Golden Cross
5 years ago
News out Canacol Energy Ltd. Provides Gas Sales and Drilling Update, and Notice of Change of Auditor
Press Release | 10/10/2019
CALGARY, Alberta, Oct. 10, 2019 (GLOBE NEWSWIRE) -- Canacol Energy Ltd. ("Canacol" or the "Corporation") (TSX:CNE; OTCQX:CNNEF; BVC:CNEC) is pleased to provide the following gas sales and drilling update.
Q3 Realized Contractual Gas Sales Average 146 MMscfpd
Natural gas sales for the third quarter of 2019 averaged approximately 146 million standard cubic feet per day (“MMscfpd”), compared to 120.5 MMscfpd for the second quarter of 2019. Natural gas sales for the first 9 days of October 2019 averaged 211 MMscfpd. As a result of the Promigas pipeline delay this year, whereby the expansion was to be delivered on June 1, 2019 but instead was delivered in full on August 24th, 2019, average annual gas sales for 2019 are forecast to be approximately 150 MMscfpd.
Clarinete 4 Encounters Record 297 Feet TVD of Net Gas Pay and tests 40 MMscfpd
The Clarinete 4 development well was spud on September 3, 2019 and reached a total depth of 8,450 feet measured depth on September 18, 2019. The well encountered 297 feet true vertical depth (“ft TVD”) of net gas pay in the Cienaga de Oro (“CDO”) sandstone reservoir with average porosity of 22%.
The CDO reservoir was perforated from 7,120 to 7,252 ft TVD and tested at a final rate of 41.1 MMscfpd with no water over a test period of 24 hours. The well will be tied into the new 8 inch Clarinete to Jobo flow line by mid October 2019.
The Pandereta 5 appraisal well was spud on July 22, 2019, and reached a total depth of 10,520 ft md on August 12, 2019. No commercial quantities of gas were encountered within the primary CDO reservoir target and the well was plugged and abandoned. The result has no negative impact on the gas reserves currently assigned to the Pandereta field.
The drilling rig is currently being mobilized to the Arandala 1 exploration well. Arandala 1 is targeting prospective gas charged reservoirs within the shallow Porquero sandstone reservoir and is anticipated to spud in late October 2019. The well will take approximately 4 weeks to drill, complete and test. The Corporation will provide regular updates on the drilling program results as they become available.
Change in Auditor
Canacol announces that it has changed its auditors from Deloitte LLP ("Former Auditor") to KPMG LLP ("Successor Auditor") effective October 4, 2019. At the request of the Corporation, the Former Auditor resigned as the auditor of the Corporation effective October 4, 2019 and the board of directors of the Corporation appointed the Successor Auditor as the Corporation’s auditor effective October 4, 2019, until the next Annual General Meeting of the Corporation. The Corporation historically retained Deloitte for both audit and permissible advisory services. Given the quantum of permissible non audit services to the audit services being provided the Corporation, at the direction of its audit committee, has made the decision to segregate it’s service providers between audit and advisory services with Deloitte being retained for ongoing advisory and tax services.
There were no reservations in the Former Auditor’s reports on the Corporation’s financial statements for the ?period commencing at the beginning of the Corporation’s two most recently completed financial years and ?ending on the date of resignation of the Former Auditor.? There are no reportable events including disagreements, consultations, or unresolved issues as defined ?in National Instrument 51-102 – Continuous Disclosure Obligations ("NI 51-102") (Part 4.11) between the Corporation and the Former Auditor.?
In accordance with NI 51-102, the notice of change of auditor, together with the required letters from the Former Auditor and the Successor Auditor, have been reviewed by the board of directors of the Corporation and filed on SEDAR.
Canacol is an exploration and production company with operations focused in Colombia. The Corporation's common stock trades on the Toronto Stock Exchange, the OTCQX in the United States of America, and the Colombia Stock Exchange under ticker symbol CNE, CNNEF, and CNE.C, respectively.
This press release contains certain forward-looking statements within the meaning of applicable securities law. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur, including without limitation statements relating to estimated production rates from the Corporation's properties and intended work programs and associated timelines. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Corporation cannot assure that actual results will be consistent with these forward looking statements. They are made as of the date hereof and are subject to change and the Corporation assumes no obligation to revise or update them to reflect new circumstances, except as required by law. Prospective investors should not place undue reliance on forward looking statements. These factors include the inherent risks involved in the exploration for and development of crude oil and natural gas properties, the uncertainties involved in interpreting drilling results and other geological and geophysical data, fluctuating energy prices, the possibility of cost overruns or unanticipated costs or delays and other uncertainties associated with the oil and gas industry. Other risk factors could include risks associated with negotiating with foreign governments as well as country risk associated with conducting international activities, and other factors, many of which are beyond the control of the Corporation.
Contact Investor Relations:
IR@canacolenergy.com
Ph: +57 (1) 621 1747
Ph: +(1) 403-561-1648
Website: canacolenergy.com
cash4
7 years ago
Canacol Energy Ltd. Announces 2016 Year End Results Posting $135.5 Million of EBITDAX
Mar 27, 2017
OTC Disclosure & News Service
-https://www.otcmarkets.com/stock/CNNEF/news/Canacol-Energy-Ltd--Announces-2016-Year-End-Results-Posting--135-5-Million-of-EBITDAX?id=154342
Canacol Energy Ltd. Announces 2016 Year End Results Posting $135.5 Million of EBITDAX
CALGARY, ALBERTA--(Marketwired - Mar 27, 2017) - Canacol Energy Ltd. ("Canacol" or the "Corporation") (TSX:CNE)(OTCQX:CNNEF)(BVC:CNEC) is pleased to report its financial results for the year ended December 31, 2016. Dollar amounts are expressed in United States dollars, except as otherwise noted.
