Canacol Energy Ltd. ("Canacol" or the "Corporation") (TSX:CNE)(OTCQX:CNNEF)(BVC:CNEC) is pleased to report on the conventional natural gas prospective resources (resources other than reserves, ROTR) for its Esperanza, VIM-21, VIM-5, and VIM-19 exploration blocks in the Lower Magdalena valley basin of Colombia. Prospective resources are based on a new independent resources audit prepared by Gaffney, Cline & Associates ("GCA"), effective December 31, 2016 (the "GCA Report").
Charle Gamba, President and CEO of Canacol, commented "The Corporation has achieved significant conventional natural gas exploration and development drilling success across its substantial acreage position in the Lower Magdalena valley basin over the past 3 years. Mark Teare, Canacol's Senior Vice President of Exploration will comment about our large inventory of conventional natural gas opportunities, and the Corporation's recent engagement of GCA to prepare an independent audit of the prospective resources of the inventory plays, prospects and leads."
Mr. Teare said "GCA's independent prospective resources audit evaluated and estimated conventional natural gas prospective resources for 47 individual prospects and leads, which Canacol has aggregated to an unrisked mean of 2 trillion standard cubic feet or a risked mean of 482 billion standard cubic feet. The estimated prospective resources underline the significant potential of Canacol's exploration blocks located in the Lower Magdalena valley basin of northern Colombia. Using state of the art 3D seismic acquisition and processing technology, our subsurface G&G technical team has developed techniques to high-grade prospects that may be gas charged in the Oligocene aged Cienaga de Oro Formation ("CDO") thereby reducing the geological risk associated with drilling of the prospects.
In addition, recent exploration drilling success at the Nelson 6 exploration well has opened up a new shallow gas play in the Miocene aged Porquero Formation ("Porquero"), which our subsurface G&G team is currently investigating further across our blocks. With an established prospect and lead inventory that contains multiple exploration drilling targets in the CDO, and a new gas exploration fairway proven in the shallow Porquero sandstone reservoir, we anticipate being very busy exploring our blocks in the foreseeable future."
Third Party Independent Audit for Conventional Natural Gas Prospective Resources (Resources Other Than Reserves, ROTR)
The following discussion is subject to a number of cautionary statements, assumptions and risks as set forth therein. See "Information Regarding Disclosure on Oil and Gas Resources and Operational Information" at the end of this release for additional cautionary language, explanations and discussion, and see "Forward-looking Statements" for a statement of principal assumptions and risks that may apply. See also "Definitions" in this press release. The discussion includes reference to prospective resources as per the GCA Report, which was prepared in accordance with the COGE Handbook.
GCA was commissioned to conduct an independent prospective resources audit of Canacol's internal estimates of prospective resources for the Corporation's 100% Working Interest position in the Esperanza, VIM-21, VIM-5, and VIM-19 exploration blocks in the Lower Magdalena valley basin (the "Audited Areas") effective December 31, 2016. All references in the following discussion to prospective resources are in reference to conventional natural gas in the Audited Areas included in the GCA Report.
On an unrisked and risked basis, the following table represents an aggregation of gross prospective resources and associated after royalty before tax expected monetary value for identified plays, leads and prospects (1, 2, 3) on the four exploration blocks.
Anticipated strong growth in base production
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.
As of the December 2016 reserve reports, the Corporation had 13 MMbls of net 2P oil reserves plus deemed volumes and 72 MMboe of net 2P natural gas reserves.
High-impact exploration portfolio that will continue to deliver growth
Canacol has built an exploration portfolio that exposes shareholders to 5 different basins in Colombia and Ecuador across 21 blocks or 3 million gross acres. Given Canacol's historical commercial exploration success record of 62%, the Corporation anticipates that the exploration portfolio will continue to deliver solid commercial success for many years to come, yielding continuing growth in production and cash flow.
SOURCE: Canacol Energy Ltd.
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