Americas Petrogas Inc.

Americas Petrogas Inc.

October 26, 2011 08:30 ET

Americas Petrogas' Exploration Drilling Program Results in Three New Discoveries of Conventional Oil in the Neuquen Basin of Argentina

CALGARY, ALBERTA--(Marketwire - Oct. 26, 2011) - Americas Petrogas (TSX VENTURE:BOE) ("Americas Petrogas" or the "Company"), is pleased to announce three conventional oil discoveries from the recently-completed exploration drilling program on the Rinconada Norte block (96 or 37 sections) located in La Pampa Province in the eastern margin of the Neuquén Basin of Argentina.

Americas Petrogas' wholly-owned Argentina subsidiary, Americas Petrogas Argentina S.A., is the operator of the Rinconada Norte block, holding a 65% working interest, while Gran Tierra Energy (NYSE Amex:GTE)(TSX:GTE), through its Argentina subsidiary, holds a 35% working interest.

The three exploration wells lie along a NE-SW line with RN.x-1004 in the centre, RN.x-1001 to the SW and RN.x-1000 to the NE. The distance between the wells is approximately two kilometers. This wide separation can readily account for the differences in the results of the tests.

The first of these wells (RN.x-1004) was announced September 12, 2011 as a significant discovery with 1,023 barrels of oil equivalent per day and gravity of 29.6 degrees API (light oil) from the Precuyo formation. This is similar to the oil currently being produced from the same formation in Americas Petrogas' Medanito Sur Block immediately to the north. The intervals tested, 982-992 metres and 1022-1032 metres, indicated an oil column of 60 metres (197 feet) thick. The total well depth was 1150 metres.

The service rig then moved to the second well, RN.x-1001. This well tested 24 barrels of oil per day plus 459 barrels of water in a 22-metre thick sandstone at the top of the Precuyo formation. The oil gravity is 29.3 degrees API, similar to the oil tested in the RN.x-1004 well. The low percentage of oil produced in the 24 hour test demonstrates that the well may have encountered the oil-water contact and, therefore, there may be possibilities to drill water-free wells in structurally higher positions. The interval tested was 1057-1072 metres and the total depth was 1250 metres.

The service rig then moved to the third well, RN.x-1000. This well tested 87 barrels of oil per day with 185 barrels of water from the 893-900 metre interval at the top of the Precuyo formation. The oil gravity is 31.1 degrees API. The total well depth was 1050 metres.

All three wells are capable of production but only RN.x-1004 is likely to be in production during the fourth quarter of 2011.

The foregoing well results enable the Company to refine its prospect mapping and to identify other locations where the oil percentages could be higher and the development risk lower. As mentioned previously, these three wells are considered exploration wells. While such wells can produce economically, their primary purpose is to more accurately delineate the parameters and dimensions of the target field so as to optimize exploitation drilling. The resulting information provides essential input for a commercial development plan. In this regard, Americas Petrogas intends to drill additional wells in Rinconda Norte in the near future.

The Rinconada Norte block is currently under an Exploitation concession, which will allow Americas Petrogas and Gran Tierra Energy, with previous approvals from the authorities, to move ahead with development activities in the near term. The Company anticipates building test production facilities in the fourth quarter of 2011.

Commenting on this most recent discovery, Mr. Guimar Vaca Coca, Managing Director of Americas Petrogas Argentina S.A., stated, "We are very excited about these discoveries which will allow us to make commercial developments in a short time and will increase cash flow."

Mr. Barclay Hambrook, President & CEO of Americas Petrogas, stated, "Results of these exploration wells confirm the geological model as well as the upside potential of the Rinconada Norte Block. Three out of three exploration discoveries is a testament to the experience and expertise of our technical team, moving us up the learning curve."

About Americas Petrogas Inc.

Americas Petrogas Inc. is a Canadian company whose shares trade on the TSX Venture Exchange under the symbol "BOE". Americas Petrogas has conventional and unconventional (shale and tight sands) oil and gas interests in numerous blocks in the Neuquen Basin of Argentina. Americas Petrogas has joint venture partners, including Exxon Mobil, Apache and Gran Tierra Energy, on various blocks in Argentina. For more information about Americas Petrogas, please visit

Certain statements contained in this press release constitute "forward-looking statements" as such term is used in applicable Canadian and US securities laws. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or are not statements of historical fact and should be viewed as "forward-looking statements". These statements relate to analyses and other information that are based upon forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

In particular, statements (express or implied) contained herein regarding the RN.x-1001 well may have encountered the oil-water contact and that there may be possibilities to drill water-free wells in higher positions, the capability for commercial production from the three wells, drilling of additional wells, development plans, the ability to make commercial developments in a short time and to increase cash flows, the zone and interval depth, and conventional and unconventional resources, should all be viewed as forward looking statements.

There can be no assurance that such forward-looking statements will prove to be accurate as actual results and future events could vary or differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements contained in this news release. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

Forward-looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Company undertakes no obligation to update forward-looking statements and if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable law.

"Barrels of oil equivalent" (BOE) may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: per 1 barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.


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