Charle Gamba, President and CEO of the Corporation, commented: "2016 saw the emergence of Canacol as a premier gas producer in Colombia. By April 2016, we had achieved our goal of 90 million standard cubic feet per day ("MMscfpd") of gas production. As a result of the increased gas sales, our adjusted petroleum and natural gas revenues after royalties increased 43% to $173.2 million for the year ended December 31, 2016 compared to $121.5 million in 2015; our adjusted funds from operations increased 122% to $113 million for the year ended December 31, 2016 compared to $51 million in 2015; our EBITDAX increased 101% to $135.5 million for the year ended December 31, 2016 compared to $67.4 million in 2015; and we posted comprehensive income of $23.6 million in 2016. After achieving the 90 MMscfpd milestone, several significant new 2016 gas discoveries drive our reserve and production base towards our December 1, 2017 target of 130 MMscfpd, and our December 1, 2018 target of 230 MMscfpd, which will place Canacol as the second largest gas producer in Colombia behind the state oil company.
Our industry leading 2015/2016 average gas F&D of $2.52/boe ($0.44/Mcf), combined with our very low operating expenses and robust long term gas contracts denominated in US dollars, ensure that our current and future gas production will yield consistently high netbacks and margins for our shareholders. This operating base in conjunction with the financial flexibility achieved by the closing of the February, 2017 $265 million senior secured term loan, led by Credit Suisse, provides a solid platform for our targeted growth. For 2017, management's primary goals are to 1) achieve a gas production rate of 130 MMscfpd by December 1, 2017 via the construction of a new private gas pipeline, 2) drill three gas exploration wells to continue to build the Corporation's gas reserves base at industry leading F&D costs, and 3) drill two oil exploration wells to increase oil production and satisfy exploration commitments to the ANH.
With respect to the new private gas pipeline, a Special Purpose Vehicle ("SPV") has been formed to build and operate a six inch pipeline that will transport 40 MMscfpd of gas from the Corporation's Jobo gas processing facility to Sincelejo / Bremen approximately 80 kilometers ("kms") to the north, where the private pipeline will connect to the Promigas operated pipeline that ships gas to Cartagena. Canacol has executed a ten year take-or-pay contract for 40 MMscfpd of gas at contractual terms comparable to the Corporation's current US dollar denominated gas sale contracts. A bank has been retained to raise the $60 million that the SPV will require to complete the pipeline outside of Canacol. In the meantime, the SPV is acquiring all of the right of ways required for the pipeline, and is tendering all of the major contracts which would include tubulars and compression. The Corporation anticipates that the pipeline will be in operation on December 1, 2017. The productive capacity of the Corporation's currently producing wells is approximately 195 MMscfpd, and that of the Corporation's gas processing facilities approximately 200 MMscfpd.
Canacol has also spud the Canahuate-1 gas exploration well and the Pumara-1 oil exploration well. The Canahuate-1 exploration well, located on the Esperanza E&P Contract (100% operated working interest), was spud on March 24, 2017. The Canahuate-1 well is located approximately three kms north of the Corporation's Jobo gas processing facility and is targeting gas bearing sandstones within the proven producing Cienaga de Oro reservoir. Over the past three years, six of the seven exploration wells drilled by the Corporation on its gas blocks, including the Esperanza E&P contract, have resulted in commercial gas discoveries. The Canahuate-1 well is expected to take approximately six weeks to drill and test.
Canacol also maintains a large inventory of light oil drill ready production and exploration opportunities. The Corporation will spud the Pumara-1 exploration well on the LLA-23 E&P Contract (100% operated working interest) on March 31, 2017. The Pumara-1 exploration well is located three kms north of the Labrador field and is targeting light oil bearing reservoirs within the proven producing C7, Mirador, Gacheta and Ubaque reservoirs. Over the past four years, five of the six exploration wells drilled by the Corporation on the LLA-23 contract have resulted in commercial light oil discoveries. The Pumara-1 well is expected to take approximately five weeks to drill and test, and if successful, it will be placed immediately on permanent production via the Corporation's oil processing facilities located at Pointer.
With the 2017 capital program to be funded by a combination of existing working capital and cash flows, Canacol is well positioned to continue to build production and revenues despite the uncertainty and volatility associated with global oil prices, especially with a near to mid term global outlook of "low oil prices for longer". It is important to point out that approximately 90% of our current production revenues are not impacted by global oil prices, and that the Corporation's debt facility is not subject to redetermination should oil prices fall. Our financial strength, coupled with Canacol's outstanding exploration drilling and commercialization track record, provides a solid platform which will allow us to reach our target of 230 MMscfpd of gas production exiting 2018.
The Corporation anticipates releasing an update on its Mono Capuchino-1 exploration well on March 28, 2017 and its 2017 guidance during the week of April 3, 2017."
During 2016, the Corporation had many operational and financial accomplishments:
The drilling and completion of the Oboe-1 exploration well and its combined test results of 66 MMscfpd in March 2016.
The completion of the Promigas pipeline and the Promisol Jobo gas plant upgrade in April 2016, which allowed Canacol to increase gas production to 90 MMscfpd. Canacol's total current gas processing capability is 200 MMscfpd.
The drilling and completion of the Nispero-1 exploration well and its test result of 28 MMscfpd in August 2016.
The completion of the first and second tranche of private placement offerings of 9,687,670 and 1,800,000 common shares of the Corporation, respectively, issued at C$4.08 per common share for a total of C$46.9 million in August 2016.
The drilling and completion of the Trombon-1 exploration well and its test result of 26 MMscfpd in October 2016.
The drilling and completion of the Nelson-6 exploration well and its test result of 23 MMscfpd in November 2016.
The initiation of a private pipeline venture in November, 2016 that will deliver 40 MMscfpd of new gas production to new and existing customers located on the Caribbean coast in December 2017, thereby increasing the Corporation's transportation capacity from its current 90 MMscfpd to 130 MMscfpd upon completion.
