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C&C Energia Reports Third Quarter Operating and Financial

C&C Energia Reports Third Quarter Operating and Financial Results 
CALGARY, ALBERTA -- (Marketwire) -- 11/09/12 -- C&C Energia Ltd.
("C&C Energia" or the "Corporation") (TSX:CZE) is pleased to report
its operating and financial results for the three and nine months
ended September 30, 2012. 
C&C Energia continues to deliver year-on-year production growth as a
result of its successful drilling program, positive response from its
Gacheta water injection program at Carrizales and well optimizations.
Average daily production for the third quarter 2012 was 11,424
barrels of oil per day ("bopd"), which is 19% higher than the same
period in 2011, and year-to-date production grew 39% to 10,776 bopd.
The Corporation expects to average approximately 10,800 bopd for
full-year 2012 with an exit rate of approximately 11,500 bopd.  
Funds flow (after tax) from operations for the three months ended
September 30, 2012 was $1.00 per share or $64.1 million, an increase
of 71% from the prior year period reflecting higher sales, increased
production and cost reduction initiatives. During the third quarter
2012, C&C Energia realized an average price of $101.71 per barrel on
its sales, generating operating netbacks of $59.12 per barrel.
Operating costs and transportation costs (excluding one-time standby
fees incurred during the first half of 2012) were down approximately
3% and 7% respectively from second quarter 2012 as the effects of
cost cutting initiatives began to be realized. 
The Corporation has a strong balance sheet with an adjusted working
capital surplus of $73.3 million (including $61.5 million in cash)
and no debt. Crude inventory levels decreased almost 50% from the
second quarter to just over 200,000 barrels at September 30, 2012,
resulting in a significant increase in accounts receivable to $68
million. C&C Energia collected $38.0 million of these receivables in
October.  
C&C Energia will be filing its interim financial statements and
management's discussion and analysis as at and for the three and nine
months ended September 30, 2012, which will contain detailed
information regarding the Corporation's results. When filed, these
documents will be available for review under C&C Energia's profile on
the SEDAR website at www.sedar.com. 
FINANCIAL & OPERATIONAL HIGHLIGHTS  
(All references to $ are to United States dollars unless otherwise
noted.) 


 
                                 Three Months Ended       Nine Months Ended 
                                      September 30,           September 30, 
(unaudited)                        2012        2011        2012        2011 
----------------------------------------------------------------------------
                                                                            
Operating                   (thousands of US$, except share, per share, per 
                                                      bbl and bopd amounts) 
                                                                            
Operating cash flow (1)          76,956      47,646     181,330     119,766 
                                                                            
Average crude oil volumes                                                   
 (before royalties)                                                         
  Production (bopd)              11,424       9,572      10,776       7,768 
  Sales (bopd)                   14,445       8,430      11,386       7,372 
                                                                            
Average reference price                                                     
  WTI ($ per bbl)                 92.10       89.48       96.14       95.28 
                                                                            
Operating netback ($ per                                                    
 bbl) (4)                                                                   
  Average realized price (5)     101.71      104.14      106.04      104.85 
  Royalties                      (11.29)     (10.03)     (12.22)     (12.49)
  Production expenses            (14.69)     (15.95)     (15.88)     (16.86)
  Transportation expenses        (16.61)     (14.51)     (17.71)     (13.71)
----------------------------------------------------------------------------
Operating netback (4)             59.12       63.65       60.23       61.79 
----------------------------------------------------------------------------
                                                                            
Financial                                                                   
                                                                            
Oil revenues (net of                                                        
 royalties)                     120,164      72,988     292,697     185,881 
                                                                            
                                 64,125      37,601     134,912      87,698 
Funds flow from operations                                                  
 (2)                                                                        
  Per share - basic ($)            1.00        0.59        2.11        1.48 
  Per share - diluted ($)          1.00        0.59        2.11        1.45 
                                 31,711      20,811      71,982      43,080 
                                                                            
Net income                                                                  
  Per share - basic ($)            0.50        0.33        1.13        0.73 
  Per share - diluted ($)          0.50        0.32        1.13        0.71 
                                                                            
                                 26,741      30,943     128,740     109,682 
                                                                            
Capital expenditures                                                        
Total assets                    588,413     492,149     588,413     492,149 
Debt                                  -           -           -           - 
Adjusted working capital                                                    
 surplus (3)                     73,339      69,697      73,339      69,697 
                                                                            
Common shares outstanding                                                   
  Basic                      63,842,503  63,842,503  63,842,503  63,842,503 
  Fully diluted              69,225,005  69,360,005  69,225,005  69,360,005 
Weighted average common                                                     
 shares outstanding                                                         
  Basic                      63,842,503  63,842,503  63,842,503  63,842,503 
  Diluted                    63,874,622  64,068,369  63,961,124  60,612,028 
----------------------------------------------------------------------------

