Petroamerica Announces Farm Out of El Porton Block and Provides an Operations Update for its Activities in Colombia

CALGARY, March 6, 2014 /CNW/ - Petroamerica Oil Corp. (TSX-V:PTA) ("Petroamerica" or the "Company"), a Canadian oil and gas company operating in Colombia is pleased to announce a farm out of its El Porton Block and provide an operations update for its drilling and production activities in Colombia (note: all financial amounts are shown in United States Dollars unless otherwise stated).

Company Production
First quarter production levels remain strong with total company working interest production averaging 6,497 barrels of oil equivalent per day ("boepd") for the month of February, and 6,453 boepd for January 2014. More than 95% of this production is coming from the Las Maracas Field, which continues to outperform, averaging 12,417 barrels of oil per day ("bopd") (gross) for the month of February.

Business Development and Strengthening Balance Sheet
The Company is pleased to announce that it has farmed out a 50% working interest to Parex Resources Colombia Ltd. Surcusal ("Parex") in the Exploration Area of the El Porton Block, where Petroamerica currently holds a 100% working interest. To earn its 50% working interest and operatorship on the Exploration Area Parex has agreed to pay 80% of the dry-hole cost for Crypto-1, the next exploration well to be drilled on the block. Parex is expected to operate the well, which is anticipated to spud sometime during the second quarter, under a service agreement with the current operator.

This farm out reduces the risk exposure to Petroamerica, and will result in a projected firm capital expenditure reduction for 2014 from approximately $70 million to $53 million. The Company is also pleased to report a continued strengthening of its balance sheet with a cash position of more than $95 million as of March 1, 2014, and as such, is currently evaluating opportunities that would strengthen and diversify the asset base.

Appraisal Activities
Following disappointing test results from the La Guira-2 appraisal well, the Company has taken the decision to suspend this well. Despite encountering the top Mirador and Gacheta reservoirs 10 feet higher than at La Guira-1, testing yielded oil and water at non-commercial flow rates. The Mirador formation swab-tested 37 degree API oil at average rates of 84 bopd under natural flow for 20.5 hours with the water-cut reducing toward the end of the test. However, following more extensive testing with an electro-submersible pump over a 79-hour period the well produced at an average rate of 61 bopd only and an average watercut of 92%.

The Rumi-1 long-term test facility (40% Petroamerica working interest) is being constructed and this well is expected to be on-stream before the end of the second quarter. The Curiara-1 long-term test facility (25% Petroamerica working interest) is more than 70% complete and the long-term production test is expected to commence sometime during the month of April.

2014 Exploration Drilling Schedule
Exploration drilling activity planned for the rest of the year is documented in the following table.

Firm Wells	Working Interest	Q1	Q2	Q3	Q4
Crypto-1	50%		X
Malavar-1	50%			X
Los Ocarros-X-1	50%			X

About Petroamerica:
Petroamerica Oil Corp. is a Canadian oil and gas exploration and production company with activities in Colombia. Petroamerica produces more than 6,400 boepd and has interests in five blocks, all located in Colombia's Llanos Basin. Petroamerica's shares are listed on the TSX Venture Exchange under the symbol "PTA".

Forward-Looking Statement

This news release includes forward-looking statements related to the expected occurrences in relation to the properties and drilling activities identified, the anticipated timing of well results, the capital budget, the expected use of finds in the current fiscal year and possible new exploratory drilling in the current year. A multitude of factors can cause actual events to differ significantly from any anticipated development and although Petroamerica believes that the expectations represented by such forward-looking statements are reasonable; there can be no assurance that such expectations will be realized.  These forward looking statements are based upon assumptions that Petroamerica has made concerning the oil and gas industry in Colombia, the reliability of available data regarding the properties, and the continuing market for oil and gas.  Risk factors may include the uncertainty of conducting operations under a foreign regime, the availability of labour and equipment, the fluctuating price of oil and gas, and Petroamerica's dependence upon other participants in the property areas.  Neither Petroamerica nor any of its subsidiaries nor any of its officers or employees guarantees that the assumptions underlying such forward-looking statements are free from errors, nor do any of the foregoing accept any responsibility for the future accuracy of the opinions expressed in this document or the actual occurrence of the forecasted developments.

Although the Company believes that the expectations represented by the forward-looking statements contained herein are reasonable, undue reliance should not be placed on the forward-looking statements because there can be no assurance that such expectations will be realized. The forward-looking statements contained in this document are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Data obtained from the initial testing results at the wells identified in this press release, including barrels of oil and cubic feet of gas produced, levels of water cut and net feet of oil pay, should be considered to be preliminary until a further and detailed analysis or interpretation has been done on such data. The well test results obtained and disclosed in this press release are not necessarily indicative of long-term performance or of ultimate recovery. The reader is cautioned not to unduly rely on such results as such results may not be indicative of future performance of the well or of expected production results for the Company in the future.

Neither the 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 release.

Use of 'boe'

Throughout this press release, the calculation of barrels of oil equivalent ("boe") is at a conversion rate of 5,600 cubic feet ("cf") of natural gas for one barrel of oil and is based on an energy equivalence conversion method. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 5,600 cf: 1 barrel is based on an energy equivalence conversion method primarily applicable at the burner tip and does not represent a value equivalence at the wellhead

 

SOURCE: Petroamerica Oil Corp.

Nelson Navarrete
President and CEO

Colin Wagner
CFO

Ralph Gillcrist
COO, Executive Vice President

Tel Bogota, Colombia: [phone]
Tel Calgary, Canada: [phone]
Email: [email protected]
Web Page: www.PetroamericaOilCorp.com