Canacol Energy : Increases PDP Reserves by 110% and Adds Calendar 2015 2P Reserves of 30.3 MMboe (1,013% reserves replacement) to Post a 2P F&D of US$ 2.85/boe

b8b3d1fa-87f4-4f1b-bed0-30040d7d8a87.pdf

Canacol Energy Ltd. Increases PDP Reserves by 110% and Adds Calendar 2015 2P Reserves of 30.3 MMboe (1,013% reserves replacement) to Post a 2P F&D of US$ 2.85/boe

CALGARY, ALBERTA - (March 16, 2016) - Canacol Energy Ltd. ("Canacol" or the "Corporation") (TSX:CNE; OTCQX:CNNEF; BVC:CNEC) is pleased to report its reserves for the fiscal year ended December 31, 2015 for it assets located in Colombia and Ecuador. Highlights include:

• Proven developed producing ("PDP") reserves increased by 110% since June 30, 2015, to total 28.4 million barrels of oil equivalent ("MMboe") at December 31, 2015

• Proved plus probable ("2P") reserves totaled 79.2 MMboe at December 31, 2015, with a before tax value discounted at 10% of US$ 1.3 billion, being CAN$ $9.44 per share

• Achieved a 2P reserve replacement of 1,013%, based on calendar 2015 gross reserve additions of 30.3 MMboe, being more than 10 times of those produced in the same period

• Achieved a 1P reserve replacement of 656% based on calendar 2015 gross proven reserve additions of 19.7 MMboe

• Achieved 2P finding and development costs ("F&D") of US$ 1.81/boe for its gas assets and US$ 2.85/boe as a corporate total for calendar 2015

• Achieved 2P F&D of US$ 3.78/boe for its gas assets and US$ 7.18/boe as a corporate total for the 2.5 year period ending December 31, 2015

• Recorded 2P finding, development and acquisition costs ("FD&A") of US$ 2.44/boe for its gas assets and US$ 3.38/boe as a corporate total for calendar 2015

• Recorded a 2P reserves life index ("RLI") of 24 years based on 2015 production, and a 10 year RLI based on expected future gas production of 90 MMscfpd upon the completion of the Promigas pipeline expansion (1P RLI being 16 years and 7 years, respectively)

• The December 31, 2015 reserve reports do not include the results of the successful Oboe 1 well which completed drilling in February, 2016 and recently tested cumulative production of 66 MMscfpd

Charle Gamba, President and CEO of Canacol, commented "During a period marked by significant declines in global commodity prices, we have focused exclusively on increasing the value of our reserves base for our shareholders. Towards this end, I am pleased to report an increase in both the amount and value of our proven reserves base, largely due to the continued growth of our Colombian gas platform during the past 6 months. Since the last reserves report issued in June 2015, Canacol's proven developed producing reserves, the most valuable and important category of reserve, increased by 110% and total proven reserves by 3% to 28.4 million barrels of oil equivalent and 53 million barrels of oil equivalent respectively. More importantly, the before tax value discounted at 10% of Canacol's proven reserves increased 16% to US$ 937 million, corresponding to CAN $6.32 per share. Total 2P reserves remained relatively flat over the 6 month reporting period at 79 million barrels of oil equivalent, with a before tax value discounted at 10% of US$ 1.3 billion, or CAN$ 9.44 per share.

Canacol's management team continues to successfully execute its growth strategy with respect to high value Colombian gas, marked both by the recent success at the Oboe 1 well, and the ramp up of gas production to 90 MMscfpd by the end of March 2016. The reserves associated with the Oboe 1 well, which tested at a combined rate of 66 MMscfpd from three separate zones, are not included in this current reserves report, and will be the subject of a separate reserves report to be issued for June 2016 which will increase Canacol's proven reserves base. Canacol estimates that gas sales will average approximately 80 MMscfpd (14,035 boepd) for calendar 2016 (including approximately 90 MMscfpd for the last three quarters of calendar 2016) at an anticipated average realized price of US$ 5.60 / thousand standard cubic feet ("mscf") (US$ 31.92/ boe), with an average netback of approximately US$ 4.56/mcf (US$ 26.00/boe), generating approximately US$ 163 million of gross revenues.

