January 1, 2011 by staff
Tamarin, Canacol Energy Ltd. (“Canacol” or the “Company”) (TSX VENTURE: NTC | PowerRating) (BVC: CNEC) is pleased to announce a U.S. and 106 million capital budget in 2011 for exploration and development in Colombia, Guyana and Brazil. The budget includes the drilling of 39 gross wells (13 net wells), 6 exploration wells and 33 development wells and evaluation. The budget also provides for the acquisition of 650 kilometers (km) of 2D seismic exploration, construction of a production facility in early discovery Capella, continued expansion of its production facilities operated Rancho Hermoso and funding from corporations CBO pipeline project in Colombia. The budget consists of the United States and 52 million for conducting the program of exploration and commitments pipeline in Colombia, Guyana and Brazil and the United States and 54 million in discretionary spending devoted primarily to developing programs drilling and production in Colombia. The Company anticipates an average of 10,000 to 11,000 barrels of oil per day (“bpd”) of net after royalty production in 2011, which excludes any production resulting from exploration success.
The Company anticipates that it will USS65 dollars in cash at the end of Q4 2010, and the work program and budget 2011 should be financed by a combination of cash on hand and cash flow from operations. The budget is based on an average oil price of West Texas Intermediate U.S. and 85 per barrel for 2011.
Charle Gamba, president and CEO of Canacol, said: “This year, emphasis has been increasing power production, and I am pleased to announce that, with current net production from 10,998 b / d royalty, we exceeded our 2010 target exit rate of 7,000 b / d by a healthy margin, and generated an increase of 400% of production for 2010. For 2011, the Company focuses on the performance of its major exploration programs, both in its light oil assets in Guyana and its heavy oil assets in Colombia. The success of one of these programs generates returns for shareholders. Also in 2011, the Company will focus on rebuilding its exploration portfolio in Brazil. On the production side, Canacol continue to recycle its cash flows for drilling programs at Rancho Hermoso and Capella heavy oil discovery in its exploration programs. ”
Canacol has interests in 8 exploration contracts and production in Colombia, and plans to spend 92 million on exploration and development projects in 2011. These projects include the drilling of five development wells operated at its Rancho Hermoso field, 28 development wells and evaluation at its heavy oil discovery at Capella, and 3 explorations well on its heavy oil blocks side of the oil discovery Capella. The budget also provides for the acquisition of 650 km of 2D seismic on its blocks of heavy oil, expansion of facilities at the aerodrome of Rancho Hermoso, and financing of its direct interest of 0.5% in the gas pipeline project CBO.
Canacol operated interests in the Rancho Hermoso and Entrerrios producing fields in the Llanos Basin.
Rancho Hermoso Production Contract
The Company plans to continue the drilling of development wells in Rancho Hermoso, monitoring its development program is successful drilling in 2010. The current drilling program will continue in January 2011 with the drilling of 10 wells in the HR, and restarts at the end of Q2/2011 with the drilling of wells HR 11, 12, 13 and 14. In addition to new development wells, the Company plans to expand the treatment capacity of existing facilities fluids to treat the additional production, which will be completed by March 2011. The new facility will have a capacity to process 100,000 barrels of fluid per day.
Putumayo Basin – Caguan
Canacol is one of the largest landowner’s explorations in Putumayo – Caguan Basin of southern Colombia, with the interests of labor contracts for three explorations and production area and a technical evaluation.
Ombu E & P Contract – Capella Heavy Oil Discovery (10% owned non-operated working)
Since its discovery in 2008, the Company participated in drilling 12 wells in the field, and the acquisition of 189 square kilometers of 3D seismic. In 2011, the Company intends to spend U.S. and 17 mm net to fund its share of drilling and completion of 28 new wells and construction of production facilities, such as field development begins. In addition, the pilot cyclic steam injection using the C5 Capella and well A1 will continue to better assess the role of steam injection and oil recovery on the recovery of reserves strengthened.
Tamarind and Cedrela E & P contracts (100% operated working interest)
The Tamarin Cedrela and contracts are located about 25 km directly southwest of the contract Ombu, and were attributed to Canacol in 2009. Based on geophysical and geological data available in this border area, the Company has determined that this trend because when discovered Capella north-east continues on the building of Tamarin, the development potential for another perspective Capella type heavy oil. With the proximity AME Pacarana, awarded to the Company in July 2009, Canacol now occupies a significant position operated exploration 100% interest immediately offset its heavy oil discovery Capella. Canacol acquired 60 km of 2D seismic on the contract Tamarin May 2010 and plans to acquire 250 km of 2D seismic on the block Cedrela in January 2011. The Company plans to drill three exploratory wells on the contracts of Tamarin and Cedrela starting in Q3 2011.