 
Notes See "GAAP, Additional GAAP and Non-GAAP Measures", below, 
(1) Operating cash flow is oil revenues less royalties, operating
expenses, transportation expenses and administration expenses.
Operating cash flow is a non-GAAP measure (as defined herein) because
it is not presented in the 2011 annual consolidated financial
statements. 
(2) Funds flow from operations is cash flow from operating activities
before changes in other non-cash working capital items. Funds flow
from operations is an additional GAAP measure because it is presented
in Note 12 to the Corporation's 2011 annual consolidated financial
statements. 
(3) Adjusted working capital surplus includes current assets less
current liabilities excluding risk management contracts (unrealized
gains (losses) on commodity swaps) and deferred taxes. Adjusted
working capital surplus is a non-GAAP measure because it is not
presented in the 2011 annual consolidated financial statements. 
(4) Operating netback is determined by dividing oil sales revenues
less royalties, production expenses and transportation expenses by
sales volumes. Netbacks are calculated by subtracting royalties,
production expenses, transportation expenses, administrative
expenses, interest and taxes paid by the Corporation from crude oil
revenue and dividing by sales volumes. Operating netback is a
non-GAAP measure because it is not presented in the 2011 annual
consolidated financial statements. 
(5) Excludes impact of risk management contracts (unrealized gains
(losses) on commodity swaps).  
FINANCIAL & OPERATIONAL HIGHLIGHTS  


 
--  Increased average third quarter 2012 production to over 11,400 bopd, an
    increase of 19% from the same quarter of 2011 and 9% over the second
    quarter of 2012. Production for the first nine months of 2012 averaged
    10,776 bopd which was 39% higher than for the nine months ended
    September 30, 2011. The Corporation expects to average approximately
    10,800 bopd for full-year 2012.  
--  Funds flow (after tax) ("Funds flow") from operations for the third
    quarter was $1.00 per share or $64.1 million, an increase of 71% above
    the third quarter of 2011. Funds flow increased $35.0 million from the
    second quarter of 2012 as a result of sales of crude oil inventory that
    was build up in the second quarter. Funds flow for the nine month period
    ended September 30, 2012 was $134.9 million ($2.11 per share) up over
    50% from the $87.7 million for the same period in 2011. 
--  Net income for the third quarter of 2012 was $31.7 million compared to
    net income of $20.8 million in the third quarter of 2011, reflecting the
    increase in production and sales volumes. Net income for the nine month
    period ended September 30, 2012 was $72.0 million, which represents an
    increase of over 65% that of the same period in 2011. 
--  Operating netbacks for the three months ended September 30, 2012 were
    $59.12 per barrel based on an average realized price of $101.71 per
    barrel. 
--  As previously announced on October 11, 2012, during the third quarter
    2012, the Corporation completed drilling four exploration wells
    (Heredia-2, Guacharrios-1, Monarca-1 and Maquito-1), resulting in two
    oil wells and two dry holes (respectively). 
--  As announced on October 19, 2012, the Corporation was notified it was
    the lead bidder on a heavy oil block, LLA-83, during the Colombian Bid
    Round in October 2012. The Corporation anticipates receiving final
    confirmation in mid-November 2012.

