Mr. Corey Ruttan reports

PETROMINERALES REPORTS FIRST QUARTER FINANCIALS AND PROVIDES OPERATIONAL UPDATE HIGHLIGHTED BY OUR TAYA OIL DISCOVERY

Petrominerales Ltd. has released its 2013 first quarter financial results and an operational update highlighted by its Taya-1 oil discovery. All currency figures in this release are expressed in United States dollars unless otherwise indicated.

First quarter financial and operating highlights

• New oil discovery on the company's Corcel block with the company's Taya-1 discovery;
• Potential new oil discovery on the company's Central Llanos acreage with the company's Curito-1 well; well logs indicating hydrocarbon prospectivity in four different formations totalling 54 feet of potential net oil pay;
• Positive results from the company's heavy oil assets; Tatama horizontal well averaging 458 barrels of oil per day (bopd) over 43 testing days in January and February and the company realized $1.3-million of net revenue related to the sale of this production; subsequent to March 31 retested the well with a larger pump and the well averaged 633 bopd; no heavy oil reserves reflected in Dec. 31, 2012, independent reserves report;
• Maintained strong operating netbacks of $61.44 per barrel;
• The OCENSA pipeline restructuring completed converting the pipeline from a cost model to a profit model effective Feb. 1, 2013; estimated share of 2013 profits, to be paid through semi-annual dividends, to be approximately $28-million;
• Expanded oil marketing business in Colombia and earned $3.3-million of operating cash flow through the purchase and resale of third party oil using underutilized capacity on pipeline assets;
• Generated funds flow from operations of $102.3-million, or $1.21 per share;
• Capital expenditures of $81.9-million, resulting in free cash flow of $20.4-million;
• Closed previously announced secured credit facility of $250-million (U.S.);
• Completed an accretive acquisition of the Canaguaro block, located adjacent to existing acreage, that includes 416 bopd and 2.3 million barrels of proved plus probable reserves;
• Engaged TD Securities Inc. as financial adviser for a formal process to pursue opportunities to monetize pipeline assets;
• Acquired two additional blocks in Brazil in the highly prospective Gomo trend.

                              FINANCIAL HIGHLIGHTS
                       (In millions, except where noted) 

                                                Three months ended March 31,  
                                                         2013           2012

Oil sales                                              $254.1         $333.0
Funds flow from operations                              102.3          199.8
Per share
Basic ($)                                                1.21           2.01
Diluted ($)                                              1.20           1.97
Adjusted net income (loss)                                6.5           80.3
Per share
Basic ($)                                                0.08           0.81
Diluted ($)                                              0.08           0.75
Dividends declared                                       10.4           12.5
Expenditures on PP&E and E&E                             81.9          218.4
Production (bopd)
Deep Llanos                                            14,273         23,596
Central Llanos                                          3,576          4,416
Neiva                                                   2,722          3,746
Orito                                                   1,210          2,226
Heavy oil                                                 246             63
Production Colombia                                    22,027         34,047
Production Brazil                                          36              -
Total production                                       22,063         34,047
Inventory changes and other (loss)                         66         (1,234)
Produced oil sales volumes                             22,129         32,813
Operating netback of produced oil ($/bbl)
Brent benchmark price                                  112.55         118.49
(Discount) -- Brent to Vasconia                         (5.38)         (3.85)
Vasconia benchmark price                               107.18         114.64
(Discount) Vasconia to sales price                      (1.77)         (3.12)
Sales price of produced oil                            105.41         111.52
Transportation expenses                                  7.62           6.83
Realized crude oil price                                97.79         104.69
Royalties                                               14.61          11.79
Royalties as a percentage of realized price               15%            11%
Production expenses                                     21.74          13.23
Operating netback of produced oil                       61.44          79.74

Financial review

The company's sales volumes of produced oil of 22,129 bopd and operating netback of $61.44 per barrel resulted in funds flow from operations of $102.3-million ($1.21 per basic share) for the first quarter, a 16-per-cent decrease over the preceding quarter. The change in funds flow primarily relates to lower sales volumes and higher operating and transportation costs.

Capital expenditures in the first quarter were $81.9-million, representing a significant decrease from the fourth and first quarters of 2012. This reflects the company's plan to execute a more balanced capital program between development and exploration, along with drilling fewer high-cost exploration wells in 2013.

The company expanded its oil marketing business in Colombia as a result of the OCENSA pipeline restructuring effective Feb. 1, 2013. For the remainder of the first quarter, the company earned $3.3-million of operating cash flow through the purchase and resale of third party oil using unused capacity on the company's pipeline assets.