The execution of the agreement with Promigas in November 2016 to expand the existing gas distribution network currently used by the Corporation to accommodate an additional 100 MMscfpd of new gas transportation and sales, thereby increasing the Corporation's transportation capacity to 230 MMscfpd in December 2018.
The drilling and completion of the Clarinete-3 development well and its test result of 18 MMscfpd in December 2016.
The Nelson-5 Porquero recompletion and its test result of 13 MMscfpd in December 2016.
Highlights for the Three Months Ended December 31, 2016
(in thousands of United States dollars, except as otherwise noted; production is stated as working-interest before royalties)
Financial and operating highlights of the Corporation include:
Realized contractual sales volumes increased 96% to 18,310 boepd for the three months ended December 31, 2016 compared to 9,359 boepd for the same period in 2015. The increase is primarily due to an increase in gas production in the Esperanza and VIM-5 blocks as a result of the additional sales related to the Promigas pipeline expansion.
Average daily production volumes increased 96% to 17,728 boepd for the three months ended December 31, 2016 compared to 9,064 boepd for the same period in 2015. The increase is primarily due to an increase in gas production in the Esperanza and VIM-5 blocks as a result of the additional sales related to the Promigas pipeline expansion.
Adjusted funds from operations for the three months ended December 31, 2016 increased 395% to $42 million compared to $8.5 million for the same period in 2015. Adjusted funds from operations are inclusive of results from the Ecuador Incremental Production Contract (the "Ecuador IPC") (see full discussion in MD&A). The increase in adjusted funds from operations is primarily the result of additional sales related to the Promigas pipeline expansion and an increase in benchmark crude oil prices.
Petroleum and natural gas revenues for the three months ended December 31, 2016 increased 141% to $42 million compared to $17.4 million for the same period in 2015. Adjusted petroleum and natural gas revenues, inclusive of revenues related to the Ecuador IPC, for the three months ended December 31, 2016 increased 93% to $47.9 million compared to $24.9 million for the same period in 2015. The increase is primarily the result of additional sales related to the Promigas pipeline expansion.
Average corporate operating netback for the three months ended December 31, 2016 increased 9% to $24/boe compared to $21.96/boe for the same period in 2015. Operating corporate netback is inclusive of results from the Ecuador IPC.
The Corporation recorded a comprehensive income of $20.3 million for the three months ended December 31, 2016 despite the non-cash impairment charge of $37.3 million, mainly due to the execution of its tax planning strategies which significantly reduced income tax expense. The Corporation recognized a current income tax recovery of $6.3 million and a deferred income tax recovery of $42.3 million during the three months ended December 31, 2016 despite its $42 million adjusted funds from operations.
Capital expenditures for the three months and year ended December 31, 2016 were $58.6 million and $107.9 million, respectively, while adjusted capital expenditures, inclusive of amounts related to the Ecuador IPC, were $59.7 million and $110.2 million, respectively.
At December 31, 2016, the Corporation had $66.3 million in cash and $62.1 million in restricted cash.
Three
months
ended
December 31, Three
months
ended
December 31, Twelve
Months
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December 31, Six
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December 31, Twelve
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June 30,
Financial 2016 2015 Change 2016 2015 Change 2015 Change
Petroleum and natural gas revenues, net of royalties 41,967 17,402 141% 147,985 39,360 276% 149,047 (1%)
Adjusted petroleum and natural gas revenues, net of royalties(2) 47,943 24,883 93% 173,184 54,782 216% 177,937 (3%)
Cash provided by operating activities 30,289 4,974 509% 73,577 19,276 282% 64,445 14%
Per share - basic ($) 0.17 0.03 467% 0.44 0.14 214% 0.58 (24%)
Per share - diluted ($) 0.17 0.03 467% 0.44 0.13 238% 0.58 (24%)
Adjusted funds from operations (1) (2) 41,979 8,473 395% 113,019 23,690 377% 87,395 29%
Per share - basic ($) 0.24 0.05 380% 0.68 0.17 300% 0.79 (14%)
Per share -diluted ($) 0.24 0.05 380% 0.67 0.16 319% 0.78 (14%)
Comprehensive income (loss) 20,331 (84,466) n/a 23,638 (103,495) n/a (106,022) n/a
Per share - basic ($) 0.12 (0.54) n/a 0.14 (0.72) n/a (0.96) n/a
Per share - diluted ($) 0.12 (0.54) n/a 0.14 (0.72) n/a (0.96) n/a
Capital expenditures, net, including acquisitions 58,638 22,394 162% 107,930 44,693 141% 217,342 (50%)
Adjusted capital expenditures, net, including acquisitions (1)(2) 59,691 22,867 161% 110,224 48,947 125% 243,108 (55%)
December 31,
2016 December 31,
2015
Cash 66,283 43,257 53%
Restricted cash 62,073 61,721 1%
Working capital surplus, excluding non-cash items and current portion of bank debt(1) 64,899 46,310 40%
Current and long-term bank debt 250,638 248,228 1%
Total assets 787,508 668,349 18%
Common shares, end of period (000s) 174,359 159,266 9%
Operating Three
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December 31, Three
months
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December 31, Twelve
months
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December 31, Six
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December 31, Twelve
months
ended
June 30,
2016 2015 Change 2016 2015 Change 2015 Change
Petroleum and natural gas production, before royalties (boepd)
Petroleum (2) 3,616 5,523 (35%) 4,012 6,253 (36%) 7,999 (50%)
Natural gas 14,112 3,541 299% 11,930 3,507 240% 3,505 240%
Total (2) 17,728 9,064 96% 15,942 9,760 63% 11,504 39%
Petroleum and natural gas sales, before royalties (boepd)
Petroleum (2) 3,657 5,468 (33%) 4,019 6,370 (37%) 8,010 (50%)
Natural gas 13,986 3,542 295% 11,830 3,499 238% 3,512 237%
Total (2) 17,643 9,010 96% 15,849 9,869 61% 11,522 38%
Realized contractual sales, before royalties (boepd)
Natural gas 14,653 3,891 277% 12,357 3,674 236% 3,512 252%
Crude oil 2,026 3,390 (40%) 2,315 4,253 (46%) 6,083 (62%)
Ecuador (tariff oil) (2) 1,631 2,078 (22%) 1,704 2,117 (20%) 1,927 (12%)
Total (2) 18,310 9,359 96% 16,376 10,044 63% 11,522 42%
Operating netbacks ($/boe) (1)
Esperanza (natural gas) 26.35 24.03 10% 27.15 23.27 17% 20.62 32%
VIM-5 (natural gas) 21.99 20.78 6% 23.68 20.78 14% - n/a
LLA-23 (oil) 14.80 12.02 23% 12.05 16.74 (28%) 34.91 (65%)
Ecuador (tariff oil) (2) 38.54 38.54 - 38.54 38.54 - 38.54 -
Total (2) 24.00 21.96 9% 24.92 22.38 11% 28.05 (11%)
(1) Non-IFRS measure - see "Non-IFRS Measures" section within MD&A.
