Last close As at 05/08/2026
—
— 0.00 (0.00%)
Market capitalisation
—
Research: Energy & Resources
Canacol recently provided market guidance for 2018 with capex and production guidance broadly in line with market expectations. Capex guidance is set at US$80m, realised contractual gas sales at 114-129mmscfd and oil sales at an average 1,700bod. Primary objectives for 2018 include: 1) investments in drilling, facilities and flowlines to underpin production capacity in excess of 230mmscfd by 1 December 2018; 2) a four-well, gas-focused E&A programme; and 3) divestment of legacy conventional oil assets to complete the transition to a pure-play, gas-focused Colombian E&P. Consensus expects US$177m EBITDA in 2018 and 122mmscfd of realised gas sales.
Written by
Canacol Energy |
Ramping up to 230mmscfd by end 2018
|
Oil & gas |
QuickView
10 January 2018 |
Share price graph
Share details
Business description
Bull
Bear
Analysts
Canacol Energy is a client of Edison Investment Research Limited |
||||||||||||||||||||||||
Canacol recently provided market guidance for 2018 with capex and production guidance broadly in line with market expectations. Capex guidance is set at US$80m, realised contractual gas sales at 114-129mmscfd and oil sales at an average 1,700bod. Primary objectives for 2018 include: 1) investments in drilling, facilities and flowlines to underpin production capacity in excess of 230mmscfd by 1 December 2018; 2) a four-well, gas-focused E&A programme; and 3) divestment of legacy conventional oil assets to complete the transition to a pure-play, gas-focused Colombian E&P. Consensus expects US$177m EBITDA in 2018 and 122mmscfd of realised gas sales.
2018 capital programme set at US$80m
Canacol’s 2018 capital budget is to be funded from existing cash resources (Q317 cash and restricted cash US$90.8m, net debt US$203.9m) and cash flow. Highlights include: 1) drilling four E&A wells and three development wells at a total cost of US$33m; 2) facilities expansion and equipment at US$17m; and 3) seismic, workovers and other costs at US$30m. 97% of forecast spend is to be directed to the group’s gas assets, with complete divesture of the company’s Colombian oil portfolio expected in 2018.
Pure-play Colombian gas E&P
Realised gas sales are expected to be in the 114-129mmscfd range in 2018, with the upper end assuming that the Promigas pipeline expansion (100mmscfd of transportation capacity) is delivered on 1 December 2018. The lower end assumes a delay into 2019. Canacol’s current portfolio of 2018 gas contracts, net of transportation costs, is approximately US$4.75/mcf. 2017 was a successful year for gas exploration and we expect a material increase in 2P gas reserves, which should push 2P gas reserve life beyond the current c 8 years based on 2018 production.
Valuation: Positive FCF in 2018
Consensus is currently expecting an increase in EBITDA of 42% in 2018 from US$125m to US$177m, and the company to report 2018 FCF (post capex) of US$48.1m. Canacol continues to trade at a meaningful discount to its last disclosed post-tax NPV10 of US$945m 2P (C$5.36/share on deduction of year-end 2016 net debt) based on contracted gas prices – this excludes the EMV of prospective gas resource estimated at US$789m by Gaffney Cline.
|
Consensus estimates
Source: Bloomberg. Note: Year end has changed from June to December. *Unadjusted. |
|
Disclaimer
|
|
Disclaimer
|
Growth in revenue and cash is strong after four months of trading. Focusrite continues to build on its leadership positions in international markets, and to benefit from its c 85% non-UK market exposure. Further growth in cash is also encouraging as it suggests good profit conversion despite expected cost increases. If these independent growth trends continue to the half-year, we would see upside risk to our forecasts.