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Press release from Marketwire

C&C Energia Ltd. Announces Success in Colombia Bid Round and Provides Operational Update

Wednesday, June 23, 2010

C&C Energia Ltd. Announces Success in Colombia Bid Round and Provides Operational Update08:00 EDT Wednesday, June 23, 2010CALGARY, ALBERTA--(Marketwire - June 23, 2010) - C&C Energia Ltd. ("C&C Energia" or the "Corporation") (TSX:CZE) is pleased to announce that it was a successful bidder on two blocks in the Colombia Exploration Bid round held on June 22, 2010 in Cartagena, Colombia. The Corporation was selected as the successful bidder for the right to explore for oil and natural gas on VMM-21, an approximately 119,000 acre block in the Middle Magdalena Basin in central Colombia, approximately 200 kilometers from Bogota. The bid for the block was submitted by C&C Energia as the Operator for a 100% participating interest and is subject to final approval by, and execution of an exploration and production contract (an "E&P Contract") with the National Agency of Hydrocarbons (the "ANH") in Colombia. In summary the Corporation has made a total work commitment of US$13.6 million for seismic and drilling. The Corporation also bid a 2% "x-factor", which equates to an incremental royalty on production from the block.The Corporation and its partner, VETRA Exploration and Production Colombia S.A. ("VETRA"), bid as a Consortium and were selected as the successful bidders for the right to explore for oil and natural gas on Putumayo Block-8, an approximately 103,000 acre block in the Putumayo Basin in southern Colombia. C&C Energia and VETRA each hold a 50% participating interest, with VETRA being the Operator. The selection is subject to final approval by, and execution of an E&P Contract with the ANH. In summary the Consortium made a total work commitment of US$20.9 million for seismic and drilling. The Consortium also bid a 2% "x-factor", which equates to an incremental royalty on production from the block.Management of C&C Energia anticipates definitive agreements and execution of the E&P contracts with the ANH to be finalized by the end of August 2010.Richard Walls, President and CEO of C&C Energia, said, "We are extremely pleased and excited to be selected as the winning bidder for VMM-21. We have identified several exploration leads that could provide significant growth opportunities for the Company." "We are also delighted to be partnering with VETRA on Putumayo Block-8. VETRA is an international company focused on oil and gas exploration and production activities in several countries, including Colombia, and is a proven Operator in the Putumayo Basin." said Mr. Walls."Winning this bid is a significant step in our strategy to build a long-term business in Colombia and complements our efforts to capture other opportunities in the country through farm-ins and acquisitions," said Tomas Villamil, Executive Vice-President of Exploration for C&C Energia. Operational UpdateThe Corporation is also pleased to provide an update on its ongoing operations in Colombia. The Corporation has been engaged in an active drilling and exploration program over the past six months. -- In the Llanos Basin, the Corporation drilled 11 wells (7.5 net), 6 wells on the Cravoviejo block (100% participating interest) and 5 on the Cachicamo block (30% participating interest) since the beginning of January 2010. The Corporation is currently drilling a well on each of the Cravoviejo and Cachicamo blocks and plans to drill an additional 2 to 3 wells on Cravoviejo over the next 2 to 3 months. -- Tested 8 wells, 5 on Cravoviejo and 3 on Cachicamo, resulting in a 100% success rate since the beginning of January 2010. -- Current production levels are in excess of 6,000 barrels of oil per day ("bopd"), with approximately an additional 750 bopd awaiting tie-in. The Corporation expects to bring approximately 300 bopd on production by the end of July with the remaining 450 bopd coming on-stream late in the fourth quarter due to seasonal construction delays. Just over 95% of the current production comes from the Corporation-operated Cravoviejo block. -- Shortly, the Corporation plans to mobilize a drilling rig and a service rig to its Morpho block in the Middle Magdalena Valley where it intends to test the intermediate and upper sands identified in the Zeus-1 well, drilled by Ecopetrol in 2008, and the shallow sands as identified in the Morpho-1 well, drilled and tested by the Corporation in 2009. Operations are expected to commence in the next 45 to 60 days. -- The Corporation is planning to reduce its production costs on the Cravoviejo block through the investment of approximately US$15 to $20 million in centralized production facilities. Construction is expected to commence in the fourth quarter of 2010 with anticipated start-up in the second quarter of 2011. The facilities will initially be capable of handling over 120,000 barrels of total fluids per day and are expandable. The Corporation estimates that production costs could be reduced by 20 to 30 percent by mid-next year as a result of improved water handling, reduced diesel fuel consumption