Mr. Nelson Navarrete reports

PETROAMERICA ANNOUNCES 2014 SECOND QUARTER RESULTS, A MATERIAL INCREASE IN SUROCO RESERVES, AND PROVIDES AN OPERATIONS AND NEW BUSINESS UPDATE

Petroamerica Oil Corp. has released the financial and operating results for the three and six months ended June 30, 2014, and has provided an update on the Suroco Energy Inc. acquisition, operations and new business developments.

Copies of the company's management's discussion and analysis and financial statements have been filed with the Canadian securities regulatory authorities and can be viewed or downloaded at the company's website or at SEDAR. The financial results for all periods presented are in U.S. dollars unless otherwise indicated.

Quarterly highlights include:

• Generated revenue of over $47.8-million, after royalties, leading to positive funds flow from operation of $18.2-million (three cents per share) with an operating netback of approximately $59 per barrel;
• Achieved average daily production of 6,513 barrels of oil equivalent per day;
• Closed the quarter with over $101-million in cash and short-term investments, an increase of 52 per cent from the close of 2013.

Other highlights:

• Closed the corporate acquisition of Suroco in mid-July, 2014, thereby adding significant new acreage, reserves and production in the Putumayo basin of Colombia;
• Received 5.9 million barrels of proved plus probable reserves from a midyear update by external reserves auditor GLJ, representing an 87-per-cent increase from the 2013 year-end allocation; these reserves have a net present value (before tax, discounted at 10 per cent) of approximately $186.8-million;
• Signed a farm-out agreement with Parex Resources Inc. for the exploration block LLA-10, where Parex will pay up to $2.5-million for civil works and 89 per cent of the exploration well to earn a 44.5-per-cent working interest;
• Bid for the Putumayo exploration block, PUT-31, in the 2014 Colombia bid round in a consortium with Gran Tierra Energy Inc.; Petroamerica will hold a 35-per-cent working interest in this block;
• Continues to maintain a strong balance sheet with current cash balance of approximately $63-million after accounting for the Suroco acquisition costs;
• Will participate in the drilling of up to six exploration wells in the second half of 2014: two targeting high-impact low-side fault closures in the Llanos, two conventional Llanos foreland fault traps and two N-Sand prospects in the Putumayo basin;
• Will partner in approximately eight development wells in the Quinde and Cohembi fields in the latter part of 2014 and the early part of 2015.

Financial and operating results

Second quarter financial summary

For the three months ended June 30, 2014, the company reported $47.8-million in revenue, net of royalties, from the sale of 589,000 barrels of oil equivalent. The realized sales price was $105.10 per boe generating an operating netback of approximately $59 per barrel.

For the second quarter of 2014, the company's net income was $6.4-million (one cent per share, diluted), a result of strong production levels through the quarter and continued strong oil prices, offset by foreign exchange losses incurred due to the strengthening of the Canadian dollar and additional income tax charges due to reduced overall exploration costs expensed compared with the prior period. The company's capital expenditures for the second quarter were $6.3-million, all invested in Colombia. These capital expenditures were financed from available cash on hand. As at June 30, 2014, the company held 17,000 barrels of oil in inventory.

Suroco acquisition

On July 15, 2014, the company announced that it had closed the previously announced plan of arrangement under the provisions of the Business Corporations Act (Alberta) between the company, Suroco and the shareholders of Suroco.

Under the arrangement, holders of common shares of Suroco were able to elect to receive one of the following for each Suroco share held:

1. Common shares of the company: 2.2161;
2. Petroamerica shares: 1.6401 and a cash payment of 20.79 Canadian cents;
3. Eighty Canadian cents in cash.

Immediately on completion of the arrangement, trading in Suroco shares ceased, and Petroamerica paid approximately $16-million and issued 253,795,411 Petroamerica shares to former holders of Suroco shares. The company currently has approximately 858 million basic shares outstanding and, when all warrants and options are considered, over 1.1 billion shares on a fully diluted basis.

This acquisition provides added scale and diversity to the Petroamerica portfolio, material exposure to an exciting new play in the Putumayo basin, and a production base and a reserves base that complement Petroamerica's with the ability to add significant future growth.

The company is currently working toward merging the two sets of operations and anticipates issuing to the marketplace revised production guidance and capital spending profiles by mid-September, 2014.

Suroco midyear 2014 reserve update

Petroamerica is further pleased to announce the results of the independent reserves report, effective June 30, 2014, and dated Aug. 8, 2014, for Suroco (which became a wholly owned subsidiary of Petroamerica upon closing of the arrangement). Suroco's reserves were evaluated by GLJ Petroleum Consultants of Calgary, Alta., in compliance with National Instrument 51-101 (standards of disclosure for oil and gas activities) and in accordance with the Canadian oil and gas evaluation handbook.

