Suroco Energy Inc. Recommends Rejection of Vetra Offer and Reaffirms Unanimous Support for Arrangement With Petroamerica

Suroco Energy Inc. (TSX VENTURE:SRN) ("Suroco" or the "Corporation") announces
that its Board of Directors (the "Suroco Board"), has, upon the recommendation
of the independent special committee (the "Special Committee") of the Suroco
Board and advice from its financial advisor and legal counsel, unanimously
recommended that holders of Suroco Shares (as defined below) ("Suroco
Shareholders") REJECT the unsolicited cash offer (the "Vetra Offer") from Vetra
Acquisition Ltd., a wholly owned subsidiary of VETRA Holding S.a.r.l.
(collectively "Vetra") to acquire the issued and outstanding common shares of
Suroco ("Suroco Shares").


As previously announced, Suroco has entered into an arrangement agreement with
Petroamerica Oil Corp. ("Petroamerica"), as amended (the "Arrangement
Agreement"), under which Petroamerica will acquire all of the issued and
outstanding Suroco Shares pursuant to a plan of arrangement (the "Petroamerica
Arrangement"). The Suroco Board unanimously supports the Petroamerica
Arrangement. 


Each of the Special Committee and the Suroco Board have also unanimously
determined that the Vetra Offer is not a "Superior Proposal" (as defined in the
Arrangement Agreement) in relation to the Petroamerica Arrangement. 


Under the Petroamerica Arrangement, holders of Suroco Shares can elect to
receive one of the following for each Suroco Share held: 




(i)   2.2161 common shares of Petroamerica ("Petroamerica Shares") (the     
      "Share Consideration");                                               
                                                                            
(ii)  a cash payment for a portion of the Suroco Shares tendered and        
      Petroamerica Shares in consideration for the balance of the Suroco    
      Shares tendered such that, for every 100 Suroco Shares, the electing  
      Suroco Shareholder would receive approximately 164.01 Petroamerica    
      Shares in exchange for 74.01 of those Suroco Shares (being 2.2161     
      Petroamerica Shares per Suroco Share) and would receive approximately 
      CDN$20.79 in cash for the remaining 25.99 Suroco shares (being        
      CDN$0.80 per Suroco Share) (the "Cash and Share Consideration"); or   
                                                                            
(iii) CDN$0.80 in cash (the "Cash Consideration").                          



The total amount of cash available is capped at US$27 million. In the event that
the amount of cash elected to be received by the holders of Suroco Shares
exceeds US$27 million (including pursuant to the Cash and Share Consideration),
the Suroco Shareholders that elected to receive the Cash Consideration will be
subject to proration and such Suroco Shareholders will receive consideration
consisting cash and Petroamerica Shares.


Reasons to Reject the Vetra Offer 

On June 23, 2014, Vetra announced its intention to increase the cash
consideration under the Vetra Offer to CDN$0.83 in cash for each Suroco Share,
from its earlier insufficient offer of CDN$0.75 in cash for each Suroco Share.
After completing a comprehensive evaluation of the Petroamerica Arrangement and
the Vetra Offer, upon the recommendation of the Special Committee, input from
its legal counsel and Peters & Co. Limited, and consideration of other factors,
including a fairness opinion from Peters & Co. dated July 3, 2014 that the
consideration to be received by Suroco Shareholders pursuant to the Petroamerica
Arrangement is fair, from a financial point of view, the Suroco Board hereby
reaffirms that it has unanimously determined that: (i) the Petroamerica
Arrangement is in the best interests of Suroco; (ii) is fair, from a financial
point of view, to the Suroco Shareholders; and, (iii) unanimously recommends
that the Suroco Shareholders vote IN FAVOUR of the Petroamerica Arrangement. The
Suroco Board believes that the Petroamerica Arrangement is in the best interests
of the Suroco Shareholders and that the Petroamerica Arrangement provides a
number of benefits, primarily relating to an improved platform to enhance value
to Suroco Shareholders, including:




--  The Suroco Board believes that the proposed Petroamerica Arrangement
    will provide long term value. The Petroamerica Arrangement creates a
    combined company holding interests in eleven exploration and production
    contracts focused on high netback light and medium oil exploration and
    production in the Llanos and Putumayo Basins in Colombia, including the
    recently acquired 50% interest in the Putumayo 7 Block in Colombia that
    is immediately adjacent to the Suroriente Block. Suroco's management
    believes that the Putumayo 7 Block may contain an extension of the
    recently discovered Quinde field and when drilled, is expected to add
    significant value to the combined company, under better economic terms
    than the Suroriente Block. 
    
