PetroFalcon’s 40%-owned joint venture, PetroCumarebo, S.A., commenced natural gas production from the La Vela Field in the East Falcon Block.

PetroCumarebo is delivering 10 million cubic feet of natural gas per day ("mmcf/d") from the La Vela Field into PDVSA's Interconnection Centro Occidente ("ICO") pipeline, which transports the natural gas to the nearby Paraguana Refinery Complex.

PetroFalcon's President, William Gumma, said, "The opening of PDVSA's ICO pipeline from La Vela will allow PetroCumarebo to test wells recently completed in the area. We look forward to increasing production of oil and natural gas."

Due to the ICO pipeline closure on December 6, 2006, PetroCumarebo still has approximately 12 mmcf/d and 150 barrels of oil per day ("bbls/d") shut-in from the Cumarebo Field in the East Falcon Block.

Management has been advised that deliveries to the ICO pipeline from the Cumarebo Field are expected to resume in the fourth quarter of 2007.