Canacol Energy Ltd. Provides 2023 Capital and Gas Sales Guidance
On December 20, 2022, Canacol Energy Ltd. (CNNEF) revealed its 2023 capital budget of $138-$163 million, fully funded through existing cash and projected cash flows. Expected gas sales range from 160 to 206 million standard cubic feet per day (MMscfpd) with an average wellhead price of $4.95 to $5.09 per Mcf. The company aims to drill ten exploration wells and acquire 282 square kilometers of 3D seismic in 2023. Additionally, Canacol continues its Jobo to Medellin pipeline project, enhancing its capacity to over 300 MMscfpd by 2024 while maintaining shareholder returns through dividends and buybacks.
- 2023 capital budget of $138-$163 million is fully funded by existing cash and cash flows.
- Projected gas sales of 160-206 MMscfpd enhance revenue potential.
- Focused on drilling ten exploration wells, targeting a 2P reserves replacement ratio of over 200%.
- Plan to acquire 282 square kilometers of 3D seismic to identify new gas prospects.
- Progressing on the Jobo to Medellin pipeline to increase sales capacity to over 300 MMscfpd by late 2024.
- Commitment to maintain dividends and share buybacks supports shareholder value.
- Projected natural gas sales volume at the low end is lower than 2022 estimates.
- Reliance on take-or-pay contracts raises concerns if demand fluctuates.
- Interruptible sales as a percentage of total gas sales might decrease significantly.
CALGARY, Alberta, Dec. 20, 2022 (GLOBE NEWSWIRE) -- Canacol Energy Ltd. (“Canacol” or the “Corporation”) (TSX:CNE; OTCQX:CNNEF; BVC:CNEC) is pleased to provide its capital and gas sales guidance for 2023. Dollar amounts are expressed in United States dollars, with the exception of Canadian dollar unit prices (“C$”) where indicated and otherwise noted.
The Corporation announces that its 2023 capital budget is between
Charle Gamba, President and CEO of Canacol, stated: “For 2023, the Corporation is focused on the following objectives:
1) the drilling of up to 10 exploration and appraisal wells in a continuous program targeting a 2P reserves replacement ratio of more than
2) the acquisition of 282 square kilometers of 3D seismic on the VIM-5 block to expand the Corporation’s exploration prospect inventory;
3) continue to progress the new gas pipeline project from Jobo to Medellin which will add 100 MMscfpd of new gas sales to the interior in late 2024, allowing Canacol to increase gas sales to over 300 MMscfpd;
4) continue to return capital to shareholders in the form of dividends and share buybacks; and
5) continue with our commitment of strengthening our environmental, social and governance strategy and reporting with the objective of improving the Corporation’s ranking on various sustainability indices.”
2023 Corporate Guidance
Provided below is the Corporation’s guidance for 2023:
| Highlights | 2022E | 2023 Low End Guidance | 2023 High End Guidance |
| Natural Gas Sales Volume (MMscfpd) | 182 | 160 | 206 |
| EBITDA (US$ millions) | |||
| Capital Expenditures (US$ millions) (1) |
(1) The Corporation will be reimbursed for the Jobo-Medellin pipeline expenditures by SETCO.
2023 Capital Program – Continuing to build our reserves base to sustain growth
| In US$ millions | 2022E | 2023 Low End Guidance | 2023 High End Guidance | |||
| Maintenance and development drilling | ||||||
| Exploration activities (wells and seismic) | ||||||
| Facilities and infrastructure | ||||||
| Administrative, social, environmental and other | ||||||
| Field capital expenditures | $166 | $130 | $155 | |||
| Jobo-Medellin pipeline expenditures (1) | ||||||
| Total capital expenditures | $174 | $138 | $163 | |||
(1) The Corporation will be reimbursed for the Jobo-Medellin pipeline expenditures by SETCO.
2023 Wells and 3D Seismic Acquisition
The bulk of the 2023 capital program targets the Corporation’s large exploration portfolio with the drilling of a total of up to 10 exploration and appraisal wells. Nine of the exploration and appraisal well targets are in the Corporation’s traditional exploration and production (“E&P”) contracts located in the Lower Magdalena Basin, while one targeted exploration well is in a block where the Corporation has not yet drilled: the Toraba-1 well on the VMM-49 E&P Contract located in the Middle Magdalena Basin.
