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CALGARY -- based Petrolifera Petroleum Ltd., a South America-focused oil and gas explorer, has initiated a strategic review that could include selling the company in whole or in part.

The troubled company, spun off by Connacher Oil & Gas in 2004 and still 20 per cent owned by the oilsands producer with some common leadership, said in a news release the review "may include exploring potential asset divestments and joint ventures, a corporate sale or business combination, evaluation of financing and recapitalization opportunities or other alternatives to increase shareholder value."

It said the decision was made after looking at current operations and opportunities, contractual obligations and capital requirements to exploit lands in Argentina, Colombia and Peru.

Stock in the company rose two cents to 61 cents at mid-afternoon in Toronto.

Analysts, some of whom spoke on condition of anonymity, said Petrolifera is a company that has disappointed investors in the past - it traded at nearly $25 per share in 2006 - and is in the "penalty box" because of it.

Its best potential exploration opportunities are in Peru and Colombia but all of its production from declining fields in Argentina, which it tried unsuccessfully to sell last year, they said.

"Overall, you'd have to characterize Petrolifera as a very early stage company with a lot of exploration potential but requires a lot of money to bring these to fruition," said Greg Chornoboy, a senior oil and gas analyst for Jennings Capital.

According to its website, Petrolifera holds interests in 2.4 million hectares in 11 onshore concessions or licenses in Argentina, Colombia and Peru.

In its news release, Petrolifera reported on preliminary gas flow from a well in Colombia and said it is negotiating a farm-out of two blocks in Peru.

In second-quarter results last month, it noted a net loss of $297,000 versus a $3.4 million profit in the same three months of 2009 as revenue fell 25 per cent. Production fell 32 per cent to 3.9 million barrels of oil equivalent from 5.7 million.

dhealing@theherald.canwest.com