PetroMagdalena announces exploration update

TORONTO, Nov. 28, 2011 /PRNewswire/ - PetroMagdalena Energy Corp. (TSXV: PMD), a company focused on oil and gas exploration and production in Colombia, today announced an update on its ongoing exploration program.

Luciano Biondi, Chief Executive Officer, commented: "We are pleased with the momentum we have achieved with our exploration program, which we fully intend on continuing into 2012. The testing for the Yaraqui-1X well in the Topoyaco block has been prepared and operations are ongoing, and the new discovery at our light oil field, Petirrojo, although still at early stages, shows great promise, with the Petirrojo-2 well being tested and the Petirrojo-3ST completion to follow."

Topoyaco Block

In the Yaraqui-1X exploration well, a seven inch liner was successfully cemented from 8,356 feet MD to 10,643 feet MD last week and the first test, which is being conducted in the Villeta formation, has begun. Results of this test will be announced when completed. Four intervals in total are to be tested, three in the Villeta formation and one in the Neme sand of the Lower Rumiyaco formation.

Petirrojo Field (Cubiro Block B)

The Petirrojo-2 development well will be completed in two sands, the Carbonera C-7A (8 feet of net pay) and C-7B (23 feet of net pay). Initial testing of the well is currently being conducted, the results of which will be provided when completed.

The Petirrojo-3ST development well has also been drilled and cased. A workover rig will move in after the completion of the Petirrojo-2 well and the drilling rig is moved off location. The Petirrojo-3ST well will also be completed in the Carbonera formation, C-7A and C-7B sands, with 8 and 21 net feet of net pay respectively.

The Petirrojo-1X well is currently producing at a stable rate of 1,002 bopd, with 67% water cut from Carbonera C-7 with an electrical submersible pump.

Yopo Structure (Cubiro Block B)

The Yopo exploration prospect is located 2 km north of the producing Petirrojo Field and 5 km south of the producing Palmarito Field (operated by Perenco on the offsetting block).  The exploratory well Yopo-1X will be drilled to test this structure and is expected to be spudded within two weeks. The main objectives in this well are the Carbonera C7 sands, estimated to be at a depth of 5,800 feet MD. The drilling location is ready and the drilling rig is 98% mobilized.

Arrendajo Block

This Block is 7 km north of the Cubiro Block and the exploratory well Azor-1X will be directionally drilled to test the Carbonera formation at approximately 7,200 feet MD. The location and access road for Azor 1X well will be completed in one week and as soon as the drilling rig finishes the Petirrojo-2 well completion, it will move to drill the Azor-1X exploration well.

Santa Cruz Block

The Santa Cruz Block is located in the Catatumbo Basin in Colombia and the exploratory well Santa Cruz 1X is being drilled to test the Mirador and Barco formations at an approximate total depth of 13,500 feet MD.  The well was spudded on the 20th of November and is currently drilling at 2,553 feet MD and it is expected to be at depth in the middle of the first quarter of 2012.

Carbonera Block

The Cerro Gordo-1 gas well in the Carbonera Block was shut in on the 9th of November, 2011, for the first long term pressure build up as part of the Company's technical evaluation plan for this field. Plans are progressing to spud an exploratory well in the first quarter of 2012, and this well will fulfill the last exploration obligation on the block. The exploration well will target the La Luna, which is the producing interval in Cerro Gordo 1 well, and Cogollo formations.

PetroMagdalena is a Canadian-based oil and gas exploration and production company, with working interests in 19 properties in five basins in Colombia. Further information can be obtained by visiting our website at www.petromagdalena.com.

All monetary amounts in U.S. dollars unless otherwise stated. This news release contains certain "forward-looking statements" and "forward-looking information" under applicable Canadian securities laws concerning the business, operations and financial performance and condition of PetroMagdalena. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and reserve life of the various oil and gas projects of PetroMagdalena; the estimation of oil and gas reserves; the realization of oil and gas reserve estimates; the timing and amount of estimated future production; costs of production; success of exploration activities; and currency exchange rate fluctuations. Except for statements of historical fact relating to the company, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as "plan," "expect," "project," "intend," "believe," "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Many of these assumptions are based on factors and events that are not within the control of PetroMagdalena and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions, risks relating to international operations, fluctuating oil and gas prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the oil and gas industry, failure of plant, equipment or processes to operate as anticipated. Although PetroMagdalena has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. PetroMagdalena undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.

Statements concerning oil and gas reserve estimates may also be deemed to constitute forward-looking statements to the extent they involve estimates of the oil and gas that will be encountered if the property is developed. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Estimated values of future net revenue disclosed do not represent fair market value.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

SOURCE PetroMagdalena Energy Corp.