The company has engaged TD Securities Inc. as financial advisers for a formal process to pursue opportunities to monetize its pipeline assets. These assets consist of the company's 5-per-cent equity ownership position in OCENSA, its transportation rights of up to 28,750 bopd in the OCENSA pipeline, and its OBC investment consisting of a 9.65-per-cent equity position and 11,580 bopd of transportation capacity. The company expects to complete this process in the third quarter.

Operational review

Production

First quarter production averaged 22,063 bopd, 12 per cent or 3,077 bopd lower than the fourth quarter mainly due to:

• Lower Deep Llanos production of 13 per cent or 2,185 bopd, primarily due to natural declines;
• Lower Central Llanos production of 13 per cent or 514 bopd primarily due to shut-in production as a result of workovers (435 bopd) combined with natural declines, partially offset by new production from the Mantis-3 well;
• Lower Orito production of 591 bopd primarily due to off-line production caused by pipeline disruptions, wells awaiting workovers and natural declines;
• Higher heavy oil average production of 246 bopd during the quarter from 46 days of testing Tatama horizontal well at a rate of 465 bopd;
• Brazil production of 36 bopd related to the Alvopetro acquisition that closed in December, 2012.

Production averaged 21,230 bopd in April, representing a 3-per-cent increase over March primarily due to recovered production from wells that were off-line or under service. Average April production does not include production from the company's recent Taya discovery.

Llanos Basin heavy oil blocks (Rio Ariari, Chiguiro Oeste, Chiguiro Este), Colombia

In March, the company recommenced its Tatama horizontal well production test with a higher fluid rate pump. The well initiated production testing on March 29 for 39 days and averaged 633 bopd with a 90-per-cent water cut. To date, the well has cumulatively produced 51,000 barrels of oil from the Mirador formation. This test demonstrated that heavy oil horizontal wells are capable of producing at commercial rates. The company is planning to drill a second horizontal well in the Mochelo area to test the productivity of a more optimally designed horizontal well that should provide the basis for a first phase commercial development. The company expects to have this well drilled and on production early in the quarter.

In addition, the company is evaluating a third heavy oil horizontal oil well in its Rio Ariari-1 area. This would be a follow-up to the company's previously tested Rio Ariari-1 well that produced an average of 130 barrels of oil per day over a 124-day period from a vertical well.

Deep Llanos basin (Corcel, Guatiquia, South block 31, and Canaguaro), Colombia

The company made an oil discovery on its Corcel block with its Taya-1 exploration well. Well logs indicate 42 feet of potential net oil pay in the Mirador formation and 31 feet in the Guadalupe formation. The company's production tested the secondary target, the Guadalupe formation, over six days and the well produced an average of 1,700 bopd of 15.5-degree API oil with a 17-per-cent water cut. This production test was conducted using an electric submersible pump, a fully open choke with a drawdown of 47 per cent. The company reduced the drawdown to 26 per cent over the last 24 hours and the well averaged 777 bopd at a 42-per-cent water cut. The company plans to continue testing the well to fully evaluate the Guadalupe formation. In addition to the Guadalupe potential, the company plans to evaluate the primary target, the Mirador formation, in the second quarter. Based on this discovery, the company commenced drilling Taya-2, a separate structure from Taya-1 that offers both Mirador and Guadalupe hydrocarbon potential.

For the remainder of 2013, the company is planning to drill up to six additional wells in the area, consisting of Taya-2, a proved undeveloped location on its recently acquired Canaguaro block, Canaguay-2, and four additional exploration wells.

As previously announced, the company's acquisition of an 87.5-per-cent interest in the Canaguaro block is strategic for a number of reasons, including accretive transaction metrics of $24.57 per barrel of proved plus probable reserves, the addition of 2.3 million barrels of proved plus probable reserves, over 400 bopd of additional production and providing a contiguous area of underexplored land located adjacent to its blocks 25 and 31. The company believes the Canaguaro block is on the same fault trend as other oil fields to the south of the block, including the Balay discovery and its Corcel and Guatiquia discoveries.

Central Llanos basin (Casimena, Castor, Casanare Este, Mapache blocks), Colombia

During the quarter the company drilled two wells, Mantis-3 and Zaino-1. Mantis-3 is a vertical development well targeting the upper Mirador formation. The well was placed on production in late March and since then has produced at an average rate of 347 bopd. In addition, the company drilled the Zaino prospect on its Casimena block and based on drilling results, the company abandoned the well.

In April, the company drilled its Curito-1 prospect on its Casanare Este block. Well logs indicate 54 feet of potential net oil pay in four different formations, the C7, Mirador, Gacheta and Ubaque. The company plans to production test each interval during the second quarter and with success, drill follow-up appraisal wells.

