Canacol has commenced its drilling and workover activities on its operated Rancho Hermoso and Entrerrios oil fields located in the Llanos Basin of Colombia. The Corporation has signed a definitive contract with Saxon Services de Panama (Saxon) to provide the 1500 horsepower Saxon 126 drilling rig which will be used to drill three wells.

The program will commence with the drilling of the Rancho Hermoso 3A well in early August, 2009, followed by the drilling of the Entrerrios 5 and Rancho Hermoso 5 wells, with the entire program scheduled to be completed by late November 2009. The program also includes working over three existing wells to increase productivity by perforating oil bearing reservoir behind pipe and comingling with existing oil production.

The Corporation has also completed the acquisition of a 46 square kilometer 3D seismic program on its operated La Sierra E&P Contract located in the Middle Magdalena Basin. The results of this program will be used to drill an exploration well in the first quarter of 2010.

Charle Gamba, President and CEO of Canacol, stated, "The drilling and work over activities at Rancho Hermoso and Entrerrios are expected to add approximately 5,000 initial barrels oil per day ("bopd") of revenue production to our current 1,700 bopd of revenue production from Colombia. At a net cost of US $10.1 million, this program captures significant value at a low cost. The results of the 3D seismic program at La Sierra will be used to drill our exploration prospect on that block in early 2010. Both of these programs reflect the Corporation's focus on executing its strategy of low risk organic growth on its operated assets."

Tags: Canacol Energy Inc.