La Cortex Energy has provided the following operational update on the company's Puerto Barco Block located in northeastern Colombia:

La Cortez, as operator of the Puerto Barco block, has completed the technical evaluation of the block, which yielded very encouraging data as to future production potential. Upon completion of the technical evaluation, the company developed a comprehensive civil works, community socialization, and operational work-over program designed to successfully re-initiate near-term production in the Puerto Barco field.

Social Activity

Successful socialization of the Puerto Barco reactivation area has been undertaken with community leaders in both La Gabarra and Tibu, including government authorities and clergymen. The next step, which is planned for the 2nd& 3rd week of August, is to conduct socialization activities within the smaller communities in both direct and indirect influence areas. Since July 1st, 2011, we have contracted and stationed an experienced social professional in the area based in La Gabarra.

Civil Works Activity

Early this year, we performed a detailed evaluation of the area infrastructure, and subsequently developed a comprehensive civil works improvement program set to commence August 15th, 2011. Phase I is expected to last approximately 2 months covering the area from La Gabarra to the Puerto Barco-2 pad, which is the planned location for the first work-over well. Phase II will commence in mid September, and will consist primarily of road maintenance along specific points from La Gabarra to Tibu, which is approximately 23 km.

Operational Activity

Work-over rig mobilization is expected to begin in October, with initial work-over activity set to commence immediately following completion of the civil works program in late October. We have approved the initial Authorization for Expenditure (AFE) for the first work-over well, which is estimated to cost $1.87 MM net to the company. Initial production is expected in late November, with production rates estimated to reach 50 bopd net. Historical production in the Puerto Barco field has yielded high quality, light crude oil exceeding 40 degrees API.

This activity will begin the process of securing more recent, complete technical data that could potentially allow for a reclassification of certain resource estimates to booked reserve quantities. The results will also provide us with the technical data needed in connection with the company's ongoing negotiations with Ecopetrol regarding amendment of the existing contract terms. We continue to be actively engaged with Ecopetrol regarding opportunities to amend the contract terms, though the final outcome of such discussions remains unknown at this point. The first well intervention in Puerto Barco-2 is considered to be a strategic milestone event that will give Ecopetrol the opportunity to evaluate our ability to implement exploration and development activity in the block beyond 2013. We remain enthusiastic regarding future options for our activity in this area, where some of the long-standing hydrocarbon production in Colombia is located.

Andres Gutierrez, president and CEO of La Cortez, commented on the announcement: "We are very pleased with re-initiation activity in the Puerto Barco block, which we believe will provide us with the opportunity to add near-term production, gather more complete technical data, and demonstrate our ability to operate in this part of Colombia. This is a significant step forward in our intent to amend and extend the existing contract terms, and enter into a new exploration area with Ecopetrol. We continue to place utmost importance on developing strong community relations in the area, and have been pleased with the support that we have received for our planned activities."

Tags: La Cortez Energy