves can be given pending confirmation through exploratory drilling.

Ron Suttill, Aviva's CEO, said: "This new contract is a big step forward which will allow Ecopetrol and Argosy to maximize utilization of extensive existing infrastructure in the program to augment current proved oil reserves. Under the new contract terms, Argosy is committed to drill one well before October 2003, and the location for this well has been identified and the necessary environmental permits have been obtained."

He also said: "Our intention is to involve industry and service company partners, and a letter of intent has already been signed with Schlumberger Surenco, S.A., long established in Colombia, to participate, through provision of services and materials, in the drilling of an exploratory well on the Inchiyaco prospect (formerly called Mary East). This well, the Inchiyaco #1, is expected to be drilled to a total depth of 8,100 feet and test the several formations which have been successfully produced in the adjacent Mary structure and throughout the Putumayo Basin. Commencement of drilling of Inchiyaco #1, which is subject to various contingencies including rig availability and execution and delivery of definitive agreements with Schlumberger, is currently scheduled for the fourth quarter of 2002."