PetroLatina Wins Exploration Block in Colombia, Proposes Farm-Out Agreement

PetroLatina has announced that Colombia's hydrocarbon regulatory agency, (the Agencia Nacional de Hidrocarburos ("ANH")), confirmed on December 26, 2008, that Petroleos del Norte S.A. ("PDN"), PetroLatina's wholly owned Colombian operating subsidiary, was the successful bidder for the Putumayo-4 block in the recent Colombian licence bidding round 'Mini-Ronda 2008'.

The Putumayo-4 block covers an area of 51,333 hectares located in the Putumayo Basin of southern Colombia and has over 400km of pre-existing 2D seismic data from which PetroLatina has already identified promising leads. The Putumayo Basin is considered by ANH to be one of the most promising exploration areas in Colombia and is rapidly becoming a prolific hydrocarbon producer with companies such as Gran Tierra Energy Inc., Petrominerales Ltd. and Ecopetrol S.A. amongst others operating in the region.

Under the proposed terms of the exploration and production contract (the "E&P Contract") with ANH, PetroLatina will be required to shoot a minimum of 103km of 2D seismic data and to drill at least one exploratory well within the first three years of the work program. PetroLatina's proposal for the Putumayo-4 block also included additional work commitments, comprising US $1.6 million in additional seismic work, and a 1% net production revenue payment after royalties to ANH. The E&P Contract comprises two 3 year exploration phases and a 24 year production phase.

PetroLatina expects to finalize and sign the formal E&P Contract with ANH during the first quarter of this year.

In addition, through PDN, PetroLatina has also entered into a memorandum of understanding for a proposed farm-out agreement for the project with La Cortez Energy Inc., an early stage oil and gas exploration and production company currently focusing on the energy sector in South America. Pursuant to the terms of the proposed farm-out agreement, La Cortez will assume two-thirds of the cost of the first seismic campaign (estimated to be US $2.6 million), which will be reimbursed in full by PetroLatina should the initial exploratory well ultimately prove to be a producing well. La Cortez will also be entitled to a 50% Net Working Interest in the Putumayo-4 block. The proposed farm-out agreement is intended to be finalized shortly after signature of the E&P Contract.

Operations Update

Further to the announcement made on December 1, 2008, PetroLatina is also pleased to provide an operational update in respect of the Colon-1 exploration well.

The Company previously announced the commencement of drilling operations on Colon-1, the first exploratory well to be drilled on the La Paloma block, with an expected total drilling depth of 9,072ft in order to test the La Paz, Lisama and Umir formations. The well has to date been drilled to a total depth of 8,825ft. At 6,700ft a gas show was registered in the Eocene La Paz Formation and at 8,700ft good oil shows and gas were observed in the Cretaceous Umir Sandstones. At a depth of 8,825ft, the current drilling program had to change as a result of the overpressure zone penetrated in the Umir formation and a cement plug has now been set up in the original hole at a depth of approximately 2,275ft. A side track has been started at 2,370ft in order to reach an intended revised target depth of up to approximately 9,200ft. This side track operation is expected to result in an increase of approximately US $1.6 million in the original projected costs of US $6 million, but the Directors of PetroLatina remain encouraged by the well's progress to date.

The remaining program, including completion of the side track drilling operation to a total depth of approximately 9,200ft (about 41m from the original bottom coordinates), wireline logging and initial production testing, is expected to take a further 12 days to complete.

The Company retains an 80% working interest in the Colon-1 well and is the operator.

Juan Carlos Rodriguez, CEO of PetroLatina, commented, "PetroLatina is delighted to have secured this block in a proven hydrocarbon basin with exceptional exploration potential. The award underlines the reputation and technical abilities of our operational team in Colombia. This has been further evidenced by the proposed farm-out agreement with La Cortez which substantially reduces the exploration risk for our shareholders."

"We remain excited by the potential of the Colon-1 prospect which we believe has possible recoverable reserves of up to 19.8 million barrels of oil. We hope to be able to announce initial production testing results in the coming weeks following completion of the side-track process."