Charle Gamba's Colombia-focused Canacol Energy Ltd. (CNE) gained two cents to $4.31 on 327,900 shares, after announcing that its Pandereta-3 appraisal well produced up to 168 million cubic feet of gas per day in a flow test. The well's flow rate stabilized at 43 million cubic feet a day. This is higher than the previously announced results from Pandereta-1 and Pandereta-2, which flowed at stabilized rates of 29 million and 35 million cubic feet a day, respectively. Along with Pandereta-3, Canacol also drilled an appraisal well called Gaiteros-1 on the same block, called the VIM 5 block. Gaiteros-1 was drilled to 9,350 feet but found no commercial gas. Canacol has plugged and abandoned the well. It is now preparing to drill its next two VIM 5 appraisal wells, called Chirimia-1 and Breva-1, though the company is in no hurry. It will drill Chirimia-1 in the second quarter and Breva-1 in the third quarter. Indeed, it does not plan to tie in Pandereta-3 to its gas processing facility until midyear. Aside from appraisal results, Canacol had another item of news, one that it might have been relieved to report: Its Sabanas pipeline (also in Colombia) has finally ramped up to its full capacity of 40 million cubic feet a day. (The company had hoped to finish the ramp-up on Dec. 1, 2017, but as of Dec. 5, Sabanas was transporting only 20 million cubic feet a day.)
Canacol estimates that it will be able to sell its Colombian gas at $4.75 (U.S.) per million British thermal units in 2018. This price compares with about $3 (U.S.) per million BTU in the United States and $1.50 (U.S.) per million BTU in Canada, by Canacol's calculations. The company seems quite pleased with its Colombian gas operations, and in fact it is selling its Colombian oil interests. It owns oil assets in four basins in Colombia, and together the assets are expected to produce 1,700 barrels a day this year. For context, Canacol's gas production target for 2018 is between 114 million and 129 million cubic feet a day, or between 19,000 and 21,500 barrels of oil equivalent a day.
Best Rgds;
R