 
OPERATIONAL REVIEW  
C&C Energia's lands are located in Colombia in the Llanos Basin (four
blocks), Putumayo Basin (three blocks), and Middle Magdalena Valley
(one block). 
During the third quarter of 2012, the Corporation invested $26.7
million primarily in the following areas: drilling and completion
$14.1 million, workovers $2.4 million, civil works $1.3 million,
facilities and roads $3.3 million, seismic $2.9 million and general
property and capitalized G&A of $2.7 million.  
Llanos Basin 
On the Cravoviejo block, the Corporation drilled a successful
exploration well in the Heredia field, a follow-on exploration well
to the 2011 Heredia-1 discovery. The well was completed in the C5 and
Gacheta Formations. The Gacheta Formation tested under natural flow
at 415 bopd of 27 degrees of API oil at a 2% water cut over a four
day testing interval. The C5 Formation tested under natural flow at
approximately 385 bopd of 31 degrees API oil at a 35% water cut. The
well will be brought on permanent production from the Gacheta
Formation in late November. "We are excited by the results of the
Heredia-2 well," said Randy McLeod, President and CEO. "The
indications are that we have a stratigraphic play concept in the
Gacheta sands on the Cravoviejo block, which could provide future
potential. We anticipate spudding Heredia-3 prior to year-end to
further test the concept."  
Subsequent to quarter end, the Saimiri-2 exploration well was
completed in the C5 Formation and tested on natural flow at
approximately 540 bopd of 33 degrees API oil at a less than 1% water
cut. An application is being made to bring the well on permanent
production, which is expected in late November or early December
2012. 
On the Cachicamo block, C&C Energia drilled three exploration wells
and completed the extended testing of the Greta Oto-1 discovery well
during the third quarter. The Greta Oto-1 well was perforated and had
sustained production rates of approximately 500 bopd of 26 degrees
API oil and has been placed on permanent production. The Guacharios-1
exploration well tested approximately 430 bopd of 28 degrees API oil
from the Gacheta Formation with a 5% water cut and has been placed on
permanent production. As C&C Energia announced on August 13, 2012,
the Monarca-1 and Maquito-1 exploration wells, which were testing
prospects in the outer edges of the Cachicamo block, were plugged and
abandoned. Drill and abandonment costs were approximately US$1.5
million for each of these wells. 
C&C Energia has completed an extended volumetric pressure test of the
Mirador Formation on the Tormento-1 well discovery in the Llanos 19
block. An extended production test of the Gacheta Formation is
expected to be completed in early 2013. Results of the two tests will
be combined to assess the potential of the discovery and to determine
the locations of future appraisal drilling activity. The Corporation
plans to drill an appraisal well, Tormento-2, in the first quarter of
2013. 
The Corporation had the leading bid for the right to explore for oil
and natural gas on LLA-83 block, an approximately 35,755 acre heavy
oil block in the Llanos Basin in central Colombia, approximately 50
kilometers from the Rubiales heavy oil field. The bid for the block
was submitted by C&C Energia as the operator for a 100% participating
interest and is subject to final approval by, and execution of an
exploration and production contract (an "E&P Contract") with, the
National Agency of Hydrocarbons (the "ANH") in Colombia. The
Corporation bid a 25% "x-factor", which equates to an incremental
royalty on production from the block together with a total work
commitment of US$14.0 million for seismic and drilling.  
Management of C&C Energia anticipates receiving final confirmation as
to the winning bidder for the LLA-83 block in mid-November 2012. If
C&C Energia is confirmed as the winning bidder, management expects
that negotiation of definitive agreements and execution of the E&P
Contract with the ANH will be finalized by the end of 2012. 
Putumayo Basin 
Civil works continue on the Coati block without interruption. The
Corporation, together with its partner Canacol Energy Ltd.,
anticipates the civil works will be completed in early 2013 and has
planned for a well to spud in late first quarter 2013. Results are
anticipated in the second quarter of 2013. 
The Corporation and its partner VETRA Exploration and Production
Colombia S.A. have completed acquisition of a 95 km2 3D seismic
survey on the Putumayo-8 block (50% working interest). The data has
been provided to a third party for processing, which is expected to
be completed later in the fourth quarter 2012. An exploratory well is
planned on this block for late in 2013, pending seismic processing
results and receipt of drilling permits. The Putumayo-8 block is
immediately adjacent to the Platanillo field, with a recently
announced significant oil discovery in the Villeta Formation. C&C
Energia is targeting the same pay horizons on an analogous play
concept on its block less than three kilometers from the Platanillo
discovery. 
CAPITAL AND OUTLOOK 
2012 
The Corporation had approved a capital investment budget for 2012 of
between $150.0 and $165.0 million. The Corporation expects to invest
the funds as follows: seismic, approximately $4.0 million to $6.0
million; drilling, completions and testing approximately $102.0
million to $107.0 million; field development and work-overs
approximately $17.0 million; facilities and equipment approximately
$22.0 million to $30.0 million; and $5.0 million for various other
projects.  
Average daily production for 2012 is forecast at approximately 10,800
bopd, a 28% increase over the 2011 annual average daily production.
The Corporation plans to drill five wells (including one injection
well), in the fourth quarter of 2012, which will result in a total of
18 to 19 wells in 2012. 
2013 
The Corporation is pleased to announce its planned operating and
capital budget for 2013. C&C Energia plans to drill between 20 and 22
wells in 2013 and will invest funds of between $160.0 and $175.0
million. Investments will be made on the following operations:
seismic $2.0 to $4.0 million; drilling completions and testing $96.0
to $99.0 million; workovers, field development and health and safety
costs $26.0 to $28.0 million; equipping, pipelines and facilities
costs $32.0 to $35.0 million; and $9.0 million for various other
projects. Production for 2013 is expected to average between 11,800
and 12,100 bbls/day, a 9% to 12% increase over the 2012 estimated
annual average daily production. This will generate an estimated
