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CALGARY, Aug. 31 /CNW/ - Canacol Energy Ltd. ("Canacol" or the "Corporation") (TSX VENTURE: CNE) is pleased to announce that it has been awarded the Tamarin Exploration and Production Contract ("Tamarin E&P Contract") by the Agencia Nacional de Hidrocarburos ("ANH") of Colombia, and that it has entered into an agreement with Canaccord Capital Corporation ("Canaccord") to raise gross proceeds of up to $2,000,000 (the "Offering") through a convertible unsecured subordinate debenture financing.

Tamarin E&P Contract

The Tamarin E&P Contract is located approximately 25 kilometers directly to the southwest of the Ombu E&P Contract which contains the Corporation's Capella heavy oil discovery, which is currently under appraisal. Based upon the available geophysical and geological data in this frontier area, the Corporation has determined that the fault trend present at its Capella discovery to the northeast continues onto the Tamarin E&P Contract, setting up the potential for another Capella type heavy oil prospect. Together with the nearby Pacarana TEA, awarded to the Corporation in July 2009, Canacol now has a 100% operated position in approximately 500,000 hectares of exploration land offsetting its Capella discovery. Including its interest in the Ombu E&P Contract, operated by Emerald Energy Plc., the Corporation now has interest in approximately 530,000 hectares in this portion of the basin.

Charle Gamba, President and CEO of Canacol, stated, "Canacol in the past two months has secured over 500,000 hectares of operated exploration acreage adjacent to its Capella heavy oil discovery on the Ombu E&P Contract at 100% working interest. The Tamarin E&P Contract represents one of the last contracts that will be awarded directly to industry, as all of the remaining open acreage in the area has recently been reserved for future competitive bid rounds by the ANH in what has become a significant emerging heavy oil exploration play in Colombia. Canacol's exploration success at Capella has put this part of Colombia on the map, and the Corporation has taken full advantage of its status as a qualified operator to negotiate both of these contracts directly with the ANH. This qualification provides Canacol with a significant competitive advantage over other junior players."

The Corporation has a 100% working interest in the Tamarin E&P Contract, which is approximately 27,500 hectares in size and is located in the Putumayo - Caguan Basin of Colombia. The terms of the six year contract are as follows:

Phase 1 Exploration Period: The Corporation will acquire, process and interpret 60 kilometers of 2D seismic and interpret all existing magnetic and gravity geophysical data.