Canacol Energy Ltd. Reports Fiscal Q1 2013 Financial Results

Canacol Energy Ltd. Reports Fiscal Q1 2013 Financial Results 
CALGARY, ALBERTA -- (Marketwire) -- 11/14/12 -- Canacol Energy Ltd.
("Canacol" or the "Corporation") (TSX:CNE) (COLOMBIA:CNEC) announced
today its financial results for the three months ended September 30,
Financial Highlights for the Three Months Ended September 30, 2012 
(in United States dollars, except as otherwise noted)  
Financial highlights of Canacol Energy Ltd. ("Canacol" or the
"Corporation") include: 

--  Total revenues for the three months ended September 30, 2012 increased
    18% to $41.8 million from $35.3 million for the comparable period. 
--  At September 30, 2012, the Corporation had $41.5 million in cash, cash
    equivalents and restricted cash, and $21.7 million of working capital
    surplus, including the current portion of long-term debt. 
--  Net loss for the three months ended September 30, 2012 was $6.2 million
    compared to net income of $13.5 million for the comparable period. 
--  Capital expenditures for the three months ended September 30, 2012 were
    $18.9 million. 
--  Average daily sales volumes were 6,922 barrels of oil per day ("bopd")
    for the three months ended September 30, 2012. The decrease from the
    fourth quarter of fiscal 2012 was due to a combination of well shut-ins,
    a civil road blockage, water handling constraints, and natural
    production declines, and was offset by a change in crude oil inventory.
    Downtime during the first quarter of fiscal 2013 was 5% in July, 3% in
    August, and 37% in September, resulting in an overall average downtime
    of 15% for the quarter. Of the 37% downtime reported in September, 34%
    was related to a blockade of the main oil trucking route by the
    community, which was resolved in the first week of October 2012.
    Further, sales volumes were impacted by the continuing shift of tariff
    production to NRI production to optimize cash flows in the Rancho
    Hermoso field, which results in lower reported total volumes since
    tariff production volumes are reported 100% while NRI production volumes
    are only reported at 22.4% in the first quarter of 2013. However, Rancho
    Hermoso NRI production receives a significantly higher operating netback
    compared to tariff production. 
--  Starting in September 2012, Ecuador oil fields have begun providing
    incremental production to the Corporation and are expected to see
    significant increased production in future periods as the development
    program is executed. For the three months ended September 30, 2012,
    average incremental production from the fields was 223 bopd,
    approximately 56 bopd of which is the Corporation's share. For the
    months of October and November, average gross incremental production
    from the fields were 827 bopd and 1,595 bopd, respectively, of which,
    approximately 207 bopd and 399 bopd are the Corporation's share,
Financial Highlights for the Three Months Ended September 30,2012           
(in thousands of United States dollars, except as otherwise noted)          
Financial                                 Three months ended September 30,  
                                      2012            2011          Change  
Crude oil sales, net of                                                     
 royalties                          37,822          26,453              43% 
Tariff revenue                       3,973           8,877             (55%)
Total revenues                      41,795          35,330              18% 
Funds from operations (1)           14,091          17,761             (21%)
 Per share - basic and                                                      
  diluted ($)                         0.02            0.03             (30%)
Net income (loss)                   (6,214)         13,486             n/a  
 Per share - basic and                                                      
  diluted ($)                        (0.01)           0.03             n/a  
Capital expenditures                18,931          31,356             (40%)
                                   30,2012   June 30, 2012          Change  
Cash and cash equivalents           31,088          30,789               1% 
Restricted cash                     10,378           6,555              58% 
Working capital surplus (1)         21,742          17,697              23% 
Long-term bank debt                 30,153          15,986              89% 
Total assets                       412,266         406,828               1% 
Common shares, end of                                                       
 period (000s)                     618,982         618,982               -  
Operating                                 Three months ended September 30,  
                                      2012            2011          Change  
Crude oil production (bopd)                                                 
 Tariff                              2,410           6,476             (63%)
 NRI                                 3,332           3,274               2% 
 Total                               5,742           9,750             (41%)
Crude oil sales (bopd)                                                      
 Tariff                              2,417           6,458             (63%)
 NRI                                 4,505           3,452              31% 
 Total                               6,922           9,910             (30%)
Rancho Hermoso - tariff oil                                                 
 operating netback ($/bbl)                                                  
 Realized tariff oil price           17.36           14.94              16% 
 Operating and                                                              
  transportation costs              (11.43)          (6.23)             83% 
 RH tariff oil operating                                                    
  netback                             5.93            8.71             (32%)
Rancho Hermoso - non-tariff                  
 (NRI) oil operating                                                        
 netback ($/bbl) (1)                                                        
 Realized crude oil price,                                                  
  net of royalties                   95.88           84.43              14% 
 Operating and                                                              
  transportation costs              (50.60)         (29.26)             73% 
 RH NRI oil operating                                                       
  netback                            45.28           55.17             (18%)
(1) Non-IFRS measure. See "Non-IFRS Measures" section within MD&A.          

