Canacol Energy Ltd. reports its calendar 2012 capital program of US $150 million for exploration and development activities in Colombia, Brazil, and Guyana. The budget includes the drilling of 40 gross wells, which consists of 26 gross development wells and 14 gross exploration wells. The budget also includes the acquisition of 740 kilometers and 361 square km of 2D and 3D seismic respectively and the expansion of facilities at Canacol's operated Rancho Hermoso field. In total, the Corporation plans to spend US $88 million for exploration programs in Colombia, Brazil, and Guyana and US $62 million for production programs in Colombia in 2012. The budget meets the Corporation's exploration drilling and seismic acquisition work program commitments for 2012.

The Corporation's net after royalty revenue production guidance for 2012 is expected to average between 14,000 to 16,000 barrels of oil per day. This guidance excludes any production from potential future exploration success. Canacol's capital program is fully funded from a combination of cash-on-hand and operating cash flow.

Charle Gamba, President and CEO of Canacol, stated "We expect to exit this year with approximately 14,000 net bopd and within our production guidance of 10,500 and 11,500 net average bopd for 2011. For 2012, Canacol's focus is threefold:

(1) achieve strong base production and cash flow growth from drilling and re-completion programs at Rancho Hermoso field. (2) access potential near term, light oil production and solid cash flow from the LLA 23 contract, which is located immediately north of and on trend with Rancho Hermoso field. (3) execute our large exploration programs, which target heavy oil in the Caguan-Putumayo basin and light oil in the Putumayo and Middle Magdalena basins. Of Canacol's 2012 exploration budget of US $88 million, approximately 60% is dedicated to light oil exploration programs and approximately 40% is committed to heavy oil programs."

COLOMBIA

Canacol is designated operator of 11 of 18 exploration and production contracts representing 1.5 million net acres in Colombia. In 2012 the Corporation plans to spend over US $140 million on various exploration and development programs in Colombia. These programs include the drilling of 3 development wells and 1 injector well at Rancho Hermoso field, 22 development wells at the Capella heavy oil discovery, and 12 high-impact exploration wells. The budget also includes the acquisition of 740 km and 361 square km of 2D and 3D seismic, respectively, and the expansion of facilities at Rancho Hermoso field.

Llanos basin

Canacol is designated operator of 4 of 6 total exploration and production contracts representing 194,000 net acres in the Llanos basin, Colombia.

Rancho Hermoso

Since acquiring the Rancho Hermoso field in 2008, the Corporation has drilled 10 wells into the field with 100% success. In 2012 Canacol plans to spend US $44 million on drilling, seismic, and facilities expansion. Following the strong development drilling program in 2011, the Corporation will begin 2012 with the drilling of 3 consecutive development wells and 1 injector well. In addition to the new wells, Canacol intends to acquire 37 square kilometers of 3D seismic to further define the Barco and Carbonera reservoir channels within the field for potential future drilling. The Corporation intends to expand Rancho Hermoso's existing facilities to process additional fluids and incur various construction costs for completion of the gas plant facility, which is anticipated to come online in February 2012.

Tags: Canacol Energy Inc.