Canacol Energy Ltd. Announces Oil Discovery at Oso Pardo 1 Exploration Well in Colombia

Canacol Energy Ltd. Announces Oil Discovery at Oso Pardo 1 Exploration Well in 
Colombia 
CALGARY, ALBERTA -- (Marketwired) -- 08/27/13 -- Canacol Energy Ltd.
("Canacol" or the "Corporation") (TSX:CNE)(BVC:CNEC) provides the
following operational update concerning the Oso Pardo 1 exploration
well drilled on the Santa Isabel Exploration and Production ("E&P")
contract located in the Middle Magdalena Valley of Colombia. The Oso
Pardo - 1 well was spud on June 10, 2013, and was designed to test
the oil potential of both the shallow conventional Tertiary Lisama
sandstone reservoir and deeper naturally fractured shale and
carbonate reservoirs within the La Luna and Simiti oil shales with a
planned total depth of 10,199 feet measured depth ("ft md").  
The well penetrated the Lisama sandstones as anticipated at 3,390 ft
md with good oil and gas shows while drilling, and drilled through
the Umir Formation with similarly good oil and gas shows in two
separate oil filled sandstone intervals at 3,665 and 3,800 ft md
respectively. Petrophysical evaluation of the openhole logs acquired
indicate 88 feet of oil pay with these Tertiary sandstones: 60 ft of
oil pay within the Lisama sandstones with an average porosity of 25%,
and 28 ft of oil pay within two separate Umir sandstones with an
average porosity of 16%. However, while drilling the Tertiary
section, the Corporation encountered technical problems that
compromised the integrity of the wellbore. The appropriate corrective
measures were taken but it was decided not to proceed with the
drilling of the deeper Cretaceous shales. The Corporation
subsequently exercised its option to continue shallow operations at
Oso Pardo - 1 on a 100% cost basis, with the objective of conducting
a series of cased hole production tests of the Umir and Lisama
sandstones. 
Production Test Results 
The Upper Umir sandstone interval was perforated by the Corporation
between 3,666 - 3,685 ft md and produced at a final stable rate of
approximately 205.3 barrels oil per day ("bopd") of 23 degrees API
oil with a water cut of 9.67 % and gas production of 107.54 thousand
cubic feet per day. The well has been on production over a period of
13 days using a jet pump. Water cut decreased steadily throughout the
course of the test, and management believes the water to be
completion fluid related to the drilling of the well, as over 2,000
barrels of drilling fluid were lost into the Umir and Lisama
sandstones. An analysis of the pressure build up performed at the end
of the test indicated heavy formation damage related to the drilling
process. This damage will be remediated with a small acid stimulation
prior to the zone being brought on long term production test. 
The Lisama reservoir was perforated between 3,399 - 3,427 ft md and
tested a small amount of heavy oil of less than 10 degrees API
gravity and filtrate using a jet pump. The entire reservoir interval
is believed to contain heavy oil. The Corporation is considering
various production techniques that could be used to establish
commercial production from this heavy oil discovery at some point in
the future. 
The Corporation is currently designing a stimulation for the Upper
Umir sandstone in order to remove the formation damage caused while
drilling and improve productivity, and anticipates placing the well
on long term production test once the appropriate permit has been
received, within a period of one month. As per the farm-out agreement
between Canacol and ConocoPhillips, the Corporation has the right to
receive 100% of the crude oil produced from the Umir and Lisama
sandstones, subject to the approval of the ANH.  
Charle Gamba, CEO of the Corporation commented, "Although the Oso
Pardo 1 well did not reach its primary shale objectives due to
technical difficulties encountered while drilling, we are pleased to
have made a light oil discovery in the Umir sandstone which we shall
continue to production test. This discovery, the first on the Santa
Isabel contract, indicates that there is significant potential within
the shallow sandstone section of the block, where Canacol has the
right to receive 100% of the crude produced, subject to the approval
of the ANH. We look forward to the drilling of the next well on the
contract, which shall be done using what we have learned while
drilling this well." 
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. 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
www.sedar.com. 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 and Energy of Colombia and is published by the
Ministry on its website; a direct link to this information is
provided on the Corporation's website. References to "net" production
refer to the Corporation's working-interest production before
royalties. 
Boe conversion - The term "boe" is used in this news release. Boe may
be misleading, particularly if used in isolation. A boe conversion
ratio of cubic feet of natural gas to barrels oil equivalent is based
on an energy equivalency conversion method primarily applicable at
the burner tip and does not represent a value equivalency at the
wellhead. In this news release, we have expressed boe using the
Colombian conversion standard of 5.7 Mcf: 1 bbl required by the
Ministry of Mines and Energy of Colombia.
Contacts:
Canacol Energy Ltd.
Investor Relations
888-352-0555
IR@canacolenergy.com
www.canacolenergy.com