Canacol Energy is an oil and gas company involved in the exploration and production of hydrocarbons with operations in South America. The company intends to focus on continuing to grow its Colombia natural gas business.
On 24 August 2019, Canacol achieved a record production of 217mmscfd of natural gas. This is a significant milestone for the company in Colombia, as it has now surpassed production from the country’s declining offshore gas fields. This was made possible by the completion of the Jobo to Cartagena pipeline in July 2019, which supplied Canacol with additional export capacity. Canacol is now working with its partners to form a consortium to build and operate a new export pipeline to Medellin that would expand export capacity to 315mmscfd by the beginning of 2023. To guarantee supply to this increasing pipeline network, Canacol has been active at the drill bit. The drilling programme has been successful to date, with two development wells and two exploration wells tied into the Jobo production facility and brought onto production. Our updated 2P + risked exploration NAV stands at C$6.40/share, a 2% increase since our last note. The slight delay in the pipeline coming online was offset by a stronger US dollar versus the Canadian dollar.
The Colombian, Caribbean Coast gas market is expected to move into gas deficit in the absence of LNG imports, incremental piped gas or the development of recent deepwater discoveries. We expect Canacol’s market share to increase materially in 2019 and 2020, with management expecting production to ramp-up to 215mmcfd by mid-2019.