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Canacol Energy Ltd. doubles natural gas drilling activity in Colombia

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Oilfield Technology,


Canacol Energy Ltd. has provided a revised capital plan for 2016. The new capital plan accelerates the Corporation's natural gas opportunities in Colombia with three new gas wells. In addition, one new oil well will be drilled over the remainder of 2016. The revised 2016 capital plan has increased by US$34 million, from US$58 million to US$92 million. In August, Canacol raised US$35 million from long term strategic investors including follow-on investment from the Corporation's largest shareholder, Cavengas Holdings S.R.L. to accelerate gas drilling.

Despite significant volatility in global oil prices, the Corporation anticipates near record EBITDAX of approximately US$135 million for 2016. Canacol forecasts average realised gas sales pricing of US$5.60 per thousand ft3 with a netback of US$4.56/ft3, representing an estimated 81% netback margin. The Corporation's fixed price gas contracts mitigate impact from oil volatility with approximately 86% of 2016 corporate production insensitive to world oil prices. The Corporation continues to reduce costs with an estimated 40% reduction in general & administrative expenses for the year. Canacol estimates oil and gas sales before royalty between 16 000 to 17 000 boe/d for 2016 and third quarter oil and gas sales before royalty of approximately 18 200 boe/d.

Over the past three years, the corporation has made four gas discoveries and added 302 BCF in 2P reserves on the Esperanza and VIM 5 E&P blocks located in the Lower Magdalena Basin, Colombia. Canacol recently added a second rig to the two blocks. The objectives of the expanded gas drilling programme are to 1) target management's estimate of more than 100 billion ft3 of new potential recoverable resource in 2016 to secure new gas sales contracts, and 2) increase the productive capacity of the Corporation's gas assets to more than 190 million ft/d in anticipation of new sales contracts. Canacol has a large inventory of prospects and leads targeting 2.4 - 2.8 trillion ft3 of unrisked mean estimate resource potential. The Corporation's gas resource capture strategy remains balanced for the remainder of 2016 with two gas exploration wells and two gas development wells.

Trombon-1 gas exploration well

Esperanza E&P contract - Lower Magdalena Basin, Colombia

100% working interest

Offset to the Nispero-1 gas discovery, the Corporation spud Trombon-1 on September 13, 2016. Canacol anticipates the well will take five to six weeks to drill and flow test. In late August 2016, Nispero-1 exploration well tested 28 million ft3/d  of dry gas with no water. The well encountered 79 ft measured depth (55 ft true vertical depth) of net gas pay with average porosity of 17% within the primary Cienaga de Oro (CDO) reservoir sandstones. With success at Nispero, the Corporation spud Trombon-1 from Nispero's drilling platform. Trombon-1 exploration well is targeting the same CDO reservoir interval tested in the offsetting Nispero-1 well, but in a distinct and isolated fault block located approximately 2 km south of the Nispero discovery. Management estimates Trombon-1 may contain 40 BCF of potential recoverable resource.

Nelson-6 gas exploration well

Esperanza E&P contract - Lower Magdalena Basin, Colombia

100% working interest

The corporation plans to spud Nelson-6 in October 2016. The well may provide the potential to book reserves against by-passed pay within the shallow Porquero sandstone reservoirs in the Nelson gas field. As of December 31, 2015, Nelson gas field had 2P reserves of 209 BCF associated with the CDO reservoir with four straight successful wells drilled into the field. Management estimates Nelson-6 may contain 31 BCF of potential recoverable resource.

Nelson-8 gas development well

Esperanza E&P contract - Lower Magdalena Basin, Colombia

100% working interest

The Corporation plans to spud Nelson-8 in November 2016. The well offers the opportunity to reclassify reserves and an additional 8 - 12 000 ft3/d of productive capacity. The well is targeting the CDO reservoir sandstones in the Nelson gas field.

Starting in late September 2016, the Corporation plans to workover four Nelson gas wells. The objective is to extend each well's productive life and optimize reserve recovery. The Corporation also plans to upgrade the Jobo facility and Nispero-Jobo flow line.

Clarinete-3 gas development well

VIM-5 E&P contract - Lower Magdalena Basin, Colombia

100% working interest

The Corporation plans to spud Clarinete-3 in the fourth quarter of 2016. The well may provide the potential to reclassify reserves and additional 10 - 12 MMcf/d of productive capacity. Clarinete-3 well is targeting the CDO reservoir sandstones which is productive in both the Clarinete and Nelson gas fields. As of December 31, 2015, Clarinete had 2P reserves of 163 BCF with two straight successful wells drilled into the field.

Mono Capuchino-1 oil exploration well

VMM-2 E&P contract - Middle Magdalena Basin, Colombia

67% working interest

Offset to the Mono Arana-1 oil discovery, the Corporation plans to spud Mono Capuchino-1 in October 2016. In January 2013, Mono Arana-1 exploration well tested approximately 600 bpd from a 335 ft perforated interval in the La Luna Formation. With Mono Capuchino-1, the Corporation plans to further investigate the potential for this established play. Management estimates the Mono Capuchino-1 prospect may contain 9 million bbls of potential recoverable resource.


Adapted from a press release by Louise Mulhall

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/22092016/canacol-energy-ltd-doubles-natural-gas-drilling-activity-in-colombia/

 

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