Sunday, May 1, 2016

Canacol Energy achieves forecasted gas sales in Colombia


Canacol Energy Ltd. is pleased to provide the following update concerning its gas sales and the expansion of its Jobo gas processing facility. 

Realized contractual gas sales currently total 90 million standard cubic feet per day (MMscfpd). Canacol’s gas sales are priced in US dollars sold at the Jobo plantgate under long term multi year escalated take or pay contracts at a 2016 average sales price of US$31.92 / barrel of oil equivalent boe), or US$5.60 / thousand standard cubic feet (mscf), to major Colombian gas consumers including thermoelectric producers and mining companies. Realized contractual gas sales for the months of January 2016, February 2016, and March 2016 were approximately 30.0 MMscfpd, 38.5 MMscfpd and 47.0 MMscfpd respectively, reflecting the additional sales related to the Promigas pipeline expansion. Realized gas sales netbacks for the first quarter of 2016 was approximately US$25.80 / boe, or US$4.53 / mscf. 

This is why I bought the stock. The area in Colombia where Canacol Energy ships its gas has a shortage of gas. The wall of cashflow will now commence as the company realizes a netback $4.53 per thousand cubic feet. In its operations update the company stated that they anticipate $135 million in EBITDAX for calendar 2016. The management also stated that they will turn their oil exploration back on if the oil price goes above $50 per barrel. I like this company especially in the cotext of a rising oil price which I expect over the rest of 2016.

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