Canacol Energy annouces light oil discovery in Ecuador

BOGOTA, Colombia -- Canacol Energy Ltd. and its JV partners have completed the drilling and testing of the successful Secoya Oeste - A001 exploration well located adjacent to the producing Libertador and Atacapi light oil fields in the Oriente basin of Ecuador.

Canacol holds a non-operated working interest of 25% in the Ecuadorian consortium, which includes a risked service contract governing light oil production from the Libertador and Atacapi light oil fields. The Secoya Oeste - A001 exploration well was spud in early June 2015 targeting the T, U, and basal Tena sandstone reservoirs, which produce in the adjacent Libertador and Atacapi oil fields. The well encountered 33 ft of net oil pay within these reservoirs.

The Lower U sandstone reservoir tested at an average gross rate of 972 bopd (243 bopd net) of 27 degrees API oil with a 10% water cut over the course of a 50-hour test using a jet pump. The Upper U sandstone tested at an average gross rate of 326 bopd (82 bopd net) of 29 degrees API oil with 8% water cut over the course of a 53-hour test using a jet pump.

The consortium plans to commingle the two intervals and bring the well on permanent production shortly, and is using the well results to plan the drilling of potential follow up appraisal and development wells. The consortium operates these two fields, and the new Secoya Oeste - A001 discovery well, under a risked service contract whereby the state oil company pays the consortium a flat tariff of US$ 38.56/bbl of incremental production not tied to global oil prices. As the state oil company pays for all operating costs, the US$ 38.56/bbl tariff is the netback the consortium receives for incremental production.

Canacol Energy commenced the drilling of the Clarinete 2 appraisal well at its Clarinete gas discovery located on the VIM5 block in the Lower Magdalena Valley on August 1. It has a 100% operated working interest in the VIM5 block. The well is located approximately 1.5 km to the west of the Clarinete 1 discovery well, and is targeting the same two productive sandstone reservoirs that tested approximately 42 MMscfpd of natural gas from the Tertiary Cienaga de Oro Formation in the Clarinete 1 discovery well. The well is anticipated to take approximately five weeks to drill, complete, and production test.

Upon the completion of testing operations at Clarinete 2, the drilling rig will be mobilized to drill Oboe 1. Oboe 1 is located approximately 3 km to the north of the Clarinete 1 discovery well, and is targeting the same two productive sandstone reservoirs tested at the Clarinete 1 discovery. Oboe 1 is also anticipated to take approximately five weeks to drill, complete and test. As per a third party reserves report, effective February 2015, Canacol has booked 150 BBcf of net recoverable 2P reserves to the Clarinete natural gas discovery based on the Clarinete 1 well.