ANNUAL INFORMATION FORM FOR THE YEAR ENDED JUNE 30, 2009

NOVEMBER 25, 2009

Statements in this Annual Information Form may be viewed as forward-looking statements. Such statements involve risks and uncertainties that could cause actual results to differ materially from those projected. There are no assurances the Corporation can fulfill such forward-looking statements and the Corporation undertakes no obligation to update such statements. Such forward-looking statements are only predictions; actual events or results may differ materially as a result of risks facing the Corporation, some of which are beyond the Corporations control. The forward-looking statements or information contained in this Annual Information Form are made as of the date hereof and the Corporation undertakes no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, unless required by applicable securities laws.

TABLE OF CONTENTS GLOSSARY ................................................................................................................................................ 1 ABBREVIATIONS AND CONVERSION ............................................................................................... 5 METRIC CONVERSION TABLE ........................................................................................................... 6 INFORMATION......................................................................................................................................... 6 FORWARD LOOKING STATEMENTS................................................................................................. 6 NAME AND INCORPORATION............................................................................................................. 8 INTERCORPORATE RELATIONSHIPS .............................................................................................. 8 GENERAL DEVELOPMENT OF THE BUSINESS .............................................................................. 9 DESCRIPTION OF THE BUSINESS AND OPERATIONS ............................................................... 16 STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION................ 22 UNDEVELOPED RESERVES FORECAST PRICES AND COSTS.................................................. 29 DESCRIPTION OF CAPITAL STRUCTURE...................................................................................... 35 DIVIDEND RECORD AND POLICY.................................................................................................... 36 MARKET FOR SECURITIES................................................................................................................ 36 PRIOR SALES.......................................................................................................................................... 37 ESCROWED SECURITIES .................................................................................................................... 37 DIRECTORS AND OFFICERS.............................................................................................................. 37 LEGAL PROCEEDINGS AND REGULATORY ACTIONS.............................................................. 42 TRANSFER AGENT AND REGISTRARS ........................................................................................... 43 MATERIAL CONTRACTS..................................................................................................................... 43 INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS .................. 43 INTEREST OF EXPERTS ...................................................................................................................... 44 RISK FACTORS....................................................................................................................................... 44 ADDITIONAL FINANCIAL AND OTHER INFORMATION ........................................................... 57 SCHEDULE A REPORT ON RESERVES DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATOR (FORM 51-101F2) SCHEDULE B REPORT OF MANAGEMENT AND DIRECTORS ON OIL AND GAS DISCLOSURE (FORM 51-101F3)

GLOSSARY In this Annual Information Form, the following abbreviations and terms shall have the meanings set forth below, unless otherwise indicated: ABCA means the Business Corporations Act (Alberta), R.S.A. 2000, c. B-9, as amended, including the regulations promulgated thereunder; ANH means Agencia Nacional de Hidrocarburos, or National Hydrocarbon Agency, an agency of the Colombian government; ANP means Agncia Nacional do Petrleo, Gs Natural e Biocombustveis, Brazils National Petroleum Agency; BCH means BCH Ltd., a former wholly owned subsidiary of the Corporation incorporated under the ABCA; bitumen means a highly viscous oil which is too thick to flow in its natural state, and which cannot be produced without altering its viscosity; Board of Directors means the board of directors of the Corporation, as constituted from time to time; Common Shares means common voting shares in the capital of Canacol as presently constituted; Corporation or Canacol means Canacol Energy Ltd., and, when used in the context of describing the Corporations assets and business, may include its subsidiaries and predecessors; crude oil or oil means a mixture that consists mainly of pentanes and heavier hydrocarbons, which may contain sulphur and other non-hydrocarbon compounds, that is recoverable at a well from an underground reservoir and that is liquid at the conditions under which its volume is measured or estimated. It does not include solution gas or natural gas liquids; DeGolyer means DeGolyer and MacNaughton Canada Limited, independent oil and gas reservoir engineers for the Corporations Brazil properties; DeGolyer Report means the report dated July 31, 2009 entitled Appraisal Report as of June 30, 2009 on certain properties owned by Canacol Energy Ltd. prepared by DeGolyer; development costs means costs incurred to obtain access to reserves and to provide facilities for extracting, treating, gathering and storing the oil and gas from the reserves. More specifically, development costs, including applicable operating costs or support equipment and facilities and other costs of development activities, are costs incurred to: (a) gain access to and prepare well locations for drilling, including surveying well locations for the purpose of determining specific development drilling sites, clearing ground, draining, road building, and relocating public roads, gas lines and power lines, to the extent necessary in developing the reserves;

-2(b) drill and equip development wells, development type stratigraphic test wells and service wells, including the costs of platforms and of well equipment such as casing, tubing, pumping equipment and the wellhead assembly; (c) acquire, construct and install production facilities such as flow lines, separators, treaters, heaters, manifolds, measuring devices and production storage tanks, natural gas cycling and processing plants, and central utility and waste disposal systems; and (d) provide improved recovery systems; development well means a well drilled inside the established limits of an oil or gas reservoir, or in close proximity to the edge of the reservoir, to the depth of a stratigraphic horizon known to be productive; Ecopetrol means Empresa Colombiana de Petrleos, the Colombia national oil company; Emerald Energy means Emerald Energy Plc, operator under the Ombu E&P Contract; exploration costs means costs incurred in identifying areas that may warrant examination and in examining specific areas that are considered to have prospects that may contain oil and gas reserves, including costs of drilling exploratory wells and exploratory type stratigraphic test wells. Exploration costs may be incurred both before acquiring the related property (sometimes referred to in part as prospecting costs) and after acquiring the property. Exploration costs, which include applicable operating costs of support equipment and facilities and other costs of exploration activities, are: (a) costs of topographical, geochemical, geological and geophysical studies, rights of access to properties to conduct those studies, and salaries and other expenses of geologists, geophysical crews and others conducting those studies (collectively sometimes referred to as geological and geophysical costs); (b) costs of carrying and retiring unproved properties, such as delay rentals, taxes (other than income and capital taxes) on properties, legal costs for title defence and the maintenance of land and lease records; (c) dry hole contributions and bottom hole contributions; (d) costs of drilling and equipping exploratory wells; and (e) costs of drilling exploratory type stratigraphic test wells; forecast prices and costs means future prices and costs that are: (a) generally accepted as being a reasonable outlook of the future; and (b) if, and only to the extent that, there are fixed or presently determinable future prices or costs to which the reporting issuer is legally bound by a contractual or other obligation to supply a physical product, including those for an extension period of a contract that is likely to be extended, those prices or costs rather than the prices and costs referred to in paragraph (a);

-3future net revenue means the estimated net amount to be received with respect to the development and production of reserves (including synthetic oil, coal bed methane and other non-conventional reserves) estimated using constant prices and costs or forecast prices and costs; gross means: (a) in relation to the Corporations interest in production or reserves, its company gross reserves, which are its working interest (operating or non-operating) share before deduction of royalties and without including any royalty interests of the Corporation; (b) in relation to wells, the total number of wells in which the Corporation has an interest; and (c) in relation to properties, the total area of properties in which the Corporation has an interest; heavy oil means a dense, viscous oil with a high proportion of bitumen, which is difficult to extract with conventional techniques and is more costly to refine; La Sierra E&P Contract means the exploration and production contract located in the Middle Magdalena Basin in Colombia, awarded by the ANH in 2007 and operated by Canacol; net means: (a) in relation to the Corporations interest in production or reserves its working interest (operating or non-operating) share after deduction of royalty obligations, plus its royalty interest in production or reserves; (b) in relation to the Corporations interest in wells, the number of wells obtained by aggregating the Corporations working interest in each of its gross wells; and (c) in relation to the Corporations interest in a property, the total area in which the Corporation has an interest multiplied by the working interest owned by the Corporation; Netherland Sewell means Netherland Sewell & Associates, Inc., independent oil and gas reservoir engineers for the Capella Colombia properties; Netherland Sewell Report means the report dated July 31, 2009 entitled Appraisal Report as of June 30, 2009 on certain properties owned by Canacol Energy Ltd. prepared by Netherland Sewell; NI 51-101 means the National Instrument 51-101 Standard of Disclosure for Oil and Gas Activities of the Canadian Securities Administrators; Ombu E&P Contract means the exploration and production contract located in the Caguan Basin, to the south-west of the Llanos Basin, in Colombia (Capella conventional heavy oil discovery), awarded by the ANH in December 2006 and operated by Emerald Energy; Ombu Farmout Agreement means a farmout agreement entered into in July 2008, whereby the Corporation earned a 10% Working Interest, subject to approval by the ANH, in the Ombu E&P Contract;

-4operating costs or production costs means costs incurred to operate and maintain wells and related equipment and facilities, including applicable operating costs of support equipment and facilities and other costs of operating and maintaining those wells and related equipment and facilities; Option Plan means the stock option plan of Canacol; possible reserves means those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves; probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves; production means recovering, gathering, treating, field or plant processing (for example, processing gas to extract natural gas liquids) and field storage of oil and gas; proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves; reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, from a given date forward, based on (a) analysis of drilling, geological, geophysical, and engineering data; (b) the use of established technology; and (c) specified economic conditions, which are generally accepted as being reasonable and shall be disclosed. Reserves are classified according to the degree of certainty associated with the estimates being proved reserves, probable reserves and possible reserves; Ryder Scott means Ryder Scott Company Petroleum Consultants, independent oil and gas reservoir engineers for the Rancho Hermoso and Entrerrios Colombia properties; Ryder Scott Report means the report dated July 31, 2009 entitled Appraisal Report as of June 30, 2009 on certain properties owned by Canacol Energy Ltd. prepared by Ryder Scott; Shareholder means a holder of record of one or more Common Shares; Tax Act means the Income Tax Act (Canada) and the regulations promulgated thereunder, as amended; TSXV means the TSX Venture Exchange Inc.; undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g., when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned. In multi-well pools, it may be appropriate to allocate total pool reserves between the developed and undeveloped categories or to sub-divide the developed reserves for the pool between developed producing and developed non-producing. This allocation should be based on the estimators assessment as to the reserves that will be recovered from specific wells, facilities and completion intervals in the pool and their respective development and production status;

-5unproved property means a property or part of a property to which no reserves have been specifically attributed; and well abandonment costs means costs of abandoning a well (net of salvage value) and of disconnecting the well from the surface gathering system. They do not include costs of abandoning the gathering system or reclaiming the wellsite; W. Washington means W. Washington Empreendimentos E. Participaes Ltda., the Corporations Brazilian joint venture partner in certain lands; and Working Interest means the net interest held in an oil and natural gas property which normally bears its proportionate share of the costs of exploration, development and operations as well as any royalties or other production burdens. ABBREVIATIONS AND CONVERSION In this Annual Information Form, the following abbreviations and terms have the meanings set forth below:
Oil and Natural Gas Liquids BBL BBLS MBBLS MMBBLS MSTB BBLS/D BOPD NGLs STB Other API API BOE American Petroleum Institute an indication of the specific gravity of crude oil measured on the API gravity scale. Liquid petroleum with a specified gravity of 28 API or higher is generally referred to as light crude oil. barrel of oil equivalent on the basis of 1 BOE to 6 Mcf of natural gas. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 1 BOE for 6 Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. barrels of oil equivalent per day cubic metres 1,000 barrels of oil equivalent 1,000 cubic feet of gas equivalent on the basis of 6 McfGEs to 1 bbl of crude oil. McfGEs may be misleading, particularly if used in isolation. A McfGE conversion ratio of 6 McfGEs to 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. 1,000 cubic feet equivalent per day 1,000 McfGE Probable reserves Possible reserves thousands of dollars West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma for crude oil of standard grade barrel barrels thousand barrels million barrels 1,000 stock tank barrels barrels per day barrels of oil per day natural gas liquids standard tank barrels MCF MMCF MCF/D MMCF/D MMBTU BCF GJ Natural Gas thousand cubic feet million cubic feet thousand cubic feet per day million cubic feet per day million British Thermal Units billion cubic feet gigajoule

BOE/D m3 MBOE McfGE

McfGE/D MmcfGE Prob Poss $000s or M$ WTI

-6METRIC CONVERSION TABLE The following table sets forth certain factors for converting metric measurements into imperial equivalents.
To convert from Boe Mcf Cubic metres Bbls Cubic metres (m3) Feet Metres Miles Kilometres (km) Acres To imperial units Mcf Cubic metres (m3) Cubic feet Cubic metres (m3) Bbls Metres Feet Kilometres (km) Miles Hectares Multiply by 6 28.174 35.494 0.159 6.290 0.305 3.281 1.609 0.621 0.405

INFORMATION The information in this Annual Information Form is stated as at June 30, 2009, unless otherwise indicated. For an explanation of the capitalized terms and expression and certain defined terms, please refer to the Glossary and Abbreviation and Conversion sections at the beginning of this Annual Information Form. Except as otherwise indicated, all dollar amounts in this Annual Information Form are expressed in Canadian dollars and references to $ are to Canadian dollars. Colombian (Rancho Hermoso and Entrerrios) estimated future net revenue based on the Ryder Scott Report is presented in U.S. dollars effective June 30, 2009. Colombian (Capella) estimated future net revenue based on the Netherland Sewell Report is presented in U.S. dollars effective date June 30, 2009. Brazil estimated future net revenue based on the DeGolyer Report is presented in U.S. dollars effective June 30, 2009. FORWARD LOOKING STATEMENTS Certain statements contained in this Annual Information Form may constitute forward-looking statements. These statements relate to future events or the Corporations future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as seek, anticipate, plan, continue, estimate, expect, may, will, project, predict, potential, targeting, intend, could, might, should, believe and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Corporation believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this Annual Information Form should not be unduly relied upon by investors. These statements speak only as of the date of this Annual Information Form and are expressly qualified, in their entirety, by this cautionary statement. In particular, this Annual Information Form contains forward-looking statements, pertaining to the following:

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projections of market prices and costs; supply and demand for oil and natural gas; the quantity of reserves; oil and natural gas production levels; capital expenditure programs; treatment under governmental regulatory and taxation regimes; and expectations regarding the Corporations ability to raise capital and to continually add to reserves through acquisitions and development.

With respect to forward-looking statements contained in this Annual Information Form, the Corporation has made assumptions regarding, among other things: the Colombian, Brazilian and Guyanese legislative and regulatory environment; the impact of increasing competition; and the Corporations ability to obtain additional financing on satisfactory terms.

The Corporations actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this Annual Information Form: volatility in the market prices for oil and natural gas; uncertainties associated with estimating reserves; geological, technical, drilling and processing problems; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; incorrect assessments of the value of acquisitions; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; and the other factors referred to under Risk Factors.

The forward-looking statements or information contained in this Annual Information Form are made as of the date hereof and the Corporation undertakes no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, unless required by applicable securities laws.

-8NAME AND INCORPORATION Canacol and its subsidiaries are primarily engaged in petroleum and natural gas exploration and development activities in Colombia, Brazil and Guyana. Canacol, through its predecessor companies, was originally incorporated on July 20, 1970 under the British Columbia Company Act, under the name New Claymore Resources Ltd.. On November 18, 2004, New Claymore Resources Ltd. changed its name to BrazAlta Resources Corp. and continued under the ABCA on November 24, 2004. On February 12, 2009, the Corporation changed its name to Canacol Energy Ltd. The Corporations head office is located at Suite 620, 304 - 8th Avenue S.W., Calgary, Alberta T2P 1C2. The Corporation has material branch offices in Bogota, Colombia at Calle 100 No. 8-55 Torre C Oficina 309 (W.T.C) and in Rio de Janeiro Brazil at Rua da Assembleia 66 - 17 Andar. The registered office of the Corporation is located at 1000, 250 - 2nd Street S.W., Calgary, Alberta T2P 0C1. The Corporation is a reporting issuer in the Provinces of Alberta and British Columbia. The Common Shares are listed and posted for trading on the TSXV under the trading symbol CNE. INTERCORPORATE RELATIONSHIPS The following chart sets forth the Corporations relationship with each wholly-owned and controlled subsidiary and their respective jurisdictions of incorporation.

CANACOL ENERGY LTD. (Alberta)

Canacol Energy (USA) Ltd. (Texas) 100% owned by Canacol

Brazalta Brasil Norte Commercialiazcao De Petroleo Ltda. (Brazil) 100% owned by Canacol

Brazalta Brasil Sul (Brazil) (inactive) 100% owned by Canacol

Canacol Energy Inc. (Alberta) 100% owned by Canacol

Canacol Energy (Guyana) Inc. (Guyana) 100% owned by Canacol

Hemotron Investements S.A. International (BVI) 100% owned by Canacol

Canacol Andina Inc. (Panama) (inactive) 100% owned by Canacol

Canacol Energy (Panama) Inc. (Panama) 100% owned by Canacol

Rancho Hermoso S.A. (Colombia) 94.95% owned by Hemotron 5.05% owned by Canacol Energy Inc.