The company is currently drilling its Mantis-4 step-out well to test a southwest extension to the Mantis oil field in both the Upper and Lower Mirador formations. With success at Mantis-4, several additional development locations could be added targeting both the Upper and Lower Mirador formations. Following Mantis-4, the company plan to drill Mantis-5, an infill location targeting the Upper Mirador formation.

Orito (Putumayo basin), Colombia

The company recommenced its Orito development drilling program in December, 2012, and has drilled three wells to date, Orito-196, 197 and Orito-Norte. It targeted the Villeta formation in Orito-196, and based on its petrophysical interpretation it has calculated the presence of a similar pay to the one encountered in Orito-193. The company expects to have Orito-196 on production by mid-May, and both Orito 197 and Orito-Norte on production in June.

Brazil

In December, 2012, the company expanded its presence in the Reconcavo basin, onshore Brazil, by acquiring a 75-per-cent interest in Alvopetro Oil and Gas Investments Inc. The primary target on the company's Brazilian acreage is the Gomo member, which is both the mature source rock and contains the prospective reservoir sands. On its acreage, the Gomo is oil saturated and found at depths between 2,500 and 3,200 metres. There have been 24 wells drilled by other operators that have identified thick, stacked, oil-bearing sands. The Gomo net pay on these blocks ranges between 25 and 100 metres, averaging 44 metres with porosities ranging from 9 to 15 per cent and permeability between 0.1 and four millidarcies. Oil quality ranges between 34 and 38 degrees API.

To further complement its Brazilian portfolio, the company recently agreed to acquire interests in two additional blocks in the Reconcavo basin: blocks 170 and 183. Both blocks are contiguous with the company's existing acreage and offer the same tight oil potential on trend with the Gomo member of the Candeias formation. The company entered into farm-in agreement on block 170 to acquire a 50-per-cent economic interest in the shallow zones (to the base of the Caruacu member of the Maracangalha formation, approximately 2,100 metres) and a 90-per-cent economic interest in the deep zones of block 170. As consideration for this acquisition, the company will: invest $700,000 in well equipment; carry the farmor for 100 per cent of the drilling of one exploration well; and pay 50 per cent of a 5-per-cent royalty to a third party previous owner. In addition, should the farmor elect not to participate in the second required commitment well, the farmor forfeits its entire remaining interest in the block to Alvopetro SA. The transfer is subject to approval by Brazil's National Agency of Petroleum, Natural Gas and Biofuels (ANP). In addition, the company acquired a 100-per-cent working interest on block 183 for approximately $800,000, subject to approval by the ANP.

Including the acquisition of block 170 and block 183, Petrominerales holds an indirect interest in 10 blocks covering over 57,859 acres and has secured the majority of the high-potential Deep Gomo play fairway in the Reconcavo basin, onshore Brazil.

The company plans to drill up to two exploration wells in 2013 and recomplete one well. Its vision is to implement a large-scale, repeatable, low-risk, multiwell development program in Brazil, utilizing advanced technology and completion techniques. The company is excited about its entry into Brazil with this large resource opportunity.

Outlook

For the remainder of 2013, the company plans to drill up to 25 wells, balanced between development drilling opportunities and high-impact exploration in Colombia, Peru and Brazil. Its plan includes:

• Continuing development drilling programs at its Orito and Neiva blocks, drilling up to five more wells at Orito and up to six wells at Neiva;
• Drilling up to four wells on its Central Llanos acreage focusing on appraisal and development wells at its Yenac/Mantis oil fields and its potential new discovery at Curito;
• Drilling up to six exploration wells in Llanos basin of Colombia targeting light oil resources of up to 44 million barrels of undiscovered petroleum initially in place;
• Positioning itself to quickly develop a commercial production platform on its heavy oil acreage based on the outcome of its Tatama test results;
• Drilling its first two wells in Brazil targeting a large, tight oil resource on its newly acquired lands;
• Exposure to the first of two high-impact exploration prospects to be drilled by its joint venture partner in Peru at no cost to Petrominerales as it is carried on the cost of these wells by its joint venture partner;
• Commenced a formal process to pursue opportunities to monetize its pipeline assets.

The company looks forward to updating its shareholders on its progress throughout 2013.

Annual and special meeting

Petrominerales will be holding its annual special meeting of shareholders on Thursday, May 9, 2013, at 3 p.m. (Mountain Time) (5 p.m. Eastern Time) at the Calgary Petroleum Club, Devonian room, located at 319 5th Ave. SW, Calgary, Alta. The meeting and a corporate presentation following the formal business of the meeting will also be webcast live.

We seek Safe Harbor.