Canadian Oil

[Arctec]

Petrolifera Petroleum Limited

PDP - TSX

January 2, 2007



Petrolifera Exits 2006 on a High Note



Calgary, Alberta  Petrolifera Petroleum Limited announces today it achieved a peak level of daily oil production from Puesto Morales in Argentina of 13,400 bbl/d of light gravity crude in late December 2006.



ARGENTINA



The achieved production level was primarily from twelve of the fourteen new wells drilled by Petrolifera since late 2005. Ten of the wells continue to be flowing oil wells with the remaining two (1019 and 1024) on pump. Additionally, wells 1018 and 1032 are either being tested or awaiting completion and the company also plans to conduct remedial activity at 1004, which remains a flowing oil well at this time. The best flowing wells in descending order are 1013, 1012, 1010, 1003 and 1015 with water cuts for these wells averaging a very modest 0.1 percent. The indicated water cut for all production, including the old stripper wells from Puesto Morales Sur, remains very low at approximately 2.5 percent. It should be noted daily production rates may fluctuate for a variety of reasons, including work over activity, testing and natural gas conservation initiatives. A fourth quarter operating update will be provided once more detailed information is available to the company.



Associated and non-associated natural gas sales volumes currently approximate 1.8 mmcf/d (300 boe/d, using a conversion rate of six mcf per barrel of crude oil.) Readers are cautioned that the conversion used in calculating barrels of oil equivalent is based on an energy equivalency conversion method primarily applicable to the burner tip and does not necessarily represent a value equivalency at the wellhead. Furthermore, boes may be misleading if used in isolation. This rate is anticipated to improve towards 3 mmcf/d in the near future.



Accordingly, total peak daily production and sales achieved during the month of December 2006 was 13,700 boe/d. A portion of total natural gas volumes was utilized for fuel gas. It is anticipated that surplus volumes not presently being sold will be utilized for pressure maintenance and additional sales once field facilities are completed. Production results in total were in line with the companys expectations and guidance.



Drilling is now anticipated to commence in late January 2007 or early February 2007 as the new rig to be utilized suffered minor damages during the offloading process. Repairs are underway in the contractors yard in Neuquin, as is the conversion to an 1100 meter drilling rig of the new service rig contracted to Petrolifera. It is now estimated that the third drilling rig will arrive in Argentina in late January 2007, after which it will be cleared through customs for use by a target date of mid-March 2007. Initial drilling is targeted to evaluate locations offsetting the companys more prolific or higher productivity wells. Drilling on the Rinconada Block will also be undertaken in 2007.



Petrolifera is investigating the introduction of pressure maintenance at Puesto Morales. A water injection study is in progress, including design of optimum injection patterns. Petrolifera also anticipates reinjection of some solution gas into wells 1003 and 1010 in the northern culmination, as they are in the structurally highest position on this accumulation. It is anticipated the combination of water injection and natural gas reinjection will assist Petrolifera in maintaining its optimum base production, which can then be supplemented by the impact of the numerous new wells planned for Argentina during 2007. The companys crude oil pipeline is operational and increased oil volumes will be shipped through the pipeline as soon as the expanded water pipeline and treatment facility are completed and available for on-site processing. In the interim, approximately 75 percent of produced volumes continue to be trucked to third party treatment facilities.



The 252 square kilometer 3D seismic program designed to secure 100 percent coverage over the Puesto Morales Block and the accessible portion of the Rinconada Block has been completed. Data is being processed and interpretation is proceeding as data comes available, with final mapping of potential new locations scheduled for completion by the end of March 2007.



The company continues to examine new opportunities in Argentina, including exploratory acreage and now producing properties with development potential which have recently been made available for sale.



PERU



Test flights for the Companys extensive aeromag/gravity survey over Block 107 in the Ucayali Basin, Peru have now been completed and the program is anticipated to commence in January 2007. Petroliferas Environmental Impact Assessment for Block 107 has been completed and submitted to the relevant government authorities for review and acceptance. Presently, the company is hopeful its seismic program will commence in the Spring 2007 upon receipt of timely authorization and approvals.



The companys geochemistry program over three project areas within Block 106 is now complete and the data is being analyzed and interpreted. Results are expected to impact on the location and orientation of seismic programs anticipated for the Fall 2007 over Block 106.



OTHER



Petrolifera is awaiting confirmation of its application to secure agreements over a number of exploratory areas in Colombia.



The company remains in a strong financial condition with growing production, cash flow, working capital and no debt.



Forward Looking Statements



This press release contains forward-looking statements, including but not limited to estimated reserves and future net revenues, future exploration and development plans, anticipated future production, future capital expenditures and anticipated completion of infrastructure and transportation systems. . These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections in relation to production, costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with foreign governments and risk associated with international activity. Additional risks and uncertainties are described in the company's Annual Information Form which is filed on SEDAR at www.sedar.com.



The company's ability to complete its capital program and potentially increase production volumes and reserves is dependent on access to services, drilling rigs and equipment. Similarly, the company's ability to increase sales of oil and natural gas is dependent on completion of certain infrastructure and transportation systems that are currently under construction. There can be no assurance that the company will be able to access the required services and equipment based on the company's planned timetable to ensure the completion of the company's capital program and the construction of required infrastructure and transportation systems. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in the company's securities should not place undue reliance on these forward-looking statements. Forward looking statements contained in this press release are made as of the date hereof and are subject to change. The company assumes no obligation to revise or update forward looking statements to reflect new circumstances, except as required by law.