-9Canacol Energy Inc. (Canacol Energy) was incorporated on January 25, 2008 and amalgamated with 1415386 Alberta Ltd. on October 30, 2008 under the ABCA to continue as Canacol Energy Inc. The registered office of Canacol Energy is located at 1000, 250 - 2nd Street S.W., Calgary, Alberta T2P 0C1. The Corporation performs oil and gas exploration and development activities in Brazil primarily through BrazAlta Brasil Norte Commercializacao do Petroleo Ltda. (BrazAlta Norte). BrazAlta Norte was incorporated on October 24, 2005 in Brazil with its registered office at Praca Prof. Jose Lannes n40 CJ 61 Edificio Berrini 500, Sao Paulo, SP, Brazil 04571-100. BrazAlta Brasil Sul Ltda. is an inactive corporation which was incorporated on October 24, 2005 in Brazil with its registered office at Praca Prof. Jose Lannes n40 CJ 61 Edificio Berrini 500, Sao Paulo, SP, Brazil 04571-100. The Corporation also performs oil and gas exploration and development activities in Colombia primarily through Rancho Hermoso S.A (RHSA), Hemotron Investments S.A. International (Hemotron) and Canacol Energy (Panama) Inc. (Canacol Panama). RHSA was incorporated on December 7, 2001 in Colombia with its registered office at Calle 100, n 8A-55 - Torre C, suite 601, Bogota D.C., Colombia. Hemotron was incorporated on June 14, 2006 in the British Virgin Islands with its registered office at P.O. Box 3152, Road Town, Tortola, British Virgin Islands. Canacol Panama was incorporated on September 4, 2007 in Republica de Panama, Panama with a registered office at Edificio Plaza Obarrio, Oficina 308, Panama City, Panama. Canacol Andina Inc. is an inactive corporation which was incorporated on May 21, 2008 in Republica de Panama, Panama with a registered office at Edificio Plaza Obarrio, Oficina 308, Panama City, Panama. The Corporation also performs oil and gas exploration and development activities in Guyana primarily through Canacol Energy (Guyana) Inc. (Canacol Guyana). Canacol Guyana was incorporated as a limited-liability company on January 24, 2005 under the Companies Act, 1991 (Guyana), under the name Groundstar Resources Inc. Canacol Guyana changed it name from Groundstar Resources Inc. to Canacol Energy (Guyana) Inc. on October 23, 2009 and has a registered office at 62 Hadfield & Cross Sts., Werk-en-rust, Georgetown, Guyana, South America. GENERAL DEVELOPMENT OF THE BUSINESS Three Year History Canacol is a resource corporation engaged in the acquisition, exploration and development of oil and natural gas in Colombia, Brazil and Guyana. The Corporation is headquartered in Calgary, Alberta, Canada. The following describes the development of Canacols business and major transactions and events of the last three completed financial years, and activities that have or are expected to occur in the current financial year. Period From July 1, 2006 to June 30, 2007 During this period the Corporations focus was on activities in Brazil.

- 10 On May 16, 2006, the Corporation completed the acquisition of a drilling rig with a 2,000 metre plus depth capability for use in Brazil. In November 2006, as part of the Round 8 land auctions, the ANP awarded the Corporation two onshore blocks, W.Washington, the Corporations Brazilian joint venture partner, one onshore block and Brownstone Ventures Inc. (Brownstone) two onshore blocks. Each block represents approximately 180 km2 and are known as Blocks 131, 132, 161, 172 and 177 in the Tucano Basin area of Central Eastern Brazil. The Corporation, W.Washington and Brownstone entered into an agreement pursuant to which each party will co-operate on the ownership and development of the combined five blocks awarded in the Round 8 land auctions. On January 9, 2007, the Corporation repaid a promissory note to W.Washington for $3,209,883 which represented principal plus interest of $29,883. The promissory note was part of the consideration for certain of the Corporations assets in Brazil. On January 9, 2007, the Corporation also completed a private placement of 3,010,000 units for total gross proceeds of $3,160,500 to Oyan Services Corp., a corporation controlled by the shareholders of W.Washington. Each unit issued consists of one Common Share and one-half of one warrant, with each whole warrant entitling the holder thereof to acquire one Common Share at $1.20 per share until January 9, 2009. On January 10, 2007, the Corporation completed an underwritten private placement of 8,334,000 units, at a price of $1.20 per unit for total gross proceeds of $10,000,800. Each unit issued was comprised of one Common Share and one half of one warrant, with each whole warrant entitling the holder thereof to acquire one Common Share at $2.00 per share until July 10, 2008. The private placement was completed by a syndicate of underwriters led by Westwind Partners Inc. and including FirstEnergy Capital Corp. The Corporation used $7,500,000 of proceeds to purchase a second drilling rig and ancillary equipment with the balance for further development of Brazilian oil and gas assets and general corporate purposes. On February 23, 2007, the Corporations former wholly owned service company, BCH, entered into drilling services contracts with Petrleo Brasileiro S.A. (Petrobras) to provide onshore drilling services. On April 27, 2007, the Corporation entered into four multi-year contracts with Petrobras for the provision of drilling rigs and related services. Period From July 1, 2007 to June 30, 2008 During the period ended June 30, 2008, BCH secured two additional drilling service contracts with Petrobras bringing the total number of rigs contracted with Petrobras to six and established three new field bases throughout Brazil during 2008 in (i) Mossor, Rio Grande de Norte, (ii) Aracaju, in Sergipe and (iii) So Mateus, Espirito Santo, complementing its main field office in Catu, Bahia and in-country head office in Rio de Janeiro. In August 2007, BCH, the former subsidiary of the Corporation, closed a senior secured medium term loan credit facility of US$30,000,000 and completed two draws on the facility totalling US$28,200,000 to fund expanding operations in the Brazilian oilfield services market. In August 2007, the Corporation as guarantor and W. Washington, its Brazilian joint venture partner, as borrower, jointly closed a reserves based US$50,000,000 revolving line of credit facility (the Brazil

- 11 Credit Facility) with a syndicate of lenders led by Standard Bank Plc. (Standard Bank). The Corporation issued Standard Bank 3,500,000 warrants to purchase Common Shares at a price of $2.00 per share for a period of five years as part of the Brazil Credit Facility. On November 28, 2007, the ANP awarded the Corporation three blocks in the on-shore Esprito Santo basin located in Central Eastern Brazil as part of the Round 9 auction. The Esprito Santo blocks acquired in Round 9 are known as Blocks ES-T-318, ES-T-362, and ES-T-380. These exploration blocks cover approximately 30 km2 each. In addition, as part of the Round 9 auction, the ANP awarded a consortium led by W. Washington and including the Corporation, Brownstone, and Petro Latina do Brasil Explorao e Produo de Petrleo e Gs Natural Ltda. (Petro Latina) two onshore blocks known as REC-T-170 and REC-T-169, covering approximately 28 km2 each in the Recncavo area of North Eastern Brazil. The first exploration phase on these blocks is for a three year term. In December 2007, the Corporation completed a brokered private placement of 9,917,364 Common Shares at a price of $0.55 per share for gross proceeds of $5,454,550. An additional 82,636 Common Shares for gross proceeds of $45,450 were issued on a non-brokered basis to Brazilian based employees of the Corporation, for aggregate gross proceeds of $5,500,000. On January 31, 2008, BCH issued a US$40,000,000 convertible secured subordinated debenture (the Allis-Chalmers Debenture) to Allis-Chalmers Energy Inc. (Allis-Chalmers). The Allis-Chalmers Debenture was convertible at any time prior to maturity, at Allis-Chalmers option, into common shares of BCH at a conversion price of US$4.163 per BCH common share, equating to approximately 49% of the post-conversion outstanding common shares of BCH. On January 31, 2008, the Corporation also entered into an agreement with Allis-Chalmers whereby AllisChalmers was granted the option to acquire the remaining outstanding shares of BCH from the Corporation on or about maturity of the Allis-Chalmers Debenture, at fair market value, such value to be determined by a mutually agreed upon third party valuator. In June 2008, the Corporation and W. Washington entered into a participation agreement with Brownstone to earn interests in Test Well Blocks 24, 31, 52, 39, 91, 102 & 113, each in the Reconcavo Basin, Brazil. Brownstone earns a 25% interest in each of the Test Well Blocks by paying 25% of the costs associated with the drilling of each test well. Operational highlights for the year ended June 30, 2008 included: The Corporation drilled six (2.5 net) exploration wells in Brazil of which five (2 net) were unsuccessful and abandoned and one (0.5 net) was cased for production and produced under a long-term test and was shut-in. The Corporation also drilled two successful (1 net) new development wells in Brazil.

Period From July 1, 2008 to June 30, 2009 On August 25, 2008, Canacol entered into a definitive amalgamation agreement for the arms length acquisition of all of the issued and outstanding common shares and warrants of a private oil and gas exploration company, Canacol Energy Inc. (the Canacol Energy Acquisition). The final agreed aggregate consideration for all of the Canacol Energy common shares and warrants was a total of

- 12 39,999,994 Common Shares. On October 31, 2008, the Canacol Energy Acquisition was successfully completed. Pursuant to the Canacol Energy Acquisition, the Corporation acquired oil exploration, development, and production operations in the countries of Colombia and Guyana. The assets in Colombia included the Rancho Hermoso and Entrerrios oil fields, the Ombu E&P Contract and the La Sierra E&P Contract. In addition to Colombia, the Corporation acquired a 55% non-operated working interest in Guyana under a farmin agreement covering a large onshore exploration contract through participation in the drilling of two exploration wells. On August 29, 2008, the Corporation, in conjunction with Canacol Energy, closed the acquisition of a private Colombian exploration and production company, RHSA, for gross proceeds of US$28,600,000. A debt facility was jointly put in place by Canacol and Canacol Energy in order to finance the acquisition of RHSA. Canacol (through a subsidiary) and Canacol Energy jointly borrowed from Standard Bank the sum of US$25,600,000 as co-borrowers (the Standard Bank Loan). The Standard Bank Loan comprised two credit facilities: (1) a US$50,000,000 three year senior secured borrowing base revolving credit facility with an initial availability of US$14,000,000; and (2) a US$11,600,000 mezzanine facility. The security package and terms for the Standard Bank Loan included a lien on the shares of RHSA; a guarantee from each of the Corporation and Canacol Energy; and a hedge of a percentage of RHSA production. In addition, the Corporation issued to Standard Bank warrants to acquire 10,000,000 Common Shares at a price of $0.80 per share for a period of five years (the Series I Warrants), and cancelled the 3,500,000 warrants previously issued to Standard Bank as part of a Brazil Credit Facility. On October 27, 2008, the Corporations former wholly owned subsidiary, BCH, completed a nonbrokered private placement of 4,474,999 common shares, at a price of US$4.163 per BCH common share for aggregate gross proceeds of US$18,629,421. The Corporation acquired 2,282,249 BCH common shares and Allis-Chalmers acquired 2,192,750 BCH common shares pursuant to the private placement. BCH use the proceeds from the private placement to pay down intercompany debt to the Corporation (US$7,400,000), interest to Allis-Chalmers with respect to the Allis-Chalmers Debenture (US$3,500,000), acquire additional drilling rig equipment, and for general BCH corporate purposes. On November 10, 2008, the Corporation and Emerald Energy executed an amendment of the Ombu Farmout Agreement. Under the terms of the amendment, Canacol would not enter the second and third phases of the Ombu Farmout Agreement, whereby Canacol would have funded 100% of the cost of the continued appraisal and development program which was to have included 14 additional wells, 61 km of 2D seismic, and 70 km2 of 3D seismic in consideration for up to 30% Working Interest on the Ombu E&P Contract. As a result, Canacols Working Interest in the Ombu E&P Contract is 10%, the interest earned in phase 1 of the Ombu Farmout Agreement, and Canacol will pay its Working Interest share of all future appraisal and development activity on the block. On December 11, 2008, Canacol closed a transaction with Standard Bank and sold its initial hedge agreement associated with its net oil production in Colombia for net consideration of US$5,000,000. The proceeds from the sale of the initial hedge was used to repay a portion of the US$11,600,000 mezzanine loan due to Standard Bank. A new hedge agreement was simultaneously entered into which involved the same production volumes as the initial hedge, however, the oil collar floor was reduced to US$55.00 per bbl and the cap was reduced to US$80.25 per bbl, which continued through the year end.

- 13 On January 2, 2009, the Corporation completed the sale of BCH to Allis-Chalmers. Under the terms of the transaction, Allis-Chalmers assumed the Corporations US$23,500,000 portion of BCHs outstanding term debt facility with Standard Bank and the Allis-Chalmers Debenture. In addition, Allis-Chalmers paid cash consideration of US$5,000,000 to the Corporation which was applied to the Corporations outstanding mezzanine loan facility under the Standard Bank Loan. On April 17, 2009, Canacol executed a series of agreements with Gemini Oil and Gas Fund II, L.P. (Gemini), the Jersey, Channel Island based oil and gas investment fund, whereby Gemini agreed, subject to certain preconditions, to invest up to US$9,000,000 to be used to fund a portion of the Corporations development and appraisal programs on its producing assets in Colombia in 2009. Under the terms the agreements, Gemini agreed to invest: Up to US$3,000,000 towards the drilling of a development well and the workover of two existing wells in Entrerrios field; Up to US$3,000,000 towards the drilling of two development wells and the workover of one existing well in Rancho Hermoso field; and Up to US$3,000,000 towards the drilling of additional delineation wells in the Capella field (Ombu E&P Contract).

In return for the investment, Gemini is entitled to receive payment equivalent to a percentage of Canacols gross revenue from production on the fields. Gemini has indicated that at its discretion the total investment may be increased up to maximum of US$12,000,000. On April 17, 2009, Canacol and W. Washington paid the full amount owing of US$7,100,000 under the Brazil Credit Facility, resulting in the elimination of the Corporations debt facility in Brazil. Following this transaction, the Corporation no longer cross guaranteed the debt of W. Washington on the Brazil Credit Facility. In connection with the repayment of the Brazil Credit Facility, the Corporation increased its debt on the Standard Bank Loan by $3,500,000. As part of this process the Colombia mezzanine facility was repaid in full. The increase in the Standard Bank Loan was accomplished as a result of increased proven reserves in Colombia. In May 2009, the Corporation completed a brokered private placement of 48,000,000 units, at a price of $0.125 per unit for aggregate gross proceeds of $6,000,000 in two closings. Each unit issued was comprised of one Common Share and one half of one warrant, with each whole warrant entitling the holder thereof to acquire one Common Share at $0.20 per share until May 14, 2011 with respect to the warrants issued pursuant to the first closing of the private placement (the 2009 Series II Warrants) and May 28, 2011 with respect to the warrants issued pursuant to the second closing of the private placement (the 2009 Series III Warrants). On May 15, 2009, Canacol entered into a conditional share purchase agreement to acquire from Groundstar Resources Limited (the Groundstar Vendor) all of the shares of Groundstar Resources Inc. (Groundstar), a Guyana company which holds entitlement to a 7,800 km2 Petroleum Prospecting Licence (the Takutu Block PPL) in the Takutu Basin, onshore Guyana (the Groundstar Acquisition).

- 14 Operational highlights for the year ended June 30, 2009 included six wells being drilled on the Corporations Capella field exploration and appraisal drilling program on the Ombu E&P Contract: Five wells (Capella No. 1, 2, 3, 4, and 5) were tested and flowed heavy oil in the range of 9 to 11 API gravity at individual well rates of up to 345 boe/d under cold flow conditions. Extended production testing of the Capella No. 1, 2, and 3 wells in February yielded stable production rates of 400 bbls/d, with the water cut for the field steadily reducing to a level of approximately six percent. The Capella No. 6 well was drilled to a total depth of 3,645 feet on March 30, 2009 and penetrated both Mirador formations. The upper Mirador showed 80 feet of thick continuous sandstone reservoir exhibiting up to 37% porosity, while the lower Mirador conglomerate showed 175 feet with production tested at approximately 300 bbls/d.

Subsequent to June 30, 2009 On July 2, 2009, Canacol announced that it had been awarded the Pacarana Technical Evaluation Area in Colombia, immediately adjacent and to the south of the Ombu E&P Contract. Canacol has 100% Working Interest in this block, which is approximately 470,000 hectares in size and is located in the Caguan-Putumayo Basin. The work obligations associated with this block include acquiring 2,240 km of aeromagnetic and gravity data and conducting geotechnical studies over a period of 24 months for an anticipated cost of approximately US$465,000. On July 7, 2009, Canacol completed the sale of a US$1,000,000 receivable for proceeds of US$910,000 to an arms length purchaser. Canacol issued to the purchaser 1,500,000 warrants to acquire one Common Share at $0.30 per share until January 7, 2011. On July 23, 2009, the Corporation completed a non-brokered private placement of 2,219,048 units, at a price of $0.17 per unit for total gross proceeds of $377,238. Each unit issued was comprised of one Common Share and one half of one warrant, with each whole warrant entitling the holder thereof to acquire one Common Share at $0.30 per share until January 23, 2011. On August 31, 2009, Canacol announced that it was awarded the Tamarin E&P contract (the Tamarin E&P Contract) in Colombia. The Tamarin E&P Contract is located 25 km directly southwest of the Ombu E&P Contract and covers approximately 27,000 hectares and is located in the Putumayo-Caguan Basin. The Tamarin E&P Contract has a six year term and includes the requirement to acquire and interpret 60 km of 2D seismic. In September 2009, Canacol completed a brokered private placement of convertible unsecured subordinated debentures (the 2009 Debentures) in the aggregate principal amount of $4,000,000 in two closings. Each 2009 Debenture issued pursuant to the private placement is subject to a coupon interest rate of 12% per annum, payable quarterly in arrears through the issuance of Common Shares at a price equal to a 10% discount to the volume weighted average trading price of the Common Shares for the 10 trading days immediately preceding the quarterly interest payment date or such higher price as any regulatory body shall require. The 2009 Debentures mature on September 4, 2011, and are convertible into Common Shares at the holder's option at a conversion price equal to $0.36 per share. At maturity, Canacol has the option to repay the 2009 Debentures through the issuance of Common Shares at the price equal to 95% of the weighted average price of the Common Shares for the 20 consecutive trading days ending five days before the maturity date.

