Canacol Energy Ltd announced it is to spend US$ 106 million capital budget in 2011 for exploration and development activities in Brazil, Colombia and Guyana. The budget includes the drilling of 39 gross wells (13 net wells), which include 6 exploration wells and 33 appraisal and development wells.

The budget also includes the acquisition of 650 kilometers of 2D exploration seismic, the building of an early production facility at the Capella discovery, the continued expansion of its operated Rancho Hermoso production facilities, and funding of the Corporations share of the OBC pipeline project in Colombia. The budget consists of US$ 52 million to fulfill exploration work program and pipeline commitments in Brazil, Colombia and Guyana, and US$ 54 million in discretionary spending dedicated primarily to development drilling and production programs in Colombia.

The Corporation anticipates to average between 10,000 to 11,000 barrels of oil per day ("bopd") of net after royalty production in 2011, which excludes any production resulting from exploration success.

The Corporation anticipates that it will have USS65 million in cash at the end of Q4, 2010, and the 2011 work program and budget is expected to be funded from a combination of cash on hand and cash-flow from operations. The budget is based on an average West Texas Intermediate oil price of US$85 per barrel of oil for 2011.

Charle Gamba, President and CEO of Canacol, noted that this year, the Canadian firm’s focus was ramping up production, adding that with current net after royalty production of 10,998 bopd the firm has exceeded itd 2010 exit rate target of 7,000 bopd by a healthy margin, and has generated a 400% increase in production for 2010.

For 2011, the Corporation is focused on executing its large exploration programs, both on its light oil asset in Guyana and its heavy oil assets in Colombia. The success of either of these programs will generate significant returns for shareholders. Also in 2011, the Corporation will focus on rebuilding its exploration portfolio in Brazil. On the production side, Canacol will continue recycling cash flow from its drilling programs at Rancho Hermoso and Capella heavy oil discovery into its exploration programs, he said.

Canacol has interests in 10 exploration and production blocks in Brazil, including a 47.5% non-operated working interest 5 producing oil fields located onshore in the Reconcavo Basin of Brazil, and a working interest of 38% in the REC170 contract also located in the Reconcavo Basin.

30 Dec 2010.