--  The Petroamerica Arrangement is supported by the largest Suroco
    Shareholder, by Suroco's directors and officers and by other Suroco
    Shareholders. Alentar, Suroco's largest shareholder, and Suroco's
    directors and officers have all confirmed that they continue to support
    the Petroamerica Arrangement. Such persons hold approximately 19.18% of
    the outstanding Suroco Shares (16.86% on a fully-diluted basis) and are
    parties to support agreements which require them to vote in favour of
    the Petroamerica Arrangement. Furthermore, the Suroco Board has received
    written communications from Suroco Shareholders, including Alentar, that
    hold or control in excess of 35% of the currently issued and outstanding
    Suroco Shares, indicating their awareness of the Petroamerica
    Arrangement and the Vetra Offer, and that their preference is for the
    Petroamerica Arrangement, and specifically Petroamerica Shares, so that
    they can participate in what they believe to be the potential upside of
    a combined Petroamerica and Suroco and their oil and gas properties. As
    a result, the Petroamerica Arrangement is subject to less completion
    risk than the Vetra Offer. 
    
--  Analyst target prices for Petroamerica imply CDN$1.04 per Suroco Share
    of potential value to Suroco Shareholders.  Petroamerica is covered by
    seven research analysts (five of them unrestricted) with an average
    target price of CDN$0.46 per Petroamerica Share (with a target price as
    high as CDN$0.60 per Petroamerica Share), which equates to CDN$1.04 per
    Suroco Share (or CDN$1.33 per Suroco Share, using the highest target
    price) based on the exchange ratio per Suroco Share under the Share
    Consideration pursuant to the Petroamerica Arrangement, and further
    demonstrates the upside potential of the Petroamerica Arrangement to
    Suroco Shareholders. 
    
--  The growth and development of Petroamerica is expected to be accelerated
    by the combination with Suroco. The Petroamerica Arrangement creates a
    combined company with a production base of approximately 9,000 barrels
    of oil equivalent per day (net before royalty) ("boepd") holding
    interests in eleven exploration and production contracts focused on high
    netback light and medium oil exploration and production in the Llanos
    and Putumayo Basins in Colombia. Petroamerica has stated that the
    Petroamerica Arrangement represents an important step towards realizing
    its vision of becoming a leading Colombia focused exploration and
    production player targeting oil production upwards of 30,000 boepd and a
    sustainable reserve life of more than five years. The combined asset
    base of both companies provides the potential to achieve these goals
    over a two to three year time frame. Petroamerica also expects that the
    combined company will be opportunistic in its pursuit of additional
    acquisitions in its Llanos and Putumayo basin core areas. 
    
--  The combined company resulting from the Petroamerica Arrangement is
    expected have a strong, under-levered balance sheet that is expected to
    fully fund the future development and exploration of its asset base. As
    of July 3, 2014, Petroamerica held approximately US$100 million in cash
    and, upon the completion of the Petroamerica Arrangement and after the
    payment of expenses thereunder and Suroco's existing credit facilities
    and the issuance of the cash component of the Cash and Share
    Consideration, expects to have at least US$35 million in cash and have
    only US$31.5 million in debt owing. For the 2014 fiscal year,
    Petroamerica expects the combined company to generate cash flows from
    operations of approximately US$116 million and have free cash flows
    (i.e. cash flow after all capital expenditures) of at least US$30
    million. It is also anticipated that the combined company will generate
    significant cash flows from its production assets in 2015 and beyond.
    Recent strengthening of Brent oil prices should further enhance the
    financial capabilities of the combined company.  
    