- 15 On October 15, 2009, the Corporation completed an underwritten private placement of 142,858,000 Common Shares, at a price of $0.28 per share for total gross proceeds of $40,000,240. The private placement was completed by a syndicate of underwriters led by Canaccord Capital Corporation and including FirstEnergy Capital Corp. On October 23, 2009, the Corporation completed the Groundstar Acquisition in consideration for a cash payment of US$3,450,000. The Groundstar Acquisition provides the Corporation a 90% Working Interest in the Takutu Block PPL in Guyana. The Corporation will carry the Groundstar Vendors 10% Working Interest. The Groundstar Vendor will remain operator of the Takutu Block PPL until commercial production. The first exploratory well expected to be spud prior to May 2010. The Corporation was previously committed to spend approximately US$12,000,000 (paying 100% of the costs through this expenditure amount) on the Takutu Block PPL to earn a 55% interest through a farmin agreement with Groundstar Vendor dated May 18, 2008. The farmin agreement was terminated by the completion of the Groundstar Acquisition. On November 5, 2009, the Corporation completed a farmout agreement with Sagres Energy Inc. (Sagres), whereby Sagres acquired a 25% interest in the Takutu Block PPL. On closing, Sagres paid US$1,250,000 to be applied first to 30% of prior direct costs incurred by Canacol, then to 30% of future cash calls to a maximum of US$1,750,000, and 27.5% of cash calls thereafter. Sagres is entitled to 30% of revenues until recovery of its first US$3,000,000 paid to Canacol, 27.5% of revenues until its full cost recovery, and 25% thereafter. Under the terms of the agreement, the Corporation and Sagres will carry the Groundstar Vendors 10% remaining Working Interest until first commercial oil production. The Corporation also entered into an agreement with Roraima Energy Ltd. (Roraima) to eliminate Roraimas prior interest in the Takutu Block PPL in exchange for payment by the Corporation of funds equal to the amount previously paid by Roraima. Following the completion of the above transactions, the Corporations net Working Interest in the Takutu Block PPL is 65%. Operational updates subsequent to the year ended June 30, 2009 include: The Corporation commenced drilling operations on the Rancho Hermoso 3A well. The well encountered 24 feet of net interpreted oil pay within the Mirador reservoir, which was perforated from 9,118 to 9,133 feet. Early production testing was completed, yielding production rates of up to 799 bbls of 35 API oil per day from the Mirador reservoir at initial total fluid rates of up to 3,994 bbls of fluid per day. The Corporation participated in the drilling of two slim-hole test wells in the area around the Capella No. 6 well, the drilling of the first horizontal well in the field, and the commencement of a cyclic steam injection pilot on one of the existing vertical producing wells. Both slim hole test wells were abandoned due to mechanical problems experienced at shallow depths prior to penetrating the producing reservoir intervals. Emerald Energy and the Corporation have decided not to attempt another slim hole until the contractor has prepared a revised drilling program for the wells that will ensure mechanical and operational success. As the contract was awarded to the vendor on a turnkey success basis, no costs were incurred related to this program.

Significant Acquisitions and Dispositions During the fiscal year ended June 30, 2009, the Corporation did not complete any significant acquisitions as defined in National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102). The Corporation did, however, sell its remaining interest in BCH and complete the Canacol Energy

- 16 Acquisition. See General Development of the Business - Three Year History. The Corporation did not file a Form 51-102F4 in relation to the Canacol Energy Acquisition. DESCRIPTION OF THE BUSINESS AND OPERATIONS General Canacol is an international oil and gas company involved in the production, development, appraisal and exploration of hydrocarbons. The Corporations key interests are in Colombia and Brazil, with further interests in Guyana. The Corporations asset portfolio encompasses production, development, appraisal and exploration properties. Exploration and Development Strategy The near-term business plan of the Corporation is to continue growing its production and reserves base through a combination of exploration, property development and acquisitions. To accomplish this, Canacol continues to pursue an integrated growth strategy including exploration and development drilling focused in Colombia, Brazil and Guyana, acquisitions, farmin opportunities, farmout opportunities, further land acquisitions and trades. Additionally, potential asset and/or corporate acquisitions will be considered to further supplement the growth strategy of the Corporation. It is anticipated that any future acquisitions would be financed through a combination of cash flow and additional equity and/or debt. The Corporation will seek out, analyze and complete asset and/or corporate acquisitions where value creation opportunities have been identified that have the potential to increase Shareholder value and returns, taking into account the Corporations financial position, taxability and access to debt and equity financing. Management of the Corporation has industry experience in several producing areas in addition to the Corporations geographic areas of interest and has the capability to expand the scope of the Corporations activities as opportunities arise. The Corporation is largely opportunity driven and will focus its expenditures in areas that provide the greatest economic return to the Corporation, recognizing that all drilling involves substantial risk and that a high degree of competition exists for prospects. No assurance can be given that drilling will prove successful in establishing commercially recoverable reserves. See Risk Factors. Competitive Conditions Companies involved in the petroleum industry must manage many risks which are beyond their direct control. Among these risks are risks associated with exploration, environment, commodity prices, foreign exchange and interest rates. The oil and natural gas industry is intensely competitive and the Corporation competes with a substantial number of other companies, many of whom have greater financial resources. Many of such companies not only explore for and produce oil and natural gas, but also carry on refining operations and market petroleum and other products on a world-wide basis. There is also competition between the petroleum industry and other industries supplying energy and fuel to industrial, commercial and individual customers. There is no assurance that the Corporation will be able to successfully compete against its competitors. See also Risk Factors.

- 17 Cyclical Nature of Business The Corporations business is generally not cyclical. The exploration and development of oil and natural gas reserves is dependent on access to areas where production is to be conducted. Seasonal weather variation, including rainy seasons, affects access in certain circumstances. See also Risk Factors. Specialized Skill and Knowledge Operations in the oil and natural gas industry mean that Canacol requires professionals with skills and knowledge in diverse fields of expertise. In the course of its exploration, development and production, the Corporation utilizes the expertise of geophysicists, geologists, petroleum engineers and landmen. The Corporation faces the challenge of attracting and retaining sufficient employees to meet its needs. See also Risk Factors. Employees As at June 30, 2009, the Corporation had approximately 40 full-time equivalent employees worldwide, of which 22 full-time employees are working in the exploration and production segment. In addition, the Corporation utilizes, as required from time to time, the services of professionals on contract or consulting basis. Environmental Protection and Policies The Corporation and others in the oil and gas industry are subject to various federal, provincial and local environmental laws and regulations enacted in most jurisdictions in which it operates, which primarily govern the manufacture, processing, importation, transportation, handling and disposal of certain materials used in its operations. The Corporation adheres to all such laws and regulations. While regulatory developments that may follow in subsequent years could have the effect of reducing industry activity, we cannot predict the nature of the restrictions that will be imposed. The Corporation may be required to increase operating expenses or capital expenditures in order to comply with any new restrictions or regulations. See also Risk Factors. Historically, environmental protection requirements have not had a significant financial or operational effect on the Corporations capital expenditures, earnings or competitive position. Environmental requirements have not had a significant effect on such matters in fiscal 2009 nor are they currently anticipated to in the future. The Corporation has incorporated certain health, safety and environmental policies and procedures aimed at protecting the safety of the personnel and reducing the environmental impact of its operations. Foreign Operations The Corporations oil and gas operations and assets are located in foreign jurisdictions. As a result, the Corporation is subject to political, economic and other uncertainties, including but not limited to changes, sometimes frequent, in energy policies or the personnel administering them, nationalization, expropriation of property without fair compensation, cancellation or modification of contract rights, foreign exchange restrictions, currency fluctuations, royalty and tax increases, and other risks arising out of foreign governmental sovereignty over the areas in which the Corporations operations are conducted, as well as risks of loss due to civil strife, acts of war, guerrilla activities and insurrections. Changes in legislation may affect the Corporations oil and natural gas exploration and production activities. The

- 18 Corporations international operations may also be adversely affected by laws and policies of Canada as they pertain to foreign trade, taxation and investment. See also Risk Factors. Principal Properties and Operations The following is a description of the Corporations principal oil and gas properties and operations as at June 30, 2009. Colombia Rancho Hermoso and Entrerrios Fields The Corporations operations are primarily engaged in exploration, development and production of oil in Colombia though its two operated producing fields, Rancho Hermoso (100% Working Interest) and Entrerrios (60% Working Interest), located on the Llanos Basin. The Corporation operates the Rancho Hermoso and Entrerrios fields. Rancho Hermoso is operated under a risk service contract with Ecopetrol whereby the Corporation, through RHS, receives an operating tariff per gross produced bbl of oil from Ecopetrol. The Corporation also receives reimbursement for transportation costs. The Entrerrios field is operated under a participation contract. Gross production from the Rancho Hermoso and Entrerrios fields is approximately 2,800 bbls/d. The Corporations net production is 1,700 bbls/d, comprised of 350 bbls/d net of government royalties and 1,350 bbls/d of tariff production. The majority of the net oil production is currently hedged at a floor of US$55.00 per bbl and a ceiling of US$80.25 per bbl until late 2011. The average tariff price for 2009 is approximately US$9.63 per gross bbl, and is insensitive to WTI oil price fluctuation. Under the existing agreement with Ecopetrol the tariff will increase through a series of steps each year to approximately US$17.36 per gross bbl in 2012 for the duration of life of the field. The average tariff price for 2010 will be approximately US$12.04 per bbl. Subsequent to the year ended June 30, 2009, the Corporation commenced a three well development program on the Rancho Hermoso and Entrerrios fields and intends to workover three existing oil producing wells in the fields by the end of December 2009. Ombu E&P Contract Capella Conventional Heavy Oil Discovery Pursuant to the Ombu Farmout Agreement, Canacol earned a 10% Working Interest in the Ombu E&P Contract by paying 100% of all activities associated with the drilling, completion, and testing of the Capella No. 1 well. The Capella conventional heavy oil discovery is operated by Emerald Energy on the Ombu E&P Contract in the Caguan Putumayo Basin in Colombia. The Caguan Basin comprises more than 100,000 km2 and is located in South East Colombia where it shares the border with Ecuador and Peru. The Caguan Basin is considered to be the northern extension of and contiguous with the Putamayo Basin. The Capella field, which is currently being delineated, is a large seismically defined field and is equivalent to the Mirador Formation common in the Llanos Basin to the north.

- 19 Six wells have been drilled to date on the Capella field: The Capella No.1 exploration well was drilled to a total depth of 3,802 feet, discovered oil of approximately 10 API gravity in two intervals in the target Eocene aged Mirador formation, and was flow tested at a combined oil rate of 240 bbls/d. The Capella No.2 well, located approximately 1.3 km southwest of Capella No.1, was drilled to a total depth of 3,550 feet, also encountered oil in two intervals in the Mirador reservoir, and was flow tested at a combined oil rate of 345 bbls/d. The Capella No.3, the first deviated well drilled in the block, was drilled from a surface location adjacent to the Capella No.1 and penetrated the reservoir approximately 340 metres away. The lower Mirador reservoir was flow tested at a rate of approximately 135 bbls/d with a water cut of approximately 8%. The upper Mirador reservoir was encountered with similar thickness and petrophysical properties as in the previous wells but was not flow tested. The Capella No.4 vertical well was drilled approximately 1.6 km to the southwest of the Capella No.1 location and both of the Mirador reservoir intervals were encountered with the upper interval in this well being thinner than in previous wells. However, poor cementing within the well bore, resulted in neither of the Mirador intervals being effectively flow tested. The Capella No.5 well, located some 3.4 km to the northeast of Capella No.1, also encountered both Mirador reservoirs. The lower Mirador reservoir was flow tested at an average rate of approximately 82 bbls/d with a water cut of approximately 52% and the upper Mirador reservoir was flow tested at an average rate of approximately 26 bbls/d with a water cut of approximately 4%. The Capella No.6 well, located 4.2 km to the southwest of Capella No.1, was drilled to a total depth of 3,645 feet and penetrated both Mirador formations.

Emerald Energy plans to drill one additional horizontal well, Capella No. 7, in 2009 and to complete extended production testing of all the wells as part of the appraisal of the southern part of the Capella structure. The intervals flow tested to date in the first five wells drilled have flowed heavy oil in the range of approximately 9 to 11 API gravity. Extended production testing of Capella wells commenced in February 2009 with an average daily production rate of approximately 400 bbls/d, comprising of contributions from the Capella No.1 and Capella No.2 wells, and with the water cut for the field steadily reducing to a level of approximately 6%. The Capella oil has, to date, been sold directly to industrial end users within Colombia but it is expected that, during commercial development, the Capella oil will be delivered to existing pipelines following blending or upgrading. Subsequent to the year ended June 30, 2009, the Corporation was awarded the Pacarana Technical Evaluation Area (100% Working Interest), which is approximately 470,000 hectares in size and is located immediately adjacent and to the south of the Ombu E&P Contract. The Corporation was also awarded the Tamarin E&P Contract, which is approximately 27,000 hectares is size and is located 25 km directly southwest of the Ombu E&P Contract. See General Development of the Business Three Year History.

- 20 La Sierra E&P Contract The Corporation also operates the La Sierra E&P Contract (51% Working Interest) located in the Middle Magdalena Basin, awarded by the ANH in 2007. The Upper Magdalena Basin is classified as a Neoceneaged, intermontagne basin located on the upper reach of the Magdalena River between the Central and Eastern Cordillera of central Colombia. The contract contains the La Sierra 1 oil discovery, which was drilled in 1992 and recovered 23 bbls of 17 API oil from 10 feet of net pay in the Tertiary Honda Formation at 1,400 feet measured depth. The Corporation acquired 33 km of 2D seismic on the La Sierra E&P Contract in Q3, 2008 and completed the acquisition of a 46 km2 3D seismic program subsequent to the year ended June 30, 2009 at a net cost of US$1,100,000. It is intended that the results of this program will be used to drill an offset to the La Sierra 1 discovery well in early 2010. The exploration well will target the Tertiary Honda reservoir in close proximity to the existing La Sierra 1 well. The well may be production tested with a progressive cavity pump to improve deliverability from the reservoir, with possible follow up using cyclic steam injection to increase recovery. Brazil In addition to the operations in Colombia, the Corporation is also engaged in the exploration, development and production of oil and gas in the prolific Reconcavo, Esprito Santo and Tucano Basins of Brazil. The Corporation has interests in four producing fields in Reconcavo Basin, Brazil, operated by its joint venture partner W. Washington. During 2007, the ANP approved the assignment to Canacol of a 47.5% Working Interest in all W. Washingtons concession contracts including the development blocks (four blocks) acquired by W. Washington in Round 0; and its exploration blocks (14 blocks) acquired in Round 6 and Round 7. The ANP also approved the assignment to W. Washington of a 52.5% Working Interest in all Canacols Round 7 concession contracts (17 blocks), thus formalizing the completion of the Corporations joint venture with W. Washington to hold, explore, develop and produce hydrocarbons in Brazil. Recncavo Basin, Brazil As part of the Round 9 auction in 2007, the ANP awarded a consortium led by W. Washington and including the Corporation, Brownstone, and Petro Latina two onshore blocks known as REC-T-170 and REC-T-169, covering approximately 28 km2 each in the Recncavo area of North Eastern Brazil. The Recncavo Basin is located in northeastern Brazil, in the state of Bahia, and occupies an area of 11,500 km2. The first exploration phase on these blocks is for a three year term. Espirito Santo Basin, Brazil As part of the Round 9 auction, the ANP awarded the Corporation three blocks in the on-shore Esprito Santo Basin located in Central Eastern Brazil. The Esprito Santo blocks acquired by the Corporation are known as Blocks ES-T-318, ES-T-362, and ES-T-380. These exploration blocks cover approximately 30 km2 each. The Espirito Santo Basin is a Cretaceous rift basin located in Bahia east-central Brazil. The basin extends into the near offshore Atlantic where it is contiguous with the offshore part of the Campos Basin. It comprises more than 100,000 km2; roughly 20% of that is represented onshore. Oil production for the

- 21 Espirito Santo Basin in 2008 averaged 67,000 bbls/d and 253 MMcf/d. Petrobras holds all rights to this production. Tucano Basin, Brazil As part of the Round 8 land auctions, the ANP awarded the Corporation two onshore blocks, W. Washington, the Corporations Brazilian joint venture partner, one onshore block and Brownstone two onshore blocks. Each block represents approximately 180 km2 and the blocks are known as Blocks 131, 132, 161, 172 and 177 in the Tucano Basin area of Central Eastern Brazil. The Corporation, W. Washington and Brownstone entered into an agreement pursuant to which each party will co-operate on the ownership and development of the combined five blocks awarded in the Round 8 land auctions. On November 28, 2006, a federal judge in Brasilia issued an injunction suspending the auction after a congresswoman of the governing Workers Party challenged an auction rule that limits the number of bids each company is allowed to place at the auction. During previous Rounds, Brazils oil block auctions have been challenged in the courts, with ANP successfully overturning any judicial actions against them. As at November 25, 2009, the court injunction with respect to the Round 8 land auctions has been lifted in the superior court from one of two jurisdictions. Canacol and its partners have no information indicating that they will not retain their successful Round 8 Bid Lands. The Tucano Basin, also in the state of Bahia, extends north and west of the Recncavo Basin, and shares the same depositional history and stratigraphy, but to date has proven more gas prone. It is separated from the Recncavo basin by the Apor high, where the sedimentary cover thins significantly or disappears entirely. Guyana Takutu Basin, Guyana Subsequent to the year ended June 30, 2009, Canacol acquired a 90% Working Interest in the 7,800 km2 Takutu Block PPL pursuant to the Groundstar Acquisition. The Takutu Block PPL is located in the Takutu Basin, onshore Guyana adjacent to the border with Brazil and was awarded to the Groundstar Vendor in July 2005. The Takutu Block PPL was recently extend to July 2012 with a commitment to drill one well on the property by May, 2010 and a second well must be drilled by May, 2011. On November 5, 2009, the Corporation completed a farmout agreement with Sagres, whereby Sagres acquired a 25% interest in the Takutu Block PPL. On closing, Sagres paid US$1,250,000 to be applied first to 30% of prior direct costs incurred by Canacol, then to 30% of future cash calls to a maximum of US$1,750,000, and 27.5% of cash calls thereafter. Sagres is entitled to 30% of revenues until recovery of its first US$3,000,000 paid to Canacol, 27.5% of revenues until its full cost recovery, and 25% thereafter. Under the terms of the farmout agreement, the Corporation and Sagres will carry the Groundstar Vendors 10% remaining Working Interest until first commercial oil production. The Corporation also entered into an agreement with Roraima to eliminate Roraimas prior interest in the Takutu Block PPL in exchange for payment by the Corporation of funds equal to the amount previously paid by Roraima. Following the completion of the above transactions, the Corporations net Working Interest in the Takutu Block PPL is 65%.

