Canacol Energy Ltd. Announces 98% Increase in Proved Reserves

Canacol Energy Ltd. Announces 98% Increase in Proved Reserves +
Deemed Volumes and Replaces 200% of 2P Reserves for Fiscal Year Ended
June 30, 2012 
CALGARY, ALBERTA -- (Marketwire) -- 09/20/12 -- Canacol Energy Ltd.
("Canacol" or the "Corporation") (TSX:CNE) (BVC:CNEC) is pleased to
report its reserves for the fiscal year ended June 30, 2012 for its
assets located in Colombia and Ecuador. 
Total corporate proved reserves ("1P") plus deemed volumes ("DV") for
the fiscal year ended June 30, 2012 increased 98% to 10.5 million
barrels ("MMbbls") from 5.3 MMbbls for the fiscal year ended June 30,
2011, with a corresponding 1P reserve replacement of 121%(i). In the
same period, 1P plus DV pre-tax NPV-10 increased 55% from US $199.2
million to US $308.4 million. Total corporate proved plus probable
reserves ("2P") plus DV increased to 16.1 MMbbls for the fiscal year
ended June 30, 2012. In the same period, 2P plus DV pre-tax NPV-10
increased to US $492.1 million. The Corporation's 2P plus DV
represents 94% oil and 6% gas liquids. 
CORPORATE 
Net after royalty reserves, deemed volumes and pre-tax NPV-10
summaries 


 
                                               30-Jun-12                    
                                                                            
                                 Subtotal                       Total       
                           --------------------         --------------------
Volumes in MMbbls                                                           
                                                  Deemed                    
Pre-tax NPV-10s in millions             Pre-tax  Volumes Reserves    Pre-tax
 of US dollars              Reserves     NPV-10   ("DV")     + DV NPV-10(ii)
----------------------------------------------------------------------------
Total proved (1P)                6.3 $    167.7      4.2     10.5 $    308.4
Probable                         4.6      135.1      1.0      5.6      183.7
Total proved plus probable                                                  
 (2P)                           10.9      302.8      5.2     16.1      492.1
Possible                         4.4      136.9      1.6      6.0      188.4
                           -------------------------------------------------
Total proved plus probable                                                  
 plus possible (3P)             15.3 $    439.7      6.8     22.1 $    680.5
----------------------------------------------------------------------------
 
                                 30-Jun-11     
                           --------------------
                                   Total       
                           --------------------
Volumes in MMbbls                              
Pre-tax NPV-10s in millions Reserves    Pre-tax
 of US dollars                  + DV NPV-10(ii)
-----------------------------------------------
Total proved (1P)                5.3 $    199.2
Probable                         3.7      112.7
Total proved plus probable                     
 (2P)                            9.0      311.9
Possible                         5.4      158.7
                           --------------------
Total proved plus probable                     
 plus possible (3P)             14.4 $    470.6
-----------------------------------------------