--  Petroamerica has an established history of deal making and delivering
    reserves and production growth that has resulted in substantial value
    creation for its shareholders. Petroamerica has grown net production
    from an average of 155 boepd in the first quarter of 2012 to 6,478 boepd
    average in the first quarter of 2014. Petroamerica has also increased
    working interest proved plus probable reserves from 3.0 million barrels
    of oil equivalent as at December 31, 2011 to 4.9 million barrels of oil
    equivalent as at December 31, 2013 and Petroamerica's share price has
    appreciated more than 230% from the beginning of 2012 to the June 19,
    2014 close of trading of the Petroamerica Shares.  
    
--  Suroco Shareholders will benefit from increased liquidity. Suroco's
    average daily dollar volume traded year-to-date on all Canadian
    exchanges and prior to the announcement of the execution of the
    Arrangement Agreement on April 28, 2014 was approximately CDN$22,600 per
    day compared to Petroamerica's average daily dollar volume traded of
    approximately CDN$472,300 per day over the same period. Petroamerica
    Shares are substantially more liquid than Suroco Shares. The increased
    size of the combined company after completion of the Petroamerica
    Arrangement can be expected to further enhance the liquidity of the
    Petroamerica Shares. 
    
--  The combined company resulting from the Petroamerica Arrangement will be
    better positioned to close the valuation gap with its Colombian peers.
    Petroamerica is currently trading considerably below its peer group
    valuation range based on current and forward looking production and cash
    flow estimates. The increased scale of the combined company, coupled
    with a strong balance sheet and an active 2014 drilling campaign, should
    position the combined company to close this valuation gap. Shareholders
    of the combined company would be expected to realize price appreciation
    should the combined company trade more in-line with peer group
    comparables. 
    
--  Access to additional sources of non-dilutive funding. Upon the
    completion of the Petroamerica Arrangement, the combined company is
    expected to initially be significantly under-levered compared to its
    peers. Petroamerica has stated that is has already begun to review a
    number of different options to refinance its US$31.5 million of long-
    term debt and that it anticipates that this alternative source of long-
    term debt financing will provide it with reduced interest costs and will
    eliminate any requirement to issue equity sweeteners in connection with
    the debt financing. As a result, the overall cost of capital to the
    combined company should be lower, with no expected adverse dilutive
    effect on the combined company's equity structure. 
    
--  Restructuring of Debt Facility. Petroamerica indicates that it is in
    advanced discussions with a number of financial institutions regarding a
    restructuring of its current debt facility on favourable terms to a
    larger sized and longer term debt facility that better reflects the
    strong financial position of the company. 



Meeting Date

As Suroco Shareholders are no doubt aware, the annual and special meeting of the
Suroco Shareholders (the "Meeting") has been adjourned to 10:00 a.m. (Calgary
Time) on Monday, July 14, 2014 at the offices of Gowling Lafleur Henderson LLP
at TD Canada Trust Tower, Suite 1600, 421 - 7th Avenue SW, Calgary, Alberta.  At
the Meeting, Suroco Shareholders will be asked, among other things, to consider
and vote upon the Petroamerica Arrangement.   


The deadline for submitting proxies is now 10:00 a.m. (Calgary time) on Friday,
July 11, 2014. 


Election Deadline 

The deadline for submitting a valid election with respect to the consideration
to be received under the Petroamerica Arrangement remains 5:00 pm (Calgary time)
on July 11, 2014 (the "Election Deadline"). The Letter of Transmittal and
Election previously provided should be used. A Suroco Shareholder who does not
deposit the Letter of Transmittal and Election prior to the Election Deadline
indicating the Suroco Shareholder's election, or who otherwise fails to satisfy
applicable requirements, will be deemed to have elected to receive Petroamerica
Shares in exchange for their Suroco Shares. The Letter of Transmittal and
Election which provides for the elections set forth above was provided with the
First Supplement (as defined below) and is available on SEDAR at www.sedar.com
and on Suroco's website at www.suroco.com.


