Canacol Contracts Rig for Guyana Exploration

Canacol has executed a contract with Tuscany South America for the provision of the 1,500 horse power drilling rig #110 for the purpose of drilling its K-2 exploration well in Guyana. Upon the execution of the contract Tuscany commenced mobilization of the drilling rig from Oklahoma, USA, to Guyana. It is anticipated that the rig will arrive on location within 60 to 75 days, and that drilling will commence shortly thereafter. Canacol has a 90% working interest in the Takutu PPL, which contains the Karanambo discovery drilled by Home Oil in 1982.

The Corporation plans to drill the K-2 well to a planned total depth of approximately 11,000 feet measured depth. The bottom hole location for the K-2 well will be approximately 400 meters northwest of the Karanambo 1 discovery well, and will target the same productive reservoirs that tested over 400 barrels of oil per day of 42o API light oil in 1982. Gaffney Cline and Associates attributed gross mean recoverable prospective resources of 128 million barrels of oil to the discovery in the December 2009 report compiled for the Corporation. The joint venture to date has completed the construction of the drilling pad, access roads, and staging areas in preparation of drilling, has purchased and mobilized tubular and wellheads sufficient for 3 wells which are now in country and on location. The well is anticipated to take 50 days to drill and test, and if successful will be put on a long term production test to establish the deliverability and performance of the reservoirs.

Canacol's partners include Sagres Energy, who are eligible to earn a 25% working interest in the PPL by paying for 30% of the cost to drill the K-2 exploration well, and Groundstar Resources Corp. who hold a 10% working interest in the PPL.