 
The numbers in this table may not add exactly due to rounding. 
The evaluations, effective June 30, 2012, were conducted by the
Corporation's independent reserves evaluators DeGolyer and
MacNaughton ("D&M") and Petrotech Engineering Ltd. ("Petrotech") and
are in accordance with National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities. The reserves are provided on a
net after royalty basis in units of barrels of oil using a forecast
price deck, adjusted for crude quality, in US dollars. The estimated
values may or may not represent the fair market value of the reserve
estimates. 
(i)1P Reserves replacement ratio: Ratio of reserve additions to
production, as reported in financial statements during the fiscal
year ended June 30, excluding acquisitions and dispositions on a
proven basis 
2P Reserves replacement ratio: Ratio of reserve additions to
production, as reported in financial statements during the fiscal
year ended June 30, excluding acquisitions and dispositions on a
proven + probable basis 
(ii)Net present valuations discounted at 10% include the values for
both risk service contracts in Colombia and Ecuador and the net after
royalty reserves in Colombia 
Charle Gamba, President and CEO of Canacol, commented "In 2012 the
Corporation significantly grew its reserves and deemed volumes base
and the corresponding value of those reserves and volumes. In fact 2P
volumes have increased by approximately 80% year over year, and this
after our best year in terms of production volumes lifted. Aside from
the ambitious development plans we have for our producing assets in
Colombia and Ecuador in 2013, the Corporation has also established
over 80 leads and prospects across 19 exploration contracts
representing 3 million net acres of conventional and unconventional
oil opportunities. The continued development of our producing asset
base, and the execution of our exploration programs for the remainder
of calendar year 2012 and 2013, has the potential to continue to grow
our reserves and production base, which will continue to add core
value to our shareholders." 
OIL FOCUSED IN COLOMBIA AND ECUADOR 
The Corporation has interests in 3 producing oil fields in Colombia
and 2 producing oil fields in Ecuador. For Colombia, the
Corporation's 2P plus DV increased 33% to 12.0 MMbbls and represented
a pre-tax NPV-10 of US $327.6 million. As of period end June 30,
2012, approximately 75% of the Corporation's 2P plus DV originated
from Colombia and is balanced 51% vs. 49%, light vs. heavy oil,
respectively. In February 2012, the Corporation was awarded a 15-year
incremental production contract by the national oil company of
Ecuador for the Libertador and Atacapi mature fields. Canacol has a
non-operated 25% equity participation in the contract and receives a
fixed price tariff of $39.53 for each incremental barrel produced.
For Ecuador, the Corporation's 2P DV were 4.1 MMbbls and represented
a pre-tax NPV-10 of US $164.5 million for the fiscal year end June
30, 2012. 
Net after royalty reserves, deemed volumes and pre-tax NPV-10
summaries 


 
                                                    30-Jun-12               
                                    ----------------------------------------
                                          Colombia             Ecuador      
                                    ----------------------------------------
Volumes in MMbbls                                                           
Pre-tax NPV-10s in millions of US    Reserves    Pre-tax             Pre-tax
 dollars                                 + DV NPV-10(ii)       DV NPV-10(ii)
----------------------------------------------------------------------------
Total proved (1P)                         7.3 $    185.3      3.2 $    123.1
Probable                                  4.7      142.3      0.9       41.4
Total proved plus probable (2P)          12.0      327.6      4.1      164.5
Possible                                  4.9      140.7      1.1       47.7
                                    ----------------------------------------
Total proved plus probable plus                                             
 possible (3P)                           
16.9 $    468.3      5.2 $    212.2
----------------------------------------------------------------------------
 
                                          30-Jun-12     
                                    --------------------
                                            Total       
                                    --------------------
Volumes in MMbbls                                       
Pre-tax NPV-10s in millions of US    Reserves    Pre-tax
 dollars                                 + DV NPV-10(ii)
--------------------------------------------------------
Total proved (1P)                        10.5 $    308.4
Probable                                  5.6      183.7
Total proved plus probable (2P)          16.1      492.1
Possible                                  6.0      188.4
                                    --------------------
Total proved plus probable plus                         
 possible (3P)                           22.1 $    680.5
--------------------------------------------------------

 
The numbers in this table may not add exactly due to rounding. 
(ii)Net present valuations discounted at 10% include the values for
both risk service contracts in Colombia and Ecuador and the net after
royalty reserves in Colombia 
COLOMBIA 
Llanos basin 
Rancho Hermoso (100% operated working interest)  
Entrerrios (60% operated working interest)  
Morichito (15% non-operated working interest) 
The Corporation operates Rancho Hermoso and Entrerrios oil fields.
The Rancho Hermoso field has two contracts governing the production.
One contract, a risk service contract, provides tariff revenue for
each barrel produced from the Mirador interval in the Rancho Hermoso
field, and the remaining three contracts are production sharing type
arrangements whereby the Corporation is entitled to an equity share
of the volumes produced net of a royalty payment to the government.
For the Entrerrios field, there is one contract for all producing
formations, whereby the Corporation is entitled to an equity share of
the volumes produced net of a royalty payment to the government. 
In the Llanos basin, the Corporation's 1P plus DV for the fiscal year
ended June 30, 2012 increased 46% to 4.1 MMbbls from 2.8 MMbbls for
the fiscal year ended June 30, 2011. In the same period, 2P plus DV
increased 69% to 6.1 MMbbls. The Corporation's 2P plus DV represents
84% oil and 16% gas liquids. 
Net after royalty reserves, deemed volumes and pre-tax NPV-10
summaries 