- 22 The Takutu block contains the Karanambo discovery made by Home Oil in 1982. The Karanambo 1 well tested 411 bbls/d (42 API) from a sub-salt reservoir during a five-hour drill stem test proving the existence of a light oil hydrocarbon system within this frontier basin. Two other large seismically defined prospects have been identified on the block. Other Canada Operations in Canada are considered to be non-core. Canadian properties at December 31, 2008 were non operated and included five natural gas wells (1.70 net) located in Sylvan Lake, Alberta, and royalty income from six wells in the Lochend area of Alberta. On January 1, 2009, the Corporation completed a sale of the majority of its Canadian petroleum properties for proceeds of $122,000. Following the sale, the Corporation continues to hold interests in some non producing properties and is seeking to dispose of its interest in these remaining properties. The Corporation does not expect to receive any material proceeds from such a future sale. Ireland Exploration in Ireland is considered to be non-core and high risk and includes oil and natural gas exploration and the potential for development of salt cavern gas storage. The Corporation is currently reviewing and will likely discontinue future activity in Ireland. STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION Date of Statement This Statement of Reserves Data and Other Oil and Gas Information is dated June 30, 2009 unless indicated otherwise. Disclosure of Reserves Data The reserves data set forth herein is based upon evaluations completed by Ryder Scott (Colombia Rancho Hermoso and Entrerrios), Netherland Sewell (Colombia - Capella), and DeGolyer (Brazil) (collectively, the Evaluators). Each of the Ryder Scott Report, the Netherland Sewell Report and the DeGolyer Report (collectively referred to herein as the Reports) is dated effective June 30, 2009. The reserves data contained herein summarizes the oil and heavy oil reserves of the Corporation and the net present values of future net revenue for these reserves using forecast prices and costs. The reserves data complies with the requirements of NI 51-101. Certain additional information not required by NI 51101 has been included herein to provide readers with further information regarding our properties. The Corporation engaged the Evaluators to provide evaluations of proved, probable, and possible reserves. All of the Corporations reserves are in Colombia and Brazil. In preparing the Reports, basic information was provided to the Evaluators by the Corporation, which included land data, well information, geological information, reservoir studies, estimates of on-stream dates, contract information, current hydrocarbon product prices, operating cost data, capital budget forecasts, financial data and future operating plans. Other engineering, geological or economic data required to conduct the evaluations and upon which the Reports are based, was obtained from public records, other operators and

- 23 from the Evaluators non-confidential files. The extent and character of ownership and the accuracy of all factual data supplied for the Reports, from all sources, was accepted by the Evaluators as represented. The tables and information contained herein, show the estimated share of the Corporations crude oil and the present value of estimated future net revenue for these reserves, using forecast prices and costs as indicated. Colombian (Rancho Hermoso and Entrerrios) estimated future net revenue based on the Ryder Scott Report is presented in U.S. dollars effective June 30, 2009. Colombian (Capella) estimated future net revenue based on the Netherland Sewell Report is presented in U.S. dollars effective date June 30, 2009. Brazil estimated future net revenue based on the DeGolyer Report is presented in U.S. dollars effective June 30, 2009. All evaluations and reviews of future net cash flow are stated prior to any provision for interest costs or general and administrative costs and after the deduction of estimated future capital expenditures for wells to which reserves have been assigned and future site restoration and reclamation costs for wells in Brazil and Colombia to which reserves have been assigned. It should not be assumed that the estimated future net cash flow shown below is representative of the fair market value of the Corporations properties. There is no assurance that such price and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of crude oil reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil reserves may be greater than or less than the estimates provided herein. The Report of Management and Directors on Oil and Gas Disclosure (on Form 51-101F3) and the Reports on Reserves Data by Ryder Scott, Netherland Sewell and DeGolyer are included in this Annual Information Form. See attached hereto as Schedules A and B, respectively. The reserves data contained herein is based on the Evaluators respective price forecasts, in each case as of June 30, 2009. Undeveloped Reserves The Corporation attributes proved, probable, and possible undeveloped reserves based on accepted engineering and geological practices as defined under NI 51-101. These practices include the determination of reserves based on the presence of commercial test rates from either production tests or drill stem tests, extensions of known accumulations based upon either geological or geophysical information and the optimization of existing fields. Subject to the success of operations, within the next two years, the Corporation has the following plans regarding the development of proved, probable and possible undeveloped reserves: The Corporations proved undeveloped reserves will be developed through further drilling and completion of wells within these areas. In Q4 2009 and 2010, the Corporations planned drilling program consists of two locations at Rancho Hermoso, three locations at Entrerrios and 15 at Capella along with workovers in all areas. The 2010 drilling and completions schedule will focus on these three areas and on any other opportunities arising from the Corporations exploration programs.

- 24 Probable undeveloped reserves in Brazil and in the Colombian properties are generally assigned adjacent to proved well locations. Drilling plans are affected by economic considerations including commodity prices and the Corporations drilling plan for 2010 is expected to range from 15 to 24 wells in Colombia, Brazil and Guyana depending on the commodity prices. Undeveloped reserves, like all projects, are subject to competition for capital and consequently may be delayed or accelerated from time to time. Significant Factors or Uncertainties Affecting Reserves Data There are numerous uncertainties inherent in estimating quantities of proved reserves, including many factors beyond the control of the Corporation. The reserve data included herein represents estimates only. In general, estimates of economically recoverable oil and natural gas reserves and the associated future net cash flows are based upon a number of variable factors and assumptions, such as historical production from the properties, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary considerably from actual results. All such estimates are to some degree speculative, and classifications of reserves are only attempts to define the degree of speculation involved. For those reasons, estimates of the economically recoverable oil and natural gas reserves attributable to any particular group of properties, classification of such reserves based on risk of recovery and associated estimates of future net revenues expected, prepared by different engineers or by the same engineers at different times, may vary substantially. The actual production, revenues, taxes and development and operating expenditures of the Corporation with respect to these reserves will vary from such estimates, and such variances could be material. Estimates with respect to proved reserves that may be developed and produced in the future are often based upon volumetric calculations and upon analogy to similar types of reserves rather than actual production history. Estimates based on these methods are generally less reliable than those based on actual production history. Subsequent evaluation of the same reserves based upon production history will result in variations, which may be substantial, in the estimated reserves. Consistent with the securities disclosure legislation and policies of Canada, the Corporation has used forecast prices and costs in calculating reserve quantities included herein. Actual future net cash flows also will be affected by other factors such as actual production levels, supply and demand for oil and natural gas, curtailments or increases in consumption by oil and natural gas purchasers, changes in governmental regulation or taxation and the impact of inflation on costs. All three Evaluators have used the same uninflated and forecasted oil prices and inflation rates in their evaluations.
Unes calated WTI Year 2009 (6 months ) 2009 (6 months ) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020 + 66.00 69.00 72.00 75.00 78.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 US$/BBL E calated s WTI US $/BBL 51.56 66.00 70.38 74.91 79.59 84.43 88.33 90.09 91.89 93.73 95.61 97.52 99.47 Oil Field Inflation % 1.80 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00

Es calate oil prices at 2.0% per year therafter

- 25 The following table sets forth the reconciliation of Canacols gross reserves by principal product type using forecast prices and cost estimates at June 30, 2009.
RECONCILIATION OF COMPANY GROSS RESERVES BY PRINCIPAL PRODUCTION TYPE FORECAST PRICES AND COSTS AS OF JUNE 30, 2009
Light and Medium Oil Heavy Oil Gross Proved Gross Proved Gross Proved Gross Proved Gross Proved Gross Proved (mbbl) plus plus (mbbl) plus plus Probable Probable Probable Probable (mbbl) plus Possible (mbbl) plus Possible (mbbl) (mbbl) Rancho Hermoso and Entrerrios (2) (287) (287) 1,584 3,635 3,635 (76) (76) (76) 1,506 3,272 3,272 348 (58) 12 (89) 213 348 (60) 1,584 12 (165) 1,719 1,335 (36) (7) (89) 1,202 1,335 (323) 3,635 (7) (165) 4,474 1,404 424 (34) (89) 1,705 1,404 136 3,635 (34) (165) 4,977 934 934 934 934 Capella 2,258 2,258 2,258 2,258 3,781 3,781 3,781 3,781

Factors Colombia June 30, 2008 Extensions Technical Revisions Discoveries Acquisitions Dispositions Economic Factors Production June 30, 2009 Brazil June 30, 2008 Extensions Technical Revisions Discoveries Acquisitions Dispositions Economic Factors Production June 30, 2009 Corporate Total June 30, 2008 Extensions Technical Revisions Discoveries Acquisitions Dispositions Economic Factors Production June 30, 2009
Notes:

All reserves presented herein represent the Corporations and t he Corporations subsidiaries interest, where applicable. T he reserves of the subsidiaries of the Corporation have been consolidated into the Corporations accounts. T able may not add due to rounding.

- 26 The following table provide a summary of the Canacols net present value of future net revenue at June 30, 2009 using forecast prices and costs.
Table 2.2.2 Total Corporation NI 51-101 SUMMARY OF NET PRESENT VALUE OF FUTURE NET REVENUE FORECAST PRICES AND COSTS AS OF JUNE 30, 2009
Net Present Value (NPV) of Future Net Revenue (FNR) Before Income Taxes - Discounted at (% /yr) After Income Taxes - Discounted at (% /yr) 0 5 10 15 20 0 5 10 15 20 (US$ 000's) (US$ 000's) (US$ 000's) (US$ 000's) (US$ 000's) (US$ 000's) (US$ 000's) (US$ 000's) (US$ 000's) (US$ 000's) Unit Value BFIT Disc. @ 10% /Yr (US$/BOE)

RESERVES CATEGORY Colombia (Capella) Proved Developed Producing Developed Non-Producing Undeveloped Total Proved Probable Total Proved Plus Probable Possible Total Proved + Probable + Possible

(9,738) 5,524 18,871 14,657 26,673 41,330 31,767 73,097

(6,962) 4,604 13,368 11,010 17,099 28,109 15,666 43,775

(5,189) 3,933 9,692 8,435 11,327 19,762 8,028 27,790

(4,010) 3,425 7,164 6,580 7,723 14,303 4,257 18,560

(3,196) 3,032 5,383 5,219 5,401 10,620 2,324 12,944

(9,738) 5,095 13,752 9,109 17,456 26,565 20,788 47,352

(6,962) 4,201 9,346 6,585 10,714 17,298 9,755 27,053

(5,189) 3,553 6,472 4,835 6,743 11,578 4,708 16,286

(4,010) 3,066 4,543 3,599 4,328 7,927 2,320 10,246

(3,196) 2,691 3,217 2,712 2,815 5,527 1,155 6,682

(900.87) 23.65 12.72 9.03 8.55 8.75 5.30 7.36

Colombia (Rancho Hermoso and Entrerrios) Proved Developed Producing Developed Non-Producing Undeveloped Total Proved Probable Total Proved Plus Probable Possible Total Proved + Probable + Possible Brazil Proved Developed Producing Developed Non-Producing Undeveloped Total Proved Probable Total Proved Plus Probable Possible Total Proved + Probable + Possible Corporate Total Proved Developed Producing Developed Non-Producing Undeveloped Total Proved Probable Total Proved Plus Probable Possible Total Proved + Probable + Possible 6,612 10,891 34,413 51,916 105,812 157,727 55,460 213,188 7,572 9,428 26,299 43,299 78,359 121,658 32,140 153,798 7,873 8,294 20,498 36,666 59,506 96,171 19,904 116,075 7,826 7,390 16,233 31,448 46,052 77,500 13,065 90,565 7,597 6,652 13,021 27,269 36,150 63,419 9,000 72,419 1,463 9,095 24,184 34,742 81,885 116,627 43,419 160,046 3,014 7,788 18,091 28,892 60,252 89,145 25,473 114,617 3,816 6,793 13,833 24,442 45,514 69,956 16,022 85,979 4,197 6,012 10,763 20,971 35,064 56,035 10,695 66,730 4,337 5,384 8,488 18,208 27,410 45,618 7,487 53,105 5.64 13.07 26.90 13.13 16.93 15.24 10.45 14.13 2,572 1,690 4,262 38,957 43,219 23,693 66,912 1,911 1,391 3,302 28,456 31,758 16,474 48,232 1,489 1,159 2,648 21,287 23,935 11,876 35,811 1,205 977 2,182 16,202 18,384 8,808 27,192 1,004 832 1,836 12,487 14,323 6,676 20,999 2,245 1,609 3,854 36,956 40,810 22,631 63,441 1,655 1,324 2,979 26,933 29,912 15,718 45,630 1,280 1,103 2,383 20,091 22,474 11,314 33,788 1,028 929 1,957 15,241 17,198 8,375 25,573 851 790 1,641 11,700 13,341 6,332 19,673 9.50 5.91 7.51 21.52 19.91 23.61 21.00 13,778 3,677 15,542 32,997 40,182 73,179 73,179 12,623 3,433 12,931 28,987 32,804 61,791 61,791 11,573 3,203 10,807 25,583 26,892 52,474 52,474 10,630 2,988 9,069 22,686 22,127 44,813 44,813 9,789 2,787 7,638 20,214 18,262 38,476 38,476 8,956 2,391 10,432 21,779 27,473 49,253 49,253 8,321 2,263 8,745 19,329 22,606 41,934 41,934 7,725 2,137 7,362 17,224 18,680 35,904 35,904 7,178 2,017 6,220 15,415 15,496 30,910 30,910 6,682 1,903 5,271 13,856 12,894 26,750 26,750 9.38 11.77 16.98 20.04 18.43 18.43

Reference Item 2.1(1) and (2) of Form 51-101F1. NPV of FNR includes all resource income: Sale of oil reserves; Processing of third party reserves; Other income. Income Taxes includes all resource income, appropriate income tax calculations and prior tax pools. Note: The numbers in this table may not add exactly due to rounding.

The following table sets forth Canacols total future net revenue at June 30, 2009 using forecast prices and costs.

TOTAL FUTURE NET REVENUE (UNDISCOUNTED) FORECAST PRICES AND COSTS AS OF JUNE 30, 2009
BT Future AT Future Net Revenue Net Revenue (1) Income Taxes (1) (US$ 000's) (US$ 000's) (US$ 000's) 18,838 57,062 106,409 32,997 73,179 73,179 4,261 43,220 66,912 56,096 173,460 246,500 9,729 30,497 59,056 11,218 23,926 23,926 408 2,409 3,471 21,355 56,832 86,453 9,109 26,565 47,353 21,779 49,252 49,252 3,853 40,811 63,441 34,741 116,628 160,047

Revenue RESERVES CATEGORY (US$ 000's) Colombia (Capella) 54,204 TOTAL PROVED 138,099 TOTAL PROVED + PROBABLE 245,438 TOTAL PROVED + PROB + POSS Colombia (Rancho Hermoso and Entrerrios) 98,186 TOTAL PROVED 222,642 TOTAL PROVED + PROBABLE 222,642 TOTAL PROVED + PROB + POSS Brazil 14,364 TOTAL PROVED 84,825 TOTAL PROVED + PROBABLE 122,219 TOTAL PROVED + PROB + POSS Corporate Total 166,754 TOTAL PROVED 445,566 TOTAL PROVED + PROBABLE 590,299 TOTAL PROVED + PROB + POSS

Royalties (US$ 000's) 69,011 149,718 149,718 1,014 5,677 8,008 70,025 155,395 157,726

Operating Cost (US$ 000's) 27,029 58,444 98,531 (8,659) (16,700) (16,700) 8,576 25,891 34,491 26,946 67,636 116,322

Development Costs (US$ 000's) 7,542 20,580 36,953 2,640 14,594 14,594 170 9,513 12,234 10,352 44,687 63,781

Well Aband. Costs (US$ 000's) 795 2,013 3,545 2,197 1,851 1,851 343 524 574 3,335 4,388 5,970

Note: The numbers in this table may not add exactly due to rounding.

The following table sets forth Canacols total future net revenue by production group as of June 30, 2009 using forecast prices and costs.

TOTAL FUTURE NET REVENUE BY PRODUCTION GROUP FORECAST PRICES AND COSTS AS OF JUNE 30, 2009

RESERVES CATEGORY Colombia (Capella)

PRODUCTION GROUP

BFIT Future Net Revenue Discounted (10% /Yr)(1) (US$ 000's) 8,435 19,762 27,790 25,583 52,474 52,474 2,648 23,935 35,811 28,231 8,435 76,409 19,762 88,285 27,790

UNIT VALUE (US$/BBL) 9.03 8.75 7.36 16.98 18.43 18.43 7.51 19.91 21.00 15.19 9.03 18.87 8.75 19.39 7.36

Heavy Oil PROVED Heavy Oil PROVED + PROBABLE PROVED+PROB+POSSIBLE Heavy Oil Colombia (Rancho Hermoso and Entrerrios) Light & Medium Crude Oil PROVED Light & Medium Crude Oil PROVED + PROBABLE PROVED+PROB+POSSIBLE Light & Medium Crude Oil Brazil Light & Medium Crude Oil PROVED Light & Medium Crude Oil PROVED + PROBABLE PROVED+PROB+POSSIBLE Light & Medium Crude Oil Corporate Total Light & Medium Crude Oil Heavy Oil Light & Medium Crude Oil PROVED + PROBABLE Heavy Oil PROVED+PROB+POSSIBLE Light & Medium Crude Oil Heavy Oil PROVED (1) The unit values are based on net reserve volumes before income tax (BFIT).
Reference Item 2.2(3)(c) of Form 51-101F1. Note: The numbers in this table may not add exactly due to rounding.

