An anonymous director reports

CANACOL ENERGY LTD. TESTS NELSON 6 GAS DISCOVERY AT 23 MMSCFPD (4,035 BOEPD)

Canacol Energy Ltd. has provided an update for the Nelson 6 shallow Porquero exploration well, which represents the corporation's sixth-consecutive gas exploration success.

Nelson 6 shallow Porquero gas discovery

Esperanza exploration and exploitation (E&E) contract

Lower Magdalena basin, Colombia

A 100-per-cent working interest

The Nelson 6 well was spudded on the Esperanza E&P contract on Oct. 18, 2016. The well reached a total depth of 6,400-foot measured depth in nine days. The objective of the well was to assess the deliverability of interpreted bypassed gas pay in the Miocene-aged Porquero sandstone reservoirs encountered in offset wells within the Nelson gas field currently productive in the deeper Oligocene-aged Cienaga de Oro (CDO) reservoir sandstones. The well encountered a 41-foot measured depth (39-foot true vertical depth) of net gas pay with average porosity of 19 per cent within the primary Porquero reservoir target. The offsetting Nelson 5 well located 1.8 kilometres away and drilled in 2014 encountered a 62-foot measured depth of interpreted gas pay within the same shallow Porquero reservoir.

The Porquero reservoir interval in Nelson 6 was perforated between 5,752- and 5,760-foot measured depth and 5,784- and 5,831-foot measured depth and flowed at a final stabilized rate of 23 million cubic feet per day (4,035 barrels of oil equivalent per day) of dry gas with no water at a flowing tubing head pressure of 879 pounds per square inch over a 23-hour test period. The corporation is finishing the completion of the Nelson 6 well for permanent production through the corporation's operated Jobo production facility.

In addition to the established play type involving the deeper CDO sandstones, which are productive at the corporation's Nelson, Palmer, Clarinete, Trombon and Nispero gas fields, the success of the Nelson 6 discovery well confirms the commerciality of a new exploration play type in the shallower Porquero sandstones across the company's acreage position held at 100-per-cent working interest on the Esperanza, VIM 21, VIM 5 and VIM 19 blocks, which combined are 785,000 net acres in size.

Drilling program in 2016

The corporation's resource capture strategy anticipates three more wells before year-end. Upon completion of the Nelson 6 well, the Tuscany Rig-12 will be mobilized to drill the Nelson 8 gas development well, which will be completed prior to year-end. The Nelson 8 development well is targeting productive reservoirs within the CDO reservoir that are not being drained by the existing producing wells in the Nelson field. The Tuscany Rig-15 is currently drilling the Clarinete 3 gas development well, which spudded on Nov. 3, 2016, mobilizing from the Trombon discovery to the Clarinete field. The Tuscany Rig-14 has been contracted and is mobilizing to drill the Mono Capuchino-1 oil exploration well on the VMM 2 E&P contract located in the Middle Magdalena basin. The corporation anticipates spudding the well on Dec. 5, 2016, and anticipates that the well will take two months to drill and test.

We seek Safe Harbor.