Canacol Energy Ltd Profile
Canacol Energy Ltd. operates as an independent exploration and production company.
The company focuses on the exploration and commercialization of conventional natural gas in northern Colombia. The company’s asset portfolio encompasses production, development, appraisal and exploration properties. All of the company’s oil and gas operations are located in Colombia concentrated in the Llanos and Magdalena regions.
The company’s core natural conventional gas exploration and production assets, the Esperanza E&E Contract and the VIM 5, VIM 19, and VIM 21 E&P Contracts, are located in the Lower Magdalena basin in northern Colombia.
The near-term business plan of the company is to continue growing its production and reserves base through a combination of exploration, property development and acquisitions. To accomplish this, the company continues to pursue an integrated growth strategy, including exploration and development drilling in its core areas of Colombia, farm-in opportunities, farm-out opportunities, further land acquisitions and swaps of property interests.
As of December 31, 2019, the company had approximately 732,301 gross (397,188 net) acres of unproved property. This acreage is situated in Colombia.
Lower Magdalena Basin
VIM 5 E&P Contract
The company, through its wholly owned subsidiary, CNE Oil & Gas S.A.S., owns a 100% working interest in the VIM 5 block located in the Departments of Sucre and Cordoba. The VIM 5 block contains one producing gas field (Clarinete) and three evaluation areas (Pandereta, Acordeón and Ocarina) operated under a contract with the ANH (Agencia Nacional de Hidrocarburos, or National Hydrocarbon Agency, an agency of the Colombian government) and produces dry natural gas for sale to local customers under long-term contracts.
VIM 19 E&P Contract
The company holds a 100% working interest in the VIM 19 E&P Contract. The VIM 19 E&P Contract is located in the Departments of Sucre and Cordoba covering a total area of 62,073 acres and is adjacent due east of the SSJN-7 E&P Contract. The VIM 19 E&P Contract is in phase 1 of a six year exploration period.
VIM 21 E&P Contract
The company holds a 100% working interest in the VIM 21 E&P Contract. The VIM 21 E&P Contract is located in the Departments of Sucre and Cordoba covering a total area of 51,107 acres and is adjacent to Esperanza E&E Contract and VIM 5 E&P Contract. The VIM 21 E&P Contract is in phase 2 of the exploration period, which ends on June 12, 2021.
VIM 33 E&P Contract
The company, through its wholly-owned subsidiary, CNE Oil & Gas S.A.S., holds a 100% working interest in the VIM 33 E&P Contract. The VIM 33 E&P Contract is located in the Lower Magdalena Basin covering a total area of 155,310 acres.
Esperanza E&E Contract
The company, through the Colombian branches of its wholly-owned subsidiaries, Geoproduction Oil and Gas GmbH and Shona Energy GmbH, owns a 100% working interest in the Esperanza block located in the Department of Cordoba in the Lower Magdalena Basin of Colombia. The Esperanza block contains producing gas fields and one evaluation area (Cañahuate) operated under a contract with the ANH and produces dry natural gas for sale to local customers under long-term contracts. The Esperanza E&E Contract is in the second phase of an extended subsequent exploratory period (PEP-2), which expires on December 4, 2020.
SSJN-7 E&P Contract
The SSJN-7 Contract is 669,000 gross acres in size, and is situated between the VIM 5 and VIM19 E&P Contracts along both of the proven and productive Cienaga de Oro and Porquero gas play fairways, as evidenced by the position of large producing gas fields both to the north and to the south of the block. The block is in phase 1 of the exploration period, which was extended by ANH until December 18, 2020.
Magdalena Basin
VMM 2 E&P Contract
ConocoPhillips is the operator under the VMM 2 E&P Contract holding an 80% working interest and the company, through its wholly-owned subsidiary, Canacol Energy Colombia S.A.S., holds a 20% working interest. The VMM 2 E&P Contract is in phase 1 (duration 36 months), which is suspended until the ANLA issues an environmental license.
VMM 3 E&P Contract
ConocoPhillips is the operator under the VMM 3 E&P Contract (holding an 80% working interest) and the company, through its wholly-owned subsidiary, CNE Oil & Gas S.A.S., holds the other 20% working interest. The VMM 3 E&P Contract is in phase 1 (duration 36 months), which is suspended.
VMM 45 E&P Contract
The company, through its wholly-owned subsidiary, CNE Oil & Gas S.A.S., holds a 100% working interest in the VMM 45 E&P Contract. The VMM 45 E&P Contract is located in the Middle Magdalena Basin covering a total area of 12,422 acres. The company has committed to an exploratory work program, which includes geological studies, the drilling one A3 exploration well and the reprocessing of 24 km2of 3D seismic over a three-year phase (phase 1).
VMM 49 E&P Contract
The company, through its wholly-owned subsidiary, CNE Oil & Gas S.A.S., holds a 100% working interest in the VMM 49 E&P Contract. The VMM 49 E&P Contract is located in the Middle Magdalena Basin covering a total area of 148,244 acres.
Llanos Basin
In 2018, the company sold the majority of its conventional oil assets to Arrow Exploration Ltd. As such, the company’s operations in the Llanos Basin during the year ended December 31, 2019 were engaged in the production of oil solely through its operated producing field, Rancho Hermoso. However, in December 2019, the company entered into an agreement for the sale of its interests in the Rancho Hermoso block with an arm’s length purchaser in consideration for the assumption of contractual work commitments on the block by the purchaser.
Rancho Hermoso Field
Rancho Hermoso is a mature oil field governed by an Ecopetrol contract. The contract holds three work overs and the abandonment of three wells as pending commitments.
