CALGARY, ALBERTA--(Marketwired - Apr 25, 2017) - Canacol Energy Ltd. ("Canacol" or the "Corporation")
(TSX:CNE)(OTCQX:CNNEF)(BVC:CNEC) is pleased to announce that it has purchased Pacific Exploration and Production's ("PEP") 50%
operated interest in the SSJN7 Exploration and Production ("E&P") Contract for a consideration of the assumption of
contractual exploration obligations to the Agencia Nacional de Hidrocarburos ("ANH"), Colombia's resource administrator. The
agreement is subject to approval by the ANH, which the Corporation expects to receive within the next 3 to 6 months.
Charle Gamba, President and CEO of Canacol, commented, "The low cost acquisition of the SSJN7 block continues the
consolidation of our core operated gas exploration and production area in the Lower Magdalena Valley basin, following the
purchase of Shona's interests in the Esperanza and VIM21 blocks in 2012, and of OGX's interests in the VIM5 and VIM19 blocks in
2014. Our consolidation efforts over the past four years have been both low cost and successful, with our exploration efforts on
those blocks yielding six commercial gas discoveries containing 318 billion cubic feet of 3P reserves as represented by the
Corporation's reserve auditors since 2014.
The SSJN7 block occupies a prime central position within our core gas exploration area, with the block flanked both to the
north and to the south by large producing gas fields and historic commercial gas fields discovered on the block itself. SSJN7 is
located along both the Cienaga de Oro (CDO) and the Porquero exploration gas play fairways that our management team knows well,
having drilled six commercial gas discoveries in the past four years into these fairways on the adjacent operated blocks. The
block is also situated along the route of both the existing Promigas pipeline and the planned route for the new gas pipeline that
Canacol is building via a Special Purpose Vehicle. This ensures that when gas is found on the SSJN7 block it will be quickly and
efficiently commercialized."
SSJN7 E&P Contract
CNE Oil and Gas S.A.S, 50% Operated WI
335,000 net acres
The SSJN7 Contract is situated between the VIM 5 and VIM19 E&P contracts where Canacol has a 100% operated working
interest acquired from OGX in 2014 (Figure 1). The SSJN7 block is 669,000 gross acres in size, and increases Canacol's net
exploration acreage position 43% from 785,000 acres to 1,120,000 acres within the most prolific gas prone and productive part of
the Lower Magdalena Valley basin.
The SSJN7 block is situated along both of the proven and productive CDO and Porquero gas play fairways, as evidenced by the
position of large producing gas fields both to the north and to the south of the block. Historically, a number of exploration
wells have been drilled, and two commercial discoveries in the CDO were developed on the block, namely the Chinu (1956) and El
Deseo (1989) fields. At present, Canacol management have identified a number of leads based on the limited 2D seismic coverage on
the block. As part of the future plans for the block the Corporation will reprocess the existing 2D seismic data utilizing
seismic processing and interpretation techniques to identify gas-filled reservoirs. The Corporation expects to high-grade
prospective areas on the block for the acquisition of additional 2D and 3D seismic data to advance the leads to prospect status,
and to identify additional leads and prospects. The Corporation expects to acquire new seismic and drill an exploration well in
the next 18 months.
To view Figure 1, click on the following link: http://media3.marketwire.com/docs/Canacol425b.jpg
Canacol is an exploration and production company with operations in Colombia, Ecuador and Mexico. The Corporation's common
stock trades on the Toronto Stock Exchange, the OTCQX in the United States of America, and the Colombia Stock Exchange under
ticker symbol CNE, CNNEF, and CNE.C, respectively.
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,
including without limitation statements relating to estimated production rates from the Corporation's properties and intended
work programs, gas pipelines, and associated timelines. 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.
Definitions
Resource definitions, including those set out below, are as specified by NI 51-101, including by reference to CSA Staff Notice
51-324 - Glossary to NI 51-101 Standards of Disclosure for Oil and Gas Activities and the COGE Handbook.
Boe conversion - The term "boe" is used in this news release. Boe may be misleading, particularly if used in isolation. A
boe conversion ratio of cubic feet of natural gas to barrels oil equivalent is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In this news release, we have
expressed boe using the Colombian conversion standard of 5.7 Mcf: 1 bbl required by the Ministry of Mines and Energy of
Colombia.
"3P" means Total Proved + Probable + Possible
"Proved reserves" are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely
that the actual remaining quantities recovered will exceed the estimated proved reserves;
"Probable reserves" are those additional reserves that are less certain to be recovered than proved reserves. It is
equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus
probable reserves;
"Possible reserves" means those additional reserves that are less certain to be recovered than probable reserves. It is
unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible
reserves;