(2) Inclusive of amounts related to the Ecuador IPC - see "Non-IFRS Measures" section within MD&A.
The Corporation's has filed its audited consolidated financial statements and related Management's Discussion and Analysis and Annual Information Form as of and for the year ended December 31, 2016 with Canadian securities regulatory authorities. These filings are available for review on SEDAR at www.sedar.com.
Canacol is an exploration and production company with operations focused in Colombia, Ecuador and Mexico. The Corporation's common stock trades on the Toronto Stock Exchange, the OTCQX in the United States of America, the Colombia Stock Exchange and the Mexico Stock Exchange under ticker symbols CNE, CNNEF, CNEC and CNEN respectively.
This press release contains certain forward-looking statements within the meaning of applicable securities law. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur, including without limitation statements relating to estimated production rates from the Corporation's properties and intended work programs and associated timelines. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Corporation cannot assure that actual results will be consistent with these forward looking statements. They are made as of the date hereof and are subject to change and the Corporation assumes no obligation to revise or update them to reflect new circumstances, except as required by law. Information and guidance provided herein supersedes and replaces any forward looking information provided in prior disclosures. Prospective investors should not place undue reliance on forward looking statements. These factors include the inherent risks involved in the exploration for and development of crude oil and natural gas properties, the uncertainties involved in interpreting drilling results and other geological and geophysical data, fluctuating energy prices, the possibility of cost overruns or unanticipated costs or delays and other uncertainties associated with the oil and gas industry. Other risk factors could include risks associated with negotiating with foreign governments as well as country risk associated with conducting international activities, and other factors, many of which are beyond the control of the Corporation. Other risks are more fully described in the Corporation's most recent Management Discussion and Analysis ("MD&A") and Annual Information Form, which are incorporated herein by reference and are filed on SEDAR at www.sedar.com. Average production figures for a given period are derived using arithmetic averaging of fluctuating historical production data for the entire period indicated and, accordingly, do not represent a constant rate of production for such period and are not an indicator of future production performance. Detailed information in respect of monthly production in the fields operated by the Corporation in Colombia is provided by the Corporation to the Ministry of Mines and Energy of Colombia and is published by the Ministry on its website; a direct link to this information is provided on the Corporation's website. References to "net" production refer to the Corporation's working- interest production before royalties.
Use of Non-IFRS Financial Measures - Due to the nature of the equity method of accounting the Corporation applies under IFRS 11 to its interest in the Ecuador IPC, the Corporation does not record its proportionate share of revenues and expenditures as would be typical in oil and gas joint interest arrangements. Management has provided supplemental measures of adjusted revenues and expenditures, which are inclusive of the Ecuador IPC, to supplement the IFRS disclosures of the Corporation's operations in this press release. Such supplemental measures should not be considered as an alternative to, or more meaningful than, the measures as determined in accordance with IFRS as an indicator of the Corporation's performance, and such measures may not be comparable to that reported by other companies. This press release also provides information on adjusted funds from operations. Adjusted funds from operations is a measure not defined in IFRS. It represents cash provided by operating activities before changes in non-cash working capital and decommissioning obligation expenditures, and includes the Corporation's proportionate interest of those items that would otherwise have contributed to funds from operations from the Ecuador IPC had it been accounted for under the proportionate consolidation method of accounting. The Corporation considers adjusted funds from operations a key measure as it demonstrates the ability of the business to generate the cash flow necessary to fund future growth through capital investment and to repay debt. Adjusted funds from operations should not be considered as an alternative to, or more meaningful than, cash provided by operating activities as determined in accordance with IFRS as an indicator of the Corporation's performance. The Corporation's determination of adjusted funds from operations may not be comparable to that reported by other companies. For more details on how the Corporation reconciles its cash provided by operating activities to adjusted funds from operations, please refer to the "Non-IFRS Measures" section of the Corporation's MD&A. Additionally, this press release references working capital and operating netback measures. Working capital is calculated as current assets less current liabilities, excluding non-cash items such as the current portion of commodity contracts, the current portion of warrants, and the current portion of any embedded derivatives asset/liability, and is used to evaluate the Corporation's financial leverage. Operating netback is a benchmark common in the oil and gas industry and is calculated as total petroleum and natural gas sales, less royalties, less production and transportation expenses, calculated on a per barrel of oil equivalent basis of sales volumes using a conversion. Operating netback is an important measure in evaluating operational performance as it demonstrates field level profitability relative to current commodity prices. Working capital and operating netback as presented do not have any standardized meaning prescribed by IFRS and therefore may not be comparable with the calculation of similar measures for other entities.