From a reserves perspective, the remainder of 2016 shall see the management team focused on growing Canacol's Colombian gas reserves and production base through the execution of our large gas rich exploration portfolio. The management team is also negotiating the construction of a new gas pipeline which will send 100 MMscpf of new gas production to the Caribbean coast of Colombia in 2018. Meanwhile, Canacol maintains a large inventory of light oil drilling opportunities which could be rapidly executed should global oil prices recover to a reasonable level and justify capital investment."

Year Ended December 31, 2015 Reserves Report: Discussion of Reserves

The following tables summarize information contained in the independent reserves report prepared by DeGolyer and MacNaughton Canada Limited dated March 8, 2016 with an effective date of December 31, 2015 (the "D&M 2015 report") and the independent reserves report prepared by Petrotech Engineering Ltd. dated March 11, 2016 with an effective date of December 31, 2015 (the "Petrotech 2015 report"). Comparative information is included for the independent reserves report prepared by D&M dated September 10, 2015 with an effective date of June 30, 2015 and the independent reserves report prepared by Petrotech dated September 2, 2015 with an effective date of June 30, 2015. The year-end report effective December 31, 2015 is prepared in respect of the change in Canacol's fiscal year-end as disclosed on July 15, 2015.

Canacol Working Interest Before Royalty Reserves for the Year Ended December 31, 2015

Reserve Category(1)	30-Jun-15 (Mboe)(2)	31-Dec-15 (Mboe)	Difference (%)
Proven developed producing	13,548	28,413	110
Proved (1P)	51,468	53,012	3
Proved plus probable (2P)	79,853	79,229	(1)
Proved plus probable plus possible (3P) (1) All reserves are presented as Canacol working interest before royalties	91,565	93,032	2

(2) Mboe is defined as thousands of barrels of oil equivalent. Gas volumes are converted to boe using a factor of 5.7 as per Colombia regulatory practice

Canacol Working Interest Before Royalty Reserves for the Year Ended December 31, 2015 by Product Type (1)

Total

Proved Developed Producing	Total Proved	Total Proved + Probable	Proved + Probable + Possible
Light and medium crude(2)	Mbbl	751	5,632	8,615	10,857
Heavy crude	Mbbl	-	2,183	5,353	8,636
MMc
Conventional natural gas	f	157,676	257,623	371,992	419,170
Mbo
Total oil equivalent(3)	e	28,413	53,012	79,229	93,032

1. All reserves are Canacol working interest share before royalty.

2. Light and medium crude volumes include working interest volumes and deemed volumes.

3. The term "Boe" means a barrel of oil equivalent on the basis of 5.7 Mcf of natural gas to 1 barrel of oil ("bbl") as per Colombian regulatory practice.

Five Year Crude Oil Price Forecast - D&M Report December 31, 2015 and June 30, 2015

Reserve

Report Date	2016	2017	2018	2019	2020
WTI	US$/ Bbl	31-Dec-15	48.00	56.10	60.34	66.86	72.52
WTI	US$/ Bbl	30-Jun-15	66.30	72.83	79.59	84.43	86.12
% difference	-28%	-23%	-24%	-21%	-16%

Five Year Gas Price Forecast - Petrotech Report December 31, 2015

Reserve

Report Date 2016 2017 2018 2019 2020

Esperanza & Clarinete blended average gas price

US$/ Mmbtu

31-Dec-15 5.60 6.21 6.25 6.47 6.70

Reserves Net Present Value Before Tax Summary(1)

Net Asset

Reserve	BT NPV-10 30-Jun-15	BT NPV-10 31-Dec-15	Value 31-Dec-15
Category	(M US$)(2)	(M US$)(2)	($ CDN/share)(3)
Proven developed producing	286,718	570,544	3.14

