Canacol Energy Ltd. and ConocoPhillips Sign Agreement for Shale Oil Exploration
Project in Colombia
CALGARY, ALBERTA -- (Marketwire) -- 02/27/13 -- Canacol Energy Ltd.
("Canacol" or the "Corporation") (TSX:CNE) (BVC:CNEC) is pleased to
announce that its wholly-owned subsidiary, Canacol Energy Colombia
S.A. ("CEC"), has entered into a farm-out agreement (the "FOA") with
ConocoPhillips Colombia Ventures Ltd., a wholly-owned subsidiary of
ConocoPhillips Company ("ConocoPhillips") (NYSE:COP) for the
exploration and potential development of the Corporation's operated
Santa Isabel exploration and production ("E&P") contract located in
the Middle Magdalena basin of Colombia. The Santa Isabel E&P contract
is one of five contracts that Canacol has interests in totaling
approximately 334,000 net acres that expose the Corporation to a
potentially large unconventional shale oil play, as supported by
recent drilling results on the Corporation's adjacent VMM2 contract.
Charle Gamba, President and CEO of the Corporation, commented,
"ConocoPhillips brings significant experience, technology, research
and financial resources to this shale oil joint venture with Canacol,
and we look forward to working with their team to explore the
substantial shale oil potential on the Santa Isabel contract. We are
now partnered with three major international oil companies,
ExxonMobil Exploration Colombia, Shell Colombia, and now
ConocoPhillips, looking to unlock the potential of this large and
significant resource in Colombia. The results of the recently drilled
Mono Arana 1 well confirm the very promising nature of this play on
our acreage position in this basin. We look forward to spudding the
first exploration well on the Santa Isabel contract, the Oso Pardo 1
well, in the second quarter of 2013 with our new co-venturers,
ConocoPhillips. This well is designed to test the potential of both a
conventional light oil target in the Tertiary Lisama reservoir, and
more importantly the potential of deeper Cretaceous oil reservoirs
within the La Luna reservoir."
The Corporation has exposure to approximately 334,000 net acres of
shale oil potential on five contracts located in the Middle and Upper
Magdalena Basins which include VMM 2 (20% interest, 15,000 net acres,
ExxonMobil operator), VMM 3 (2
0% right to back in, 17,000 net acres,
Shell operator), Santa Isabel (30% operated interest, 30,000 net
acres), COR 39 (70% operated interest, 95,000 net acres), and COR 11
(70% operated interest, 177,000 net acres).
Key terms and conditions
Pursuant to the terms of the FOA, ConocoPhillips will carry the cost
of the drilling, completing, and testing of up to 13 wells (presently
expected to comprise 5 exploration and 8 appraisal wells), covering
in full actual drilling, completion, and testing costs, to earn 70%
of Canacol's 100% working interest in the deeper Cretaceous section.
Canacol will retain 100% interest in the shallow Tertiary section.
ConocoPhillips will also pay Canacol a bonus of US$ 13,500,000 in two
separate tranches upon the fulfillment of certain conditions outlined
in the FOA. Canacol will remain operator of Santa Isabel for the
drilling, completion, and testing of up to the second exploration
well. The first exploration well, Oso Pardo 1, is anticipated to be
spudding in the second quarter 2013. The formal assignment of the
working interest as contemplated by the FOA is subject to the
approval of the Agencia Nacional de Hidrocarburos (ANH) of Colombia.
Santa Isabel E&P Contract
Located in the Middle Magdalena basin, the Santa Isabel E&P contract
exposes Canacol to a potentially large, unconventional shale oil
fairway in the thick Cretaceous La Luna and Tablazo formations
analogous to the Eagle Ford formation in the United States and the
Vaca Muerta Formation in Argentina. Ranked as one of the most
productive source rocks in the world, the La Luna is also the primary
source rock in Venezuela's Maracaibo basin, which contains over 250
billion barrels of recoverable oil.
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 CNEC, 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 disclosures. 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. Other risks are more fully
described in the Corporation's most recent Management Discussion and
Analysis, which is incorporated herein by reference and is filed on
Canacol Energy Ltd.
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