CALGARY, ALBERTA -- (Marketwire) -- 02/13/13 -- Canacol Energy Ltd. ("Canacol" or the "Corporation") (TSX: CNE) (BVC: CNEC) announced today its financial and operating results for the three and six months ended December 31, 2012.
Highlights for the Three and Six Months Ended December 31, 2012
(in United States dollars, except as otherwise noted; "net" production represents working-interest production before royalties)
Completion of Shona Acquisition
On December 21, 2012, Canacol completed the acquisition of all the outstanding common and preferred shares of Shona Energy Company, Inc. ("Shona") for cash consideration of $40.2 million, excluding transaction costs, and share consideration of 24,600,758 common shares of Canacol. All of Shona's outstanding options were surrendered and terminated prior to closing the acquisition, while Shona's warrants were adjusted such that they maintained their economic equivalency.
Shona was an international oil and gas exploration and production company with operations focused in Colombia and Peru. With working interests in five blocks, Shona had net proven and probable reserves of approximately 95 billion cubic feet, or 16.6 million boe, at December 31, 2011 and operated production for the three months ended December 31, 2012 of approximately 15.6 million cubic feet per day, or 2,744 boepd, before royalties, from the Esperanza field in Colombia.
The strategic rationale of the acquisition of Shona included:
-- Doubling of the Corporation's 2P reserves plus deemed volumes to 33 million boe, net after royalties, with a before-tax NPV10 of $736 million.-- Adding long reserve life gas fields to the Corporation's existing portfolio of oil reserves.-- Adding significant production under long-term sales contracts with escalating pricing. The Corporation also has the ability to raise gas production volumes in the short term with no material additional capital required.-- Adding interests in five exploration assets with net risked prospective resources of 66 million barrels of oil and gas. Three of these assets are located adjacent to the Corporation's Capella heavy oil field situated in the Caguan-Putumayo Basin of Colombia.
Results of operations for Shona are only included in the condensed consolidated results of the Corporation from the acquisition date, December 21, 2012. Shona's assets are expected to significantly contribute to the production and operating cash flows of the Corporation in future periods.
On October 31, 2012 the Corporation announced that the Mona Arana 1 exploration well on its VMM2 E&P contract located in the Middle Magdalena Basin had encountered 85 feet of net potential oil pay within the conventional Lisama sandstone reservoir. A subsequent test of the interval in January 2013 produced 1,242 bopd. On January 24, 2013 the Corporation announced that the Mona Arana 1 well had encountered 230 feet of potential net oil pay within 700 gross feet of the non-conventional Upper La Luna shale. ExxonMobil Colombia, the Corporations partner in the well, exercised its right to assume operatorship of the well and the contract. ExxonMobil Colombia is presently considering options to drill the well deeper and/or conduct flow tests of the La Luna shale in late second quarter of calendar 2013. The Corporation has a 20% non-operated working interest in the contract.