Operating netback is defined as revenues less royalties and production and transportation expenses.
Realized contractual gas sales is defined as gas produced and sold plus gas revenues received from nominated take or pay contracts.
Total cash sales is defined as realized contractual gas sales and crude oil sales plus cash received for gas classified as deferred income according to IFRS.
The reserves evaluations, effective December 31, 2016, were conducted by the Corporation's independent reserves evaluators DeGolyer and MacNaughton ("D&M") and Petrotech Engineering Ltd. ("Petrotech") and are in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities. The reserves are provided on a Canacol working interest before royalty basis in units of barrels of oil equivalent using a forecast price deck, adjusted for quality, in US dollars. The estimated values may or may not represent the fair market value of the reserve estimates.
"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;
"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;
"deemed volumes" means those volumes produced under a service agreement in which the Corporation does not have a direct interest, but represents reserves attributable to the Corporation as calculated using the cash flow divided by the fixed tariff price over the life of the reserves. The Corporation has a non-operated 25% equity participation interest in the Ecuador IPC for which it receives a fixed price tariff for each incremental barrel produced;
Boe Conversion - "boe" barrel of oil equivalent is derived by converting natural gas to oil in the ratio of 5.7 Mcf of natural gas to one bbl of oil. A BOE conversion ratio of 5.7 Mcf 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. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 5.7:1, utilizing a conversion on a 5.7:1 basis may be misleading as an indication of value. In this news release, the Corporation has expressed Boe using the Colombian conversion standard of 5.7 Mcf: 1 bbl required by the Ministry of Mines and Energy of Colombia.
F&D - Finding and development costs on a 2P (Total Proved plus Probable) basis.
With the F&D costs, the aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year.
This press release contains a number of oil and gas metrics, including F&D, FD&A, reserve replacement and RLI, which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies. Such metrics have been included herein to provide readers with additional measures to evaluate the Corporation's performance; however, such measures are not reliable indicators of the future performance of the Corporation and future performance may not compare to the performance in previous periods.
Investor Relations
+1 (214) 235-4798
IR@canacolenergy.com
www.canacolenergy.com
Copyright © 2017 Marketwired. All Rights Reserved
cash4
7 years ago
Canacol Energy Ltd. Announces 2P Reserves of 85 MMBOE Worth US$1.3B BTAX and 13 Year Reserve Life Index
Mar 27, 2017
OTC Disclosure & News Service
-https://www.otcmarkets.com/stock/CNNEF/news/Canacol-Energy-Ltd--Announces-2P-Reserves-of-85-MMBOE-Worth-US-1-3B-BTAX-and-13-Year-Reserve-Life-Index?id=154345
Canacol Energy Ltd. Announces 2P Reserves of 85 MMBOE Worth US$1.3B BTAX and 13 Year Reserve Life Index
CALGARY, ALBERTA--(Marketwired - Mar 27, 2017) - Canacol Energy Ltd. ("Canacol" or the "Corporation") (TSX:CNE)(OTCQX:CNNEF)(BVC:CNEC) is pleased to report its light, medium and heavy crude oil and conventional natural gas reserves and deemed volumes for the fiscal year end December 31, 2016. The Corporation engaged DeGolyer and MacNaughton Canada Limited ("DMCL") to prepare independent reserves evaluations for its two primary conventional natural gas fields in Colombia and for its oil reserves in Colombia and deemed volumes in Ecuador. The DMCL evaluated reserves and deemed volumes represent 92% of the Corporation's total reserves and deemed volumes on a Total Proved "1P" basis.
The Corporation's conventional natural gas reserves are located in the Lower Magdalena Valley basin, Colombia. Canacol's light and medium crude oil reserves are located in the Llanos and Middle Magdalena Valley basins, Colombia. Additional deemed volumes of light and medium crude oil are developed in the Oriente basin, Ecuador. Heavy crude oil reserves are located in the Caguan basin, Colombia.
Canacol Energy Ltd. Gross Reserves and Deemed Volumes Summary
Gross Reserves + Deemed Volumes
Proved Proved Proved Total Total Proved
Developed Developed Undeveloped Total Proved + Probable
Producing Non-Producing Proved + Probable + Possible
Product Type ("PDP") ("PDNP") ("PUD") ("1P") ("2P") ("3P")
Conventional natural gas Bcf 236.0 1.0 45.2 282.3 411.0 503.2
Light and medium crude(3) MMbbl 1.0 2.0 2.0 5.1 7.5 9.3
Heavy crude MMbbl - 0.1 2.1 2.1 5.0 8.4
Total oil equivalent(4) MMBOE 42.4 2.3 12.0 56.7 84.6 106.0
Before tax NPV-10(5) MM US$ $ 693.0 $ 36.5 $ 170.0 $ 899.5 $ 1,330.8 $ 1,594.2
After tax NPV-10(5) MM US$ $ 506.9 $ 27.9 $ 116.0 $ 650.7 $ 945.3 $ 1,128.9
The numbers in this table may not add exactly due to rounding
All reserves and deemed volumes are represented at Canacol's working interest share before royalties
Light and medium crude volumes include working interest volumes and deemed volumes
The term "BOE" means a barrel of oil equivalent on the basis of 5.7 Mcf of natural gas to 1 barrel of oil ("bbl") as per Colombian regulatory practice
Net Present Value (NPV) are stated in thousands of USD and are discounted at 10 percent
Highlights include:
Proved Developed Producing "PDP" reserves and deemed volumes increased by 49% since December 31, 2015, to total 42.4 million barrels of oil equivalent ("MMBOE") at December 31, 2016
Total Proved + Probable "2P" reserves and deemed volumes totaled 84.6 MMBOE at December 31, 2016, with a before tax value discounted at 10% of US$ 1.3 billion, representing CAD $ 8.79 per share
Achieved 1P reserve replacement of 166% and 2P reserve replacement of 194% based on calendar 2016 gross reserve and deemed volume additions of 9.3 MMBOE (1P) and 11 MMBOE (2P)
Achieved 2P finding and development costs ("F&D") of US$ 4.71/BOE for its gas assets and US$ 5.31/BOE as a corporate total for calendar 2016
Achieved 2P F&D of US$ 2.52/BOE for its gas assets and US$ 3.48/BOE as a corporate total for the 2 year period ending December 31, 2016
Recorded 2P finding, development and acquisition costs ("FD&A") of US$ 5.04/BOE for its gas assets and US$ 5.66/BOE as a corporate total for calendar 2016
Recorded a 2P reserves life index ("RLI") of 13 years based on annualized fourth quarter 2016 production of 17,778 BOEpd
Ravi Sharma, Chief Operating Officer of Canacol Energy, commented: "The Corporation has achieved significant conventional natural gas exploration and development drilling success over the past 3.5 years. During this time, we have added over 315 BCF of 2P conventional natural gas reserves from commercial success on 11 out of 12 wells, representing a 52% compound annual growth rate ("CAGR"). As of December 31, 2016, Canacol's total 1P reserves and corresponding before tax NPV-10 are 57 MMBOE and US$ 900 million, respectively, or CAD $5.47 per share. The Corporation's 2P reserves and corresponding before tax NPV-10 are 85 MMBOE and US$ 1.3 billion, respectively, or CAD $8.79 per share.
