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Canacol Energy Ltd. Announces Oil Discovery at Mono Arana 1

Canacol Energy Ltd. Announces Oil Discovery at Mono Arana 1 in
CALGARY, ALBERTA -- (Marketwire) -- 01/24/13 -- Canacol Energy Ltd.
("Canacol" or the "Corporation") (TSX:CNE) (BVC:CNEC) is pleased to
provide the following update concerning its Mono Arana 1 exploration
well drilled on the VMM2 Exploration and Production ("E&P") contract
located in the Middle Magdalena Valley of Colombia. Subject to the
completion of the formal assignment process with the ANH, Canacol
holds a 20% non-operated working interest in the E&P contract, with
ExxonMobil Exploration Colombia ("ExxonMobil") holding a 70.1%
working interest and Vetra Exploracion y Produccion Colombia
("Vetra") holding the remaining 9.9% operated working interest. The
recognition of the aforementioned working interests has been
submitted for the approval of the Agencia Nacional de Hidrocarburos
The Mono Arana 1 well was spud on September 23, 2012, and was
designed to test the oil potential of both the shallow conventional
Tertiary Lisama sandstone reservoir and deeper shale and carbonate
reservoirs within the La Luna and Tablazo oil source rocks. The well
has been drilled and cased to a depth of 9,942 feet measured depth
("ft md") within the Cretaceous La Luna Formation. Approximately 760
feet of L
a Luna were encountered, with good oil and gas shows noted
throughout the entire interval while drilling. Additional deeper
prospective zones in the La Luna and Tablazo sections were not
penetrated due to the high pressure encountered while drilling, so
casing was set within the La Luna Formation. Subject to obtaining ANH
approval, ExxonMobil Exploration Colombia will assume operatorship of
the block, including further operations on Mono Arana 1. Once
operatorship of the well has been formally transferred to ExxonMobil
before the ANH, the partners plan to re-enter the well for further
evaluation of the La Luna formation late in the second quarter of
Two intervals within the tertiary Lisama sandstone were tested, which
flowed at a combined average gross rate of 1,242 barrels of oil per
day ("bopd") during short term tests. The operator has applied for
and expects to receive a permit to conduct a three month production
test of the Lisama intervals. 
Charle Gamba, President and CEO of Canacol, commented "We are pleased
to have confirmed a conventional oil discovery in the shallow
Tertiary Lisama reservoir, and with the preliminary results obtained
while drilling the deeper Cretaceous La Luna formation, which
demonstrate the presence of a thick, porous, over pressured source
rock in the La Luna. Throughout the drilling of the La Luna section,
very encouraging signs of the productivity of the formation were
encountered including gas kicks and live oil over the shakers at
surface. While drilling at 9,585 feet within the La Luna
approximately 280 barrels of oil flowed into the mud pits. These
results mark an important milestone in de-risking the shale oil
potential of the Corporation's 405,021 net acres held in this play in
the Middle and Upper Magdalena Valley's. With ExxonMobil expected to
take over operatorship of the Mono Arana 1 well, we look forward to
test results from the La Luna later this year. Meanwhile, we look
forward to working together with our partners to appraise the Lisama
discovery and bring it onto commercial production in 2013. Both of
these results bode very well for the adjacent Santa Isabel block,
which has the same potential in these same reservoirs, but where,
subject to the completion of the formal assignment process with the
ANH, we hold a 100% operated working interest. Plans are underway to
spud the first exploration well on Santa Isabel, the Oso Pardo 1
well, located approximately 12 kilometers to the west of the Mono
Arana 1 well, in the second quarter of 2013."  
Lisama Results  
The top of the Lisama Formation was penetrated at a depth of
approximately 4,800 ft md. Based on Canacol's petrophysical analysis
of the openhole logs run across the interval, the Lisama contains
approximately 85 ft of potential net oil pay with an average porosity
of 21% in 3 main zones. 
The Upper Lisama was perforated between 5,392 - 5,408 ft md and
yielded an average of 340 and 409 bopd of 20 API with a final water
cut of 2% over two separate 24 hour tests. The Lower Lisama was
perforated between 5,509 - 5,540 ft md and yielded an average of 523
and 833 bopd of 21 API with a final water cut of 0.5% over two
separate 24 hour tests.  
La Luna Results  
The top of the La Luna was encountered at a depth of 9,180 ft md.
Good oil and gas shows were encountered across the gross drilled
interval of approximately 760 ft md, with the La Luna exhibiting high
overpressure of up to 16.5 ppg throughout the entire interval. The La
Luna was cored between 9,925 and 9,942 ft md. Upon completion of the
coring, the operator cased the well to ensure well integrity. 
Based on Canacol's petrophysical analysis of the openhole logs run
across the interval, the part of the La Luna penetrated in the well
contains approximately 230 ft of potential net oil pay with an
average porosity of 14%.  
Forward Plans  
Plans to re-enter the well and either proceed to drill the remainder
of the La Luna Formation or to not drill any further and test that
portion of the La Luna that has already been penetrated, is yet to be
decided. This operation is anticipated to occur late in the second
quarter of 2013. 
Canacol Energy is an exploration and production corporation with
operations focused in Colombia and Ecuador
. 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