PetroMagdalena setting casing to test the Yaraqui-1X exploratory well

TORONTO, Nov. 21, 2011 /PRNewswire/ - PetroMagdalena Energy Corp. (TSXV: PMD) announced today the end of drilling operations at the Yaraqui-1X well, located in the Topoyaco block, in the foothills of the Putumayo Basin in Southern Colombia, where the Company has a 50% beneficial working interest. The well was drilled to a total depth of 10,651 feet measured depth (MD), having drilled through the Tertiary and Cretaceous section and penetrating 61 feet into the pre-Cretaceous basement. This well was drilled as part of the original work commitment with the Agencia Nacional de Hidrocarburos (ANH). Pacific Rubiales Energy Corp. holds the remaining 50% beneficial working interest and is the operator for this block, in both cases subject to ANH approval.

The operator is currently preparing to run casing and will proceed to test the well. This evaluation will allow the Company to determine the quality of oil and production potential for the Topoyaco subthrust prospect and to update the evaluation of resources present in the trap.

Luciano Biondi, Chief Executive Officer of the Company commented: "We are cautiously optimistic that the information provided by the mud logging and wireline logs from the well indicate the potential of the sub-thrust play on the Topoyaco block and, if testing is successful, this is a major discovery for our Company."

The well was spudded on August 31, 2011, and was drilled directionally with a southeast-northwest orientation, in a monocline structure against the sub-thrust of the basin bounding fault, and referred to as structure "D". This structure covers an area of approximately 4,500 acres.

According to the petrophysical evaluation of the logs, the well encountered what is interpreted as 142 feet of potential hydrocarbon bearing sandstones, distributed among the base of the Rumiyaco Formation, and in the Villeta and Caballos Formations, all of which have proven to be commercial reservoirs elsewhere in the basin. In the Rumiyaco Formation, the "Arena Neme" sandstone unit was encountered at 9,714 feet MD (8,801 feet true vertical depth (TVD)) with 20 feet of log indicated net pay with a porosity of 10%. In the Villeta Formation, the pay units were found at 9,748 feet MD (8,828 feet TVD), with a total of 120 feet of potential oil pay: 10 feet in the M2 sandstones encountered at 10,110 feet MD (9,126 feet TVD), 40 feet in the "U" sandstones (10,252 feet MD and 9,201 feet TVD) and 70 feet in the "T" sandstones (10,354 feet MD and 9,327 feet TVD). The "U" sands have average porosities of 10% while the "T" sands have porosities in the order of 11%. In the Caballos Formation, found at 10,510 feet MD (9,458 feet TVD), a total of 2 feet of potential pay was found, with porosities of 11%.

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.

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SOURCE PetroMagdalena Energy Corp.