An anonymous director reports

CANACOL ENERGY LTD PROVIDES CORPORATE UPDATE

Canacol Energy Ltd. has provided the following update concerning its 2024 unaudited financial and operating results, current drilling activities and results, and recent activity in Bolivia.

The corporation is pleased that the fourth quarter of 2024 was another strong quarter, with EBITDAX (earnings before interest, taxes, depreciation, amortization and exploration costs) reaching approximately $78-million for the three months ended Dec. 31, 2024, resulting in an annual EBITDAX of approximately $298-million for 2024, which is higher than the upper end of the corporation's 2024 guidance. The strong EBITDAX is mainly driven by tightening of Colombia's natural gas supply resulting in higher natural gas and electricity prices. Capex was approximately $29-million and $123-million for the three months and year ended Dec. 31, 2024, respectively, which is lower than the lower end of the 2024 guidance, mainly due to the corporation's drilling efficiencies and cost-reduction initiatives. The corporation ended 2024 with a leverage ratio of 2.3 times, which is lower than the lower end of the 2024 guidance.

Drilling update

Natilla-2 ST1 exploration well (SSJN-7 exploration and production contract, 100-per-cent working interest)

Natilla-2 ST1 reached a total depth of 15,050 feet (ft) (true vertical depth (TVD)) near the base of the Porquero formation, the planned intermediate casing point of the well situated just above the underlying Cienaga de Oro (CDO) sandstone primary target. Drilling through the Porquero took longer than anticipated due to high pressures and wellbore issues. The well encountered an approximately 550 ft TVD gross section of interbedded sandstone and shales within the Porquero with good reservoir quality as indicated by sonic and resistivity logs collected while drilling.

Formation pressures across this section of the Porquero ranged from 12,500 to 13,500 pounds per square inch (psi) based on the PWD (pressure while drilling) tool, indicating gas at very high pressure and very high mud weights of up to 18.8 pounds per gallon while drilling were required to prevent the influx of gas into the wellbore. Despite the heavy mud weights used while drilling through this section of the Porquero, total measured gas confirmed that the sandstones are gas charged.

Casing is currently being run to isolate the Porquero prior to continuing to drill to the primary Cienaga de Oro target to a total planned depth of 16,510 ft (TVD). Upon completion of drilling, open hole and cased hole logs will be run across both the CDO and Porquero, respectively, and production tests will subsequently be conducted across any potential gas producing intervals.

Lulo-3 appraisal well (Esperanza exploration and exploitation contract, 100-per-cent working interest)

The Lulo-3 appraisal well was spudded on Jan. 19, 2025, and reached a total depth of 8,209 ft (measured depth (MD)) on Jan. 24, 2025. The well encountered 101 ft (TVD) of gas pay within the primary CDO sandstone reservoir target. The well is currently being cased and completed and will be placed on production the first week of February, 2025.

Clarinete 11 development well (VIM5 exploration and production contract, 100-per-cent working interest)

The Clarinete 11 development well was spudded on Dec. 21, 2025, and reached a total depth of 8,695 ft (MD) on Jan. 1 2025. The well encountered approximately 205 ft (TVD) of net gas pay within the CDO sandstone reservoir and was placed on production at approximately six million standard cubic feet pepr day (mmscfpd).

Siku-2 appraisal well (VIM-5 exploration and production contract, 100-per-cent working interest)

The Siku-2 appraisal well was spudded on Jan. 26, 2025, and is targeting an extension of the Siku gas field discovered by the corporation in 2020. The well is targeting gas charged CDO reservoir sandstones within a part of the field located approximately 500 metres to the southeast of the Siku-1 discovery well. The corporation anticipates that the well will be drilled, completed and tied in within three weeks.

Pibe-2 asppraisal well (VIM-21 exploration and exploitation contract, 100-per-cent working interest)

The Pibe-2 appraisal well was spudded on Dec. 19, 2024, and reached a total depth of 9,392 ft (TVD). Non-commercial gas was encountered within the CDO reservoir and the well was subsequently abandoned.

Bolivia update

The corporation has now completed the signing of four contracts with the Bolivian state through its National Oil Company YPFB. The four contracts, Tita, Arenales, Ovai and Florida Este, are located within the prolific sub-Andean basin in the south-central part of Bolivia, and are all adjacent to producing gas fields, gas export pipelines and other facilities. An aggregate of approximately $2-million (U.S.) in guarantees have been posted to secure the four contracts.

Tita is a development contract that includes a suspended gas condensate field discovered by Occidental Petroleum in 1974. The field produced approximately 4.2 million barrels of condensate and 112 billion cubic feet (bcf) of natural gas in the period from 1978 to 1996, with the gas being flared due to lack of pipeline infrastructure at that time. A gas export pipeline connecting Bolivia to Brazil was subsequently constructed in 1998 and is located approximately 10 kilometres to the north of the Tita field. The corporation has identified significant remaining gas resource potential within Tita and plans to initially execute a number of recompletions of existing wells in the first half of 2026 in order to restart production.

Final approval of the four contracts by the Bolivian Congress is anticipated in the fourth quarter of 2025, which will establish the effective date of the contracts and allow for the initiation of development and exploration activities. The minimum work program commitment associated with the four contracts is approximately $30-million (U.S.) spent over a period of five years.

About Canacol Energy Ltd.

Canacol is a natural gas exploration and production company with operations focused in Colombia. The corporation's common stock trades on the Toronto Stock Exchange, the OTCQX in the United States and the Colombia Stock Exchange under ticker symbols CNE, CNNEF and CNE.C, respectively.

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