Canacol Tags Capex for South American Operations

Canacol Energy has tagged a US $46 million capital budget in 2010 for exploration and development activities in Colombia, Guyana, and Brazil. The budget includes the drilling of 15 wells, which include 3 exploration wells, one each in Colombia, Guyana, and Brazil, and 3 appraisal and 9 development wells in Colombia. The budget also includes the acquisition of 100 square kilometers ("km") of 3D seismic and 160 km of 2D seismic in Colombia and Brazil, the building of a 2,000 barrel of fluid per day early production facility at the Capella discovery in Colombia, and the expansion of its operated Rancho Hermoso production facilities in Colombia. Canacol also plans to participate in the exploration bid round scheduled in Colombia for late June as a qualified operator.

The Corporation anticipates production to average 4,200 barrels of oil per day ("bopd") net production revenue in 2010, with an exit rate of 7,000 bopd, which excludes any production resulting from exploration success. Canacol has US$25 million in cash at the end of Q4, 2009, and the 2010 work program is expected to be fully funded from a combination of cash on hand and cash-flow from existing operations.

Charle Gamba, President and CEO of Canacol, stated, "The 2010 budget will achieve four critical objectives for the Corporation. We will key off our new pool discovery at Rancho Hermoso in Colombia to increase production and free cash flow that will be used to fund the near and midterm capital requirements for the company. We will complete the appraisal of the Capella oil discovery, which includes the drilling of the first horizontal well, and a cyclic steam flood pilot which will quantify the potential increase in ultimate recoverable reserves from this significant discovery. We will also collect the necessary geophysical data on our 100% operated Tamarin and Pacarana contracts offsetting the Capella oil discovery in advance of drilling in 2011 and 2012. Finally, we will appraise a large light oil discovery in Guyana which could have a material effect to the Corporation in the event of success. The 2010 program will be fully funded by a combination of cash on hand and free cash flow from operations."