Further afield, Charle Gamba's Colombian gas producer, Canacol Energy Ltd. (CNE), lost seven cents to $3.44 on 372,400 shares. It has drawn the ire of local utility Promigas after allegedly backing out of a pipeline-related contract. Promigas began complaining on its website last week that Canacol has decided to "unilaterally terminate the expansion of the natural gas transportation infrastructure" that Promigas built from Canacol's gas fields in Jobo to the port cities of Cartagena and Barranquilla. Long-term investors will remember this agreement from November, 2016. As Canacol announced at the time, it wanted Promigas to build a 100-million-cubic-foot-a-day pipeline expansion, with completion expected by December, 2018. Although construction ran into significant delays, Canacol eventually reported the expansion to have been "delivered in full on Aug. 24, 2019."
Barely a year later, the companies' working relationship appears to be in tatters. Canacol is allegedly refusing to enter an agreed-upon 10-year transportation contract with Promigas, which as a result is accusing Canacol of breach of contract. By Promigas's estimates, according to what it filed late last week with Colombia's Superfinanciera, Promigas is facing harm related to: (i) the investments already made in the expansion, estimated at over $210-million (U.S.); (ii) lost opportunity costs, estimated at $33.9-million (U.S.); and (iii) loss of income that would have been derived from the contract, estimated at $54.7-million (U.S.) annually. Promigas is vowing to "exercise the necessary legal actions ... in the compensation of the damages caused, without being limited to the collection of the foreseen penalties."
Despite releasing several updates in a press release last night, Canacol has not commented on the legal dispute, at least not explicitly. The closest it got was a single paragraph toward the end of the press release. In it, Canacol made vague reference to wanting to provide "clarification concerning the availability of transportation capacity" between Jobo and the above-named port cities. Under Colombian law, explained Canacol, transportation companies (such as Promigas, although Canacol avoided naming it) are more or less forbidden to deny access to the national transport system, which is considered a public utility. As a result, Canacol is moving its gas "without any interruption or issue," and even feels secure enough to reiterate its 2020 guidance of 170 million to 197 million cubic feet a day.
The only other mention of pipelines within the press release came when Canacol claimed to be in "advanced negotiations" over an entirely separate proposed pipeline expansion from Jobo to the city of Medellin. Canacol has been talking about this for ages and originally hoped to have a definitive agreement by the end of 2019. That did not happen, but Canacol wants its investors to believe it will happen by the end of 2020. It says it is "in the final stages" of figuring out how to finance the project and is also choosing among "multiple international pipeline construction and operation companies" to build and run it. It seems safe to assume that Promigas did not make the shortlist.