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Canacol Energy rises on the back of latest appraisal well results in Colombia

Last updated: 10:24 28 Jan 2014 EST, First published: 11:24 28 Jan 2014 EST

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Canacol Energy (TSE:CNE)(BVC:CNEC) shares jumped on Tuesday after the company revealed testing results from the Mono Arana 2 appraisal well in the Middle Magdalena Valley of Colombia. 

The well, which was spud on December 10, is located on the VMM2 exploration and production contract, with the company's petrophysical analysis of open hole logs indicating that the well encountered 244 feet measured depth of oil pay in two conventional sandstone reservoirs.

The Colombia- and Ecuador-focused oil and gas company said the well was designed to test the oil potential of the Tertiary Basal Lisama sandstone reservoir, which production tested about 1,403 barrels of oil per day in the Mono Arana 1 discovery well, just 0.7 km north of the appraisal well. 

"We are pleased to have encountered a thicker section of Basal Lisama sandstone oil pay in Mono Arana 2 than we encountered in the Mono Arana 1 discovery well without encountering any sign of bottom water," said president and CEO Charle Gamba, in a release sent out earlier this morning.

"This indicates that the Basal Lisama pool is larger than we had anticipated based only on the Mono Arana 1 well results, and we eagerly await the results of the 5 remaining appraisal wells to define the size of this significant oil discovery, 2 of which are in fulfilment of ANH requirements.

"In any case, we anticipate that Mono Arana, along with our recent Leono light oil discovery in the Llanos basin, will be important drivers for production growth throughout 2014."

The Mono Arana 2 well, which was drilled and cased to a depth of 6,570 feet, showed that the Lisama formation contains 244 feet of net oil pay in two main zones, with 72 feet of potential oil pay within the Upper Lisama reservoir and 172 feet of net oil pay within the Basal Lisama reservoir, with the latter having an average porosity of 19%. 

The company said the well has been equipped with a jet pump and will be placed on a long-term production test subject to regulatory approvals. 

Canacol will drill up to another five appraisal wells and construct production facilities. The next appraisal well, Mono Arana 5, was spud last week, and will be drilled to a depth of about 7,078 feet, the company said. 

Its stock rose 5.9% to $6.88 in Toronto on Tuesday, shy of its 52-week high of $7.45. 

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