and decreased rental costs. In conjunction with the facilities project, the Corporation has pro-actively undertaken an aggressive water handling program. Currently two wells have been converted to water injection wells with combined injection capability of approximately 20,000 barrels of water per day. The Corporation expects that a third injection well will be operational by the end of July. Management expects these wells to significantly reduce the volume of water being disposed at surface. -- The Corporation completed the drilling of the Carrizales 8 horizontal well, which has been tied-in and is producing in excess of 400 bopd. -- The Corporation (30% participating interest), together with its partner Ramshorn International Limited, completed the drilling of the IVF exploration well on the Cachicamo block. This well was testing a completely new stratigraphic play in the basin and is currently awaiting the completion of testing and further analysis. -- In the Llanos Basin, a 120 km2 3D seismic program was completed on the Pajaro Pinto block in May 2010 and the seismic crew mobilized to the Llanos 19 block where a 220 km2 3D seismic program has commenced. The Corporation plans to use the results of these seismic programs to define 4 to 5 exploration prospects, which will begin drilling in the first half of 2011. Prior to the Corporation's success at the June 22 bid round, it had seven blocks in Colombia totalling 544,514 gross acres (416,409 acres, net to the Corporation). "The Company is well on track to delivering on its 2010 program." explained Richard Walls. "Our production has increased by over 30% from the first quarter of 2010 as a result of a continuation of our drilling success. The Company has identified 3 or 4 exploration targets remaining on its Cravoveijo block and believes there is significant exploration and development remaining on the Cachicamo block." Walls said. "And with the addition of the new exploration blocks, we expect to be well positioned to deliver additional growth and value to our stakeholders."The Corporation, through its subsidiary Grupo C&C Energy (Barbados) Ltd, is engaged in the exploration for, and the acquisition, development and production of, oil resources in Colombia. Its strategy is to develop producing oil assets by appraising and developing existing discoveries and exploring in areas assessed by management to be of low to moderate risk.CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATIONThis press release contains forward-looking information within the meaning of applicable Canadian securities laws that involves known and unknown risks and uncertainties. Forward-looking information typically contains statements with words such as "anticipate", "estimate", "expect", "potential", "could", "will", "plans" or similar words suggesting future outcomes. The Corporation cautions readers and prospective investors in the Corporation's securities to not place undue reliance on forward-looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by C&C Energia.Forward-looking information in this press release includes, but is not limited to, information concerning the expectations of the Corporation with respect to the completion of definitive contracts with the ANH regarding the VMM-21 block and the Putumayo Block-8, expectations of the Corporation's future production growth, the Corporation's drilling plans and expected reductions in operating costs. These forward-looking statements are subject to assumptions regarding the Corporation's operations and the operating environment in Colombia. In particular, the expected timing of the finalization of definitive E&P Contracts for the VMM-21 block and the Putumayo Block-8 is based on assumptions regarding the conduct of negotiating such agreements being similar to those for prior similar agreements. Increases in production and the expected changes in the Corporation's operating costs are based on the assumptions that the Corporation's plans will be completed without any undue difficulty and that other costs will not rise. Forward-looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated by C&C Energia including, but not limited to, general risks associated with the oil and gas industry (e.g. operational risks in exploration; inherent uncertainties in interpreting geological data; changes in plans with respect to exploration or capital expenditures; the uncertainty of estimates and projections in relation to costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with the negotiating with the ANH or with other third parties in countries other than Canada and risk associated with international activity. The forward-looking information included in this news release is expressly qualified in its entirety by this cautionary statement. The forward-looking information included herein is made as of the date hereof and C&C Energia assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances, except as required by law.FOR FURTHER INFORMATION PLEASE CONTACT: C&C Energy Canada Ltd. Richard A. Walls President and Chief Executive Officer 403-262-6046 or C&C Energy Canada Ltd. Ken Hillier Chief Financial Officer 403-262-6046