Dissenting Shareholders 

A Dissenting Shareholder's written objection to the shareholder resolution to
approve the Petroamerica Arrangement must be received by Suroco, care of its
solicitors, Gowling Lafleur Henderson LLP, 1600, 421 - 7th Avenue S.W. Calgary,
Alberta T2P 4K9, Attention: Jeffrey Oliver, not later than 5:00 p.m. (Calgary
time) on the day that is two business days immediately preceding the date that
any adjournment or postponement of the Meeting is reconvened or held, as the
case may be.


Second Supplement 

Suroco will be distributing a Second Supplement (the "Second Supplement") to the
management information circular and proxy statement of Suroco dated May 27, 2014
(the "Information Circular") and the first supplement to the Information
Circular dated June 22, 2014 (the "First Supplement"), that will be mailed to
each of Suroco's Shareholders in compliance with applicable securities laws and
filed with Canadian securities regulatory authorities. The Second Supplement is
available on SEDAR on Suroco's issuer profile at www.sedar.com and on Suroco's
website at www.suroco.com. Suroco Shareholders are advised to read the Second
Supplement carefully and in its entirety, as it will contain important
information regarding Suroco, the Vetra Offer and the Petroamerica Arrangement.
If Suroco Shareholders have any questions or require more information, they are
encouraged to contact Suroco's proxy solicitation agent, Georgeson Shareholder
Communications Canada, Inc. ("Georgeson"), toll-free at 1-888-605-7641 or
outside North America, collect at 781-575-2422 or by email at
[e-mail].


Proxies 

Registered shareholders of Suroco are requested to complete, date, sign and
return ONLY the MANAGEMENT FORM OF PROXY that accompanied the Information
Circular (a copy of which can also be found on Suroco's profile on SEDAR at
www.sedar.com and which was filed on May 30, 2014, and on Suroco's website at
www.suroco.com) and the First Supplement (a copy of which can also be found on
Suroco's profile on SEDAR at www.sedar.com and which was filed on June 23, 2014,
and on Suroco's website at www.suroco.com), each of which has been sent to
Suroco Shareholders. To be valid, that form of proxy must be signed and
forwarded so as to reach, or be deposited with, Suroco's transfer agent, by one
of the following ways:




1.  By Internet at www.investorvote.com.
    
    
2.  By Telephone - [phone] (toll free) or international direct dial
    [phone].
    
    
3.  By fax to [phone].
    
    
4.  By mail - Computershare Trust Company of Canada, 8th Floor, 100
    University Avenue, Toronto, Ontario, M5J 2Y1, Attention: Proxy
    Department. 



THE DEADLINE FOR SUBMITTING PROXIES IS NOW 10:00 A.M. (CALGARY TIME) ON FRIDAY,
JULY 11, 2014.  


Non-registered (i.e. beneficial) shareholders ("Beneficial Shareholders") are
encouraged to ONLY use the MANAGEMENT VOTING INSTRUCTION FORM to vote. Such
holders should carefully follow the instructions in the voting instruction form.
A Beneficial Shareholder receiving a voting instruction form cannot use that
voting instruction form to vote Suroco Shares directly at the Meeting as the
voting instruction form must be returned in advance of the Meeting as directed
by the instructions set forth in such voting instruction form in order to have
the Suroco Shares voted. However, we recommend that Beneficial Shareholders
contact Georgeson, the proxy solicitation agent retained by Suroco, toll-free in
North America at 1-888-605-7641 or outside North America, collect at
781-575-2422 or via email at [e-mail], if you have questions or
require assistance with a voting instruction form. 


Accordingly, it is strongly suggested that Beneficial Shareholders return their
completed voting instruction form as directed by the instructions set forth in
the Management Voting Instruction Form in advance of the Meeting. 


If you have previously voted using the blue form of proxy provided by Vetra,
Suroco encourages you to submit a later dated MANAGEMENT FORM OF PROXY or
MANAGEMENT VOTING INSTRUCTION FORM. We recommend you contact your broker or
dealer, or contact Georgeson, the proxy solicitation agent retained by Suroco,
toll-free in North America at 1-888-605-7641 or outside North America, collect
at 781-575-2422 or via email at [e-mail], if you have questions or
require assistance to make such a submission.


