Drilling Commences at Manantial-1R in Colombia

PetroSouth Energy Corp. has been advised by the operator that all major equipment has arrived and been set up for commencement of the re-entry on the Manantial-1R well bore, located in the Talora Block southwest of Bogota, Colombia.

Drilling and work-over activities will commence as planned on or about January 15, 2008 and is expected to take approximately 15 days to reach final depth of 5,000 feet. Upon success an extended production test may then be conducted.

The Manantial-1 well was originally drilled and abandoned by Harken in 2001. At that time, drilling was intended to test the Hoyon unit, and reached total approximate depth of 2,360 feet. Subsequent re-interpretation of 2D seismic data suggests Harken did not reach the Hoyon unit. This re-entry's main objective will be to test the Hoyon unit/ Formation sandstones and conglomerates to a greater depth.

PetroSouth Energy has a 20% participation stake in the Talora Exploration and Exploitation Contract. The operator and majority partner is Petroleum Equipment International at 60%, with Grand Tierra Energy Inc. holding the remaining 20% working interest. Talora contract has a 6-year exploration period and 24-year production period.

The Talora Block lies just southwest of Bogota, Colombia. The 108,333-acre contiguous parcel of land contains six prospects with combined potential reserves of 209 million barrels of oil (MMBO), (Source: Petroleum Equipment International, 2005).

Several fields in close proximity to the Talora Block are active oil producers.