Canacol Energy Ltd. provided the following update concerning its Mono Arana 1 exploration well drilled on the VMM2 Exploration and Production contract located in the Middle Magdalena Valley of Colombia. Subject to the completion of the formal assignment process with the ANH, Canacol holds a 20% non-operated working interest in the E&P contract, with ExxonMobil Exploration Colombia holding a 70.1% working interest and Vetra Exploracion y Produccion Colombia holding the remaining 9.9% operated working interest. The Mono Arana 1 well was spud on September 23, 2012, and was designed to test the oil potential of both the shallow conventional Tertiary Lisama sandstone reservoir and deeper shale and carbonate reservoirs within the La Luna and Tablazo oil source rocks.

The well has been drilled and cased to a depth of 9,942 feet measured depth within the Cretaceous La Luna Formation. Approximately 760 feet of La Luna were encountered, with good oil and gas shows noted throughout the entire interval while drilling. Additional deeper prospective zones in the La Luna and Tablazo sections were not penetrated due to the high pressure encountered while drilling, so casing was set within the La Luna Formation.

Subject to obtaining ANH approval, ExxonMobil Exploration Colombia will assume operatorship of the block, including further operations on Mono Arana 1. Once operatorship of the well has been formally transferred to ExxonMobil before the ANH, the partners plan to re-enter the well for further evaluation of the La Luna formation late in the second quarter of 2013. Two intervals within the tertiary Lisama sandstone were tested, which flowed at a combined average gross rate of 1,242 barrels of oil per day during short term tests. The operator has applied for and expects to receive a permit to conduct a three month production test of the Lisama intervals.

The top of the Lisama Formation was penetrated at a depth of approximately 4,800 ft md. Based on Canacol's petrophysical analysis of the openhole logs run across the interval, the Lisama contains approximately 85 ft of potential net oil pay with an average porosity of 21% in 3 main zones. The Upper Lisama was perforated between 5,392 - 5,408 ft md and yielded an average of 340 and 409 bopd of 20 API with a final water cut of 2% over two separate 24 hour tests.

The Lower Lisama was perforated between 5,509 - 5,540 ft md and yielded an average of 523 and 833 bopd of 21 API with a final water cut of 0.5% over two separate 24 hour tests. The top of the La Luna was encountered at a depth of 9,180 ft md. Good oil and gas shows were encountered across the gross drilled interval of approximately 760 ft md, with the La Luna exhibiting high overpressure of up to 16.5 ppg throughout the entire interval.

The La Luna was cored between 9,925 and 9,942 ft md. Upon completion of the coring, the operator cased the well to ensure well integrity. Based on Canacol's petrophysical analysis of the open hole logs run across the interval, the part of the La Luna penetrated in the well contains approximately 230 ft of potential net oil pay with an average porosity of 14%.

Plans to re-enter the well and either proceed to drill the remainder of the La Luna Formation or to not drill any further and test that portion of the La Luna that has already been penetrated, is yet to be decided. This operation is anticipated to occur late in the second quarter of 2013.