 
                                               30-Jun-12                    
                                                                            
                                 Subtotal                       Total       
                           --------------------         --------------------
Volumes in MMbbls                                                           
                                                  Deemed                    
Pre-tax NPV-10s in millions             Pre-tax  Volumes Reserves    Pre-tax
 of US dollars              Reserves     NPV-10   ("DV")     + DV NPV-10(ii)
----------------------------------------------------------------------------
Total proved (1P)                3.2 $     98.8      0.9      4.1 $    116.4
Probable                         1.9       73.0      0.1      2.0       80.1
Total proved plus probable                                                  
 (2P)                            5.1      171.8      1.0      6.1      196.5
Possible                         2.3       86.5      0.5      2.8       90.3
                           -------------------------------------------------
Total proved plus probable                                                  
 plus possible (3P)              7.4 $    258.3      1.5      8.9 $    286.8
----------------------------------------------------------------------------
 
                                 30-Jun-11     
                           --------------------
                                   Total       
                           --------------------
Volumes in MMbbls                              
Pre-tax NPV-10s in millions Reserves    Pre-tax
 of US dollars                  + DV NPV-10(ii)
-----------------------------------------------
Total proved (1P)                2.8 $    170.6
Probable                         0.8       45.2
Total proved plus probable                     
 (2P)                            3.6      215.8
Possible                         2.5       79.8
                           --------------------
Total proved plus probable                     
 plus possible (3P)              6.1 $    295.6
-----------------------------------------------

 
The numbers in this table may not add exactly due to rounding. 
(ii)Net present valuations discounted at 10% include the values for
the risk service contract and net after royalty reserves 
The net after royalty reserve valuations were derived using a
forecast price deck as follows: 


 
Year               2012(i)      2013      2014      2015      2016      2017
US$/bbl, WTI     $   90.00 $   96.90 $  104.04 $  106.12 $  108.24 $  110.41
----------------------------------------------------------------------------
 
Year                  2018      2019      2020      2021      2022      2023
US$/bbl, WTI     $  112.62 $  114.87 $  117.17 $  119.51 $  121.90 $  124.34
----------------------------------------------------------------------------

 
(i)For 6 months 
The forecast price deck is adjusted for crude quality. 
For the tariff production valuation, the Corporation receives an
operating tariff from Ecopetrol S.A. for each gross produced barrel
of oil. The tariff price go-forward is US $17.36 per gross barrel. 
Caguan-Putumayo basin 
Ombu (10% non-operated working interest) 
The Corporation has a 10% gross working interest in the Capella heavy
oil discovery in Colombia. The contract was awarded to the operator
under the new terms defined by the Agencia Nacional de Hidrocarburos,
whereby production is subject to a sliding scale royalty payable to
the government. Royalty is determined by various production and
reserves thresholds, and varies from a low of 8% to a high of 23%. 
For Capella, total 1P for the fiscal year ended June 30, 2012
increased 24% to 3.1 million barrels from 2.5 MMbbls for the fiscal
year ended June 30, 2011. In the same period, 1P pre-tax NPV-10
increased 141% from US $28.6 million to US $68.9 million. Total 2P
increased to 5.8 MMbbls for the fiscal year ended June 30, 2012. In
the same period, 2P pre-tax NPV-10 increased to US $131.0 million.
Capella's 2P represents 100% heavy oil. 
Net after royalty reserves and pre-tax NPV-10 summaries 


