Petro Andina Resources Inc.

Petro Andina Resources Inc.

September 15, 2008 14:08 ET

Petro Andina Announces Award of Exploitation Concessions

CALGARY, ALBERTA--(Marketwire - Sept. 15, 2008) -


Petro Andina Resources Inc. (TSX:PAR) ("Petro Andina" or the "Company") is pleased to announce that the province of La Pampa has formally awarded to the Company exploitation concessions covering the El Renegado and Gobernador Ayala Este fields in the Gobernador Ayala III Concession ("GA III") and the Puesto Pinto field in the La Pampa portion of the CNQ-7/A Concession ("CNQ-7/A"). Petro Andina has a 70 percent working interest in GA III and a 50 percent working interest in CNQ-7/A. The Company has been producing from CNQ-7/A since 2004, with the majority of production coming from the portion of CNQ-7/A located in the province of Mendoza. To date, the Company has not been producing from GA III.

The award of the GA III exploitation concession will allow the Company to commence production from GA III on wells drilled and tested in 2007. The initial production rate from the shut-in oil wells based upon testing is expected to be approximately 1,000 barrels of oil per day (bbls/d) net to Petro Andina. Furthermore, the Company will now commence an initial 25 well development program on GA III. Peak net production from the areas currently proven productive within GA III is forecast to be approximately 2,600 bbls/d net by 2009. Further development drilling at GA III will be primarily dependent upon the results of the initial 25 well development program.

Petro Andina's 2008 exit production rate guidance is in excess of 15,000 barrels of oil equivalent per day, which anticipated commencement of production from GAIII in 2008. The Company's current oil production, including GA III coming on-stream over the next week at anticipated production levels, is approximately 14,000 bbls/d net. Further drilling and capital activity is ongoing with the Company utilizing four drilling rigs and five service rigs. The current production rate represents an increase of 25 percent from the second quarter 2008 average production volume.

With the grant of the exploitation concession, the royalty rate in the portion of CNQ-7/A falling within the La Pampa province is officially reduced to 12 percent from 15 percent. The exploitation royalty rate on GA III is 12 percent in the first two years of production, gradually increasing to 18 percent by the sixth year of production and 28 percent thereafter.

The award of the CNQ-7/A and GA III exploitation concessions to Petro Andina are only the second and third exploitation concessions to be awarded by La Pampa. Up until 2006, the award of exploitation concessions was a federal mandate but control was transferred to the provinces by the federal government in January 2007.

About Petro Andina Resources Inc.

Petro Andina is engaged in the exploration for and development and production of oil and natural gas in South America and the Caribbean. The Corporation is continuing to develop its existing reserves and to conduct appraisal and exploration drilling on its 628,000 acre (346,000 acre net) land position in the Neuquen basin of Argentina. Petro Andina is headquartered in Calgary, Canada.

BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

This news release does not constitute an offer to sell securities, nor is it a solicitation of an offer to buy securities, in any jurisdiction. All sales will be made through registered securities dealers in jurisdictions where the offering has been qualified for distribution. The securities offered are not, and will not be, registered under the securities laws of the United States of America, nor any state thereof and may not be sold in the United States of America absent registration in the United States or the availability of an exemption from such registration.

Forward-Looking Statements

Certain statements regarding Petro Andina Resources Inc. including management's assessment of future plans and operations, may constitute forward-looking statements under applicable securities laws and necessarily involve known and unknown risks and uncertainties, most of which are beyond Petro Andina's control. These risks may cause actual financial and operating results, performance, levels of activity and achievements to differ materially from those expressed in, or implied by, such forward-looking statements.

Such risks and uncertainties include, but are not limited to: the impact of general economic conditions in Canada and Argentina; industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced, both in Canada and Argentina; competition; the lack of availability of qualified personnel; fluctuations in commodity prices; the results of exploration and development drilling and related activities; imprecision in reserve estimates; the production and growth potential of Petro Andina's assets; fluctuations in foreign exchange or interest rates; the ability to access sufficient capital from internal and external sources; and obtaining required approvals of regulatory authorities, both in Canada and Argentina. Many of these risk factors are discussed in further detail in the Corporation's Annual Information Form dated March 28, 2008 on file with Canadian securities commissions. Readers are also referred to the risk factors described in other documents that Petro Andina files from time to time with securities regulatory authorities.

Accordingly, Petro Andina gives no assurance nor makes any representations or warranty that the expectations conveyed by the forward-looking statements will prove to be correct and actual results may differ materially from those anticipated in the forward looking statements. Petro Andina undertakes no obligation to publicly update or revise any forward-looking statements.

The Toronto Stock Exchange has not received and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Petro Andina Resources Inc.
    Melesia Kasha
    Investor Relations
    (403) 237-1700
    (403) 265-8216 (FAX)
    Petro Andina Resources Inc.
    Kenneth G. Pinsky
    Vice President, Finance and Chief Financial Officer
    (403) 517-1729
    (403) 265-8216 (FAX)