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Introduction

Canacol is one of the largest exploration landholders in the Caguan-Putumayo Basin of southern Colombia, with working interests in four exploration and production contracts.

The Ombu contract is operated by Sinochem Group of China (originally by Emerald Energy, a UK-based International which was acquired by Sinochem in 2009). While most of the fields in the Caguan-Putumayo Basin produce from the Villeta and Caballos formations, the primary target at Capella is the Mirador formation, specifically the Upper and Lower Mirador formations.

Capella is a large, elongated northeast-southwest fault anticline, representing approximately 27 kilometers in length. The field is located approximately 250 kilometers away from the nearest offloading station at Neiva. Currently, Capella's production is trucked to local markets.

Pursuant to the original farm-in agreement signed with Emerald, Canacol earned a 10% working interest in the Ombu contract by paying 100% of all activities associated with the drilling, completion, and testing of the Capella-1 exploration well. The Capella-1 discovery well was drilled in July 2008 and was followed by a series of successful development wells. To date, the Corporation has participated in the drilling of 16 wells into the field, and the acquisition of 189 square kilometers of 3D seismic.

For the Corporation's heavy oil discovery at Capella in 2011, the Corporation and Sinochem Group continue to drill appraisal and horizontal wells and evaluate the role of steam injection.