Canacol Energy Ltd.
TSX VENTURE : CNE

Canacol Energy Ltd.

April 27, 2009 09:00 ET

Canacol Energy Ltd. Announces Update of Drilling Results at the Capella Heavy Oil Discovery in Colombia

CALGARY, ALBERTA--(Marketwire - April 27, 2009) - Canacol Energy Ltd. ("Canacol" or the "Corporation") (TSX VENTURE:CNE) is pleased to provide an update of its drilling and operations program to date on its 300 square kilometer Ombu E&P contract in the Caguan Putumayo Basin in Colombia. On July 9, 2008, the Corporation entered into a farm-out agreement with Emerald Energy Plc. ("Emerald"), the operator of the contract, earning a 10% working interest, subject to the approval of the ANH, by paying 100% of the cost of the drilling and testing of the Capella 1 well.

The Capella 6 well, located approximately 4.2 km to the southwest of the Capella 1 discovery well, was drilled to a total depth of 3,645 feet on March 30, 2009. The vertical well penetrated both of the Mirador reservoir intervals with good oil and gas shows, encountering 80 feet of potential net hydrocarbon pay within the upper Mirador in a thick continuous sandstone reservoir exhibiting up to 37% porosity and no bottom water. This greatly exceeds the previous maximum thickness of 23 feet of net potential hydrocarbon pay encountered in the Capella 2 well, and indicates that the main reservoir interval thickens considerably towards the southwest portion of the field, 4.2 km away from the discovery well. Core composed of oil saturated porous sand was recovered from the entire upper sandstone reservoir interval while drilling. The Capella 6 well encountered 175 feet of lower Mirador conglomerate, with good oil and gas shows observed to a depth of 3,605 feet, some 130 feet deeper than recorded in the offset wells.

A cased hole test of the upper Mirador sandstone yielded stabilized flow of approximately 100 barrels of oil per day with a water cut of 2% at the end of 5 days or testing. Due to sand production, the speed of the progressive cavity pump had to be lowered to approximately 25% of that used for testing the same interval in the Capella 2 well. The operator plans to clean the sand from the wellbore and conduct a further flow test of this interval.

An open hole test of the lower Mirador conglomerate yielded stabilized flow of approximately 295 barrels of fluid per day with a water cut of approximately 90%. An evaluation of the test results and well data indicates that the majority of the water may be flowing from fractures at the base of the open hole section. The operator plans to isolate this part of the section and conduct another open hole test of the overlying oil bearing interval.

Charle Gamba, President and CEO of Canacol, commented "Capella 6 is by far the best well we have drilled in the Capella discovery, encountering the thickest oil pay yet in the upper Mirador sandstone interval, 4 times thicker than that penetrated in the 5 other wells we have drilled, and over 4 km away from the discovery well. This exciting result has a significant impact on our geological understanding of the field and confirms the large potential of the discovery."

A horizontal well, the first in the field, is planned in the southern part of the structure from the Capella 6 surface location within the upper Mirador sandstone reservoir, which was found to be exceptionally thick at the Capella 6 well location. The objective of the well is to test the productivity of a horizontal well within this porous and laterally continuous sandstone reservoir.

Extended production testing of the Capella wells, which yielded oil rates in excess of 700 barrels of oil per day, was suspended in March due to local marketing constraints. The operator is engaged in removing these constraints and expects to resume extended production testing of the Capella wells in May. The operator further anticipates that during commercial development of the Capella field the oil will be delivered to existing pipelines following blending or upgrading.

Canacol is a Canadian based international oil and gas corporation with operations in Colombia, Brazil and Guyana. Canacol is publicly traded on TSX Venture Exchange (TSX VENTURE:CNE). The Corporation's public filings may be found at www.sedar.com.

This press release may contain statements within the meaning of safe harbour provisions as defined under Securities Laws and Regulations. The above statements are based on the current expectations and beliefs of Canacol's management and are subject to a number of risks and uncertainties that may cause the actual results to differ materially from those described above.

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. 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. A barrel of oil equivalent (boe) is derived by converting gas to oil in the ratio of six thousand cubic feet of gas to oil and may be misleading, particularly if used in isolation. A boe conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead, especially in various international jurisdictions.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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