Welcome!

News Feed Item

Canacol Energy Ltd. Reports Record Adjusted Funds from Operations in Fiscal Q3 2014 and 42% Increase in Production Quarter Over Quarter

CALGARY, ALBERTA -- (Marketwired) -- 05/12/14 -- Canacol Energy Ltd. ("Canacol" or the "Corporation") (TSX: CNE)(BVC: CNEC)(OTCQX: CNNEF) is pleased to report its financial results for the three and nine months ended March 31, 2014. Fiscal Q3 2014 was a successful quarter for the Corporation as it increased its production, revenues, adjusted funds from operations, and netbacks over the comparative prior year period. Significantly, fiscal Q3 2014 represents a record quarter for Canacol in terms of cash generation with reported adjusted funds from operations of $32.3 million for the quarter.

Charle Gamba, President and CEO of the Corporation stated: "Canacol increased production for the most recent quarter by 8% compared to last quarter and by 42% over the comparative quarter as the Corporation continued to realize success from its recent exploration and production activities. Our average corporate netback has increased steadily over recent quarters and now stands at $43.57/boe for the current quarter, a 23% increase over the comparative quarter and the highest corporate average netback in the history of Canacol. This increased netback reflects our focus on high netback production, which will remain our focus in the future. Increased production and higher netbacks have also improved our cash generation from operations with Canacol posting record adjusted funds from operations this quarter of $32.3 million. With expected net proceeds from our recently announced bought deal equity financing and due to our continued exploration success on our LLA-23 block, where we just tested another 1,038 bopd from the Mirador reservoir in the Pantro-1 light oil discovery, we plan to accelerate capital activities on LLA-23 with three additional exploration well (Tigro-1, Pointer-1, and Maltes-1), up to six additional development wells, and additional facilities in 2014. We further plan to conduct additional drilling activities on our Middle Magdelana blocks which have also seen positive exploration successes, with one exploration well, Morsa-1, and one appraisal well, Oso Pardo-2, going down by the end of July 2014. We also plan to drill three additional conventional shallow wells on our VMM-2 block following up our Mono Arana Lisama discovery. Finally, we're planning to spud the Palmer- 1 well, the first of three gas exploration wells, on our Esperanza block prior to the end of June 2014. We're off to a great start in 2014, and with 11 more exploration wells and 28 development wells to come, Canacol's production and cash flow will continue to grow throughout the remainder of calendar 2014 and beyond. With that in mind, we are revising guidance for calendar 2014 up to 12,500-13,500 boepd and plan to exit the year at approximately 17,000 boepd via our drilling programs."

Highlights for Fiscal Q3 2014

(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:

--  Average sales volumes increased 60% to 11,418 barrels of oil equivalent
    per day ("boepd") for fiscal Q3 2014 compared to 7,141 boepd for the
    comparable period. Sales volumes in fiscal Q3 2014 were positively
    affected by the sale of a significant build-up of crude oil inventories
    from December 31, 2013.
--  Average daily production volumes increased 42% to 10,893 boepd for
    fiscal Q3 2014 compared to 7,659 boepd for the comparable period. This
    increase in production volumes is primarily due to new production from
    the Labrador and Leono discoveries on the LLA-23 block and production
    increases from the Libertador and Atacapi fields in Ecuador.
--  Petroleum and natural gas revenues for fiscal Q3 2014 increased 61% to
    $55.7 million compared to $34.6 million for the comparable period.
    Adjusted petroleum and natural gas revenues, inclusive of the Ecuador
    IPC (see the definition of Ecuador IPC below), for fiscal Q3 2014
    increased 68% to $61.6 million compared to $36.7 million for the
    comparable period.
--  Average operating netback for fiscal Q3 2014 increased 23% to $43.57/boe
    compared to $35.41/boe for the comparable period. Operating netback is
    inclusive of results from the Ecuador IPC.
--  Adjusted funds from operations for fiscal Q3 2014 increased 118% to
    $32.3 million compared to $14.8 million for the comparable period.
    Adjusted funds from operations is inclusive of results from the Ecuador
    IPC. The Corporation recorded net income of $19.4 million for fiscal Q3
    2014 compared to net loss of $3.4 million for the comparable period.
--  Capital expenditures for fiscal Q3 2014 were $35.9 million while
    adjusted capital expenditures, inclusive of amounts related to the
    Ecuador IPC, were $44.1 million.
--  At March 31, 2014, the Corporation had $35.7 million in cash and cash
    equivalents and $52.1 million in restricted cash. Subsequent to March
    31, 2014, the Corporation upsized its existing senior term loan for an
    additional $80 million, before transaction costs.