 
                                          30-Jun-12           30-Jun-11     
                                    ----------------------------------------
Volumes in MMbbls                                                           
Pre-tax NPV-10s in millions of US                Pre-tax             Pre-tax
 dollars                             Reserves  NPV-10(i) Reserves  NPV-10(i)
----------------------------------------------------------------------------
Total proved (1P)                         3.1 $     68.9      2.5 $     28.6
Probable                                  2.7       62.1      2.9       67.5
Total proved plus probable (2P)           5.8 
     131.0      5.4       96.1
Possible                                  2.1       50.4      2.9       78.9
                                    ----------------------------------------
Total proved plus probable plus                                             
 possible (3P)                            7.9 $    181.4      8.3 $    175.0
----------------------------------------------------------------------------

 
The numbers in this table may not add exactly due to rounding. 
(i)Net present valuations discounted at 10% include the values for
the net after royalty reserves 
The net after royalty reserve valuations were derived using a
forecast price deck as follows: 


 
Year               2012(i)      2013      2014      2015      2016      2017
US$/bbl, WTI     $   90.00 $   96.90 $  104.04 $  106.12 $  108.24 $  110.41
----------------------------------------------------------------------------
 
Year                  2018      2019      2020      2021      2022      2023
US$/bbl, WTI     $  112.62 $  114.87 $  117.17 $  119.51 $  121.90 $  124.34
----------------------------------------------------------------------------

 
(i)For 6 months 
The forecast price deck is adjusted for crude quality. 
The Corporation expects to file its Annual Information Form with
NI51-101 F1, F2 &F3 as of and for the year ended June 30, 2012 with
Canadian securities regulatory authorities shortly. These filings
will available for review at http://www.sedar.com. 
Canacol Energy is an exploration and production company with
operations focused in Colombia and Ecuador. The Corporation's common
stock trades on the Toronto Stock Exchange and the Colombia Stock
Exchange under ticker symbol CNE and CNE.C, respectively. 
This press release contains certain forward-looking statements within
the meaning of applicable securities law. Forward-looking statements
are frequently characterized by words such as "plan", "expect",
"project", "intend", "believe", "anticipate", "estimate" and other
similar words, or statements that certain events or conditions "may"
or "will" occur, including without limitation statements relating to
estimated production rates from the Corporation's properties and
intended work programs and associated timelines. Forward-looking
statements are based on the opinions and estimates of management at
the date the statements are made and are subject to a variety of
risks and uncertainties and other factors that could cause actual
events or results to differ materially from those projected in the
forward-looking statements. The Corporation cannot assure that actual
results will be consistent with these forward looking statements.
They are made as of the date hereof and are subject to change and the
Corporation assumes no obligation to revise or update them to reflect
new circumstances, except as required by law. Prospective investors
should not place undue reliance on forward looking statements. These
factors include the inherent risks involved in the exploration for
and development of crude oil and natural gas properties, the
uncertainties involved in interpreting drilling results and other
geological and geophysical data, fluctuating energy prices, the
possibility of cost overruns or unanticipated costs or delays and
other uncertainties associated with the oil and gas industry. Other
risk factors could include risks associated with negotiating with
foreign governments as well as country risk associated with
conducting international activities, and other factors, many of which
are beyond the control of the Corporation. 
"1P reserves replacement ratio": Ratio of reserve additions to
production, as reported in financial statements during the fiscal
year ended June 30, excluding acquisitions and dispositions on a
proven basis. 
"2P reserves replacement ratio": Ratio of reserve additions to
production, as reported in financial statements during the fiscal
year ended June 30, excluding acquisitions and dispositions on a
proven + probable basis. 
"deemed volume": Those volumes produced under a service agreement in
which the Corporation does not have a direct interest, but represents
reserves attributable to the Corporation as calculated using a deemed
market price on an annualized basis over the life of the reserves.
The Corporation produces crude oil from the Mirador formation at its
Rancho Hermoso field for which it receives a fixed price under a
service agreement with Ecopetrol S.A., the Colombian national oil
company. The Corporation has a non-operated 25% equity participation
in the Ecuador Incremental Production Contract for which it receives
a fixed price tariff for each incremental barrel produced.
Contacts:
Canacol Energy Ltd.
Investor Relations
1-214-235-4798
info@canacolenergy.com
www.canacolenergy.com
 
 
Press spacebar to pause and continue. Press esc to stop.