Shona Energy Company’s wholly-owned subsidiary, Geoproduction Oil and Gas Company of Colombia, has signed a Letter of Intent (LOI) with Altenesol LNG Colombia, S.A.S. to supply natural gas for Altenesol's Nataly I liquefied natural gas (LNG) Project (the "Project"). Under the terms of the LOI, Geoproduction has agreed to enter into negotiations for a Definitive Agreement that will provide the following:

1) Sale of 17 million cubic feet per day (MMCFD) of natural gas for a period of ten years. Based on initial discussions, the starting price will be negotiated within a range of $4.50 to $5.25 per MCF with an annual price escalation. The structure of the contract will be on a "take or pay" basis for both parties. 2) The parties have an option to extend the contract five years dependent on the results of the four- to five-well drilling program that Geoproduction will commence in mid 2013. 3) Milestones to be completed by Altenesol over the next six months that include, but are not limited to:

• the execution of a Definitive Agreement between Geoproduction and Altenesol by December 1, 2012; • the conversion of existing end user LOIs to definitive agreements; • the ordering of equipment, and • the initiation of construction of an LNG plant.

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