Canacol's management team continues to execute its growth strategy with respect to high value Colombian gas. The Corporation forecasts 130 million cubic feet of gas per day ("MMcfd") of natural gas production for exit rate 2017 and 230 MMcf/d of natural gas production for exit rate 2018. These targets represent production growth of 44% from current production of 90 MMcf/d and sequential production growth of 77% from 130 to 230 MMcf/d to exit 2018. "
Discussion of Year Ended December 31, 2016 Reserves Report
During the six month period from June 30th 2016 to December 31st 2016, the Corporation recorded increases in certain reserve categories as a result of the drilling and completion of exploration locations at Nelson-6, Nispero-1 and Trombon-1 on the Esperanza natural gas block in the Lower Magdalena valley Basin, Colombia.
The following tables summarize information from the independent reserves report prepared by DeGolyer and MacNaughton Canada Limited, effective December 31, 2016 (the "DMCL 2016 report") and the independent reserves report prepared by Petrotech Engineering Ltd., effective December 31, 2016 (the "Petrotech 2016 report"). The DMCL 2016 report covers 100% of the Corporation's oil reserves and deemed volumes and 90% of Canacol's natural gas reserves on a 1P basis, including Nelson and Clarinete fields.
Each independent reserves report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and National Instrument NI 51-101, Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Additional reserve information as required under NI 51-101 is included in the Corporation's Annual Information Form which will be filed on SEDAR by March 31, 2017.
Canacol Gross Reserves and Deemed Volumes for the Year Ended December 31, 2016
Reserve Category(1) 31-Dec-15 31-Dec-16 Difference
(MBOE)(2) (MBOE) (%)
Proved Developed Producing 28,413 42,426 49%
Proved Developed Non-Producing 2,882 2,265 -21%
Proved Undeveloped 21,717 12,045 -45%
Total Proved (1P) 53,012 56,735 7%
Total Proved + Probable (2P) 79,229 84,570 7%
Total Proved + Probable + Possible (3P) 93,032 106,016 14%
All reserves and deemed volumes are Canacol working interest before royalties
MBOE is defined as thousands of barrels of oil equivalent. Gas volumes are converted to BOE using a factor of 5.7mcf/BOE as per Colombia regulatory practice
5-Year Crude Oil Price Forecast - DMCL Report December 31, 2016 vs. December 31, 2015
Reserve
Report Date 2017 2018 2019 2020 2021
WTI US$/Bbl 31-Dec-16 55.00 59.16 63.46 68.98 72.52
WTI US$/Bbl 31-Dec-15 56.10 60.34 66.86 72.52 77.29
% difference -2% -2% -5% -5% -6%
5-Year Gas Price Forecast - DMCL and Petrotech Reports December 31, 2016 vs. Petrotech 2015
Reserve
Report Date 2017 2018 2019 2020 2021
Volume weighted average gas price US$/MMbtu 31-Dec-16 5.25 5.25 5.37 5.50 5.50
Volume weighted average gas price US$/MMbtu 31-Dec-15 6.21 6.25 6.47 6.70 6.97
% difference -15% -16% -17% -18% -21%
Gas price forecast is based on existing long term contracts adjusted for inflation
Reserves and Deemed Volumes Net Present Value Before & After Tax Summary (1)
Before tax After tax
Net Asset Net Asset
Value Value
Reserve Category 31-Dec-16 31-Dec-16 31-Dec-16 31-Dec-16
(M US$)(2) ($ CAD/share)(2) (M US$)(2) ($ CAD/share)(2)
Proved Developed Producing $ 692,992 $ 3.88 $ 506,871 $ 2.44
Proved Developed Non-Producing $ 36,493 - $ 27,886 -
Proved Undeveloped $ 170,046 - $ 115,975 -
Total Proved (1P) $ 899,531 $ 5.47 $ 650,732 $ 3.55
Total Proved + Probable (2P) $ 1,330,752 $ 8.79 $ 945,302 $ 5.82
Total Proved + Probable + Possible (3P) $ 1,594,155 $ 10.82 $ 1,128,868 $ 7.23
Net present values are stated in thousands of USD and are discounted at 10 percent. The forecast prices used in the calculation of the present value of future net revenue are based on the price decks described above. The DMCL price deck at December 31, 2016 is included in the Corporation's Annual Information Form. The DMCL and Petrotech forecasts for gas prices at December 31, 2016 are included in the Corporation's Annual Information Form.
