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:
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:
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.
SOURCE: Canacol Energy Ltd.
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.