The Toraba-1 exploration well is the first of several exploration wells targeting a new Tertiary conventional gas play on the Corporation’s
The 2023 drilling program emphasizes exploration as the Corporation continues to build out its reserve base while ensuring sufficient productive capacity to meet our forecast gas sales after the entrance of the Medellin pipeline. The majority of the Corporation’s exploration wells will target prospects defined on 3D seismic, with the majority being supported by AVO analysis. The application of AVO methodology is the technical means by which the Corporation mitigates risks associated with the presence of gas-charged sandstones in its exploration prospects, and in large part accounts for the Corporation’s remarkable
The Corporation also plans to acquire 282 square kilometers of new 3D seismic on the VIM-5 block, the objective being to identify gas prospects for future exploration drilling. Approximately half of the planned exploration wells for 2023 are expected to be drilled on the VIM-5 block, in areas in which the Corporation acquired new 3D seismic in 2022.
With regards to the new deep conventional gas play in the Middle Magdalena Basin, drilling of the Pola-1 well, originally budgeted for 2022, is included in a contingent high spending case budget for 2023. The Corporation is prioritizing drilling of Tertiary prospects in the short term and seeks to secure all the equipment and people needed to ensure safe drilling of a technically challenging well.
2023 Financial Highlights
| 2022E | 2023 Low End Guidance | 2023 High End Guidance | |
| Natural gas sales volume (MMscfpd) | 182 | 160 | 206 |
| Interruptible spot sales as a % of total | |||
| Assumed average gas sales price ($/Mcf) | |||
| Netback ($/Mcf) | |||
| EBITDA (US$ millions) | |||
| Capital expenditures (US$ millions) | |||
| Quarterly dividend (C$/share) |
The low end guidance assumes no interruptible sales in 2023. The Corporation’s best estimate is that there will be interruptible gas sales demand in its 2023 high end guidance of 206 MMscfpd, including contractual downtime. The interruptible spot sales price is conservatively modelled, resulting in a total average natural gas sales price being
Canacol currently has abundant productive capacity of approximately 230 MMscfpd to fulfill expected 2023 production levels.
2023 Jobo to Medellin Gas Pipeline Activities
In 2023, the Corporation will continue to progress its Jobo to Medellin gas pipeline project, including the following activities:
1) begin the construction of the pipeline by the end of Q3 2023; and
2) contract an additional 25 MMscfpd of take-or-pay contracts in order to completely fill the 100 MMscfpd of initial transportation capacity.
The Corporation executed an agreement with Shanghai Engineering and Technology Corp (“SETCO”) in October 2022 to construct a 289 kilometer long, 22 inch diameter gas pipeline from the Jobo gas processing facility to the city of Medellin. Under the terms of the agreement, SETCO will be responsible for paying
2023 Shareholder Return – Maintaining dividend and continuing share buyback
Canacol expects to maintain a dividend throughout 2023 as well as continue its normal course issuer’s bid (“NCIB”) share buyback plan.
About Canacol
Canacol is a natural gas exploration and production company with operations focused in Colombia. 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 CNEC, respectively.
Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. All statements other than statements of historical fact contained in this news release may be forward-looking statements. Such statements can generally be identified by words such as "may," "target," "could," "would," "will," "should," "believe," "expect," "anticipate," "plan," "intend," "foresee" and other similar words or phrases. In particular, forward-looking statements herein include, but are not limited to, statements relating to the expectations regarding the use of proceeds of the proposed offering. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in the forward-looking statements. Canacol believes that the expectations reflected in such forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. The forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking statements are made as of the date of this news release and Canacol assumes no obligation to update or revise them to reflect new events or circumstances, except as expressly required by applicable securities law. Further information regarding risks and uncertainties relating to Canacol and its securities can be found in the disclosure documents filed by Canacol with the securities regulatory authorities, available at www.sedar.com.
FAQ
What is Canacol Energy's capital budget for 2023?
What is the expected gas sales volume for Canacol Energy in 2023?
What are the key projects Canacol Energy is focusing on in 2023?
How will Canacol Energy fund its 2023 capital budget?
What is the expected average sales price for Canacol Energy's gas in 2023?
