Solana Resources Limited says that the Costayaco-2 well, a 560 metre step out to the northeast of the Costayaco-1 discovery well, has been successfully drilled, logged and cased. The Costayaco field is located in the Chaza Block, Putumayo Basin, southern Colombia.

Costayaco-2 reached a total measured depth of 8,600 feet on January 2, 2008, and encountered similar hydrocarbon shows and lithology as Costayaco-1. Initial log interpretations, combined with the hydrocarbon shows, indicate reservoir quality sandstones with potential oil pay in the Uand T units of the Villeta formation, and in the Caballos formation.

The Pride-6 service rig is being mobilized to initiate testing of the hydrocarbon reservoirs encountered during drilling. Testing operations are expected to begin in mid-January and scheduled to be completed in mid-February.

The Pride-17 rig used to drill Costayaco-2 was released on January 8, 2008, and is currently being moved to the Costayaco-3 location. Costayaco-3 is located approximately 960 meters west southwest of the Costayaco-1 location. Drilling is expected to commence in late January and be completed in late February.

Production from Costayaco-1 has increased to approximately 3,500 barrels of oil per day (“bopd”) gross, or 1,610 bopd net of royalty to Solana, as a result of commingling the Caballos and the Villeta T zones. Costayaco-1 oil production is currently being trucked to new offloading facilities at Uchupayaco which is connected to existing pipeline infrastructure.

Any crude oil production from Costayaco-2 will be trucked to the same facilities. Preparations for the 11 kilometre pipeline from the Costayaco field to Uchupayaco are under way. Upon completion, this pipeline will replace trucking operations.