Canacol Closes Strategic Acquisition of Additional Interest in
LLA23 and Tests 2,898 BOPD From Labrador 4 and Leono 3 Wells
CALGARY, ALBERTA--(Marketwired - Jun 18, 2014) - Canacol Energy
Ltd. ("Canacol" or the "Corporation")
(TSX:CNE)(OTCQX:CNNEF)(BVC:CNEC) is pleased to provide the
following update concerning the strategic acquisition of an
additional 10% working interest from Petromont Colombia S.A.
Sucursal Colombia ("Petromont") in its LLA23 Exploration and
Production contract located in the Llanos basin and the production
test results of the Labrador 4 and Leono 3 wells also located on
the LLA23 contract, which tested at a gross combined rate of 2,898
barrels of light oil per day ("bopd") (2,608 bopd net). The
Corporation now has a 90% operated working interest in the LLA23
contract, with Petromont holding the remaining 10% interest.
Elsewhere on the LLA23 contract the Corporation is currently
rigging up on the Maltes 1 exploration well and the Pantro 2
appraisal well, and is about to commence the shooting of 400 square
kilometers of 3D seismic data. As a result of the acquisition the
Corporation is revising its production guidance from 12,500 to
13,500 boepd net before royalty to 13,000 to 14,000 boepd net
before royalty for calendar 2014 with an anticipated exit rate for
December 2014 of approximately 18,000 boepd.
Charle Gamba, President and CEO of the Corporation, commented,
"This strategic acquisition has consolidated our interest in our
main oil producing asset at LLA23, which accounts for approximately
half of the Corporation's current 13,800 boepd of net production
before royalties. With a 100% drilling success rate for both
exploration and production wells to date, including the recently
drilled Leono 3 and Labrador 4 wells, this strategic consolidation
of interest allows us to capture almost all of the upside
associated with this contract over the next several years, all now
at a 90% operated working interest. We plan to drill 3 exploration
wells and 7 additional development and appraisal wells during the
remainder of calendar 2014, and are currently rigging up on the
Maltes 1 exploration well and the Pantro 2 appraisal well. The
Corporation is also about to commence shooting 400 sq km of 3D
seismic data which will set up our exploration drilling programs
for 2015 and 2016 on this important block."
Acquisition of 10% interest in the LLA23 contract (90% operated
working interest)
Effective as of June 1, 2014, the Corporation has acquired an
additional 10% working interest in the LLA 23 contract from
Petromont for a purchase price of US$40 million, payable in cash
and the assumption of certain liabilities related to the LLA23
contract, subject to certain post-closing adjustments relating to
unbilled expenditures attributable to the acquired interest prior
to the date of the transaction. Application has been made to the
National Agency of Hydrocarbons of Colombia ("ANH") for formal
recognition of the transaction and of the Corporation's additional
10% working interest in the LLA 23 contract.
The Acquisition has the following characteristics:
- Current production: 775 bopd
- Proved plus probable reserves: 1.3 mmbo of light and medium
crude oil (May 31, 2014)1,2
- Operating netback3: $60-$65 per barrel
- Reserves are Gross Company Reserves as evaluated by PetroTech
Engineering Ltd. as of May 31, 2014. Gross Company Reserves are
Petromonts working interest reserves before the deduction of
royalties.
- Canacol intends to release an updated corporate reserve report
effective June 30, 2014.
- Based on expected average prices for Q3/Q4 2014 and historical
Canacol operated production, transportation and royalty
expenses.
Labrador 4 production test results
The Labrador 4 well was spud on April 30, 2014 and reached a
total depth of 11,939 feet measured depth ("ft md") on May 18,
2014. The well encountered 111 feet ("ft") of net oil pay in the
C7, Mirador, Barco, Gacheta and Ubaque reservoirs.
The Gacheta reservoir was perforated from 11,261 - 282 and
11,330 - 352 ft md and for a test period of 24 hours on the 16th of
June 2014 flowed at an average gross rate of 1,193 bopd (1,074 bopd
net) of 27° API oil with 4% water cut and 7 thousand standard cubic
feet per day ("mscfpd") of gas using an electro submersible pump
("ESP") set to a frequency of 55 Hz. The Ubaque reservoir was
perforated from 11,390 - 11,394 ft md for a test period of 24 hours
on June 2, 2014. The well flowed at an average gross rate of 638
bopd (574 bopd net) of 23° API oil with 20% water cut believed to
be related to the drilling and completion of the well, and 1 mscfpd
using an ESP set to a frequency of 35 Hz. The well will be placed
on permanent production from the Gacheta reservoir subject to the
approval of the ANH.
Leono 3 production test results
The Leono 3 well was spud on May 12, 2014 and reached a total
depth of 12,590 ft md on May 26, 2014. The well encountered 36 ft
of net oil pay within the C7, Mirador, Gacheta, and Ubaque
reservoirs. The Mirador reservoir was perforated from 11,158 to
11,165 ft md and for a test period of 7 days ended on the 14th of
June 2014 flowed at an average gross rate of 1,067 bopd (960 bopd
net) of 36° API oil with 0.6 % water cut and 0.5 mscfpd of gas
using a jet pump at 2,000 pounds per square inch. The well will be
left on permanent production from the Mirador reservoir subject to
the approval of the ANH.
Forward Plans on LLA23
The rig that drilled the Labrador 4 well is about to rig up to
drill the Maltes 1 exploration well which is located approximately
2 kilometers north of the Labrador field. It is anticipated that
the Maltes 1 exploration well will take approximately 6 weeks to
drill and test. The rig that drilled the Leono 3 well is currently
rigging up to drill the Pantro 2 appraisal well, which is located
approximately 3 km south of Leono. The Pantro 2 well is anticipated
to spud in the first week of July 2014, and will take approximately
6 weeks to drill and test.
The Corporation has recently obtained all of the necessary
permits required to acquire 400 square kms of 3D seismic data and
anticipates commencing acquisition in approximately 2 weeks. The
seismic program is anticipated to be completed by the end of July
2014, with the results being used to plan the Corporation's
exploration and development drilling programs on the LLA23 contract
in calendar 2015 and 2016.
Canacol is an exploration and production company with
operations focused in Colombia and Ecuador. 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.
Data obtained from the initial testing results at wells
identified in this press release, including barrels of oil produced
and levels of water-cut, should be considered to be preliminary
until a further and detailed analysis or interpretation has been
done on such data. The well test results obtained and disclosed in
this press release are not necessarily indicative of long-term
performance or of ultimate recovery. The reader is cautioned not to
unduly rely on such results as such results may not be indicative
of future performance the wells or of expected production results
for the Corporation in the future.
The reserves evaluation, effective May 31, 2014, was
conducted by Petrotech Engineering Ltd. and is in accordance with
National Instrument 51-101 - Standards of Disclosure for Oil and
Gas Activities. The reserves are provided on a net before royalty
basis in units of millions of barrels of oil equivalent using a
forecast price deck for oil and gas, adjusted for crude quality, in
US dollars.
Canacol Energy Ltd.Investor
Relations888-352-5555IR@canacolenergy.comwww.canacolenergy.com
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