Mr. Kevin Flick reports

CANACOL ENERGY LTD. ANNOUNCES 110% INCREASE IN REVENUES AND STRONG OPERATING CASH FLOW FOR FISCAL Q1 2012

Canacol Energy Ltd. has released its financial results for the fiscal first quarter 2012, or three months ended Sept. 30, 2011. All figures are shown in U.S. dollars, unless otherwise specified.

This reporting period is the corporation's first under international financial reporting standards. As a result, the accounting policies of the corporation have been adjusted to comply with IFRS beginning with the balance sheet as at July 1, 2010. A comprehensive summary of all of the significant changes, including reconciliations of Canadian GAAP (generally accepted accounting principles) financial statements to those prepared under IFRS, is presented in note 23 "Transition to IFRS" of the corporation's interim condensed consolidated financial statements as at and for the three months ended Sept. 30, 2011.

Financial and operating highlights

Three months ended Sept. 30, 2011

Total revenues for the three months ended Sept. 30, 2011, increased 110 per cent to $35.3-million from $16.8-million for the comparable period.

Funds from operations for the three months ended Sept. 30, 2011, increased 129 per cent to $17.8-million from $7.8-million for the comparable period. Adjusted funds from operations for the three months ended Sept. 30, 2011, increased 150 per cent to $19.5-million from $7.8-million for the comparable period.

Net income for the three months ended Sept. 30, 2011, was $13.5-million, compared with a loss of $30.1-million for the comparable period.

Capital expenditures for the three months ended Sept. 30, 2011, increased to $31.4-million.

Average daily sales volumes increased 170 per cent to 9,910 barrels of oil per day for the three months ended Sept. 30, 2011, compared with 3,671 barrels of oil per day for the comparable period.

For the three months ended Sept. 30, 2011, the corporation's operating netback for non-tariff (NRI) production was $55.17 per barrel and for tariff production was $8.71 per barrel.

The corporation's balance sheet remains strong with $115.5-million in cash, cash equivalents and restricted cash, and $85.1-million of working capital surplus at Sept. 30, 2011.

               FINANCIAL AND OPERATIONS HIGHLIGHTS
                   Three months ended Sept. 30
           (in U.S. dollars, except per share amounts)

                                                 2011       2010
                                                                            
Financial
Crude oil sales, net of royalties             $26,453    $15,219
Tariff revenue                                  8,877      1,579
Total revenues                                 35,330     16,798
Funds from operations                          17,761      7,766
Per share -- basic and diluted ($)               0.03       0.02
Adjusted funds from operations                 19,451      7,766
Per share -- basic and diluted ($)               0.04       0.02
Net income (loss)                              13,486    (30,068)
Per share -- basic and diluted ($)               0.03      (0.07)
Operations                                                                  
Crude oil production (bopd)                                                 
Tariff                                          6,476      1,259
Non-tariff                                      3,274      1,729
Total                                           9,750      2,988
Crude oil sales (bopd)                                                      
Tariff                                          6,458      1,253
Non-tariff                                      3,452      2,418
Total                                           9,910      3,671
Tariff oil operating netback ($/bbl)
Realized tariff oil price                       14.94      13.70
Operating and transportation costs              (6.23)     (8.44)
Tariff oil operating netback                     8.71       5.26
Non-tariff (NRI) oil operating netback ($/bbl)
Realized crude oil price, net of royalties      84.43      69.08
Operating and transportation costs             (29.26)    (26.55)
Non-tariff oil operating netback                55.17      42.53

Outlook

The corporation confirms its net revenue production guidance of 10,500 to 11,500 net average barrels of oil per day for calendar year 2011. Canacol anticipates a strong finish to calendar year 2011 in terms of net production, with an anticipated exit rate in excess of 14,000 net bopd. Corporate net revenue production for the month of October, 2011, averaged 11,809 bopd net, and for the month of November, 2011, to date averaged 14,238 bopd net. As of Sept. 30, 2011, the corporation had approximately $115.5-million in cash and restricted cash, and remains fully financed to execute all of its development and exploration programs through 2012.

The corporation has filed its unaudited interim condensed consolidated financial statements, and related management's discussion and analysis as of and for the three months ended Sept. 30, 2011, with Canadian securities regulatory authorities. These filings are available for review at SEDAR.

We seek Safe Harbor.