Midyear 2014 reserve update highlights:

• Total proved reserves of approximately 3.1 million barrels of oil (Suroco company share before royalty), with a net present value (before tax and discounted at 10 per cent) of approximately $93.1-million;
• Total proved plus probable reserves of approximately 5.9 million barrels of oil (Suroco company share before royalty), with a net present value (before tax and discounted at 10 per cent) of approximately $186.8-million;
• Total proved, probable and possible reserves of approximately 10.0 million barrels of oil (company share before royalty), with a net present value (before tax and discounted at 10 per cent) of $277.0-million.

Booked reserves increased as follows:

• Suroco company gross proved reserves grew by 48 per cent from year-end 2013 after accounting for first-half 2014 production.
• Suroco company gross proved plus probable reserves grew by 87 per cent from year-end 2013 after accounting for first-half 2014 production.
• Suroco company gross proved plus probable plus possible reserves grew by 134 per cent from year-end 2013 after accounting for first-half 2014 production.
• The majority of the booking increases are attributed to successful exploration and development drilling and production activity in the Quinde field of Suroriente and recognition of undeveloped reserve potential in that area.
• Suroco's proved plus probable reserve life index increases from 4.0 years to 5.4 years.

The attached reserves summary table summarizes Suroco's oil and gas reserves as at Dec. 31, 2013, and June 30, 2014.

                              RESERVES SUMMARY
                                 (in Mboe)                                

Reserves category                       Dec. 31, 2013 June 30, 2014

Total proved                                    2,067         3,057
Total proved plus probable                      3,136         5,852
Total proved plus probable plus possible        4,258         9,966

Company working interest reserves, before royalty

The attached reserves net present value summary table presents a summary of the company's net present values of future cash flows as of Dec. 31, 2013, and June 30, 2014.

                    RESERVES NET PRESENT VALUE SUMMARY 
                               (in millions) 
                                             Dec. 31, 2013    June 30, 2014  
Reserves category                         Pretax After tax Pretax After tax

Total proved                               $64.9     $50.2  $93.1     $69.5
Total proved plus probable                 $89.1     $66.4 $186.8    $133.5
Total proved plus probable plus possible  $115.5     $83.8 $277.0    $194.2

Net present values discounted at 10 per cent

The price forecast used in the variable-dollar economics is available on the GLJ website.

Reserve advisory

Possible reserves are those additional reserves that are less certain to be discovered than probable reserves. There is a 10-per-cent probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

Business development activity

Increased LLA-10 working interest and farm-out

Petroamerica increased its private equity share in the Llanos-10 block from 50 per cent to 89 per cent at no additional cost by assuming Canacol Energy Ltd.'s 39-per-cent working interest. The company subsequently farmed out half of its working interest (44.5 per cent) to Parex. Pursuant to the terms of the farm-out agreement, Parex will pay up to $2.5-million for civil works and 89 per cent of the dry-hole cost of one exploration well to earn 44.5-per-cent working interest and operatorship, subject to the regulatory approval of the Colombian National Hydrocarbons Agency.

Colombia 2014 bid round award

Petroamerica, as part of a bid consortium (including Gran Tierra: 65-per-cent working interest and operator, and Petroamerica: 35-per-cent working interest), was the successful bidder in the 2014 Colombia bid round for the PUT-31 block in the Putumayo basin. This block is interpreted to lie in the sweet spot of the N-Sand play fairway in the Putumayo, and its award is subject to final confirmation by the ANH.

Operations update

Company production

Daily production for the second quarter averaged 6,513 barrels of oil equivalent per day exiting the quarter with daily production of 6,013 boepd. June production averaged 6,465 boepd (company working interest) compared with average production of 6,579 boepd for the previous month.

Las Maracas field (non-operated, Los Ocarros block and 50-per-cent working interest)

The Las Maracas-15 infill well was drilled targeting the Mirador, Gacheta and Une reservoirs. The well encountered unswept oil pay in all three reservoirs and was completed as a Mirador producer with an average oil rate of around 1,650 barrels of oil per day. The Las Maracas-16 water disposal well was also drilled and completed and is currently being used to inject produced water. The water treatment capacity and injection plant capacity are being expanded to 75,000 barrels of water per day and are scheduled for completion by the end of October, 2014.

La Casona field (non-operated, El Eden block and 40-per-cent working interest)

The gas compression plant is currently being expanded to handle 4.5 million cubic feet per day of gas and is expected to be completed before the end of August. Once commissioned, this will enable the La Casona-2 well to be placed on production from the Mirador.

Curiara-1 long-term test (non-operated, El Porton block and 25-per-cent working interest)

The Curiara-1 well has been on extended well test since early April, 2014, and has produced more than 43,000 barrels of light 42-degree API oil and 245 million cubic feet of gas from the Mirador. The well has performed better than expected and is currently producing at rates of more than 500 bopd.