The following table provides a summary of Canacols oil reserves at June 30, 2009 using forecast prices and costs.
Table 2.2.1 - Total Corporation NI 51-101 SUMMARY OF OIL RESERVES FORECAST PRICES AND COSTS AS OF JUNE 30, 2009 RESERVES
RESERVES CATEGORY Colombia Proved Developed Producing Developed Non-Producing Undeveloped Total Proved Probable Total Proved Plus Probable Possible Total Proved + Probable + Possible Brazil Proved Developed Producing Developed Non-Producing Undeveloped Total Proved Probable Total Proved Plus Probable Possible Total Proved + Probable + Possible Corporate Total Proved Developed Producing Developed Non-Producing Undeveloped Total Proved Probable Total Proved Plus Probable Possible Total Proved + Probable + Possible 1,404 315 1,719 2,755 4,474 502 4,976 510 142 652 1,559 2,211 471 2,682 6 166 762 934 1,325 2,258 1,523 3,781 5 156 716 878 1,245 2,123 1,432 3,555 1,409 481 762 2,653 4,080 6,732 2,025 8,758 516 298 716 1,530 2,804 4,334 1,903 6,237 170 43 213 989 1,202 502 1,705 158 39 198 924 1,121 471 1,592 170 43 213 989 1,202 502 1,705 158 39 198 924 1,121 471 1,592 Light & Medium Oil Gross (2) Net (3) (Mbbl) (Mbbl)
Rancho He rmoso and Entre rrios

Heavy Oil Gross (2) Net (3) (Mbbl) (Mbbl) Capella 6 166 762 934 1,325 2,258 1,523 3,781 5 156 716 878 1,245 2,123 1,432 3,555

Total Oil Gross (2) Net (3) (bbl) (bbl)

1,234 272 1,506 1,766 3,272 3,272

352 102 454 635 1,090 1,090

1,240 438 762 2,440 3,090 5,530 1,523 7,053

358 259 716 1,332 1,880 3,213 1,432 4,645

(1) Estimates of Reserves of natural gas include associated and non-associated gas. (2) "Gross Reserves" are Company's working interest reserves before the deduction of royalties. (3) "Net Reserves" are Company's working interest reserves after deductions of royalty obligations plus the Company's royalty interests. Note: The numbers in this table may not add exactly due to rounding.

-29The following table sets out the volume of the Corporations proved undeveloped and probable undeveloped reserves over the most recent three financial years and the amount of reserves first attributed in each of those years. UNDEVELOPED RESERVES FORECAST PRICES AND COSTS
Light and Medium Oil Gross (mbbl) Heavy Oil Gross (mbbl)

Reserves Category Colombia Proved Undeveloped Prior to 2007 2007 2008 2009 Probable Undeveloped Prior to 2007 2007 2008 2009 Brazil Proved Undeveloped Prior to 2007 2007 2008 2009 Probable Undeveloped Prior to 2007 2007 2008 2009 Colombia and Brazil Proved Undeveloped Prior to 2007 2007 2008 2009 Probable Undeveloped Prior to 2007 2007 2008 2009

First Cumulative First Cumulative Attributed at year end Attributed at year end Rancho Hermoso and Entrerrios Capella 1,204 90 890 55 152 90 890 55 1,356 1,204 90 90 890 890 776 544 90 90 890 890 776 1,748 762 1,325 762 1,325 762 1,325 762 1,325

-30The following table outlines the forecast for future development costs associated with the Corporations assets and properties for the reserves categories noted below, calculated on an undiscounted and a discounted (10%) basis.
TABLE 5.3 - Total Corporation NI 51-101 FUTURE DEVELOPMENT COSTS
Forecast Prices & Costs For Proved Reserves (US$ 000's) 1,270 1,247 1,273 1,299 2,451 7,540 5,517 2,640 2,197 4,837 3,648 170 170 153 2,640 1,440 1,247 1,273 1,299 4,648 12,547 9,318 For Proved + Probable Reserves (US$ 000's) 1,882 2,497 2,546 2,598 11,056 20,580 13,806 9,808 2,796 142 3,699 16,445 13,607 6,478 3,035 9,513 8,348 9,808 11,156 5,675 2,546 2,598 3,699 46,538 35,761

Year Colombia (Capella) 2009 2010 2011 2012 2013 Thereafter Total Undiscounted Total discounted at 10%

Colombia (Rancho Hermoso and Entrerrios) 2009 2010 2011 2012 2013 Thereafter Total Undiscounted Total discounted at 10% Brazil 2009 2010 2011 2012 2013 Thereafter Total Undiscounted Total discounted at 10% Corporate Total 2009 2010 2011 2012 2013 Thereafter Total Undiscounted Total discounted at 10%

-31The Corporation has three sources of funding to finance its capital expenditure programs: (i) internally generated cash flow from operations, (ii) debt financing when appropriate and (iii) new equity issues, if available on favourable terms. The Corporation expects to fund its total 2010 capital program from cash on hand and cash flow. Marketing The majority of the Corporations Colombian production is predominantly sold to Petrobras Colombia, and to Ecopetrol, the Colombian national oil company; the Brazil production is sold to Petrobras. Sales to individual counterparties exceeding 10% of consolidated revenues for the years ended June 30, 2008 and 2009 are as follows:
Sales as % of consolidated revenue 2008 2009 Petrobras Ecopetrol Hocol 97% 0% 0% 64% 25% 11%

Production The following table sets forth the Corporations conventional average daily production volumes, by major producing region, for each quarter of the previous financial year ended June 30, 2009. Currency used in this table reflects Canadian dollars.
Three Months Ended Sept. 30, Three Months Ended December 31, 2008 Canada
(6)

Three Months Ended March 31, 2009 Colombia 318 1,157

(2)

Three Months Ended June 30, 2009 Colombia 298 1,015

(2)

OPERATING RESULTS
Production Crude oil and NGLs (bbl/d) Natural gas (mcf/d) Total (boe per day) Total tariff production (bbl/d) Average sale prices Crude oil ($/bbl) Oil equivalent ($/boe) Operating netback ($/boe) Commodity sales revenue Tariff revenue Non-refundable sales taxes Realized loss on financial derivative Royalties Transportation & processing Well workover & repair MEP work unit provision Operating expenses Netback
) 1 (

2008 Colombia (2)

Brazil

(5)

Colombia -

(2)

Brazil

(5)

Canada

(6)

Brazil

(5)

Canada -

(6)

Brazil

(5)

Canada -

(6)

141 141 -

1 34 7

335 335 1,354

128 128 -

1 62 11

318

133 133 -

298

118 118 -

120.90 120.90

64.14

42.64 -

77.65 77.65

35.93

47.87 -

71.79 71.79

68.79 -

42.06 42.06

(4)

120.90 (9.98) (21.83) (9.82) (13.03) (1.64) (4.38) (32.19) 28.03

64.14 (6.85) (18.08) 39.21

42.64 11.74 (3.41) (9.10) (0.02) (14.97) 26.88

77.65 1.57 (6.55) (29.06) (2.39) (4.70) (41.19) (4.67)

35.93 (4.11) (7.33) 24.49

47.87 10.27 (3.83) (4.75) (0.03) (10.11) 39.42

71.79 (1.78) 44.90 (6.05) (23.59) (2.38) (4.61) (37.41) 40.87

68.79 10.83 (6.56) (11.96) (1.48) (12.65) 36.14

42.06 (5.83) 45.15 (7.42) (25.48) (2.54) (3.22) (22.58) 20.15

(3)

(1)

) ) ) ) )

2 3 4 5 6

( ( ( ( (

-32Total production by country is as follows:

Three Months Ended June 30,
(boe)

Year Ended June 30, 2009 2008 58,340 4,358 62,697 62,697

2009 27,077 10,778 37,855 92,367 130,222

2008 14,491 604 15,095 15,095

Colombia * Brazil Canada** Total net production Tariff production Total

76,174 43,113 1,685 120,972 279,068 400,040

* Colombian operations commenced October 30, 2008 ** The majority of the Canadian producing properties were sold effective effective January 1, 2009.

The following table provides a summary of Canacols share gross production estimates by field for the year ended June 30, 2010 using forecast prices and costs.
Light & Medium Oil (bbl)
Colombia Rancho Hermoso Entrerrios Capella Total Colombia Brazil Reconcavo Total Corporation 39,126 85,422 124,548 35,657 160,205

Proved Heavy Oil (bbl)

42,282 42,282 42,282

Percentage of estimated production

19% 42% 21% 82% 18% 100%

Light & Medium Oil (bbl)

83,602 83,602 58,684 142,286

Probable Heavy Oil (bbl)

1,189 1,189 1,189

Percentage of estimated production

0% 58% 1% 59% 41% 100%

Oil and Gas Wells The following table summarizes Canacols interests, by region and on a consolidated basis, as at June 30, 2009, in oil wells which are producing or which are considered capable of production. All wells considered capable of production have been standing for a period of less than one year, are within economic distance of transportation facilities and are classified as proved developed nonproducing reserves in the Evaluators reports. All of the Corporations properties are located onshore.
Producing Oil Gross Net Colombia Capella Rancho Hermoso Entrerrios Brazil All fields Total Corporation 6.0 3.0 3.0 7.0 19.0 0.6 3.0 1.8 3.3 8.7 Non-Producing Oil Gross Net 1.0 1.0 2.0 1.0 0.5 1.5

-33Land Holdings Canacol has undeveloped land holdings in Guyana, Brazil and Colombia as at June 30, 2009. Colombia The Corporation holds a 25.5% interest in the 130 gross km2 undeveloped La Sierra block in Colombia, or 33.2 net km2. The work commitment for the La Sierra block consists of US$1,200,000 ($1,395,000). The Corporation also purchased 100% interest in two blocks subsequent to the end of the period: (i) the Tamarin E&P Contract (27.5 net km2); and (ii) the Pacarana Technical Evaluation contract (470 net km2). The exploration commitments for the Tamarin and Pacarana blocks consist of $1,950,000 of exploration and development costs. Guyana For Guyana, as at the year ended June 30, 2009, the Corporation held a 55% interest in the Takutu Block PPL which covers 7,800 gross km2 of undeveloped lands, or 3,920 net km2. Subsequent to the year ended June 30, 2009, Canacol acquired a 90% Working Interest in the Takutu Block PPL pursuant to the Groundstar Acquisition. The Takutu Block PPL was recently extend to July 2012 with a commitment to drill one well on the property by May, 2010 and a second well must be drilled by May, 2011. On November 5, 2009, the Corporation completed a farmout agreement with Sagres, whereby Sagres acquired a 25% interest in the Takutu Block PPL. On closing, Sagres paid US$1,250,000 to be applied first to 30% of prior direct costs incurred by Canacol, then to 30% of future cash calls to a maximum of US$1,750,000, and 27.5% of cash calls thereafter. Sagres is entitled to 30% of revenues until recovery of its first US$3,000,000 paid to Canacol, 27.5% of revenues until its full cost recovery, and 25% thereafter. Under the terms of the farmout agreement, the Corporation and Sagres will carry the Groundstar Vendors 10% remaining Working Interest until first commercial oil production. The Corporation also entered into an agreement with Roraima to eliminate Roraimas prior interest in the Takutu Block PPL in exchange for payment by the Corporation of funds equal to the amount previously paid by Roraima. Following the completion of the above transactions, the Corporations net Working Interest in the Takutu Block PPL is 65%. Brazil The Corporation holds interests in a further 107 gross km2 of undeveloped lands in Brazil, or 32.8 net km2. The work commitments for blocks REC-T-169, REC-T-170, ES-T-318, ES-T-362 and ES-T-380 involve either seismic and/or drilling commitments for work programs or a payout of penalties to the Brazilian government for net $2,270,000. The deadline for the work commitments for the blocks are as follows: REC-T-169 June 2010; REC-T-170 March, 2010; and ES-T-318, ES-T-362 and ES-T-380 March, 2010. Forward Contracts and Future Commitments See Note 13, Financial Instruments and Financial Risk Management, and Note 18, Commitments and Contingencies, to the Corporations June 30, 2009 consolidated financial statements, which information is incorporated herein by reference and can be found on SEDAR at www.sedar.com.

-34Abandonment and reclamation costs were estimated for all legal obligations associated with the retirement of long-lived tangible assets such as wells, facilities and plants based on market prices or on the best information available where no market price was available. Liability for abandonment and reclamation costs in Colombia were estimated for all legal obligations associated with the retirement of long-lived tangible assets such as wells, facilities and plants based on market prices or on the best information available where no market price was available. The estimated costs are then inflated at four percent over time until the actual retirement is expected to occur. In Colombia, Ecopetrol maintains ownership of all wells once the IPCs expire. Until expiry, the Corporation is potentially liable for abandonment and reclamation costs for all wells drilled or intervened by the Corporation. As of June 30, 2009, seven wells under the IPCs and six (net 0.6) exploration wells under the ANH exploration contracts have either been drilled or intervened. The total abandonment and reclamation costs net of salvage values of all of the Corporations operations, on a consolidated basis, are estimated to be $2,316,000 (Brazil - $411,000 and Colombia - $1,905,000). In the next three financial years the Corporation anticipates that approximately $262,000 on an undiscounted basis and $234,000 discounted at 10% will be incurred on abandonment and reclamation costs. Tax Horizon In Canada, Canacols tax pools shelter it from paying current cash income taxes. Based on the DeGolyer Report and the Corporations current exploration and development plans, the Corporation does not expect to pay income tax in Canada until 2010 or later. In Colombia, the Corporation was taxable in 2009. Capital Expenditures The following table summarizes capital expenditures related to the Corporations activities for the year ended June 30, 2009, separated into its business units. Please note the currency used is expressed in thousands of Canadian dollars. (See Acquisitions for costs incurred in respect of corporate acquisitions.)
Colombia Brazil Canada Guyana Total $ 4,289 $ 3,512 $ $ 859 $ 8,660 2,800 95 698 3,593 (3,439) (3,439) 7,089 $ 3,607 $ (2,741) $ 859 $ 8,814

Drilling and completions Facilities Land Seismic Disposals and Other

Total capital Expenditures $

-35Exploration and Development The following table summarizes the gross and net exploratory and development wells in which the Corporation and its subsidiaries participated during the year ended June 30, 2009.
Exploration Gross Net Colombia Oil Service wells Successful Dry Total Success Rate Brazil Oil Service wells Successful Dry Total Success Rate 6.0 6.0 6.0 100% 5.0 5.0 5.0 0% 0.6 0.6 0.6 100% 1.2 1.2 1.2 0% Development Gross Net 0% 0% 0% 0% Total Gross Net 6.0 6.0 6.0 100% 5.0 5.0 5.0 0% 0.6 0.6 0.6 100% 1.2 1.2 1.2 0%

Reorganizations The Canacol Energy Acquisition, which was completed on October 31, 2008, as described above. At this time, the Corporation underwent a change of management. Former management approached members of current management to replace them and seek other opportunities and types of projects for the Corporation. See General Development of the Business Three Year History. DESCRIPTION OF CAPITAL STRUCTURE The Corporation is authorized to issue an unlimited number of Common Shares and an unlimited number of preferred shares (Preferred Shares), issuable in series. As of November 25, 2009, an aggregate of 326,299,217 Common Shares (178,874,169 Common Shares as at June 30, 2009) and no Preferred Shares were issued and outstanding. The holders of the Common Shares are entitled to receive notice of and attend any meeting of the Shareholders and are entitled to one vote for each Common Share held (except at meetings where only the holders of another class of shares are entitled to vote). Subject to the rights attached to any other class of shares, the holders of the Common Shares are entitled to receive dividends, if, as and when declared by the Board of Directors and are entitled to receive the remaining property upon liquidation of the Corporation. The Corporation is authorized to issue an unlimited number of Preferred Shares. The Preferred Shares may be issued from time to time in one or more series, each series consisting of a number of Preferred Shares as determined by the Board of Directors, who may fix the designations, rights, privileges, restrictions and conditions attaching to the shares of each series of Preferred Shares. As at the date hereof, there are no Preferred Shares issued and outstanding. The Preferred Shares of each series shall,

-36with respect to dividends, liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs, shall be entitled to preference over the Common Shares and the shares of any other class ranking junior to the Preferred Shares. The Preferred Shares of any series may also be given such other preferences and priorities over the Common Shares and any other shares of the Corporation ranking junior to such series of Preferred Shares. DIVIDEND RECORD AND POLICY Canacol has not paid any dividends on its outstanding Common Shares in the three most recently completed financial years. Any decision to pay dividends on the Common Shares in the future will be dependent upon the financial requirements of Canacol to finance future growth, the financial condition of Canacol, and other factors which the Board of Directors may consider appropriate in the circumstances. MARKET FOR SECURITIES The following table sets forth the monthly high and low closing prices and volumes of the trading of the Common Shares for the periods indicated. The Common Shares are listed for trading on the TSXV and trade under the symbol CNE.
Period 2008 July August September October November December 2009 January February March April May June July August September October November
(1)

High $

Low $

Volume

0.76 0.63 0.60 0.32 0.19 0.08

0.52 0.55 0.25 0.115 0.085 0.05

1,218,424 406,335 1,446,546 2,791,150 3,105,172 12,860,768

0.12 0.12 0.095 0.17 0.185 0.21 0.19 0.345 0.315 0.46 0.40

0.075 0.07 0.06 0.075 0.125 0.155 0.15 0.16 0.24 0.29 0.32

12,416,637 3,456,540 3,278,773 10,440,955 9,754,803 5,829,777 4,694,521 16,680,333 22,671,481 21,912,350 15,900,769

-37Note: (1) Up November 25, 2009.