Proxies Previously Submitted 

If a Suroco Shareholder has already completed and returned a proxy in respect of
the Meeting and: 




--  DOES NOT wish to change how their proxy was voted, the Suroco
    Shareholder does not need to take any further action; that proxy will
    continue to be valid for use at the Meeting; or 
    
--  wishes to change how their proxy was voted, the Suroco Shareholder must
    comply with the proxy revocation procedures set forth in the Management
    Form of Proxy and in the Information Circular previously delivered to
    the Suroco Shareholder in connection with the Meeting and described
    again under the heading "Appointment and Revocation of Proxies" below. 



Appointment and Revocation of Proxies

The persons named in the Management Form of Proxy delivered to Suroco
Shareholders are directors and officers of Suroco. A Suroco Shareholder has the
right to appoint a person (who need not be a Suroco Shareholder) other than the
persons designated in the form of proxy provided by Suroco to represent the
Suroco Shareholder at the Meeting. To exercise this right, the Suroco
Shareholder should strike out the name of the management designees in the
enclosed form of proxy and insert the name of the desired representative in the
blank space provided in the form of proxy or submit another appropriate form of
proxy. In order to be effective, a proxy must be forwarded so as to reach, or be
deposited with, Computershare Trust Company of Canada, 8th Floor, 100 University
Avenue, Toronto, Ontario, M5J 2Y1, Attention: Proxy Department, by fax to (866)
249-7775, by internet at www.investorvote.com or by telephone by calling (866)
732-8683 (toll free) (international direct dial [phone]), so that it is
received no later than 10:00 a.m. (Calgary time) on Friday, July 11, 2014. The
proxy shall be in writing and executed by the Suroco Shareholder, or such
shareholder's attorney authorized in writing, or if such Suroco Shareholder is a
corporation, under its corporate seal or by a duly authorized officer or
attorney.


In addition to revocation in any other manner permitted by law, a Suroco
Shareholder may revoke a proxy by instrument in writing executed by the Suroco
Shareholder or such Suroco Shareholder's attorney authorized in writing, or, if
the Suroco Shareholder is a corporation, under its corporate seal or by an
officer or attorney thereof, duly authorized, and deposited either at the
registered office of Suroco at any time up to and including the last business
day preceding the day of the Meeting, or any adjournment thereof, at which the
proxy is to be used, or with the Chairman of the Meeting on the day of the
Meeting, or any adjournment thereof. The registered office of Suroco is Suite
1600, 421 - 7th Avenue S.W., Calgary, Alberta T2P 4K9.


General 

Suroco is a Calgary-based junior oil and gas company, which explores for,
develops, produces and sells crude oil, natural gas liquids and natural gas in
Colombia. The Corporation's common shares trade on the TSX Venture Exchange
under the symbol SRN.


For further information please visit our website at www.suroco.com. 

Definitions

Additionally, "barrels of oil equivalent" ("boe") is at a conversion rate of
6,000 cubic feet ("cf") of natural gas for one barrel of oil and is based on an
energy equivalence conversion method. Boe may be misleading, particularly if
used in isolation. A boe conversion ratio of 6,000 cf: 1 barrel is based on an
energy equivalence conversion method primarily applicable at the burner tip and
does not represent a value equivalence at the wellhead.


Forward-Looking Statements

Certain statements included in this press release constitute forward-looking
statements under applicable securities legislation. These statements relate to
future events or future performance of the Corporation. All statements other
than statements of historical fact are forward-looking statements. In some
cases, forward-looking statements can be identified by terminology such as
"may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate",
"predict", "potential", "continue", or the negative of these terms or other
comparable terminology. Forward-looking statements or information in this press
release include, but are not limited to, statements pertaining to Suroco's
future performance, business prospects or opportunities, including information
concerning the Vetra Offer and the completion and effect of the Petroamerica
Arrangement, including without limitation upon completion of the Petroamerica
Arrangement, the resulting combined company's expected drilling and exploration
plans, business strategy, priorities, plans and expected production and the
anticipated timing thereof, the extension of the Quinde field to the Putumayo 7
Block and the expected economic terms of such fled, the potential value of the N
sand oil play in the Putumayo Basin in Colombia, production growth of the
combined company, and the economic effects thereof and other statements. Readers
are cautioned not to place undue reliance on forward-looking statements, as
there can be no assurance that the plans, intentions or expectations upon which
they are based will occur. 


