Canacol Energy Ltd. ("Canacol" or the "Corporation") (TSX:CNE)(OTCQX:CNNEF)(BVC:CNEC) is pleased to report its financial and operating results for the three months ended March 31, 2017. Dollar amounts are expressed in United States dollars, except as otherwise noted.
"During the first quarter of 2017, Canacol achieved significant growth in realized contractual sales volumes to 18,043 boepd, a 61% increase over the same quarter in 2016," commented Charle Gamba, President and CEO of Canacol. "Adjusted funds from operations for Q1 2017 increased 56% to $20.9 million compared to $13.5 million for the same quarter in 2016.
Work on the private pipeline project that will lift Canacol's natural gas production to 130 MMscfpd in December 2017 is advancing very well. The right of ways required for the pipeline continue to be acquired, and the major tubular contract has been awarded to FlexSteel for delivery to Colombia in mid-July 2017. The SPV has also negotiated a contract with Enerflex Ltd. for compression which is expected to be delivered to Colombia in early August 2017. We anticipate construction of the pipeline to commence in September 2017, with first gas by December 1, 2017.
Canacol is in the final stages of evaluating three separate financing proposals for this pipeline and anticipates finalizing terms with the preferred option by the end of May 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, more than adequate to lift production to 130 MMscfpd in December 2017 when construction of the private pipeline is complete. As previously announced, Canacol 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 which is expected to be transported by the new pipeline in December 2017.
Meanwhile we continue to encounter solid exploration success, announcing our seventh consecutive natural gas discovery at Canahuate-1 that tested 28 MMscfpd of dry gas, and an oil discovery at Mono Capuchino-1ST that tested 1,013 bopd of light oil. Throughout the remainder of 2017, we plan to drill two more high impact reserves add natural gas exploration wells, Toronja-1 in June 2017, and Pandereta 1 in October 2017. The reserves from Canahuate-1, and the potential reserves from Toronga and Pandereta, will move us closer to our goal of lifting production to 230 MMscfpd by December 2018 via the new pipeline expansion to Cartagena and Barranquilla that Promigas S.A. has initiated.
Canacol also replaced its $255 million BNP Senior Secured Term Loan and Apollo Notes with a $265 million seniorr secured term loan with a syndicate of banks led by Credit Suisse ("2017 Senior Secured Term Loan"). This refinancing and consolidation achieved the following benefits: a) it defers amortization payments until March 2019, allowing the Corporation to dedicate capital to high netback production related projects instead of debt service; b) it reduces the total annual interest costs as compared to the combined BNP Senior Secured Term Loan and Apollo Notes by approximately 1.1%; and c) it harmonizes compliances and administrative deliverables under one facility. Although the Corporation's current contemplated 2017 capital budget lies within its 2017 cash flow and existing cash, the new credit agreement also allows an additional $40 million of greenshoe funds available within 12 months post-funding, allowing Canacol increased financial flexibility as it pursues its states gas production target of 230 MMscfpd by late 2018."
Highlights for the three months ended March 31, 2017
(Production is stated as working-interest before royalties)
Financial and operational highlights of the Corporation include:
SOURCE: Canacol Energy Ltd.
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