after tax funds flow from operations of approximately $175.0 million
assuming an $89.00 realized price at a Brent price of US$100.00. 
ABOUT C&C ENERGIA LTD. 
The Corporation is engaged in the exploration for and the development
and production of oil resources in Colombia. Its strategy is to
develop producing oil assets by appraising and developing existing
discoveries and exploring in areas assessed by management to be of
moderate risk. With a total of eight blocks (seven operated) and
approximately 597,000 acres (478,000 net acres) in Colombia, the
Corporation's management expects that C&C Energia has considerable
upside for future production and reserve growth.  
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION 
This press release contains forward-looking information within the
meaning of applicable Canadian securities laws that involves known
and unknown risks and uncertainties. Forward-looking information
typically contains statements with words such as "anticipate",
"estimate", "expect", "potential", "could", "will", "plans" or
similar words suggesting future outcomes. The Corporation cautions
readers and prospective investors in the Corporation's securities to
not place undue reliance on forward-looking information as by its
nature, it is based on current expectations regarding future events
that involve a number of assumptions, inherent risks and
uncertainties, which could cause actual results to differ materially
from those anticipated by C&C Energia. 
Forward-looking information in this press release includes, but is
not limited to, information concerning the expectations of the
Corporation with respect to the Corporation's planned operating and
capital budget for 2013, the Corporation's future production for 2012
as a whole and the Corpor
ation's drilling plans in each of the
Cravoviejo, Cachicamo, Llanos-19, Coati and Putumayo-8 blocks,
expectations regarding future reductions of inventory levels and
expectations regarding the timing of drilling results, the timing for
completion of civil works, receipt and timing of final confirmation
in relation to the Colombian Bid Round and the timing of the
execution of an exploration and production contract with respect to
the LLA-83 Block and receipt of approvals for certain of its wells.
These forward-looking statements are subject to assumptions regarding
the Corporation's operations and the operating environment in
Colombia. In particular, for 2012 as a whole, estimates of inventory
levels, drilling plans and expectations regarding the timing of
drilling results and regulatory approvals are based on the
assumptions that the Corporation's plans will be completed without
any undue difficulty, that costs will not rise significantly and that
events will not cause disruptions in the delivery of the
Corporation's oil production to market. The Corporation's capital
program and drilling are subject to change if circumstances change or
if management of the Corporation determines that other business plans
are more appropriate.  
Forward-looking information involves significant known and unknown
risks and uncertainties. A number of factors could cause actual
results to differ materially from those anticipated by C&C Energia
including, but not limited to, general risks associated with the oil
and gas industry (e.g. operational risks in exploration; inherent
uncertainties in interpreting geological data; changes in plans with
respect to exploration or capital expenditures; the uncertainty of
estimates and projections in relation to costs and expenses and
health, safety and environmental risks, potential risks arising from
trucking and other delivery disruptions), the risk of commodity price
and foreign exchange rate fluctuations, the uncertainty associated
with the negotiating with the ANH or with other third parties in
countries other than Canada and the risks associated with
international activity. The forward-looking information included in
this news release is expressly qualified in its entirety by this
cautionary statement. The forward-looking information included herein
is made as of the date hereof and C&C Energia assumes no obligation
to update or revise any forward-looking information to reflect new
events or circumstances, except as required by law. 
GAAP, ADDITIONAL GAAP AND NON-GAAP MEASURES 
The Corporation's financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRS")
which are generally accepted accounting principles for publicly
accountable enterprises in Canada ("GAAP"). 
This report makes reference to the terms that do not have a
standardized meaning prescribed by GAAP and accordingly, the
Corporation's use of these terms may not be comparable to similarly
defined measures presented by other companies.  
Additional GAAP Measures 
The term "funds flow from operations" is an additional GAAP measure
because it is presented in Note 12 to the annual consolidated
financial statements. Funds flow from operations is cash flow from
operating activities before changes in non-cash working capital.  
Non-GAAP Measures 
The terms "operating cash flow", "operating netbacks", "netbacks" and
"adjusted working capital", are non-GAAP measures because they are
not presented in the 2011 annual consolidated financial statements.
Operating cash flow is oil revenues less royalties, operating
expenses, transportation expenses and administration expenses.
Operating netback is determined by dividing oil sales revenues less
royalties, production expenses and transportation expenses by sales
volumes.  
Management considers netback and operating netback important as it is
a measure of profitability per barrel sold and reflects the quality
of production. Netbacks are calculated by subtracting royalties,
productio
n expenses, transportation expenses, administrative
expenses, interest and taxes paid by the Corporation from crude oil
revenue and dividing by sales volumes. Adjusted working capital
surplus includes current assets less current liabilities, excluding
risk management contracts (unrealized gains (losses) on commodity
swaps) and deferred income taxes and is used to evaluate the
Corporation's financial leverage.  
Management uses these additional and non-GAAP measurements for its
own performance measures and to provide its shareholders and
potential investors with a measurement of the Corporation's
efficiency and its ability to fund a portion of its future growth
expenditures.
Contacts:
C&C Energia Ltd.
Ken Hillier
Chief Financial Officer
403-262-6046 
C&C Energia Ltd.
Tyler Rimbey
Vice President, Business Development
403-930-0118
 
 
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