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Canacol Energy At Yr Lows As Enters Farm Out Agreement With Drift Lake Resources

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Canacol Energy Ltd. (CNE.TO) has touched a new year low of 79 cents after announcing that it has entered into a definitive agreement with Sintana Energy Inc., the South American operations subsidiary of Drift Lake Resources Inc. (DLA.V), to farm out 30% of its 100% operated working interest on the COR 11 and COR 39 Exploration and Production Contracts located in the Upper Magdalena Basin of Colombia. Drift Lake is up 2.5 cents or 8% at 32.5 cents.

Under the terms of the definitive agreement, Sintana will pay 60% of the work commitment costs associated with the Phase 1 Exploration Phase for each of the contracts in order to earn a 30% working interest in each of the contracts. The Phase 1 work commitments for the COR 11 E&P contract include the acquisition of 155 kilometers of 2D seismic and the drilling of one exploration well. The Phase 1 commitments for the COR 39 E&P Contract include the acquisition of 120 km of 2D seismic and the drilling of 2 exploration wells. The Phase 1 period for each of the contracts is 3 years in length, expiring in February 2014. Canacol shall remain the operator of both of the E&P contracts.

Canacol will use the capital saved by the farm out of these blocks to fund exploration activities on its other blocks in Colombia.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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