PRIOR SALES Other than options to acquire Common Shares pursuant to the Option Plan, during the financial year ended June 30, 2009, the Corporation issued an aggregate of 34,000,000 warrants to purchase Common Shares as follows:
Number of Warrants 10,000,000 17,410,000 6,590,000 Issue Price Per Common Share 0.80 0.20 0.20

Description 2009 Series I Warrants 2009 Series II Warrants 2009 Series III Warrants

Date August 29, 2008 May 14, 2009 May 28, 2009

Expiry August 29, 2013 May 14, 2011 May 28, 2011

Subsequent to the year ended June 30, 2009, the Corporation issued 1,500,000 warrants to purchase Common Shares in connection with the sale of a promissory note receivable at an exercise price of $0.30 per share, expiring on January 7, 2011 and 1,109,524 warrants to purchase Common Shares pursuant to a non-brokered private placement at an exercise price of $0.30 per share, expiring on January 23, 2011. The Corporation also issued the 2009 Debentures in the aggregate principal amount of $4,000,000 pursuant to brokered private placement. See General Development of the Business - Three Year History. ESCROWED SECURITIES The Corporation has no escrowed securities. DIRECTORS AND OFFICERS The following table provides the names, municipalities of residence, position, and principal occupations of the directors and officers of Canacol.
Name and Municipality of Residence and Position with Canacol Charle Gamba(3) President, Chief Executive Officer and Director Houston, USA

Director/Officer Since October 30, 2008

Principal Occupations Chief Executive Officer of Canacol. Past Vice President of Exploration for Occidental Oil and Gas Company (Oxy) in Colombia. Chief Geologist with Oxy in Ecuador and Chief Geoscientist for Oxy in Qatar. Geologist with 15 years of multidisciplinary experience in the oil and gas industry in Latin America, Middle East, North America, and South East Asia with Occidental Petroleum, Alberta Energy Company (EnCana), Canadian Occidental (Nexen), and Imperial Oil.

-38-

Name and Municipality of Residence and Position with Canacol Michael Hibberd Chairman and Director Calgary, Alberta
(1)

Director/Officer Since October 30, 2008

Principal Occupations Chairman and Chief Executive Officer of MJH Services Inc., a corporate finance advisory business established in 1995. Chairman of Heritage Oil Plc and Heritage Oil Corporation. Co-Chairman of Sunshine Oilsands Ltd. Current director of AltaCanada Energy Corp., Avalite Inc., Iteration Energy Ltd., PanOrient Energy Corp. and Zapata Energy Corporation. Former director of Challenger Energy Corp., Deer Creek Energy and Rally Energy Corp. Through MJH Services Inc., established in 1995 by Mr. Hibberd, Mr. Hibberd has focused on providing advice primarily to Calgary-based energy companies with North American and International operations. Mr. Hibberd has been involved in privatization and development projects in North America, Africa, the Middle East, Latin America and Central Asia. Prior to 1995, Mr. Hibberd spent 12 years in corporate finance with ScotiaMcLead and was Senior Vice President, Corporate Finance and a Director. Cheif Financial Officer and Director of Sagres Energy Inc., a private international oil and gas exploration company. Former Chief Financial Officer of Pan Orient Energy Corp, a South East Asia Exploration company, from 2004 to April 2009. Past Manager of Financial Reporting for Canadian 88 Energy Corp (1998-2002) and former Controller of Canadian Superior Energy Inc (2002-2004). From 1993 to 1998 was in a public accounting practice with clients including several exchange listed oil and gas companies. Chairman of the Board of Governors of CI Funds, Lead Director of Creststreet Mutual Funds Ltd., and a director of Rifco Inc. and Ria Resources Ltd. Prior to 2003, Mr. Hensman was the Chairman and Chief Executive Officer of Scotia Capital (USA) Inc. Mr. Hensman was a Managing Director (Institutional Equities) at Scotia Capital Inc. (London) from 1987 to 1999. Prior to this, he held a number of analytical and portfolio management positions at Sun Life Assurance Co. of Canada from 1981 to 1986. Mr. Hensman holds a Bachelor of Arts degree from the University of Winnipeg and a Masters of Science from the Loughborough University.

Jason Bednar(1)(2) Director Calgary, Alberta

October 30, 2008

Stuart Hensman(1)(2) Director Toronto, Ontario

November 15, 2007

-39-

Name and Municipality of Residence and Position with Canacol Alvaro Barrera, PEng, MSc Director Bogota, Colombia
(2)

Director/Officer Since October 30, 2008

Principal Occupations Chemical Engineer from the Universidad Nacional of Bogota and ScM degree in Chemical Engineering form The Massachusetts Institute of Technology (MIT). Past President of Empresa Colombiana de Petroleos the State Oil Company of Colombia. Former President of Prodegas S.A. a major Colombian gas pipeline construction and distribution company. 30 years of experience in the upstream, midstream and downstream oil and gas industry in Colombia. Formerly General Manager for Dow Chemical International responsible for Colombia and Ecuador. Founder and current Director of Canacol Energy. Former President, Chief Executive Officer and Director of Superview S.A., a Colombian tele-communications company sold to Telmex. Former Colombian representative of BGP, a Siesmic Chinese company. Mr. Baena holds a Doctor of Medicine, Masters in International Affairs in Finance and Business from Columbia University of NY and Doctoral studies at Nova South Eastern University in International Business Administration. President and Chief Executive Officer of Excelsior Energy, a Canadian heavy oil exploration and production company. An internationally focused Geologist with 23 years of multidisciplinary experience, including various technical roles and senior Management roles with BP, Sun Oil, Canadian Occidental (Nexen), Alberta Energy Company (EnCana) and Calvalley Petroleum in Latin America, North Sea, China, Netherlands, South East Asia and the Middle East.

Luis Baena(3) Director Bogota, Colombia

February 6, 2009

David Winter(2) Director Calgary, Alberta

February 6, 2009

-40-

Name and Municipality of Residence and Position with Canacol Mark Holliday Chief Operating Officer Florida, USA

Director/Officer Since October 30, 2008

Principal Occupations Mr. Holliday has 25 years of operational experience with majors, independents, and international oil companies, and has lived in Latin America for 12 years. Prior to his position in Canacol, Mr. Holliday was the V.P. of Operations, Petrominerales Colombia Ltd., living in Bogota from 2003 to 2008. During that five year period Petrominerales went from 500 bopd to 20,000 bopd. Prior to that, Mr. Holliday consulted for Pioneer Natural Resources in Gabon and Tunisia, drilling exploration wells. As the Drilling and Planning Manager for Pluspetrol Exploracion y Produccin Mr. Holliday was accountable for Argentine, Bolivian, and Peruvian drilling operations, including the pre-planning of the natural gas project, Camisea in southern Peru. For Alberta Energy Company Mr. Holliday was the drilling manager for Ecuador and Argentina. Prior to that he was with Amoco for six years, living and working in Venezuela, rotating to China for three years, and drilling exploration wells in Australia. Before attending university, Mr. Holliday worked seven years for a drilling contractor, offshore in the Gulf of Mexico. Mr. Holliday has a B.S. in Petroleum Engineering from Louisiana State University. Mr. Teare has 20 years of experience with a number of senior international Canadian energy companies in Brazil, Ecuador, Colombia, Argentina, Australia, and Canada. For the past eight years, Mr. Teare has held a series of senior management roles at EnCana Corporation, most recently as Country Lead for Brazil. Mr. Teare played an active role in EnCanas exploration success in recent ultra deep water pre-salt discoveries in offshore Brazil. Prior to his position in Brazil, Mr. Teare was Vice President of Exploration and Joint Ventures for EnCanas assets in Ecuador. Mr. Teare also held a variety of lead technical roles at Alberta Energy Company in Australia, and Home Oil Company in Argentina and Canada. Mr. Teare holds a Master of Science degree in Geology from McGill University, and is based in the Corporations head office in Calgary. Mr. Hearst is a chartered accountant with 30 years of experience in the oil and gas industry with large and junior companies having international exploration and production activities in South America, Russia, and India, bringing considerable financial leadership and experience to the senior management team. Mr. Hearst is based in the Corporations head office in Calgary. Since September 17, 2004, Barrister and Solicitor with Davis LLP. From October 1998, to September 17, 2004, Barrister and Solicitor with Borden Ladner Gervais LLP, and its predecessor firms.

Mark Teare Vice President of Exploration Calgary, Alberta

October 30, 2008

Brian Hearst, CA Chief Financial Officer Calgary, Alberta

February 20, 2009

Trevor Wong-Chor, LLB Corporate Secretary Calgary, Alberta

March 11, 2005

-41Notes: (1) (2) (3) Denotes audit committee members. Denotes corporate governance and compensation committee members. Denotes reserve committee members.

Each director will hold office until the next annual general meeting of Shareholders or until his successor is elected or appointed. As at November 25, 2009, the directors and officers of Canacol, as a group beneficially own, directly or indirectly, approximately 10,183,000 of the outstanding Common Shares (3%). Corporate Cease Trade Orders or Bankruptcies Other than as set forth below, no director, officer or shareholder holding a sufficient number of securities of the Corporation to affect materially the control of the Corporation, within 10 years before the date of this Annual Information Form, has been, a director or executive officer of any corporation that, while that person was acting in that capacity: (a) was the subject of a cease trade or similar order, or an order that denied the relevant corporation access to any exemption under securities legislation, for a period of more than 30 consecutive days; was subject to an event that resulted, after the director or executive officer ceased to be a director or executive officer, in the corporation being the subject of a cease trade or similar order or an order that denied the relevant corporation access to any exemption under securities legislation, for a period of more than 30 consecutive days; or within a year of that person ceasing to act in such capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

(b)

(c)

Michael Hibberd was an independent director of Challenger Energy Corp. (Challenger) from December 1, 2005 to September 16, 2009. Challenger obtained a creditor protection order, under the Companies Creditors Arrangement Act (Canada), from the Court of Queens Bench of Alberta, Judicial District of Calgary on February 27, 2009. On June 19, 2009, Challenger announced that it had entered into an arrangement agreement providing for the acquisition by Canadian Superior Energy Inc. (Canadian Superior) of Challenger (0.51 of a Canadian Superior common share for each Challenger common share). On September 17, 2009, all common shares of Challenger were exchanged for common shares of Canadian Superior and all creditor claims were fully honoured. In addition, Mr. Hibberd served as an independent director of E-Zone Networks Inc. (E-Zone), a Delaware company and a reporting issuer in Alberta that did not have any shares listed on any exchange, from 1988 until 2001. Mr. Hibberd resigned as a director of E-zone within one year of E-Zone filing under Chapter 7 of the Federal Bankruptcy Code (United States). Personal Bankruptcies No director, officer or shareholder holding a sufficient number of securities of the Corporation to affect materially the control of the Corporation has within 10 years before the date of this Annual Information

-42Form, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or was subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of such person. Penalties or Sanctions No director, officer or shareholder holding a sufficient number of securities of the Corporation to affect materially the control of the Corporation has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

(b)

Conflicts of Interest Certain directors and officers of the Corporation and its subsidiaries are associated with other reporting issuers or other corporations which may give rise to conflicts of interest. In accordance with corporate laws, directors who have a material interest or any person who is a party to a material contract or a proposed material contract with the Corporation are required, subject to certain exceptions, to disclose that interest and generally abstain from voting on any resolution to approve the contract. In addition, the directors are required to act honestly and in good faith with a view to the best interests of the Corporation. Some of the directors of the Corporation have either other employment or other business or time restrictions placed on them and accordingly, these directors of the Corporation will only be able to devote part of their time to the affairs of the Corporation. In particular, certain of the directors and officers are involved in managerial and/or director positions with other oil and gas companies whose operations may, from time to time, provide financing to, or make equity investments in, competitors of the Corporation. Conflicts, if any, will be subject to the procedures and remedies available under the ABCA. The ABCA provides that in the event that a director has an interest in a contract or proposed contract or agreement, the director shall disclose his interest in such contract or agreement and shall refrain from voting on any matter in respect of such contract or agreement unless otherwise provided by the ABCA. Additional information, including directors and officers remuneration and indebtedness, principal holders of Canacols securities, options to purchase securities and interests of insiders in material transactions, where applicable, will be contained in Canacols information circular for the next annual meeting of shareholders that involves the election of directors and additional information as provided in Canacols comparative financial statements for its most recently completed financial year. Canacol will provide this information to any person, upon request made to the Corporate Secretary of Canacol at Suite 620, 304 8th Avenue SW, Calgary, Alberta, T2P 1C2. The documents are also located on SEDAR at www.sedar.com. LEGAL PROCEEDINGS AND REGULATORY ACTIONS There are no legal proceedings to which the Corporation is a party or of which any of its property is the subject and there are no such proceedings known to the Corporation to be contemplated. In addition, there were no penalties or sanctions imposed against the Corporation by a court relating to securities legislation or by a securities regulatory authority during the year ended June 30, 2009, no other penalties

-43or sanctions imposed by a court or regulatory body against the Corporation that would likely be considered important to a reasonable investor in making an investment decision, and no settlement agreements entered into by the Corporation with a court relating to securities legislation or with a securities regulatory authority during the year ended June 30, 2009. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS Other than as set forth below and herein, or as previously disclosed, the Corporation is not aware of any material interests, direct or indirect, by way of beneficial ownership of securities or otherwise, of any director or executive officer or any Shareholder holding more than 10% of the Common Shares or any associate or affiliate of any of the foregoing in any transaction within the three most recently completed financial years or during the current financial year or any proposed or ongoing transaction of the Corporation which has or will materially affect the Corporation. During the year ended June 30, 2009, companies controlled by a director of the Corporation were paid a total $91,000 (2008 - $163,000) in professional and consulting fees and office rent. All of the transactions were completed on normal industry terms. None of these amounts remained outstanding at each respective period end. Effective February 6, 2009, this individual ceased to be a director of the Corporation. Canacol has an operating agreement under standard industry terms on the properties in Brazil with W, Washington. Previously, W. Washington was considered a related party by virtue that it was controlled by a director of the Corporation. Following the changes in the composition of the Corporations Board of Directors after the acquisition of Canacol Energy, effective October 30, 2008, W. Washington ceased to be considered a related party of the Corporation. Total management fee payments made to W. Washington as a related party for the year ended June 30, 2009 totalled $1,062,000 (2008 - $330,000) and are included in general and administrative expenses. These transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. TRANSFER AGENT AND REGISTRARS The transfer agent and registrar for the Common Shares is Olympia Trust Company at its principal offices in Calgary, Alberta. MATERIAL CONTRACTS The material contracts entered into by Canacol within the most recently completed financial year, or before the most recently completed financial year but which are still in effect, other than contracts entered into in the ordinary course of business, are as follows: 1. The share purchase agreement dated December 19, 2008 between the Corporation and AllisChalmers with respect to the sale of BCH to Allis-Chalmers; and 2. The amalgamation agreement dated August 25, 2008 among the Corporation, 1415386 Alberta Ltd. and Canacol Energy with respect to the Canacol Energy Acquisition.