Net asset value ("NAV") is calculated at December 31, 2016 NPV10 less estimated net debt of US$190 million (being $255 million of bank debt less estimated net working capital of $65 million) divided by 174 million basic shares outstanding as at December 31, 2016. NAV calculations are converted to $CAD at USD:CAD = 1.3427.
Reserve Life Index ("RLI")
Reserve Category(1) 31-Dec-15 31-Dec-16
(yrs.)(1) (yrs.)(2)
Total Proved (1P) 16 9
Total Proved + Probable (2P) 24 13
Calculated using average 3 month ending December 31, 2015 production of 9,064 BOEpd annualized. Production volumes include Ecuador incremental production contract barrels.
Calculated using average 3 month ending December 31, 2016 production of 17,778 BOEpd annualized. Production volumes include Ecuador incremental production contract barrels.
"RLI" Reserve Life Index is calculated by dividing a category of year end reserves by expected current production rate.
Year Ended December 31, 2016 Canacol Gross Reserves Reconciliation (1)
Total Oil Light/Med Oil Heavy Oil Sales Gas NGL TOTAL
(MBBL) (MBBL) (MBBL) (MMCF) (MBBL) MBOE
TOTAL PROVED
Opening Balance (December 31, 2015) 7,815 5,632 2,183 257,624 - 53,014
Extensions - - - - - -
Improved Recovery - - - - - -
Technical Revisions(2) 701 746 (45 ) 19,286 - 4,082
Discoveries(3) - - - 30,027 - 5,268
Acquisitions - - - - - -
Dispositions - - - - - -
Economic Factors(4) (1 ) (1 ) - - - (1 )
Production (1,298 ) (1,290 ) (8 ) (24,681 ) - (5,628 )
Closing Balance (December 31, 2016) 7,217 5,087 2,130 282,256 - 56,735
Total Oil Light/Med Oil Heavy Oil Sales Gas NGL TOTAL
(MBBL) (MBBL) (MBBL) (MMCF) (MBBL) MBOE
TOTAL PROVED + PROBABLE
Opening Balance (December 31, 2015) 13,967 8,614 5,353 371,992 - 79,228
Extensions - - - - - -
Improved Recovery - - - - - -
Technical Revisions(2) (205 ) 140 (345 ) (6,476 ) - (1,340 )
Discoveries(3) - - - 70,167 - 12,310
Acquisitions - - - - - -
Dispositions - - - - - -
Economic Factors(4) - - - - - -
Production (1,298 ) (1,290 ) (8 ) (24,681 ) - (5,628 )
Closing Balance (December 31, 2016) 12,464 7,464 5,000 411,002 - 84,570
The numbers in this table may not add due to rounding
Technical revisions (conventional natural gas) are associated with the Nelson and Clarinete gas fields, technical revisions (light/medium oil) are associated with LLA23 and Ecuador assets, technical revisions (heavy oil) are associated with the Ombu block
Discoveries are associated with the Oboe discovery on VIM-5 block and Nispero, Trombon and Porquero discoveries on Esperanza block
Economic factors are related to price and royalty factor changes
Production volumes include Ecuador incremental production contract barrels
Reserve Metrics Reconciliation - Canacol Working Interest before Royalty (1) (2) (3)
Calendar 2016 2 Year Ending
December 31, 2016
Conventional Natural Gas Total(4) Conventional Natural Gas Total(4)
Capital Expenditures $63,770 82,880 93,973 164,418
Capital Expenditures - Change in FDC(5) (11,100 ) (27,600 ) 21,300 (22,700 )
Total F&D(6) $52,670 55,280 115,273 141,718
Net Acquisitions 3,665 3,665 41,711 41,711
Total FD&A(7)(8) $56,335 58,945 156,984 183,429
Reserve Additions (MBOE) 11,174 10,407 45,768 40,742
Reserve Additions - Net Acquisitions 0 0 6,580 6,445
Reserve Additions Including Net Acquisitions (MBOE) 11,174 10,407 52,348 47,187
F&D Costs ($/BOE)(6) $4.71 $5.31 $2.52 $3.48
FD&A Costs ($/BOE) (7)(8) $5.04 $5.66 $3.00 $3.89
The numbers in this table may not add due to rounding
2016 capital expenditure numbers exclude US $33 million related to the Jobo 2 gas plant finance lease
All values in this table are stated on a 2P (Total Proved + Probable) basis
Total oil and gas includes Colombian properties only. No Ecuador deemed volumes nor capital have been included
"Capital Expenditures - change in FDC" is rounded to the nearest M US$. FDC is the 2P (Proved + Probable) future development capital
F&D - Finding and Development Costs on a 2P (Total Proved + Probable) basis
FD&A - Finding, Development and Acquisition Costs on a 2P (Total Proved + Probable) basis
With the finding and development costs, the aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year.
The recovery and reserve estimates of light and medium crude oil, heavy crude oil and conventional natural gas are estimates only. There is no guarantee that the estimated reserves will be recovered and actual reserves of light and medium crude oil, heavy crude oil and conventional natural gas may prove to be greater than, or less than, the estimates provided.
Reserves of light and medium crude oil and heavy crude oil as at December 31, 2016 are evaluated against the DMCL forecast pricing effective at that date. Comparative volumes of light and medium crude oil and heavy crude oil as at December 31, 2015 are evaluated against the DMCL forecast pricing effective at that date. Deemed volumes of light crude oil are determined by dividing cash flow by the tariff price of USD$38.54/barrel which remains constant for the life of the incremental production contract. Reserves of conventional natural gas as at December 31, 2016 are evaluated against contract pricing forecast for each gas contract. Comparative volumes of conventional natural gas as at December 31, 2015 are evaluated against contract pricing for each gas contract at the effective date. Forecast prices used in the reserves reports are included in the Corporation's Annual Information Form which will be filed on SEDAR by March 31, 2017 under the sections "Forecast Prices Used in Estimates" and "Forward Contracts" in the "Statement of Reserves Data and Other Oil and Gas Information".
