Petrolifera Petroleum Limited provides an operations update covering activity in South America.

Argentina

Puesto Morales/Rinconada Concession (100% and Operator) Current production is averaging approximately 4,000 boe/d, primarily from the Puesto Morales Norte ("PMN") Field, situated in the onshore Neuquén Basin. Recent pricing for crude oil has been quite favorable, approaching US$52.00 per barrel. Capacity at the company's water injection plant was recently increased from 25,000 bbl/d to 33,000 bbl/d and the company has acquired a stand-by water injection pump for increased production reliability. Simultaneously, produced water treatment capacity is being increased from 12,000 bbl/d of to 33,000 bbl/d, with a scheduled completion date of mid-June 2010. This expanded capacity will enable the company to handle increased fluid volumes, which is anticipated to extend the ability to sustain production and recover increased volumes of crude oil. This was also undertaken in anticipation of the commencement of an additional five well infill drilling campaign, scheduled to be underway by the middle of the third quarter 2010, which will target unproduced reserves from within the Field.

The company is considering and evaluating various proposals to accelerate drilling on its Puesto Morales/Rinconada Blocks, including a multi-well infill program within the Puesto Morales Block to access extensive identified but untapped Loma Montosa crude oil and natural gas reserve and production potential. Also, the company recently completed an agreement to farmout the northern portion of the Rinconada Block, located in La Pampa Province, in exchange for a 35 percent carried working interest in three wells and operatorship of this portion of Rinconada.

Vaca Mahuida License (25% and Operator) At Vaca Mahuida, a total of five wells have recently been drilled by Petrolifera, as operator and with a 25 percent carried interest in the program. All five wells have encountered hydrocarbons in at least one of the Centenario, Loma Montosa, Sierras Blancas, Punta Rosada and Pre-Cuyo Formations. This has validated the geological model through the confirmation of both hydrocarbon migration and trapping in the Vaca Mahuida License. Results to date for these wells are as follows: VM.x-2014 well - completed as a natural gas well; tested approximately 1.0 MMcf/d dry gas from the Centenario Los Fenicios - LFe.x-1 well - tested 80 bbl/d of crude oil and 1.5 MMcf/d of dry gas from the Centenario - with the Sierras Blancas to be further evaluated at a later date Los Griegos - LG.x-1 well - tested 1.45 MMcf/d dry gas from the Centenario, 2.2 MMcf/d dry gas from the Loma Montosa; 1.5 MMcf/d dry gas from the Sierras Blancas

There are two additional wells awaiting to be evaluated which could further expand the potential of the Vaca Mahuida Block: Pampas - Pa.x-1 well - to be evaluated by testing after encountering shows while drilling Yaganes - YA.x-1 well - just reached TD with numerous shows to be evaluated.

The full impact of the program and the follow up drilling opportunities will be evaluated and assessed once all testing is completed. Petrolifera is optimistic about the possibility of a multi-well follow-up drilling program on certain of these plays and on the possibility of securing "Gas Plus" and "Oil Plus" pricing for much of the new hydrocarbons to be produced from the discoveries.

Puesto Guevara License (100% and Operator) A two well program on the Puesto Guevara Block, also under farmout, is anticipated prior to the end of 2010. Again, Petrolifera is the operator; the company's 100 percent carried working interest in the License will be reduced to 44 percent once work commitments are fulfilled.

Colombia

Sierra Nevada License (100% and Operator) The company recently completed a four day drill stem test of the top portion of Upper Porquero Formation in the La Pinta 1X well. The well was shut-in for pressure buildup, which should be completed within the next several days, at which time pressure gauges will be pulled and data used to estimate reservoir permeability. This information will assist in the design of a fracture stimulation program, which would be implemented, if practical, following receipt of a permit for a long-term test. The feasibility of such a long-term test will be decided during June 2010.

The application for a long-term test at Brillante SE-1X well is in the final stages of preparation and we anticipate it will be submitted shortly. Approval might be secured by approximately mid-July 2010, with testing then scheduled to be initiated for late July 2010 or early August 2010. The duration of the test is anticipated to be approximately three weeks.

The 3D seismic program over the La Pinta structure was completed ahead of schedule and data is now with the processor. Final interpretation is anticipated for mid-August 2010.

The CUDD snubbing unit which was utilized in our efforts to test the deeper Cienaga de Oro ("CDO") Formation in the La Pinta 1X well has been crated and shipped to Cartagena for export to the USA. The Petrex-22 rig has been stacked temporarily but it is anticipated the rig will be used by another operator to drill a well which is to be completed by mid-October 2010, after which time it will be returned to Petrolifera for the drilling of the first well on the San Angel prospect on the Magdalena License, which is adjacent to and contiguous with the Sierra Nevada License.

Turpial License (50%) A 2D seismic program to supplement previously-acquired data was concluded on schedule and data acquired is being processed. Final delivery of data and the interpretation is anticipated in mid-August 2010. This will determine the course of future action on the Block, including possible drilling targets.

Colombian Farmouts Our Colombian properties are currently being evaluated by several companies to determine a basis for introducing joint venture activity to the Sierra Nevada and Magdalena Licenses, in order to accelerate the evaluation of the discoveries to date and if possible, to secure a new drilling commitment to further assess the deeper potential identified in the CDO Formation during the drilling of the La Pinta 1X well.

Peru

Block 107 We anticipate receiving drilling permits for five locations on this Block by mid-year 2010. Farmout discussions are continuing with two major multinational companies, while a third company continues to evaluate the opportunity and is anticipated to respond in June 2010.

Corporate We are in the final stages of negotiations with our reserve-backed lenders to extend the term of and finalize repayment provisions of our loan facility.

Outlook Our recent drilling success in Argentina and completion of our water injection and water treatment facilities should add an element of stability to our production base, while we await the outcome of our infill drilling program at PMN Field. Modestly higher realized prices for our crude oil reflect an increasing move to more market pricing influences in Argentina. Industry interest in our assets, acreage and its potential has resulted in our ability to farmout work commitments in a productive and successful manner. We anticipate further activity at both Rinconada and Puesto Morales Norte (for the Loma Montosa potential) could expand and sustain our productive base and potential.

Our next drilling in Colombia will be at San Angel on the Magdalena License in October 2010. In the interim we anticipate being able to proceed with long-term tests of both the Porquero Formation in the La Pinta 1X well and of the Brillante SE-1X natural gas discovery.

Our discussions and evaluation on ways to develop, transport and produce our recent discoveries will continue alongside our technical evaluations. Also, our farmout discussions for both Colombia and Peru, aimed at accelerating our appraisal of these significant opportunities, will continue until successfully concluded.

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