Production and consequent sales volumes in January were affected to some extent by the installation of new water treatment and waterflood facilities but showed excellent improvement throughout the remainder of the quarter, aided by successful new infill drilling as detailed herein. The current level of production and sales does not yet in any measurable manner reflect the activation of the company's recently installed waterflood at Puesto Morales Norte. Petrolifera anticipates it will be later in 2008 before the initial impact of the waterflood will be discernible and the company does not expect the full impact to occur until the second half of 2009. It is anticipated there will be increasing stability in Petrolifera's base production and sales volumes once the waterflood is optimized. During the first quarter 2008, Petrolifera drilled or initiated drilling of 16 wholly-owned wells at Puesto Morales/Rinconada, resulting in eight oil producers, two water injectors, one gas producer (PME x-1001 - currently on a sustained production test through a ten millimeter choke at a rate of approximately 1.8 mmcf/d from the Loma Montosa Formation), two wells waiting on completion, one drilling well, one preparing to drill on the company's Rinconada Block and one dry hole. The company's best new well was PMN a-1081, which tested over 1,000 bbl/d of light gravity Sierras Blancas crude oil and is now onstream contributing to the company's much improved sales. Follow-ups to this well are anticipated. The company expects to drill its second exploratory well on its 100 percent-owned Puesto Morales Este block during April 2008 and plans an aggressive evaluation and drilling program on the balance of its extensive Argentinean acreage position during the balance of 2008. Petrolifera is currently operating with two drilling rigs and two service rigs on its Argentinean acreage. Detailed financial and operating results for the first quarter 2008 will be released to the public on May 8, 2008, which is also the date of the company's Annual General Meeting, to be held in Calgary, Alberta at 3:00 P.M., MT, at the Calgary Petroleum Club. Petrolifera Petroleum Limited is a Calgary-based crude oil and natural gas exploration and production company with its principal producing asset at Puesto Morales Norte in the Neuquén Basin onshore Argentina. It also holds extensive exploratory rights and plans drilling activity in Colombia and onshore Peru, where it is conducting an extensive 2D seismic program on block 107 in the Ucayali Basin in preparation for the anticipated drilling program.