----------------------------------------------------------------------------
                           Three months ended         Nine months ended
                               March 31,                  March 31,
Financial
                           2014   2013    Change     2014    2013   Change
----------------------------------------------------------------------------
Petroleum and natural
 gas revenues, net of
 royalties               55,653 34,602        61% 146,043 102,394       43%
Adjusted petroleum and
 natural gas revenues,
 net of royalties,
 including revenues
 related to the
 Ecuador IPC (2)         61,550 36,726        68% 159,159 105,871       50%

Cash provided by (used                                             greater
 in) operating                                                        than
 activities              13,099 (8,520)      n/a   69,229   4,316      999%
 Per share - basic ($)                                             greater
                                                                      than
                           0.15  (0.10)      n/a     0.79    0.06      999%
 Per share - diluted                                               greater
  ($)                                                                 than
                           0.14  (0.10)      n/a     0.78    0.06      999%

Adjusted funds from
 operations (1)(2)       32,274 14,778       118%  72,151  32,052      125%
 Per share - basic ($)     0.36   0.17       112%    0.83    0.45       84%
 Per share - diluted
  ($)                      0.35   0.17       106%    0.81    0.45       80%

Net income (loss)        19,438 (3,425)      n/a   12,007  (8,761)     n/a
 Per share - basic ($)     0.22  (0.04)      n/a     0.14   (0.12)     n/a
 Per share - diluted
  ($)                      0.21  (0.04)      n/a     0.14   (0.12)     n/a
Capital expenditures,                    greater
 net (4)                 35,915  3,021  than 999%  76,072  37,444      103%
Adjusted capital
 expenditures, net,
 including capital
 expenditures related
 to the Ecuador IPC
 (1)(2)(4)               44,103 10,434       323% 100,525  52,053       93%

                                                    March    June
                                                      31,     30,
                                                     2014    2013   Change
                                                  --------------------------
Cash and cash
 equivalents                                       35,699  52,290      (32%)
Restricted cash                                    52,125  26,394       97%

Working capital
 surplus, excluding
 the current portion
 of bank debt and non-
 cash items (1)                                    33,328  69,148      (52%)
Short-term and long-
 term bank debt                                   135,675 134,316        1%
Total assets                                      548,501 469,592       17%
Common shares, end of
 period (000s)                                     90,220  86,506        4%

----------------------------------------------------------------------------
                          Three months ended         Nine months ended
                              March 31,                  March 31,
Operating
                          2014    2013  Change        2014    2013  Change
----------------------------------------------------------------------------
Petroleum and natural
 gas production,
 before royalties
 (boepd)
 Petroleum               8,260   4,785      73%      7,115   5,285      35%
 Natural gas             2,633   2,874      (8%)     2,919   1,051     178%
 Total                  10,893   7,659      42%     10,034   6,336      58%

Petroleum and natural
 gas sales, before
 royalties (boepd)
 Petroleum               8,792   4,267     106%      6,976   5,477      27%
 Natural gas             2,626   2,874      (9%)     2,879   1,051     174%
 Total                  11,418   7,141      60%      9,855   6,528      51%

Realized sales prices
 ($/boe)
 LLA-23 (oil)            88.61   99.62     (11%)     89.26   97.95      (9%)
 Esperanza (natural
  gas)                   23.00   30.20     (24%)     27.60   30.58     (10%)
 Rancho Hermoso
  (tariff and non-
  tariff oil and
  liquids)               85.25   88.03      (3%)     89.99   70.22      28%
 Ecuador (tariff oil)
  (2)                    38.54   38.54       -       38.54   38.54       -
 Total (2)               65.49   61.97       6%      64.35   64.08       -

Operating netbacks
 ($/boe) (1)
 LLA-23 (oil)            62.26   66.22      (6%)     64.29   65.23      (1%)
 Esperanza (natural
  gas)                   19.36   25.61     (24%)     23.19   25.85     (10%)
 Rancho Hermoso
  (tariff and non-
  tariff oil and
  liquids)               25.76   37.28     (31%)     20.84   24.48     (15%)
 Ecuador (tariff oil)
  (2)                    38.54   38.54       -       38.54   38.54       -
 Total (2)               43.57   35.41      23%      40.68   26.73      52%
----------------------------------------------------------------------------
 (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.
 (3) Includes tariff oil production and sales related to the Ecuador IPC.
 (4) Excludes business acquisition.

Outlook

The Corporation is pleased to announce that it has completed the second production test in the Pantro-1 well. The first production test was performed on the Gacheta reservoir which tested at a gross rate of 2,930 barrels of oil per day ("bopd") (2,344 bopd net). The second test was performed on the Mirador reservoir which tested at a final gross rate of 1,038 bopd (830 bopd net) of 36 degrees API oil at 110 degrees F with 2% water cut using an electro submersible pump set to a frequency of 42 Hz during a seven day flow period. This marks the first oil production from the Mirador reservoir from any well on the LLA-23 block and confirms its viability as a viable productive reservoir on the block.