-44INTEREST OF EXPERTS There is no person or company whose profession or business gives authority to a statement made by such person or company and who is named as having prepared or certified a statement, report or valuation described or included in a filing, or referred to in a filing, made under NI 51-102 by the Corporation during, or related to, the Corporations most recently completed financial year other than DeGolyer, Netherland Sewell and Ryder Scott, the Corporations independent engineering evaluators and Deloitte & Touche LLP, the Corporations auditors. As at the date of hereof, the principal reserve evaluators of DeGolyer, Netherland Sewell and Ryder Scott, as a group, beneficially own, directly or indirectly, less than 1% of the outstanding Common Shares. As at the date of hereof, the partners and associates of Deloitte & Touche LLP, Chartered Accountants, the external auditors of Canacol, as a group, did not beneficially own any of the Corporations outstanding Common Shares and are independent in accordance with the auditors rules of professional conduct in Canada. Trevor Wong-Chor, the Corporate Secretary of the Corporation, is a lawyer at Davis LLP, which law firm provides legal services to the Corporation. As of the date hereof, the associates and partners of Davis LLP, as a group, beneficially own, directly or indirectly, less than 1% of the outstanding Common Shares. RISK FACTORS Overview A potential investor should carefully consider the factors set forth below in deciding whether to invest in the securities of Canacol. An investment in securities of Canacol is suitable only to those investors who are willing to risk the loss of their entire investment. Investors must rely upon the ability, expertise, judgment, discretion, integrity and good faith of management of Canacol. An investment in the securities of Canacol is speculative and involves a high degree of risk due to the nature of Canacols involvement in the business of exploration for petroleum and natural gas. The following are certain risk factors relating to the business of Canacol which prospective investors should carefully consider before deciding whether to purchase securities of Canacol. The following is a summary only of certain risk factors and is qualified in its entirety by reference to, and must be read in conjunction with, the detailed information appearing elsewhere in this Annual Information Form. Global Financial Crisis Recent market events and conditions, including disruptions in the international credit markets and other financial systems and the deterioration of global economic conditions, have caused significant volatility and a significant overall decline of oil and natural gas prices. These conditions worsened in the fall of 2008 and continued through much of 2009, causing a loss of confidence in the broader U.S. and global credit and financial markets and resulting in the collapse of, and government intervention in, major banks, financial institutions and insurers and creating a climate of greater volatility, less liquidity, widening of credit spreads, a lack of price transparency, increased credit losses and tighter credit conditions. Notwithstanding various actions by governments, concerns about the general condition of the capital markets, financial instruments, banks, investment banks, insurers and other financial institutions caused the broader credit markets to further deteriorate and stock markets to decline

-45substantially. These factors have negatively impacted company valuations and will impact the performance of the global economy going forward. Oil and natural gas prices are expected to remain volatile for the near future as a result of market uncertainties over the supply and demand of these commodities due to the current state of the world economies, OPEC actions and the ongoing global credit and liquidity concerns. Industry Risks Competitive factors in the distribution and marketing of oil and gas include price methods and reliability of delivery. The oil and natural gas industry is intensely competitive and Canacol competes with other companies which possess greater technical and financial resources. Many of these competitors not only explore for and produce oil and natural gas, but also carry on refining operations and market petroleum and other products on an international basis. The impact on the oil and natural gas industry from commodity price volatility is significant. During periods of high prices, producers generate sufficient cash flows to conduct active exploration programs without external capital. Increased commodity prices frequently translate into very busy periods for service suppliers triggering premium costs for their services. Purchasing land and properties similarly increase in price during these periods. During low commodity price periods, acquisition costs drop, as do internally generated funds to spend on exploration and development activities. With decreased demand, the prices charged by the various service suppliers may also decline. Oil and natural gas exploration involves a high degree of risk and there is no assurance that expenditures made on future exploration or development activities by Canacol will result in discoveries of oil or natural gas that are commercially or economically feasible. It is difficult to project the costs of implementing any exploratory drilling program due to the inherent uncertainties of drilling in unknown formations, the costs associated with encountering various drilling conditions such as over pressured zones and tools lost in the hole, and changes in drilling plans and locations as a result of prior exploratory wells or additional seismic data and interpretations thereof. Canacols operations are subject to all the risks normally associated with the exploration, development and operation of oil and natural gas properties and the drilling of oil and natural gas wells, including encountering unexpected formations or pressures, premature declines of reservoirs, potential environmental damage, blow-outs, cratering, fires and spills, all of which could result in personal injuries, loss of life and damage to property of Canacol and others. In accordance with customary industry practice Canacol does maintain insurance coverage, but is not fully insured against all risks, nor are all such risks insurable. Oil and natural gas exploration and development activities are dependent on the availability of seismic, drilling and other specialized equipment in the particular areas where such activities will be conducted. Demand for such limited equipment or access restrictions may affect the availability of such equipment to Canacol and may delay exploration and development activities. Governmental Regulation The oil and gas business is subject to regulation and intervention by governments in such matters as the awarding of exploration and production interests, the imposition of specific drilling obligations, environmental protection controls, control over the development and abandonment of fields (including restrictions on production) and possible expropriation or cancellation of contract rights, as well as with

-46respect to prices, taxes, export quotas, royalties and the exportation of oil and natural gas. Such regulations may be changed from time to time in response to economic or political conditions. The implementation of new regulations or the modification of existing regulations affecting the oil and gas industry could reduce demand for oil and natural gas, increase Canacols costs and have a material adverse effect on Canacol. Competition The oil and natural gas industry is highly competitive and Canacol must compete in all aspects of its operations with a substantial number of other companies many of which have greater technical and financial resources. Many of such companies not only explore for and produce oil and natural gas, but also carry on refining operations and market oil and other products on a worldwide basis. Generally, there is intense competition for the acquisition of resource properties considered to have commercial potential. Prices paid for both oil and natural gas produced are subject to market fluctuations and will directly affect the profitability of producing any oil or natural gas reserves which may be acquired or developed by Canacol. There is no assurance that Canacol will be able to successfully compete against such competitors. Exploration and Development Canacol is engaged in oil and natural gas exploration, which is a high-risk venture with uncertain prospects for success and for which even a combination of experience, knowledge and careful evaluation may not be able to overcome. There is no assurance that expenditures made on future exploration or development activities by Canacol will result in discoveries of oil or natural gas that are commercially or economically possible. It is difficult to project the costs of implementing any exploratory drilling program due to the inherent uncertainties of drilling in unknown formations, the costs associated with encountering various drilling conditions such as overpressured zones and tools lost in the hole, and changes in drilling plans and locations as a result of prior exploratory wells or additional seismic data and interpretations thereof. Even if commercial quantities of petroleum or natural gas are discovered, there is no assurance that production therefrom or development thereof will occur or be profitable. Natural resource prices fluctuate widely and are affected by numerous factors such as inflation, interest rates, demand, global or regional political and economic crisis and production costs in major producing regions. The aggregate affect of these factors, all of which are beyond Canacols control, is impossible to predict. No assurance can be given that commercial accumulations of oil and natural gas will be discovered as a result of the efforts of Canacol and prospective investors must rely upon the ability, expertise, judgment, discretion, integrity, and good faith of the management of Canacol. The future value of Canacol is dependent on the success or otherwise of Canacols activities which are principally directed toward the further exploration, appraisal and development of its assets in Colombia. Canacol has a right to explore and appraise such assets but does not have a right to produce same until such time as the reserves are determined to be commercial. Exploration, appraisal and development of oil and gas reserves are speculative and involves a significant degree of risk. There is no guarantee that exploration or appraisal of the properties in which Canacol holds rights will lead to a commercial discovery or, if there is commercial discovery, that Canacol will be able to realize such reserves as intended. Few properties that are explored are ultimately developed into new reserves. If at any stage Canacol is precluded from pursuing its exploration or development programmes, or such programmes are otherwise not continued, Canacols business, financial condition and/or results of operations and, accordingly, the trading price of the Common Shares, is likely to be materially adversely affected.

-47Canacols operations are subject to the general risks of exploration, development and operation of oil, condensate and natural gas properties and the drilling of wells thereon, including encountering unexpected formations or pressure, premature declines of reservoirs, blow-outs, cratering, sour gas releases, fires and spills. Losses resulting from the occurrence of any of these risks could have a materially adverse effect on Canacol. Canacol may become subject to liability for pollution, blow-outs or other hazards. The payment of such liabilities could reduce the funds available to Canacol or could result in a total loss of its properties and assets. Advanced oil and natural gas related technologies such as three-dimensional seismography, reservoir simulation studies, geo-chemical surveys and horizontal drilling may be used by Canacol to improve its ability to find, develop and produce oil and natural gas. Oil and natural gas exploration and development activities are dependent on the availability of skilled personnel, drilling and related equipment in the particular areas where such activities will be conducted. Demand for such personnel or equipment, or access restrictions may affect the availability of such equipment to Canacol and may delay exploration and development activities. Uninsurable Risks In the course of exploration, development and production of oil and gas properties, certain risks, and in particular, blow-outs, pollution, craterings, fires and oil spills and premature decline of reservoirs and invasion of water into producing formations may occur all of which could result in personal injuries, loss of life and damage to property of Canacol and others. Hazards such as unusual or unexpected geological formations, pressures or other conditions may be encountered in drilling and operating wells as Canacol will initially have interests in a limited number of properties, such risk is more significant than if spread over a number of properties. It is not always possible to fully insure against such risks and Canacol may decide not to take out insurance against such risks as a result of high premiums or other reasons. Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of the securities of Canacol. Insurance against damages caused by terrorism, specifically guerrilla activities, is generally not available. Although Canacol intends to obtain insurance to address such risks, such insurance has limitations on liability that may not be sufficient to cover the full extent of such liabilities. In addition, such risks may not, in all circumstances, be insurable or, in certain circumstances, Canacol may elect not to obtain insurance to deal with specific risks due to the high premiums associated with such insurance or other reasons. The payment of such uninsured liabilities would reduce the funds available to Canacol. The occurrence of a significant event that Canacol is not fully insured against, or the insolvency of the insurer of such event, could have a material adverse effect on Canacols financial position, results of operations or prospects. There can be no assurance that insurance will be available in the future. Operations The marketability of oil and natural gas acquired or discovered will be affected by numerous factors beyond the control of Canacol. These factors include reservoir characteristics, market fluctuations, the proximity and capacity of oil and natural gas pipelines and processing equipment and government regulation. Oil and natural gas operations (exploration, production, pricing, marketing and transportation) are subject to extensive controls and regulations imposed by various levels of government which may be amended from time to time. Petroleum and natural gas operations are affected in varying degrees by government regulation such as restrictions on production, price controls, tax increases, expropriation of property, environmental and pollution controls or changes in conditions

-48under which petroleum or natural gas may be marketed. Canacols oil and natural gas operations may also be subject to compliance with federal, provincial and local laws and regulations controlling the discharge of materials into the environment or otherwise relating to the protection of the environment. Canacol may experience growth through acquisitions. Its continued profitability and growth will depend in part upon its ability to successfully integrate its acquired assets with its existing business. There is no assurance that Canacol will be able to successfully assimilate its acquisitions and its failure to do so could have a material adverse affect on its business, operations results and prospects. Continuing production from a property, and to some extent the marketing of production therefrom, are largely dependent upon the ability of the operator of the property. Canacol is currently non-operator of the majority of its properties and as such will be dependent on such operators for the timing of activities related to such properties and will be largely unable to direct or control the activities of the operators. To the extent the operator fails to perform these functions properly, revenue may be reduced. Payments from production generally flow through the operator and there is a risk of delay and additional expense in receiving such revenues if the operator becomes insolvent. Although satisfactory title reviews are conducted in accordance with industry standards, such reviews do not guarantee or certify that a defect in the chain of title may not arise to defeat the claim of Canacol to certain properties. In addition, the success of Canacol will be largely dependent upon the performance of its key officers. Minimum Work Commitments on Exploration Blocks Canacol must fulfill certain minimum work commitments on certain exploration blocks held in Colombia and Brazil as outlined above. There are no assurances that all of these commitments will be fulfilled within the time frames allowed. As such, Canacol may lose certain exploration rights on the blocks affected and may be subject to certain financial penalties that would be levied by the ANP or ANH, as applicable. Oil and Natural Gas Prices Canacols results of operations and financial condition are dependent on the prices received for its oil and natural gas production. Oil and natural gas prices have fluctuated widely during recent years and are determined by global supply and demand factors, including weather and general economic conditions as well as conditions in other oil producing regions, which are beyond the control of Canacol. World prices for oil and condensate have fluctuated widely in recent years. Future price fluctuations in world oil prices will have a significant impact upon the projected revenue of Canacol and the projected return from and the financial viability of Canacols existing and future reserves. Any decline in oil and natural gas prices could have a material adverse effect on Canacols operations, financial condition, proven reserves and the level of expenditures of the development of its oil and natural gas reserves. There is no assurance that a market will exist for oil or natural gas reserves discovered within Canacols properties. Although recent studies suggest that ready and growing oil and gas markets exist in Colombia, access to such markets cannot be assured. There is no assurance that Canacol will be able to access the pipeline transportation system for the transportation to the marketplace of any oil or gas that may be produced from Canacols properties due to capacity or other reasons. Canacol may manage the risk associated with changes in commodity prices and foreign exchanges rates from time to time, by entering into oil or natural gas price hedges and forward foreign exchange contracts. To the extent that Canacol engages in risk management activities related to commodity prices and foreign exchange rates, it will be subject to credit risks associated with counter parties with which it contracts.

-49Alternatives to/Changing Demand for Petroleum Products Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to oil and natural gas, and technological advances in fuel economy and energy generation devices will reduce the demand for crude oil and other liquid hydrocarbons. Canacol cannot predict the impact of changing demand for oil and natural gas products and any major changes would have a material adverse effect on Canacols business, financial condition, results of operations and cash flow. Reserve Estimates There are numerous uncertainties inherent in estimating quantities of proved, probable and possible reserves and cash flows to be derived therefrom, including many factors beyond the control of Canacol. The reserve and cash flow information set forth in this Annual Information Form represent estimates only. The reserves and estimated future net cash flows from Canacols properties have been independently evaluated by DeGolyer, Netherland Sewell and Ryder Scott with an effective date of June 30, 2009. These evaluations include a number of assumptions relating to factors such as initial production rates, production decline rates, ultimate recovery of reserves, timing and amount of capital expenditures, marketability of production, future prices of oil and natural gas, operating costs, abandonment and salvage values, royalties and other government levies that may be imposed over the producing life of the reserves. These assumptions were based on price forecasts for each jurisdiction Canacol has reserves that are in use at the date the relevant evaluations were prepared and many of these assumptions are subject to change and are beyond the control of Canacol. Actual production and cash flows derived therefrom will vary from these evaluations, and such variations could be material. Due to the limited history of Canacols producing wells, reserves have been estimated on a volumetric basis. The present value of estimated future net cash flows referred to herein should not be construed as the current market value of estimated oil and natural gas reserves attributable to Canacols properties. The estimated discounted future cash flows from reserves are based upon price and cost estimates which may vary from actual prices and costs and such variance could be material. Actual future net cash flows will also be affected by factors such as the amount and timing of actual production, supply and demand for oil and natural gas, curtailments or increases in consumption by purchasers and changes in governmental regulations or taxation. Environmental Concerns Extensive national, provincial and local environmental laws and regulations in Brazil, Colombia and Canada affect nearly all of the operations of Canacol. These laws and regulations set various standards regulating certain aspects of health and environmental quality, provide for penalties and other liabilities for the violation of such standards and establish in certain circumstances obligations to remediate current and former facilities and locations where operations are or were conducted. In addition, special provisions may be appropriate or required in environmentally sensitive areas of operation. There can be no assurance that Canacol will not incur substantial financial obligations in connection with environmental compliance. Environmental regulation is becoming increasingly stringent and costs and expenses of regulatory compliance are increasing. Environmental regulations place restrictions and prohibitions on emissions of various substances produced concurrently with oil and natural gas and can impact on the selection of drilling sites and facility locations, potentially resulting in increased capital expenditures.

-50Significant liability could be imposed on Canacol for damages, clean-up costs or penalties in the event of certain discharges into the environment, environmental damage caused by previous owners of properties purchased by Canacol or non-compliance with environmental laws or regulations. Such liability could have a material adverse effect on Canacol. Moreover, Canacol cannot predict what environmental legislation or regulations will be enacted in the future or how existing or future laws or regulations will be administered or enforced. Compliance with more stringent laws or regulations, or more vigorous enforcement policies of any regulatory authority, could in the future require material expenditures by Canacol for the installation and operation of systems and equipment for remedial measures, any or all of which may have a material adverse effect on Canacol. Natural Disasters and Weather-Related Risks Canacol is subject to operating hazards normally associated with the exploration and production of oil and natural gas, including blow-outs, explosions, oil spills, cratering, pollution, earthquakes, hurricanes and fires. The occurrence of any such operating hazards could result in substantial losses to Canacol due to injury or loss of life and damage to or destruction of oil and natural gas wells, formations, production facilities or other properties. The majority of oil in Colombia is delivered by a single pipeline to Ecopetrol and sales of oil could be disrupted by damage to this pipeline. Once delivered to Ecopetrol, oil production in Colombia is transported by an export pipeline which provides the only access to markets for oil. Without other transportation alternatives, sales of oil could be disrupted by landslides or other natural events which impact this pipeline. Volatility of Oil and Natural Gas Prices and Markets Canacols financial condition, operating results and future growth are dependent on the prevailing prices for its oil and natural gas production. Historically, the markets for oil and natural gas have been volatile and such markets are likely to continue to be volatile in the future. Prices for oil and natural gas are subject to large fluctuations in response to relatively minor changes to the demand for oil and natural gas, whether the result of uncertainty or a variety of additional factors beyond the control of Canacol. Pricing of oil is dependent on supply and demand for specific qualities of oil in specific market areas and quality differentials are therefore subject to change with time. Any substantial decline in the prices of oil and natural gas could have a material adverse effect on Canacol and the level of its oil and natural gas reserves. Additionally, the economics of producing from some wells may change as a result of lower prices, which could result in a suspension of production by Canacol. No assurance can be given that oil and natural gas prices will be sustained at levels which will enable Canacol to operate profitably. From time to time Canacol may avail itself of forward sales or other forms of hedging activities with a view to mitigating its exposure to the risk of price volatility. Price Volatility of Publicly Traded Securities In recent years, the securities markets in Canada and the United States have experienced a high level of price and volume volatility, and the market price of securities of many companies, particularly those considered to be development stage companies, have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. There can be no assurance that continual fluctuations in price will not occur. It is likely that the quoted market price, if any, for the Common Shares will be subject to market trends generally, notwithstanding the financial and operational performance of Canacol.

