Canacol Energy Ltd. Announces New Gas Sale Contract, Lifts Forecast Gas Sales to 14,560 BOEPD in 2015 in Colombia

CALGARY, ALBERTA--(Marketwired - Sept. 11, 2014) - Canacol Energy Ltd. ("Canacol" or the "Corporation") (TSX:CNE)(OTCQX:CNNEF)(BVC:CNEC) is pleased to announce the execution of a new gas sales contract for the sale of 30 million standard cubic feet per day ("mmscfpd") (5,263 barrels of oil equivalent per day "boepd") commencing for a 5 year period in December 2015 to an electrical generation company located on the Caribbean coast of Colombia. Under the terms of the sales contract Canacol will receive a sales price of US$ 8.00 / thousand standard cubic feet ("mscf") (US$ 46 per barrel of oil equivalent "boe") escalated at approximately 3% per year during the 5 year term of the contract. The undiscounted before tax value of the contract, after deducting investment capital and operating expenses, is approximately US$ 380 million. As previously announced in January 2014 Canacol executed two gas sales contracts to provide 35 mmscfpd (6,140 boepd) of gas to an electrical generation company located on the Caribbean coast of Colombia commencing in December 2015 for a sales price of US$ 5.40 / mscf (US$ 31 / boe) escalated at approximately 3% per year during the 5 year term of each contract. Canacol currently sells approximately 16 mmscfpd (2,807 boepd) to a local ferronickel producer under a 10 year contract that expires in 2022, and approximately 2 mmscfpd (350 boepd) to local off takers under short term contracts. Gas to supply all of the contracts will be provided by the existing Nelson gas field and the newly discovered Palmer gas field, and will include the drilling of five additional appraisal and development wells within these two fields, subject to the approval of the Agencia Nacional de Hidrocarburos ("ANH").

Charle Gamba, President and CEO of Canacol, commented, "With these three new signed sales contracts Canacol's gas sales will increase from the current level of approximately 18 mmscfpd (3,158 boepd) to 83 mmscfpd (14,561 boepd) in December 2015 at very attractive pricing of up to $US 8.00 / mscf or $46 / boe. Gas will form slightly less than half of our forecast 35,000 boepd of total planned net average risked production for calendar 2016, and will provide stable and profitable base revenues through to at least 2021 via fixed 5 year escalated sales contracts to the Corporation. Meanwhile, we're getting ready to drill two more gas exploration wells this year so that we'll have additional gas to sell at these attractive prices."