Mr. Mark Teare, Senior Vice President of Exploration at Canacol, commented “Toronja 1 marks another success in the new, high impact, shallow Porquero sandstone gas play that we tested last year with the Nelson 6 exploration well, with Toronja 1 successfully testing at a combined rate of 46 MMscfpd.
46 MMscfpd is equivalent to 8100 barrels of oil per day. This is huge and is the 8 successful well of the nine recently drilled.
The issue with Canacol currently is the ability to take the gas to market. However the management has updated its ongoing plans regarding this issue.
...the SPV has acquired approximately 60% of the right of way for the flowline, and has purchased two parcels of land for the compression stations. Fabrication and sailing of the tubulars and compression stations is on schedule, with all equipment anticipated to arrive in Colombia prior to mid August 2017. Construction of the flowline is anticipated to commence in the last week of August 2017. Pressure testing of the flowline and compression stations is anticipated to commence in mid November 2017, with the flowline anticipated to commence deliveries of gas to Cartagena via a connection to the Promigas S.A. pipeline in Bremen on December 1, 2017.
The company keeps finding more gas and has plans to get it to lucrative markets on the coast. They are receiving premium pricing because the Chevron field that used to supply the majority of the gas is in terminal decline. If the the management can execute and get the pipeline done on time we will see a huge jump in cashflows.
|Exploration success is leading to reserve growth|
|Chevron had a monopoly now it will shift to Canacol|
The upside is the oil properties that Canacol still holds. The under-investment into finding oil reserves will lead to an eventual price spike in oil at some point.