-51Debt Facilities As at June 30, 2009, Canacol has drawn a total of US$17,500,000 under the Standard Bank Loan (approximately US$12,500,000 as at November 25, 2009). These amounts are secured by certain of the assets of Canacol. In the event of default under this facility, Canacol could face adverse effects, including claims against the producing properties held. Canacol has also executed a series of agreements with Gemini, the Jersey based oil and gas investment fund, whereby Gemini has invested US$9,000,000 to fund a portion of Canacols development and appraisal programs on its producing assets in Colombia in 2009. Gemini is entitled to receive payments equivalent to a percentage of Canacols gross revenues from production. Gemini has indicated that at its discretion the total investment may be increased up to a maximum of US$12,000,000. In accordance with the Standard Bank Loan, Canacol, received the approval of Standard Bank to incorporate the Gemini investment into Canacols financial structure. Additional Financing Depending on future exploration, development, acquisition and divestiture plans, Canacol may require additional financing. The ability of Canacol to arrange any such financing in the future will depend in part upon the prevailing capital market conditions, risk associated with the international operations, as well as the business performance of Canacol. Periodic fluctuations in energy prices may affect lending policies of Canacols lenders for new borrowings, if available. This in turn could limit growth prospects in the short run or may even require Canacol to dedicate cash flow, dispose of properties or raise new equity to continue operations under circumstances of declining energy prices, disappointing drilling results, or economic or political dislocation in foreign countries. There can be no assurance that Canacol will be successful in its efforts to arrange additional financing on terms satisfactory to Canacol. This may be further complicated by the limited market liquidity for shares of smaller companies, restricting access to some institutional investors. If additional financing is raised by the issuance of shares from treasury of Canacol, control of Canacol may change and shareholders may suffer additional dilution. From time to time Canacol may enter into transactions to acquire assets or the shares of other corporations. These transactions may be financed partially or wholly with debt, which may temporarily increase Canacols debt levels above industry standards. No Assurance of Title Title to or rights in oil and gas is often not susceptible of determination without incurring substantial expense. Title to oil and gas properties may involve certain inherent risks due to problems arising from the ambiguous conveyancing history characteristic of many such properties. Although title reviews will be done according to industry standards prior to the purchase of most oil and natural gas producing properties or the commencement of drilling wells, such reviews do not guarantee or certify that an unforeseen defect in the chain of title will not arise to defeat the claim of Canacol which could result in a reduction of the revenue received by Canacol. In civil law jurisdictions like Colombia, legal title is not perfected until such time as the appropriate governmental authorities and the Executive Branch approve the assignment of a participating interest, record the title holder in the applicable registry and issue a decree. This process can take time, even several years. As a result, it is common business practice for commercial parties to proceed with the completion of a purchase and sale transaction, notwithstanding the fact that governmental approval may take years to properly reflect these business dealings. In these cases, title review due diligence involves ensuring that the current title holder has started the different authorization procedures, and also involves an update as to the status of the required authorizations.

-52Changes in Legislation Canadian federal and provincial tax laws and government incentive programs relating to the oil and gas industry have a material effect on the advisability of investing in the Common Shares. The return on an investment in securities of Canacol is subject to changes in such laws and incentive programs and there can be no assurance that such laws or programs will not be changed in a manner which adversely affects Canacol or the holding or disposing of Common Shares. Risks of Foreign Operations Generally The majority of Canacols oil and natural gas properties and operations are located in a foreign jurisdiction. As such, Canacols operations may be adversely affected by changes in foreign government policies and legislation or social instability and other factors which are not within the control of Canacol, including, but not limited to, nationalization, expropriation of property without fair compensation, renegotiation or nullification of existing concessions and contracts, the imposition of specific drilling obligations and the development and abandonment of fields, changes in energy policies or the personnel administering them, changes in oil and natural gas pricing policies, the actions of national labour unions, currency fluctuations and devaluations, exchange controls, economic sanctions and royalty and tax increases and other risks arising out of foreign governmental sovereignty over the areas in which Canacols operations are conducted, as well as risks of loss due to civil strife, acts of war, terrorism, guerrilla activities and insurrections. Canacols operations may also be adversely affected by laws and policies of Colombia, Brazil, Guyana and Canada affecting foreign trade, taxation and investment. If Canacols operations are disrupted and/or the economic integrity of its projects is threatened for unexpected reasons, its business may be harmed. Prolonged problems may threaten the commercial viability of its operations. In the event of a dispute arising in connection with Canacols operations in Brazil, Guyana or Colombia, Canacol may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdictions of the courts of Canada or enforcing Canadian judgments in such other jurisdictions. Canacol may also be hindered or prevented from enforcing its rights with respect to a governmental instrumentality because of the doctrine of sovereign immunity. Accordingly, Canacols exploration, development and production activities in Brazil, Guyana and Colombia could be substantially affected by factors beyond the Corporations control, any of which could have a material adverse effect on Canacol. Acquiring interests and conducting exploration and development operations in foreign jurisdictions often require compliance with numerous and extensive procedures and formalities. These procedures and formalities may result in unexpected or lengthy delays in commencing important business activities. In some cases, failure to follow such formalities or obtain relevant evidence may call into question the validity of the entity or the actions taken. Management is unable to predict the effect of additional corporate and regulatory formalities which may be adopted in the future including whether any such laws or regulations would materially increase Canacols cost of doing business or affect its operations in any area. Canacol may in the future acquire oil and natural gas properties and operations outside of Brazil, Guyana and Colombia, which expansion may present challenges and risks that Canacol has not faced in the past, any of which could adversely affect the results of operations and/or financial condition of Canacol. The Corporation is an experienced operator in South America.

-53Political and Economic Conditions Brazil and Colombia The Brazilian and Colombian governments have, at times, exercised and, from time to time, continue to exercise significant influence over their respective economies and frequently intervene to control inflation and affect other policies in such areas as wage and price controls, currency devaluations, capital controls and limits on imports. The oil and gas business, financial condition and results of operations may be adversely affected by changes in policy involving tariffs, exchange controls and other matters, as well as factors such as inflation, currency devaluation, exchange rates and controls, interest rates, changes in government leadership, policy, taxation and other political, economic or other developments in or affecting Brazil and Colombia, including civil disturbances, armed conflict and/or war. There is a risk of rebel, terrorist attacks and kidnappings against facilities and personnel involved in the exploration and development of the Colombian properties in which Canacol has an interest. Currency Risks Canacol is exposed to foreign exchange risks since much of its revenue and its exploration and development costs are expected to be received/paid in or by reference to U.S. dollar denominated prices while the majority of its general and administrative costs are in Canadian dollars. The exchange rate between Canadian and U.S. dollars has varied substantially recently. Availability of Drilling Equipment and Access Restrictions Oil exploration and development activities are dependent on the availability of drilling and related equipment in the particular areas where such activities will be conducted. Demand for such limited equipment or access restrictions may affect the availability of such equipment to Canacol and may delay exploration and development activities. There can be no assurance that sufficient drilling and completion equipment, services and supplies will be available when needed. Shortages could delay Canacols proposed exploration, development, and sales activities and could have a material adverse effect on Canacols financial condition. If the demand for, and wage rates of, qualified rig crews rise in the drilling industry then the oil industry may experience shortages of qualified personnel to operate drilling rigs. This could delay Canacols drilling operations and adversely affect Canacols financial condition and results of operations. To the extent Canacol is not the operator of its oil properties, Canacol will be dependent on such operators for the timing of activities related to such properties and will be largely unable to direct or control the activities of the operators. Foreign Location of Assets Other than cash on deposit, almost all of Canacols assets are located in countries other than Canada (whose laws may differ materially from those in Canada), which may impede or adversely affect the ability of Canacol and its directors and management to manage its operations and protect its assets. A portion of the cash on deposit is located in countries other than Canada. Permits and Licenses The operations of Canacol may require licenses and permits for various governmental authorities. There can be no assurance that Canacol will be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and operations of its projects.

-54Legal Proceedings Canacol is involved in litigation from time to time in the ordinary course of business. Although Canacol is currently not a party to any material legal proceedings, legal proceedings could be filed against Canacol in the future. No assumption can be given as to the final outcome of any legal proceedings or that the ultimate resolutions will not have a material adverse effect on Canacol. Legal Systems Canacol is subject to the legal systems and regulatory requirements of a number of jurisdictions with a variety of requirements and implications for Shareholders. International exploration and development activities may require protracted negotiations with host governments, national oil companies and third parties. Foreign government regulations may favour or require the awarding of drilling contracts to local contracts or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. If a dispute arises with foreign operations, Canacol may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons, especially foreign oil ministries and national oil companies, to the jurisdiction of Canada. Brazil and Colombia are civil law jurisdictions. Guyana, having a pluralistic legal system, has a similar legal system to Canada. The Colombian legal system may result in risks such as: (i) effective legal redress in the courts of such jurisdictions, whether in respect of a breach of law or regulation or in an ownership dispute, being more difficult to obtain; (ii) a higher degree of discretion on the part of governmental authorities; (iii) the lack of judicial or administrative guidance on interpreting applicable rules and regulations; (iv) inconsistencies or conflicts between and within various laws, regulations, decrees, orders and resolutions; or (v) relative inexperience of the judiciary and courts in such matters. The commitment of local business people, government officials and agencies and the judicial system to abide by legal requirements and negotiated agreements may be more uncertain in Colombia, creating particular concerns with respect to licences and agreements for business. These may be susceptible to revision or cancellation and legal redress may be uncertain or delayed. There can be no assurance that joint ventures, licences, licence applications or other legal arrangements will not be adversely affected by the actions of government authorities or others and the effectiveness of and enforcement of such arrangements in Colombia cannot be assured. Cost of New Technologies The oil industry is characterized by rapid and significant technological advancements and introductions of new products and services utilizing new technologies. Other oil companies may have greater financial, technical and personnel resources that allow them to enjoy technological advantages and may in the future allow them to implement new technologies before Canacol does. There can be no assurance that Canacol will be able to respond to such competitive pressures and implement such technologies on a timely basis or at an acceptable cost. One or more of the technologies currently utilized by Canacol or implemented in the future may become obsolete. In such case, Canacols business, financial condition and results of operations could be materially adversely affected. If Canacol is unable to utilize the most advanced commercially available technology, Canacols business, financial condition and results of operations could be materially adversely affected. Dependence on Key Personnel The success of Canacol is dependent on the services of a number of members of senior management. The experience of these individuals will be a factor contributing to Canacols continued success and

-55growth. Canacol has key man insurance policies with respect to the Chief Executive Officer, but there is a risk that the death or departure of one or more of these individuals could have a material adverse effect on Canacol. The ability of Canacol to conduct its Brazilian and Colombian operations is also highly dependent on the availability of skilled workers. Reliance on Strategic Relationships Canacols existing business relies on strategic relationships in the form of joint ventures with local government bodies, other oil and gas companies and other overseas companies. Specific to strategic relationships with other oil and gas companies, Canacol is somewhat reliant on W. Washington, its primary joint-venture partner in Brazil and Emerald Energy, the operator under the Ombu E&P Contract (Capella conventional heavy oil discovery). There can be no assurance that W. Washington and Emerald Energy will be able to continue to fund its share of expenditures. In addition, there can be no assurances that all of these strategic relationships will continue to be maintained; however, at present management is not aware of any issues regarding its strategic relationships. Reserve Replacement Canacols oil and natural gas reserves and production, and therefore its cash flows and earnings derived therefrom are highly dependent upon Canacol developing and increasing its current reserve base and discovering or acquiring additional reserves. Without the addition of reserves through exploration, acquisition or development activities, Canacols reserves and production will decline over time as reserves are depleted. To the extent that cash flow or net revenue from operations is insufficient and external sources of capital become limited or unavailable, Canacols ability to make the necessary capital investments to maintain and expand its oil and natural gas reserves will be impaired. There can be no assurance that Canacol will be able to find and develop or acquire additional reserves to replace production at commercially feasible costs. Conflicts of Interest There are potential conflicts of interest to which some of the directors and officers of Canacol will be subject in connection with the operations of Canacol. Some of the directors and officers are engaged and will continue to be engaged in the search for oil and natural gas interests on their own behalf and on behalf of other corporations, and situations may arise where the directors and officers will be in direct competition with Canacol. Conflicts of interest, if any, which arise will be subject to and be governed by procedures prescribed by the ABCA which require a director or officer of a corporation who is a party to or is a director or an officer of or has a material interest in any person who is a party to a material contract or proposed material contract with Canacol, to disclose his interest and to refrain from voting on any matter in respect of such contract unless otherwise permitted under the ABCA. Guerrilla Activity in Colombia A 40-year armed conflict between government forces and anti-government insurgent groups and illegal paramilitary groups, both thought to be funded by the drug trade, continues in Colombia. Insurgents continue to attack civilians and violent guerrilla activity continues in many parts of the country. The Putumayo region has been prone to guerrilla activity in the past. Pipelines have also been targets, including the Trans-Andean export pipeline which transports oil from the Putumayo region. In March and April of 2008, sections of one of the Ecopetrol pipelines were blown up by guerrillas. Ecopetrol was able to restore deliveries within one to two weeks of these attacks. The Catatumbo basin borders

-56Venezuela and has historically been an area of high security risk where there continues to be guerrilla activity. Canacol does not currently have interest in either the Putumayo region or Catatumbo basin. The Colombian Government has stepped up efforts to reassert government control throughout the country, and now has a presence in every one of its administrative departments. However, continuing attempts to reduce or prevent guerrilla activity may not be successful and guerrilla activity may disrupt Canacols operations in the future. Canacol may not be able to establish or maintain the safety of its operations and personnel in Colombia and this violence may affect its operations in the future. Continued or heightened security concerns in Colombia could also result in a significant loss to Canacol. United States Relations with Colombia Colombia is among several nations whose progress in stemming the production and transit of illegal drugs is subject to annual certification by the President of the United States of America. Although Colombia has received a current certification, there can be no assurance that, in the future, Colombia will receive certification or a national interest waiver. The failure to receive certification or a national interest waiver may result in adverse economic consequences in Colombia, including suspension of all bilateral aid, except anti-narcotics and humanitarian aid and the requirement that the United States representatives at multilateral lending institutions vote against all loan requests from Colombia. Any sanctions imposed on Colombia by the United States government could threaten Canacols ability to obtain any necessary financing to develop the Colombian properties and could further heighten the political and economic risks associated with operations in Colombia. There can be no assurance that the United States will not impose sanctions on Colombia in the future, nor can the effect in Colombia that these sanctions might cause be predicted. International Operations International operations are subject to political, economic and other uncertainties, including but not limited to, risk of terrorist activities, revolution, border disputes, expropriation, renegotiations or modification of existing contracts, import, export and transportation regulations and tariffs, taxation policies, including royalty and tax increases and retroactive tax claims, exchange controls, limits on allowable levels of production, currency fluctuations, labour disputes and other uncertainties arising out of foreign government sovereignty over Canacols international operations. Canacols operations may also be adversely affected by applicable laws and policies of Colombia and Brazil, the effect of which could have a negative impact on Canacol. To help mitigate the risks associated with operating in foreign jurisdictions, Canacol seeks to operate in regions where the petroleum industry is a key component of the economy. Canacol believes that managements experience operating both in Colombia and in other international jurisdictions helps reduce these risks. Some countries in which Canacol may operate may be considered politically and economically unstable. In Colombia, the government has a long history of democracy and an established legal framework that, in Canacols opinion, minimizes political risks. Security Colombia has a publicized history of security problems associated with certain narco-terrorist groups. Canacol and its personnel are subject to these risks, but through effective security and social programs, Canacol believes these risks can be effectively managed. It is difficult to obtain insurance coverage to protect against terrorist incidents and as a result Canacols insurance program excludes this coverage. Consequently, incidents like this in the future could have a material adverse impact on Canacols operations. In addition to the potential effect of direct terrorist activities against Canacols facilities,

-57increased kidnapping and terrorist activity in Colombia generally may disrupt supply chains and discourage qualified individuals from being involved with Canacols operations. Dividends The future payment of dividends on the Common Shares will be dependent upon the financial requirements of Canacol to finance future growth, the financial condition and other factors which the Board of Directors may consider appropriate in the circumstances. Canacol intends to reinvest its earnings in growth of Canacol for the foreseeable future. ADDITIONAL FINANCIAL AND OTHER INFORMATION Additional information relating to the Corporation may be found on SEDAR at www.SEDAR.com. Additional information, including directors and officers remuneration and indebtedness, principal holders of Canacols securities, options to purchase securities and interests of insiders in material transactions, where applicable, will be contained in Canacols information circular for the next annual meeting of shareholders that involves the election of directors and additional information as provided in Canacols comparative financial statements for its most recently completed financial year. Canacol will provide this information to any person, upon request made to the Corporate Secretary of Canacol at Suite 620, 304 8th Avenue SW, Calgary, Alberta, T2P 1C2. The documents will also be located on SEDAR at www.sedar.com. Additional financial information is provided in the Corporations comparative financial statements and managements discussion and analysis for the year ended June 30, 2009 which are also available on SEDAR.

SCHEDULE A REPORT ON RESERVES DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATORS (FORM 51-101F2)

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SCHEDULE B REPORT OF MANAGEMENT AND DIRECTORS ON OIL AND GAS DISCLOSURE (FORM 51-101F3) Management of Canacol Energy Ltd. (the Corporation) are responsible for the preparation and disclosure of information with respect to the Corporations oil and gas activities in accordance with securities regulatory requirements. This information includes reserves data which are estimates of proved reserves and probable reserves and related future net revenue as at June 30, 2009, estimated using forecast prices and costs. Independent qualified reserves evaluators have evaluated the Corporations reserves data. The report of the independent qualified reserves evaluators will be filed with securities regulatory authorities concurrently with this report. The Reserves Committee of the board of directors of the Corporation has (a) reviewed the Corporations procedures for providing information to the independent qualified reserves evaluators; (b) met with the independent qualified reserves evaluators to determine whether any restrictions affected the ability of the independent qualified reserves evaluators to report without reservation; and (c) reviewed the reserves data with management and the independent qualified reserves evaluators. The Reserves Committee of the board of directors has reviewed the Corporations procedures for assembling and reporting other information associated with oil and gas activities and has reviewed that information with management. The board of directors has, on the recommendation of the Reserves Committee, approved: (a) the content and filing with securities regulatory authorities of Form 51-101F1 containing reserves data and other oil and gas information; (b) the filing of Form 51-101F2 which is the report of the independent qualified reserves evaluators on the reserves data; and (c) the content and filing of this report. Because the reserves data are based on judgements regarding future events, actual results will vary and the variations may be material. However, any variations should be consistent with the fact that reserves are categorized according to the probability of their recovery. (signed) Charle Gamba Charle Gamba, Chief Executive Officer, President and Director

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(signed) Mark Teare Mark Teare, VP Exploration

(signed) Michael Hibberd Michael Hibberd, Chairman and Director

(signed) David Winter David Winter, Director

Dated: November 25, 2009