All amounts in this news release are stated in Canadian dollars unless otherwise specified.
Canacol is an exploration and production company with operations focused in Colombia, Ecuador and Mexico. The Corporation's common stock trades on the Toronto Stock Exchange, the OTCQX in the United States of America, and the Colombia Stock Exchange under ticker symbol CNE, CNNEF, and CNE.C, respectively.
Forward-Looking Information and Statements
This news release contains certain forward-looking information and statements within the meaning of applicable securities law. Forward-looking statement are frequently characterized by words such as "anticipate," "continue," "estimate," "expect", "objective," "ongoing," "may," "will," "project," "should," "believe," "plan," "intend," "strategy," and other similar words, or statements that certain events or conditions "may" or "will" occur, including without limitation statements relating to estimated production rates from the Corporation's properties and intended work programs and associated timelines.
Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Corporation cannot assure that actual results will be consistent with these forward looking statements. They are made as of the date hereof and are subject to change and the Corporation assumes no obligation to revise or update them to reflect new circumstances, except as required by law. Prospective investors should not place undue reliance on forward looking statements. These factors include the inherent risks involved in the exploration for and development of crude oil and natural gas properties, the uncertainties involved in interpreting drilling results and other geological and geophysical data, fluctuating energy prices, the possibility of cost overruns or unanticipated costs or delays and other uncertainties associated with the oil and gas industry. Other risk factors could include risks associated with negotiating with foreign governments as well as country risk associated with conducting international activities, and other factors, many of which are beyond the control of the Corporation.
The reserves evaluations, effective December 31, 2016, were conducted by the Corporation's independent reserves evaluators DeGolyer and MacNaughton Canada Limited ("DMCL") and Petrotech Engineering Ltd. ("Petrotech") and are in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities. The reserves are provided on a Canacol Gross basis in units of barrels of oil equivalent using a forecast price deck, adjusted for quality, in US dollars. The estimated values may or may not represent the fair market value of the reserve estimates.
"Gross" in relation to the Corporation's interest in production or reserves is its working interest (operating or non-operating) share before deduction of royalties and without including any royalty interests of the Corporation;
"Net" in relation to the Corporation's interest in production or reserves is its working interest (operating or non-operating) share after deduction of royalty obligations, plus its royalty interest in production or reserves;
"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;
"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;
"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;
"Deemed Volumes" refer to Volume 3 of COGEH, Reserves Recognition for International Properties, Section 4 - Fiscal Regime, Service Contracts, and refer to those volumes produced under a risked Service Agreement in which the Corporation does not have a direct interest, but represents reserves attributable to the Corporation. By definition, these volumes are calculated as the production revenue divided by the fixed tariff price or operating netback per barrel, and are considered additive to volumes certified as reserves. Under the terms of this risked Service Agreement, these calculated volumes correspond to actual volumes produced. The Corporation has a non-operated 25% equity participation interest in the Ecuador IPC for which it receives a fixed price tariff for each incremental barrel produced.
BOE Conversion - "BOE" barrel of oil equivalent is derived by converting natural gas to oil in the ratio of 5.7 Mcf of natural gas to one bbl of oil. A BOE conversion ratio of 5.7 Mcf 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. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 5.7:1, utilizing a conversion on a 5.7:1 basis may be misleading as an indication of value. In this news release, the Corporation has expressed BOE using the Colombian conversion standard of 5.7 Mcf: 1 bbl required by the Ministry of Mines and Energy of Colombia.
"1P" means Total Proved
"2P" means Total Proved + Probable
"3P" means Total Proved + Probable + Possible
1P Reserves replacement ratio: Ratio of reserve additions to production, as reported in financial statements during the fiscal year ended December 31, excluding acquisitions and dispositions on a Total Proved basis.
2P Reserves replacement ratio: Ratio of reserve additions to production, as reported in financial statements during the fiscal year ended December 31, excluding acquisitions and dispositions on a Total Proved + Probable basis.
2P Finding and development costs per barrel of oil equivalent (BOE) represent exploration and development costs incurred per BOE of Total Proved + Probable reserves added during the year. The Corporation, industry analysts, and investors use such metrics to measure a Corporation's ability to establish a long-term trend of adding reserves at a reasonable cost.
2P Finding, development and acquisition costs per barrel of oil equivalent (BOE) represent property acquisition, exploration, and development costs incurred per BOE of Total Proved + Probable reserves added during the year. The Corporation, industry analysts, and investors use such metrics to measure a Corporation's ability to establish a long-term trend of adding reserves at a reasonable cost.
"RLI" Reserve Life Index is calculated by dividing a category of year end reserves by expected current production rate.
With the finding and development costs, the aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year.
Unaudited Financial Information
Certain financial and operating results included in this news release include net debt, capital expenditures, production information and operating costs based on unaudited estimated results. These estimated results are subject to change upon completion of the Corporation's audited financial statements for the year ended December 31, 2016, and changes could be material. Canacol anticipates filing its audited financial statements and related management's discussion and analysis for the year ended December 31, 2016 on SEDAR on or before March 31, 2017.
This press release contains a number of oil and gas metrics, including F&D, FD&A, reserve replacement and RLI, which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies. Such metrics have been included herein to provide readers with additional measures to evaluate the Corporation's performance; however, such measures are not reliable indicators of the future performance of the Corporation and future performance may not compare to the performance in previous periods
Investor Relations
214-235-4798
IR@canacolenergy.com
www.canacolenergy.com
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