Canacol Energy Ltd. Doubles Natural Gas Drilling Activity In Colombia

Canacol Energy Ltd. is pleased to provide a revised capital plan for 2016. The new capital plan accelerates the Corporation's natural gas opportunities in Colombia with three new gas wells. In addition, one new oil well will be drilled over the remainder of 2016. The revised 2016 capital plan has increased by $34 million, from $58 million to $92 million. In August, Canacol raised $35 million from long term strategic investors including follow-on investment from the Corporation's largest shareholder, Cavengas Holdings S.R.L. to accelerate gas drilling.

Despite significant volatility in global oil prices, the Corporation anticipates near record EBITDAX of approximately $135 million for 2016. Canacol forecasts average realized gas sales pricing of $5.60 per thousand standard cubic feet ("mscf") with a netback of $4.56/mcf, representing an estimated 81% netback margin. The Corporation's fixed price gas contracts mitigate impact from oil volatility with approximately 86% of 2016 corporate production insensitive to world oil prices. The Corporation continues to reduce costs with an estimated 40% reduction in general & administrative expenses for the year. Canacol estimates oil and gas sales before royalty between 16,000 to 17,000 barrels of oil equivalent per day ("boepd") for 2016 and third quarter oil and gas sales before royalty of approximately 18,200 boepd.

Over the past three years, the Corporation has made four gas discoveries and added 302 BCF in 2P reserves on the Esperanza and VIM 5 E&P blocks located in the Lower Magdalena Basin, Colombia. Canacol recently added a second rig to the two blocks. The objectives of the expanded gas drilling program are to 1) target management's estimate of more than 100 billion cubic feet ("BCF") of new potential recoverable resource in 2016 to secure new gas sales contracts, and 2) increase the productive capacity of the Corporation's gas assets to more than 190 million cubic feet per day ("MMcf/d") in anticipation of new sales contracts. Canacol has a large inventory of prospects and leads targeting 2.4 - 2.8 trillion cubic feet ("TCF") of unrisked mean estimate resource potential. The Corporation's gas resource capture strategy remains balanced for the remainder of 2016 with two gas exploration wells and two gas development wells.