Suroriente block (non-operated and 15.8-per-cent working interest)

The recently drilled Quinde-7 well was placed on production with an electrosubmersible pump, and, after seeing initial rates of 4,400 bopd, the well is now producing at a rate of more than 3,500 bopd. However, what was considered to be a temporary stoppage in production at the Cohembi and Pinuna fields has turned into a longer than expected shut-in. More specifically, the production in these fields has been off-line since July 13, 2014, due to a local community blockade. The operator and other operators in the surrounding area are working closely with both the local and national governments and local communities to resolve this situation.

Drilling program update for 2014

Following the acquisition of Suroco, and including wells already scheduled by Petroamerica, a number of high-impact exploration prospects will be drilled in the near term. A summary of exploration, appraisal and development drilling expected for the rest of 2014 is outlined in the attached summary of exploration, appraisal and development drilling table.

          SUMMARY OF EXPLORATION, APPRAISAL AND DEVELOPMENT DRILLING

Prospect/well      Activity type       Block    Working interest     Timing/status

Garza Roja-1         Exploration      LLA-10       44.5 per cent           Q4 2014
Zampona-1            Exploration Los Ocarros         50 per cent           Q4 2014
Crypto-1             Exploration   El Porton         50 per cent           Q4 2014
Langur-1             Exploration      LLA-19         50 per cent        Q3/Q4 2014
Trampa Mixta-1       Exploration  Alea 1848A         50 per cent   Q4 2014/Q1 2015
Cohembi North-1      Exploration  Suroriente       15.8 per cent   Q4 2014/Q1 2015
Quinde -- 4 wells    Development  Suroriente       15.8 per cent        Q3/Q4 2014
Cohembi -- 4 wells   Development  Suroriente       15.8 per cent   Q4 2014/Q1 2015

Petroamerica will participate in the drilling of up to six exploration wells in the second half of 2014: two targeting high-impact low-side fault closures in the Llanos (Langur-1 and Garza Roja-1), two conventional Llanos foreland fault traps (Crypto-1 and Zampona-1) and two N-Sand prospects in the Putumayo basin (Cohembi North-1 and Trampa Mixta-1). Additionally, the company will partner in approximately eight development wells in the Quinde and Cohembi fields in the latter part of 2014 and the early part of 2015.

Outlook

The new Petroamerica, since the acquisition of Suroco, holds interests in 12 exploration and production contracts in the Llanos and Putumayo basins of Colombia, covering more than one million gross (over 500,000 net) acres focused on high-netback light and medium oil. This portfolio includes a substantial inventory of exploration prospects and leads that will be pursued to support future production and reserves growth for the company. Furthermore, the new company will also have significant exposure to the prolific N-Sand play in the Putumayo basin in addition to the current production operations, discoveries and exploration opportunities in the Llanos basin, enhancing the overall portfolio and diversifying the company's asset base.

The company is currently merging the two sets of operations and anticipates releasing a revised production guidance and a combined capital spending program by mid-September, 2014. However, based on preliminary numbers, the company expects to be able to fully finance internally its operations for the year through the combination of free cash flow and cash on hand.

The company continues to pursue select new business opportunities that will enhance the existing portfolio and provide additional future growth in its two core areas.

     CONDENSED CONSOLIDATED INTERIM STATEMENTS OF NET INCOME AND COMPREHENSIVE INCOME 
                          (thousands of U.S. dollars, except per-share amounts)             

                                             Three months ended June 30,     Six months ended June 30,
                                                    2014           2013           2014           2013
Revenue
Oil revenue -- net of royalties             $     47,825 $       46,104 $       99,527 $       91,772
Expenses
Production                                        (2,948)        (2,444)        (4,992)        (3,755)
Transportation                                   (10,172)        (8,090)       (21,513)       (16,179)
Purchased oil                                         --         (2,624)        (1,625)        (2,624)
Exploration and evaluation                          (263)            --           (354)          (325)
Depletion and depreciation                        (9,417)        (7,186)       (18,950)       (14,357)
General and administration                        (3,738)        (2,168)        (6,473)        (4,571)
Transaction costs                                 (1,229)            --         (1,229)            --
Share-based payments                              (1,793)          (233)        (1,992)          (485)
Total                                            (29,560)       (22,745)       (57,128)       (42,296)
Finance and other                                 (1,209)        (1,226)        (2,501)        (2,498)
Foreign exchange gain (loss)                      (3,849)           485          1,843            (74)
Total                                             (5,058)          (741)          (658)        (2,572)
Income before income taxes                        13,207         22,618         41,741         46,904
Current income tax expense                        (9,296)        (5,365)       (15,810)       (13,890)
Deferred tax recovery (expense)                    2,520         (6,081)        (1,888)        (7,730)
Net income for the year                            6,431         11,172         24,043         25,284
Other comprehensive (loss) income
Items that will be reclassified subsequently
to income or (loss)
Reserve on translation of foreign operations       2,131            217         (2,051)           990
Total comprehensive income                         8,562 $       11,389 $       21,992 $       26,274
Basic income per share                              0.01 $         0.02 $         0.04 $         0.04
Diluted income per share                            0.01 $         0.02 $         0.04 $         0.04

We seek Safe Harbor.