CALGARY, ALBERTA -- (Marketwire) -- 01/24/13 -- Canacol Energy Ltd. ("Canacol" or the "Corporation") (TSX: CNE) (BVC: CNEC) is pleased to provide the following update concerning its Mono Arana 1 exploration well drilled on the VMM2 Exploration and Production ("E&P") contract located in the Middle Magdalena Valley of Colombia. Subject to the completion of the formal assignment process with the ANH, Canacol holds a 20% non-operated working interest in the E&P contract, with ExxonMobil Exploration Colombia ("ExxonMobil") holding a 70.1% working interest and Vetra Exploracion y Produccion Colombia ("Vetra") holding the remaining 9.9% operated working interest. The recognition of the aforementioned working interests has been submitted for the approval of the Agencia Nacional de Hidrocarburos (ANH).
The Mono Arana 1 well was spud on September 23, 2012, and was designed to test the oil potential of both the shallow conventional Tertiary Lisama sandstone reservoir and deeper shale and carbonate reservoirs within the La Luna and Tablazo oil source rocks. The well has been drilled and cased to a depth of 9,942 feet measured depth ("ft md") within the Cretaceous La Luna Formation. Approximately 760 feet of La Luna were encountered, with good oil and gas shows noted throughout the entire interval while drilling. Additional deeper prospective zones in the La Luna and Tablazo sections were not penetrated due to the high pressure encountered while drilling, so casing was set within the La Luna Formation. Subject to obtaining ANH approval, ExxonMobil Exploration Colombia will assume operatorship of the block, including further operations on Mono Arana 1. Once operatorship of the well has been formally transferred to ExxonMobil before the ANH, the partners plan to re-enter the well for further evaluation of the La Luna formation late in the second quarter of 2013.
Two intervals within the tertiary Lisama sandstone were tested, which flowed at a combined average gross rate of 1,242 barrels of oil per day ("bopd") during short term tests. The operator has applied for and expects to receive a permit to conduct a three month production test of the Lisama intervals.
Charle Gamba, President and CEO of Canacol, commented "We are pleased to have confirmed a conventional oil discovery in the shallow Tertiary Lisama reservoir, and with the preliminary results obtained while drilling the deeper Cretaceous La Luna formation, which demonstrate the presence of a thick, porous, over pressured source rock in the La Luna. Throughout the drilling of the La Luna section, very encouraging signs of the productivity of the formation were encountered including gas kicks and live oil over the shakers at surface. While drilling at 9,585 feet within the La Luna approximately 280 barrels of oil flowed into the mud pits. These results mark an important milestone in de-risking the shale oil potential of the Corporation's 405,021 net acres held in this play in the Middle and Upper Magdalena Valley's. With ExxonMobil expected to take over operatorship of the Mono Arana 1 well, we look forward to test results from the La Luna later this year. Meanwhile, we look forward to working together with our partners to appraise the Lisama discovery and bring it onto commercial production in 2013. Both of these results bode very well for the adjacent Santa Isabel block, which has the same potential in these same reservoirs, but where, subject to the completion of the formal assignment process with the ANH, we hold a 100% operated working interest. Plans are underway to spud the first exploration well on Santa Isabel, the Oso Pardo 1 well, located approximately 12 kilometers to the west of the Mono Arana 1 well, in the second quarter of 2013."
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