Petrolifera Petroleum Limited provides an operational update to its shareholders. The company’s first quarter 2007 crude oil sales averaged 11,333 bbl/d, which represents a 511 percent increase over the same period last year when sales were only1,855 bbl/d.

The first quarter sales also represent an increase of six percent over the fourth quarter of 2006, despite the fact fourth quarter 2006 levels were favorably affected by deliverability testing during the month of December 2006, when peak production levels of 13, 400 bbl/d were tested. Since that time, the company has curtailed production levels for sound reservoir management purposes and some pressure declines have also been experienced.

Accordingly, the company is proceeding with a pressure maintenance waterflood designed to assist longterm production levels and overall reserve recovery factors. The waterflood is anticipated to be operative by September 2007 when water injection will be initiated, after which it will take some time for response to occur in the reservoirs. In the interim, production growth is likely to be achieved from new wells drilled on newly-defined prospects which are separate from the existing accumulations.

First quarter 2007 natural gas sales were 1,858 mcf/d and on an equivalent basis, sales averaged 11,643 boe/d, 485 percent above 2006 levels of 2,062 boe/d.

In 2007, Petrolifera has drilled and completed only three wells due to the late arrival of drilling rigs. All of the wells have been tested, cased and completed as producing oil wells. Two of the wells, 1016 and 1023, have been placed on pump due to the wells encountering lower reservoir pressures. The 1021 well is aflowing oil well.

The company is currently drilling the 1056 location, situated to the east of 1004 and southeast of the 1003-1010-1011 accumulation.

The company continued to make progress with its field facilities during the quarter, with some revised engineering required as changing plans were introduced. As a result, the treatment plant at Puesto Morales is not yet fully operative, although it should be shortly.