Proved (1P)	810,245	936,350	6.32
Proved plus probable (2P)	1,227,053	1,294,868	9.44
Proved plus probable plus possible (3P)	1,417,030	1,481,502	11.06

Reserves Net Present Value After Tax Summary(1)

Net Asset

Reserve	AT NPV-10 30-Jun-15	AT NPV-10 31-Dec-15	Value 31-Dec-15
Category	(M US$)(2)	(M US$)(2)	($ CDN/share)(3)
Proven developed producing	174,071	393,029	1.59
Proved (1P)	535,079	638,950	3.73
Proved plus probable (2P)	808,215	872,610	5.76
Proved plus probable plus possible (3P)	930,486	995,232	6.83

1. Net present values are stated in thousands of USD and are discounted at 10 percent. The forecast prices used in the calculation of the present value of future net revenue are based on the price decks described above. The D&M price deck at December 31, 2015 and June 30, 2015 are included in the Corporation's Annual Information Form. The Petrotech forecasts for gas prices as at December 31, 2015 and June 30, 2015 are included in the Corporation's Annual Information Form.

2. Future Development Costs as at June 30, 2015 are included at $153.6 million for 1P, $213.6 million for 2P. Future Development Costs as at December 31, 2015 are included at $140.7 million for 1P, and $202.3 million for 2P. Cost estimates are undiscounted.

3. Net asset value ("NAV") is calculated as at December 31, 2015 NPV10 less estimated net debt of US$210 million (being $255 million of bank debt less estimated net working capital of $45 million) divided by 159 million basic shares outstanding as at December 31, 2015. NAV calculations are converted to $CAD at USD:CAD = 1.384.

Reserves Life Index ("RLI")

December

Reserve Category(1)	30-Jun-15 (yrs.)(1)	31-Dec-15 (yrs.)(2)	Pro forma (3)
Proved (1P)	14	16	7
Proved plus probable (2P)	22	24	10

1. Calculated using average 3 months ending June 30, 2015 production of 9,961 boepd annualized. Production volumes include Ecuador incremental production contract barrels.

2. Calculated using average 3 month ending December 31, 2015 production of 9,064 boepd annualized. Production volumes include Ecuador incremental production contract barrels.

3. Calculated using average 3 month ending December 31, 2015 production for oil properties of 5523 boepd annualized and using 90 MMcfd (being the Corporation's current maximum pipeline and sales capacity annualized).

Year Ended December 31, 2015 Canacol Working Interest Before Royalty Reserves Reconciliation(1)

Total

Total Proved	Proved + Probable
(Mboe)	(Mboe)
30-Jun-15	51,468	79,853
Technical & economic revisions(2)	3,299	1,131
Production(3)	(1,755)	(1,755)
31-Dec-15	53,012	79,229

1. The numbers in this table may not add due to rounding

2. Proved plus Probable reserve technical and economic revisions are primarily associated with the asset evaluations at Llanos 23 and Capella

3. Production volumes include Ecuador incremental production contract barrels

Calculation of Reserve Metrics - Canacol Working Interest Before Royalty(1)(2)(3)

Calendar 2015 Gas	Total(4)	2.5 Year Ending December 31, 2015 Gas Total(4)
Opening Balance	25,419	40,678	16,667	31,347
Technical Revisions	14,854	11,167	19,145	15,445
Discoveries & Extensions	19,739	20,283	25,862	30,033
Acquisitions & Dispositions	6,580	6,446	6,580	7,186
Economic Factors	-	(1,116)	-	(1,116)
Production	(1,331)	(2,994)	(2,992)	(8,430)
Ending Balance, 31-Dec-15	65,262	74,465	65,262	74,465

1. The numbers in this table may not add due to rounding.

2. Calculated using unaudited estimated capital expenditures and unaudited estimated cash netback as at December 31, 2015. See advisory