Pacarana TEA (100% operated working interest)
AME Pacarana is an area of technical evaluation awarded directly to Canacol in July 2009. The block is located adjacent to the block contains 2 Ombu and structural trends of the same size and orientation by the discovery that Capella north. Canacol acquired 2,500 km of gravity data Aeromag in March 2010, and based on the results used to convert part of the TEA in the E Sangretorro & P contract, which the Company anticipates will be awarded in early Q1 2011. The Company intends to acquire 250 km of 2D seismic exploration on the market in Q1 2011, followed by exploration drilling in early 2012.
Basin of the Upper Magdalena Valley
COR 11 and 39 E & P contracts (100% operated working interest)
The Company was the successful bidder for the Committee of Regions 11 and 39 contracts in the Ronda exploration bid round in 2010 held in June 2010. The Company and the remaining bidders in Ronda, is pending formal award of contracts by the ANH.
The Company has delineated seven prospects and leads on the two contracts, and has committed to spend U.S. and 28 million during the first phase of exploration work, which has duration of 3 years after the formal award. The work program includes the acquisition of 245 km of 2D seismic exploration and drilling of three exploration wells. Although the Company has no intention in respect of any work performed on these contracts in 2011, these programs can be accelerated in 2011, the Company should choose as many drilling prospects are ready and do not require Seismic Monitoring.
Takutu PPL (65% owned non-operated working)
In 2011, the Company will participate in the drilling of two exploration wells in Guyana, the first being the Apoteri K-2 exploration well on the discovery Karanambo. The Company provides for connecting the Apoteri K-2 and the last week of December 2010, as shown in a separate press release. Gaffney Cline & Associates attributed average gross prospective recoverable resources of 128 million barrels (83 million barrels net) oil discovery in the December 2009 report compiled for the Company.
The joint venture also plans to drill a second exploration well on the block in May 2011 and the formulation of drilling plans, or whether the Rewa River Pirara prospects, according to the results of the K-2. Gaffney Cline & Associates attributed average gross prospective recoverable resources of 171 million barrels (111 million barrels net) and 133 million barrels (86 million barrels net) to each potential customer, respectively in the December 2009 report compiled for the Society. Total net cost for the 2 exploration well is planned at U.S. and 11 million.
Canacol has interests in 10 blocks for exploration and production in Brazil, including a 47.5% non-operated working interest in five oil fields located onshore in the Reconcavo basin of Brazil, and an interest Direct Economic 38% in the contract REC170 also located in the Reconcavo basin.
REC 170 E & P contract (38% interest)
The Company is currently in the process of acquiring the interest of traders and market operator REC170, which ultimately give the Company, operated 75% working interest and operator on the market. The Company plans to drill an exploration well on block in the 3rd quarter of 2011. Total net cost for exploration is planned in the U.S. and 3 million, implying a 75% interest in the contract.
Production assets (47.5% non-operated interest in work)
The Company is currently in talks to sell its direct participation in the 5 areas of production, and expects the transaction to be completed in Q1 2011. This sale allows the Company to focus on building a portfolio of exploration in Brazil in the future.
Canacol is a Canadian-based global oil and gas company operating in Colombia, Guyana and Brazil. Canacol is listed on the TSX Venture Exchange (TSX VENTURE: NTC) and the Bolsa de Valores Colombia (BVC: CNEC). Public filings by the Company may be accessed at www.sedar.com.
This press release contains certain forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are frequently characterized by words such as “anticipate,” “expect,” “plan,” “intend,” “believe,” “anticipate,” “estimate” and similar expressions, or statements that certain events or conditions “may” or “should” occur, including, without limitation, statements regarding estimated production rates from the properties of the Company and the work programs and time involved. Statements This information is based on the opinions and estimates of management at the date the statements are made and are subject to various 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 Company can not 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 Company assumes no obligation to revise or update them to reflect new circumstances except as required by law. Prospective investors should not place undue reliance on forward-looking statements. These factors include risks inherent in exploration and development of crude oil and natural gas, uncertainties in interpreting drilling results and other geological and geophysical data, fluctuating energy prices, the possibility of cost overruns or unanticipated expenses or delays and other uncertainties associated with oil and gas industry. Other factors risk may 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 Company.
A barrel of oil equivalent (boe) is derived by converting gas to oil in a ratio of six thousand cubic feet of gas and oil may be misleading, particularly if used in isolation. A boe conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead, especially in various international jurisdictions.
SOURCE: Energy Ltd. Canacol
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