PetroMagdalena Provides Production and Exploration Update

TORONTO, Feb. 7, 2012 /PRNewswire/ - PetroMagdalena Energy Corp. (TSXV: PMD), today provided an update on its ongoing exploration program previously announced on January 18, 2012, and provided a production update for a new discovery on the Arrendajo block.

Luciano Biondi, Chief Executive Officer of the Company stated: "We continue to make substantial progress with our first quarter exploration program. The result from the discovery at Azor is very positive. The incremental production we have from this well underpins our cash flow and provides the financial support that will allow us to expand our 2012 work program. The new Azor-1X well adds 587 bopd to our gross working interest production. We have also made good progress on our exploration program with intermediate casing set on the Santa Cruz-1X well, logging and casing the Cernicalo-1ST well and the Arrendajo Norte-1X well just south of the Azor discovery will reach total depth by the end of the week. As previously indicated, the first quarter incorporates intensive drilling activity."

PRODUCTION  UPDATE

Azor-1X production test

The Azor-1X well has been completed and was put on production on January 31, 2012. The well produced at a stable rate of 1,181 bopd, 0.3% water cut and a well head flowing pressure of 270 psi, natural flow with a 20/64th of an inch choke over the first 12 hours. The choke was then changed to 16/64th of an inch and the well flowed at a stable average rate of 870 bopd with a wellhead flowing pressure of 290 psi of natural flow and a 0.3% water cut over a continuous 6-day period.  This results in 587 bopd gross working interest for the Company.

The Azor-1X well was spudded on December 24, 2011 and discovered the Azor field on the Arrendajo Block, north of the Cubiro Block in the Llanos Basin and on January 17, 2012, PetroMagdalena initiated production testing on the C5 sand with the announcement on January 18, 2012 that the zone was tested at 752 bopd of 35.5 degrees API oil with 1% -BS&W.  The final permit allowing for permanent production is currently in process.

The Azor field is located on the Arrendajo Block in the Llanos Basin, where the Company has a 67.5% working interest, subject to ANH approval.

EXPLORATION UPDATE

Arrendajo Block, Llanos Basin: Arrendajo Norte - 1X Exploration well

After drilling the discovery well, Azor-1X, the drilling rig has moved to another location on the Arrendajo block, Arrendajo Norte-1X, where the rig spudded on January 28, 2012 and has completed drilling to 588 feet (MD), after logging, the surface casing has been run and cemented. It is anticipated that the well will reach the projected TD of 7022 feet (MD) by February 10, 2012 to test the Carbonera sequence that was successful in the Azor-1X well, which is located 3 kilometers to the north.

Cubiro Block, Llanos Basin: Cernicalo - 1ST Exploration well

The Cernicalo-1ST well on the Cubiro Block has been drilled to a TD of 6,792 feet (MD) and has completed electric logs. Based on these results, 7-inch production casing has been run in the well to total depth and plans are in place to complete and production test the Guadalupe and C7 Carbonera Formations.  Results from the completion and testing program are expected before the end of February 2012. PetroMagdalena has a 70% working interest in the Cernicalo-1ST well and is the operator of the Cubiro Block.

Santa Cruz Block, Catatumbo Basin: Santa Cruz -1X Exploration well

After spudding the Santa Cruz-1X exploration well on November 20, 2011, intermediate casing of 9 5/8 inch was set at 9,533 ft MD and drilling has progressed to 10,580 ft MD.  It is expected the well will reach TD before the end of February 2012. This well is being drilled adjacent to the Rio Zulia field.

For location details on these wells, please refer to the Company's investor presentation at www.petromagdalena.com.

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.

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SOURCE PetroMagdalena Energy Corp.