   "Unaudited Financial Information"

3. All values in this table are stated on a 2P (Total Proved + Probable) basis.

4. Includes Colombian properties only. No Ecuador deemed volumes nor capital have been included

Calculation of Reserve Metrics - Canacol Working Interest Before Royalty(1)(2)(3)

Calendar 2015 2.5 Year Ending December 31, 2015

Gas Total(4) Gas Total(4) Capital Expenditures $30,203 81,538 98,128 315,258

Capital Expenditures - Change in FDC(5)

32,400 4,900 72,200 3,200

Total F&D(6) $62,603 86,438 170,328 318,458

Net Acquisitions 38,046 38,046 53,917 113,917

Total FD&A(7)(8) $100,649 124,484 224,245 432,375

Reserve Additions (Mboe) 34,594 30,335 45,007 44,362

Reserve Additions - Net Acquisitions

Reserve Additions Including Net Acquisitions (Mboe)

6,580 6,446 6,580 7,186

41,174 36,781 51,587 51,548

F&D Costs ($/boe)(6) $1.81 $2.85 $3.78 $7.18 FD&A Costs ($/boe) (7)(8) 2.44 3.38 4.35 8.39

1. The numbers in this table may not add due to rounding.

2. Calculated using unaudited estimated capital expenditures and unaudited estimated cash netback as at December 31, 2015. See advisory

   "Unaudited Financial Information"

3. All values in this table are stated on a 2P (Total Proved + Probable) basis.

4. Includes Colombian properties only. No Ecuador deemed volumes nor capital have been included

5. "Capital Expenditures - change in FDC" is rounded to the nearest M US$. FDC is the 2P (Proved + Probable) future development capital

6. F&D - Finding and Development Costs on a 2P (Total Proved + Probable) basis

7. FD&A - Finding, Development and Acquisition Costs on a 2P (Total Proved + Probable) basis.

8. With the finding and development costs, the aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year.

During the six month period, June 30th 2015 to December 31st 2015, the Corporation recorded increases in certain reserve categories as a result of the drilling and completion of a proved undeveloped location at Clarinete 2 on VIM 5 in the Lower Magdalena Valley Basin. Significant increases in proved developed producing reserves were achieved by the completion and tie-in of 2 gas wells at Clarinete Field to Jobo Station. Tie-in operations were successfully completed prior to December 31, 2015 in support of the Corporation's objective of monetizing quality gas assets.

D&M has been engaged by the Corporation to prepare independent evaluations of light and medium crude oil and heavy crude oil assets. Petrotech has been engaged by the Corporation to prepare independent evaluations of conventional natural gas assets. Each independent reserves report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and National Instrument NI 51- 101, Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Additional reserve information as required under NI 51-101 will be included in the Corporation's Annual Information Form which will be filed on SEDAR by March 30, 2016. All dollar amounts are in United States dollars unless otherwise noted.

The recovery and reserve estimates of light and medium crude oil, heavy crude oil and conventional natural gas are estimates only. There is no guarantee that the estimated reserves will be recovered and actual reserves of light and medium crude oil, heavy crude oil and conventional natural gas may prove to be greater than, or less than, the estimates provided.

Canacol's reserves of light and medium crude oil are located in Colombia's Llanos and Middle Magdalena Valley basins. Reserves of heavy crude oil are located in the Caguan basin. Additional deemed volumes of light and medium crude oil are developed in the Oriente basin of Ecuador. Canacol's reserves of conventional natural gas are located in the Lower Magdalena Valley basin.

Reserves of light and medium crude oil and heavy crude oil as at December 31, 2015 are evaluated against the D&M forecast pricing effective at that date. Comparative volumes of light and medium crude oil and heavy crude oil as at June 30, 2015 are evaluated against the D&M forecast pricing effective at that date. Deemed volumes of light crude oil are determined by dividing cash flow by the tariff price of USD$38.54/ barrel which remains constant for the life of the incremental production