For the remainder of calendar 2014, the Corporation plans to expand its capital program in Colombia and anticipates revised net average production before royalties of between 12,500 and 13,500 boepd for calendar 2014.

In light of its recent exploration successes on its LLA-23 and Middle Magdelena blocks, the Corporation plans to accelerate its exploration and development drilling program on the LLA-23 block. Aside from the programed Tigro and Pointer exploration wells, the Corporation plans to drill a third exploration well, Maltes-1, prior to the end of calendar 2014. In addition to its planned Labrador-4 and Leono-2 appraisal wells, the Corporation plans to also expand the program to drill up to six additional development wells at Leono, Pantro, and Tigro. The Corporation also plans to accelerate its water handling and power generation facilities on the LLA-23 block to more effectively manage operating costs. In other projects, the Corporation plans to accelerate it exploration and development drilling program on the Santa Isabel block (the Morsa-1 exploration well and the Oso Pardo-2 appraisal well), and expand its development drilling program at its Mono Arana shallow discovery on the VMM-2 block (three wells). The Corporation's revised 2014 capital exploration and development program includes plans to drill 13 gross exploration wells (versus the 11 originally planned), 43 gross development wells (versus the 36 originally planned), and work over 13 existing producing wells in its oil fields located in Colombia and Ecuador.

Exploration wells for the remainder of calendar 2014 will include the Tigro-1, Pointer-1, and Maltes-1 wells on the LLA- 23 block, the Palmer-1, Corozo-1, and Canadonga-1 exploration wells on the Esperanza block, the Morsa-1 well on the Santa Isabel block, the Pico Plata-1 well on the VMM3 block, the Cejudo-1 well on the VMM2 block, the Chipo-1 well on the Ombu block, and the Secoya Oeste-1 well in Ecuador.

Funding for the expanded 2014 capital program is expected to come from existing working capital, operating cash flows, available debt facilities, and net proceeds from the bought deal equity offering expected to close by the end of May 2014.

Change in Accounting Policy for Ecuador Incremental Production Contract ("Ecuador IPC")

On July 1, 2013, the Corporation adopted International Financial Accounting Standard ("IFRS") 11 "Joint Arrangements", which became effective for the Corporation on July 1, 2013. The adoption of IFRS 11 resulted in a change in the method of accounting for the Corporation's interest in the incremental production contract for the Libertador and Atacapi fields in Ecuador from the proportionate consolidation method to the equity method. Fiscal Q3 2014 is the third quarter for which the Corporation has reported results under IFRS 11. Significantly, under the equity method the Corporation no longer reports its proportionate share of revenues and expenditures of the Ecuador IPC as would be typical in oil and gas joint interest arrangements. Therefore, within this news release, management has provided supplemental disclosures of adjusted revenues and expenditures, which are inclusive of the Ecuador IPC, to supplement the IFRS disclosures of the Corporation's operations. For a complete discussion of the change in accounting policy and the supplemental disclosures provided, refer to the unaudited interim condensed consolidated financial statements and related Management's Discussion and Analysis ("MD&A") as of and for the three and nine months ended March 31, 2014 as filed on SEDAR.

The Corporation's has filed its unaudited interim condensed consolidated financial statements and related Management's Discussion and Analysis as of and for the three and nine months ended March 31, 2014 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 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 symbols 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. 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"), which is incorporated herein by reference and is 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 equivalent ("boe") 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.

Boe Conversion - The term "boe" is used in this news release. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of cubic feet of natural gas to barrels oil equivalent is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In this news release, we have expressed boe using the Colombian conversion standard of 5.7 Mcf: 1 bbl required by the Ministry of Mines and Energy of Colombia.

Contacts:
Canacol Energy Ltd.
Investor Relations
888-352-0555
[email protected]
www.canacolenergy.com

