Solana Resources Limited announces that the Costayaco-2 well located in the Chaza Block, Putumayo Basin, southern Colombia was spudded on December 6, 2007. Costayaco-2 is the second well in the Costayaco field that was discovered in the second quarter of 2007.

The Costayaco-1 discovery well tested at a maximum combined rate of 5,906 barrels of oil per day ("bopd") from four separate formations. Costayaco-2 is 625 metres northeast of Costayaco-1 and is expected to penetrate the target structure at the same depth as Costayaco-1.

Drilling is anticipated to take 32 days with completion and testing operations to follow. Costayaco-3, 965 meters west-southwest of Costayaco-1, will be drilled with the same rig in the first quarter of 2008, immediately following Costayaco-2. Costayaco-3 is expected to penetrate the target structure lower than Costayaco-1 and should significantly increase the Company's understanding of field size.

Costayaco-1

Costayaco-1 has been flowing from the Caballos formation at approximately 2,200 bopd (1,000 bopd net of royalty to Solana) with all production trucked to the nearby Toroyaco facility. Testing of commingled production from two zones (Caballos and Villeta T) using a jet pump is currently under way.

Seismic

The acquisition of 70 square kilometres of new 3-D seismic data over the Costayaco field and 25 line kilometres of new 2-D data over Chaza block exploration leads was completed in early December and the data is currently being processed. The interpretation results from this data will be used for planning future Costayaco wells and developing exploration plays respectively.

Additionally, the Costayaco-2 and Costayaco-3 results, in combination with the new 3-D seismic data, will greatly enhance our understanding of field size and allow us to plan field development, including additional drilling, facilities and pipelines.

Infrastructure

A crude oil truck unloading facility at Uchupayaco, and the tie in of this facility into the existing 8 inch line that runs to the Santana Station has been completed. Costayaco production is now being trucked to this facility, but will ultimately flow in a 10 kilometre 8 inch pipeline from the Costayaco-1 location to Uchupayaco and into the existing pipeline system. This line is currently in the planning stages and is scheduled to be operational by June 2008.

Solana holds a 50% working interest in the Chaza Block with Gran Tierra Energy Inc., the operator, holding the other 50% interest. The Chaza block is subject to a fiscally attractive Agencia Nacional de Hidrocarburos contract with no additional state participation.