Canacol Energy Ltd. Reports Light Oil Discovery in Colombia

Canacol Energy Ltd. Reports Light Oil Discovery in Colombia 
CALGARY, ALBERTA -- (Marketwire) -- 12/04/12 -- Canacol Energy Ltd.
("Canacol" or the "Corporation") (TSX:CNE) (BVC:CNEC) is pleased to
announce the results of its Agueda 1 ST exploration well on the
Labrador prospect on the LLA23 Exploration and Production ("E&P")
Contract, located immediately to the north of the Corporation's
Rancho Hermoso field in the Llanos Basin of Colombia. Unlike the
Rancho Hermoso field, which is governed by contracts with Ecopetrol
S.A., the LLA23 contract is governed by the Agencia Nacional de
Hidrocarburos, which receives a variable base royalty beginning in an
8% related to gross production resulting in 2-3 times better netbacks
and reserve valuations than those available under the Rancho Hermoso
tariff and non-tariff contracts. The Corporation has an 80% operated
working interest in the LLA23 contract, with Petromont Colombia S.A,
Sucursal Colombia holding the remaining 20% interest. The Agueda 1 ST
exploration well targeted various reservoir intervals within the
Labrador prospect, situated approximately 5 kilometers to the north
of the Corporation's Rancho Hermoso field. The Agueda 1 ST
encountered 70 feet of oil pay within the C7, Lower Gacheta, and
Ubaque reservoirs, all of which are productive to the south in the
Rancho Hermoso field. A production test of the Lower Gacheta
reservoir yielded 1,832 barrels of gross oil per day (1,466 barrels
of net oil per day for Canacol) of 28 degree API light oil. 
Charle Gamba, President and CEO of Canacol, stated "We are pleased by
these positive results, which set up the potential to access
meaningful near term light oil production and cash flow from the LLA
23 contract. The Labrador discovery is one of 6 prospects that we
have identified on the LLA23 block on the basis of recently acquired
3D seismic, and we are very satisfied that the first one we drilled
encountered a significant light oil accumulation. Once we have the
proper drilling permits in hand, we plan to aggressively drill this
block to grow our production base in Colombia during 2013." 
Agueda 1 ST Results 
The Aguesda 1 ST was spud on October 30, 2012 and reached a total
depth of 11,130 feet measure depth ("ft md") on November 17, 2012.
The original Agueda 1 we
ll, drilled in 2007, was re-entered and
sidetracked to drill the Labrador prospect. The Labrador prospect was
identified on recently acquired 3D seismic, with the Agueda 1 ST
testing the C7, Gacheta, and Ubaque reservoirs in a structural
position structurally up dip of the original Agueda 1 well. 
The Agueda 1 ST encountered 70 feet ("ft") of net oil pay in the
following reservoirs: 10 ft of net oil pay in the C7 reservoir with
an average porosity of 23%; 42 ft of net oil pay within the Lower
Gacheta reservoirs with an average porosity of 30%; and 18 ft of net
oil pay within the Ubaque reservoir with an average porosity of 26%. 
The Lower Gacheta was perforated in 3 separate intervals, and
produced at a gross rate of 1,832 bopd (1,466 bopd net for Canacol)
of 28 degree API light oil with 0.6 % water cut, 43 thousand cubic
feet per day of gas and a GOR of 24 standard cubic feet per barrel of
oil during a 48 hour production test. 
Forward Plans 
Production testing of the Lower Gacheta will continue in the short
term, with produced oil being transported to the nearest point of
sale. Upon completion of the production test of the Lower Gacheta,
the deeper Ubaque reservoir will be production tested, and the well
placed on permanent production from either zone. 
Plans are being formulated to drill several development wells into
the Labrador discovery. In the meantime, 5 other exploration
prospects identified on the new 3D seismic acquired on the LLA23
block are being licensed for drilling in 2013. 
Canacol is an exploration and production company with operations
focused 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. Prospective investors
should not place undue reliance on forward looking statements. These
factors include the inherent risks involved in the exploration for
and development of 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. 
Canacol Energy Ltd.
Investor Relations
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