By their nature, forward-looking statements involve numerous assumptions, known
and unknown risks and uncertainties, both general and specific, that contribute
to the possibility that the predictions, estimates, forecasts, projections and
other forward-looking statements will not occur, which may cause actual
performance and results in future periods to differ materially from any
estimates or projections of future performance or results expressed or implied
by such forward-looking statements. These assumptions, risks and uncertainties
include, among other things, the state of the economy in general and capital
markets in particular; fluctuations in oil prices; the results of exploration
and development drilling, recompletions and related activities; changes in
environmental and other regulations; risks associated with oil and gas
operations and future exploration activities; the inability to obtain regulatory
approval for any operational activities; inability to get all necessary
approvals for the completion of the Petroamerica Arrangement; the risks of the
oil and gas industry in general, such as operational risks in exploring for,
developing and producing crude oil and natural gas, market demand and
unpredictable shortages of equipment and/or labour; potential delays or changes
in plans with respect to exploration or development projects or capital
expenditures; fluctuations in oil and gas prices, foreign currency exchange
rates and interest rates; reliance on industry partners; and other factors, many
of which are beyond the control of Suroco or Petroamerica. You can find an
additional discussion of those assumptions, risks and uncertainties in Suroco's
and Petroamerica's Canadian securities filings. 


Although Suroco has attempted to identify important factors that could cause
actual actions, events, results, performance or achievements to differ
materially from those described in the forward-looking statements or information
contained in this press release, there may be other factors that cause actions,
events, results, performance or achievements not to be as anticipated, estimated
or intended. There can be no assurance that forward-looking statements or
information will prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements. Such
forward-looking statements and information are made or given as at the date of
this press release and Suroco disclaims any intention or obligation to update or
revise any forward-looking statements or information, whether as a result of new
information, future events or otherwise, except as required under applicable
securities law. The reader is cautioned not to place undue reliance on
forward-looking statements or information. 


Statements relating to "reserves" are deemed to be forward-looking statements or
information, as they involve the implied assessment, based on certain estimates
and assumptions, that the reserves described can be profitable in the future.
There are numerous uncertainties inherent in estimating quantities of proved
reserves, including many factors beyond the control of Suroco or Petroamerica.
The reserve data included herein represents estimates only. In general,
estimates of economically recoverable oil and natural gas reserves and the
future net cash flows therefrom are based upon a number of variable factors and
assumptions, such as historical production from the properties, the assumed
effects of regulation by governmental agencies and future operating costs, all
of which may vary considerably from actual results. All such estimates are to
some degree speculative and classifications of reserves are only attempts to
define the degree of speculation involved.


Non-GAAP Measures 

This press release makes reference to certain financial and operating measures
that are not recognized by GAAP to assist in assessing Suroco's and
Petroamerica's financial and operating performance. Non-GAAP financial and
operating measures do not have standardized meanings prescribed by GAAP and are
therefore unlikely to be comparable to similar measures presented by other
issuers.


The TSX Venture Exchange Inc. has in no way passed upon the merits of the
Petroamerica Arrangement or the Vetra Offer and has neither approved nor
disapproved the contents of this press release.


Neither TSX Venture Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the TSX Venture Exchange) accepts responsibility
for the adequacy or accuracy of this release. 


(Not for dissemination in the United States of America)

FOR FURTHER INFORMATION PLEASE CONTACT: 
Alastair Hill, President and Chief Executive Officer
Travis Doupe, VP Finance and Chief Financial Officer
Telephone: [phone]
Facsimile: [phone]