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
SYS-CON Events announced today that CAST Software will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CAST was founded more than 25 years ago to make the invisible visible. Built around the idea that even the best analytics on the market still leave blind spots for technical teams looking to deliver better software and prevent outages, CAST provides the software intelligence that matter ...
Businesses and business units of all sizes can benefit from cloud computing, but many don't want the cost, performance and security concerns of public cloud nor the complexity of building their own private clouds. Today, some cloud vendors are using artificial intelligence (AI) to simplify cloud deployment and management. In his session at 20th Cloud Expo, Ajay Gulati, Co-founder and CEO of ZeroStack, discussed how AI can simplify cloud operations. He covered the following topics: why cloud mana...
Docker containers have brought great opportunities to shorten the deployment process through continuous integration and the delivery of applications and microservices. This applies equally to enterprise data centers as well as the cloud. In his session at 20th Cloud Expo, Jari Kolehmainen, founder and CTO of Kontena, discussed solutions and benefits of a deeply integrated deployment pipeline using technologies such as container management platforms, Docker containers, and the drone.io Cl tool. H...
From 2013, NTT Communications has been providing cPaaS service, SkyWay. Its customer’s expectations for leveraging WebRTC technology are not only typical real-time communication use cases such as Web conference, remote education, but also IoT use cases such as remote camera monitoring, smart-glass, and robotic. Because of this, NTT Communications has numerous IoT business use-cases that its customers are developing on top of PaaS. WebRTC will lead IoT businesses to be more innovative and address...
Blockchain is a shared, secure record of exchange that establishes trust, accountability and transparency across business networks. Supported by the Linux Foundation's open source, open-standards based Hyperledger Project, Blockchain has the potential to improve regulatory compliance, reduce cost as well as advance trade. Are you curious about how Blockchain is built for business? In her session at 21st Cloud Expo, René Bostic, Technical VP of the IBM Cloud Unit in North America, will discuss th...
While some vendors scramble to create and sell you a fancy solution for monitoring your spanking new Amazon Lambdas, hear how you can do it on the cheap using just built-in Java APIs yourself. By exploiting a little-known fact that Lambdas aren’t exactly single-threaded, you can effectively identify hot spots in your serverless code. In his session at @DevOpsSummit at 21st Cloud Expo, Dave Martin, Product owner at CA Technologies, will give a live demonstration and code walkthrough, showing how ...
WebRTC is great technology to build your own communication tools. It will be even more exciting experience it with advanced devices, such as a 360 Camera, 360 microphone, and a depth sensor camera. In his session at @ThingsExpo, Masashi Ganeko, a manager at INFOCOM Corporation, will introduce two experimental projects from his team and what they learned from them. "Shotoku Tamago" uses the robot audition software HARK to track speakers in 360 video of a remote party. "Virtual Teleport" uses a...
Translating agile methodology into real-world best practices within the modern software factory has driven widespread DevOps adoption, yet much work remains to expand workflows and tooling across the enterprise. As models evolve from pockets of experimentation into wholescale organizational reinvention, practitioners find themselves challenged to incorporate the culture and architecture necessary to support DevOps at scale.
When shopping for a new data processing platform for IoT solutions, many development teams want to be able to test-drive options before making a choice. Yet when evaluating an IoT solution, it’s simply not feasible to do so at scale with physical devices. Building a sensor simulator is the next best choice; however, generating a realistic simulation at very high TPS with ease of configurability is a formidable challenge. When dealing with multiple application or transport protocols, you would be...
As more and more companies are making the shift from on-premises to public cloud, the standard approach to DevOps is evolving. From encryption, compliance and regulations like GDPR, security in the cloud has become a hot topic. Many DevOps-focused companies have hired dedicated staff to fulfill these requirements, often creating further siloes, complexity and cost. This session aims to highlight existing DevOps cultural approaches, tooling and how security can be wrapped in every facet of the bu...
SYS-CON Events announced today that CA Technologies has been named “Platinum Sponsor” of SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business – from apparel to energy – is being rewritten by software. From planning to development to management to security, CA creates software that fuels transformation for companies in the applic...
yperConvergence came to market with the objective of being simple, flexible and to help drive down operating expenses. It reduced the footprint by bundling the compute/storage/network into one box. This brought a new set of challenges as the HyperConverged vendors are very focused on their own proprietary building blocks. If you want to scale in a certain way, let’s say you identified a need for more storage and want to add a device that is not sold by the HyperConverged vendor, forget about it....
SYS-CON Events announced today that Pulzze Systems will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Pulzze Systems Inc, provides the software product "The Interactor" that uniquely simplifies building IoT, Web and Smart Enterprise Solutions. It is a Silicon Valley startup funded by US government agencies, NSF and DHS to bring innovative solutions to market.
In his session at @ThingsExpo, Dr. Robert Cohen, an economist and senior fellow at the Economic Strategy Institute, presented the findings of a series of six detailed case studies of how large corporations are implementing IoT. The session explored how IoT has improved their economic performance, had major impacts on business models and resulted in impressive ROIs. The companies covered span manufacturing and services firms. He also explored servicification, how manufacturing firms shift from se...
With Cloud Foundry you can easily deploy and use apps utilizing websocket technology, but not everybody realizes that scaling them out is not that trivial. In his session at 21st Cloud Expo, Roman Swoszowski, CTO and VP, Cloud Foundry Services, at Grape Up, will show you an example of how to deal with this issue. He will demonstrate a cloud-native Spring Boot app running in Cloud Foundry and communicating with clients over websocket protocol that can be easily scaled horizontally and coordinate...