For the remainder of calendar 2012 and the first quarter of calendar
2013, the primary focus of the Corporation will be on the successful
closing of the business combination with Shona Energy Company, Inc.,
as well as the execution of its capital program, including: 

--  The completion of the drilling of its first light oil exploration well
    on the LLA-23 block, immediately to the north of the Rancho Hermoso
    field, to test the Labrador prospect. The well commenced drilling in
    late October 2012. 
--  The completion of drilling of the Guarango 1 stratigraphic well on the
    Cedrela block, targeting potential heavy oil- bearing reservoirs in the
    Mirador sandstones. The well commenced drilling in late October 2012. 
--  The completion of the ongoing acquisition of 45 square kms of 3D seismic
    and 58 km of 2D seismic in the southern part of the Portofino block,
    with plans to use the data to drill 3 remaining stratigraphic wells in
    calendar 2012 and extending into calendar first quarter 2013. 
--  The completion of drilling and production testing of the non-operated
    Mono Arana 1 well on the VMM 2 block, which is currently underway. As
    reported on October 31, 2012, the Corporation has announced that the
    well has encountered 85 feet of potential net oil pay within the Lisama
    sandstone reservoir, which the Corporation plans to production test. 
--  Following the Mono Arana 1 well, the drilling of a second non-operated
    exploration well on the VMM 2 block, El Cejudo 1, commencing in late
    2012 and specifically targeting shale reservoirs in the Cretaceous La
    Luna and Tablazo oil source rocks. 
--  The drilling of one additional new development well and the workover of
    one existing producing well before the end of calendar 2012 under its
    non-operated incremental production contract for the Libertador and
    Atacapi mature producing oil fields in Ecuador. Starting in September
    2012, these Ecuador fields have begun providing incremental production
    to the Corporation and are expected to see significant increased
    production in future periods as the development program is executed.
    Based on the current development program, the Corporation expects
    incremental production to peak through 2013 and 2014. 
--  In October 2012, the Corporation announced a business combination with
    Shona Energy Company, Inc. ("Shona"). The transaction strengthens the
    Corporation's productive base with stable low cost production and
    associated cash flows under long-term sales contracts, and increases net
    2P reserves and deemed volumes to approximately 32 MMboe of oil and gas.
    The size of the combined company and its stable production and cash flow
    streams is expected to facilitate easier access to capital and open up
    additional consolidation opportunities, particularly in Colombia. The
    transaction positions Canacol to take a leading role in an expanding gas
    market in Colombia at a low entry price, and also adds three
    conventional heavy oil exploration contracts to its already extensive
    exploration position in the Caguan - Putumayo basin. With interests in
    29 E&P contracts, the combined company will have one of the largest and
    most diverse conventional and non-conventional oil and gas exploration
    portfolios in Colombia. The Corporation anticipates closing the Shona
    business combination on or about December 19, 2012, subject to all
    required Shona and Canacol securityholder, court and regulatory
    approvals being obtained. Shona adds stable long-life production of
    approximately 2,300 boepd, before royalties, and the Corporation also
    has the ability to raise gas production volumes in the short term with
    no additional capital required. For the six months ended June 30, 2012,
    Shona had average total production, before royalties, of 2,166 boepd,
    and 1,960 boepd after royalties. Assuming the same level of production
    for the second half of calendar 2012, on a calendar 2012 pro forma basis
    including Shona, the Corporation is projecting average total production,
    after royalties, of 10,400 boepd. Assuming the closing of the Shona
    business combination, the Corporation anticipates exiting calendar 2012
    at 6,600 boepd of total production, after royalties, which includes
    Shona but does not include production from any potential exploration

The Corporation's has filed its unaudited interim condensed
consolidated financial statements, and related Management's
Discussion and Analysis as of and for the three months ended
September 30, 2012 with Canadian securities regulatory authorities.
These filings are available for review at 
Canacol is an exploration and production corporation with operations
in Colombia, Ecuador, Brazil, and Guyana. The Corporation's common
stock trades on the Toronto Stock Exchange and the Colombia Stock
Exchange under ticker symbol CNE and CNE.C, respectively. 
This press release contains certain forward-looking statements within
the meaning of applicable securities law. Forward-looking statements
are frequently characterized by words such as "plan", "expect",
"project", "intend", "believe", "anticipate", "estimate" and other
similar words, or statements that certain events or conditions "may"
or "will" occur, including without limitation statements relating to
estimated production rates from the Corporation's properties and
intended work programs and associated timelines. Forward-looking
statements are based on the opinions and estimates of management at
the date the statements are made and are subject to a variety of
risks and uncertainties and other factors that could cause actual
events or results to differ materially from those projected in the
forward-looking statements. The Corporation cannot assure that actual
results will be consistent with these forward looking statements.
They are made as of the date hereof and are subject to change and the
Corporation assumes no obligation to revise or update them to reflect
new circumstances, except as required by law. Information and
guidance provided herein supersedes and replaces any forward looking
information provided in prior disclosure. Prospective investors
should not place undue reliance on forward looking statements. These
factors include the inherent risks involved in the exploration for
and development o
f crude oil and natural gas properties, the
uncertainties involved in interpreting drilling results and other
geological and geophysical data, fluctuating energy prices, the
possibility of cost overruns or unanticipated costs or delays and
other uncertainties associated with the oil and gas industry. Other
risk factors could include risks associated with negotiating with
foreign governments as well as country risk associated with
conducting international activities, and other factors, many of which
are beyond the control of the Corporation. Average production figures
for a given period are derived using arithmetic averaging of
fluctuating historical production data for the entire period
indicated and, accordingly, do not represent a constant rate of
production for such period and are not an indicator of future
production performance. Detailed information in respect of monthly
production in the fields operated by the Corporation in Colombia is
provided by the Corporation to the Ministry of Mines of Colombia and
is published by the Ministry on its website; a direct link to this
information is provided on the Corporation's website.
Canacol Energy Ltd.
Investor Relations
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