Canacol Energy Ltd., a Calgary-based oil company that operates in Colombia, rallied to its highest level in two months after announcing a discovery in the central part of the country.
Shares rose 1.7 percent to 6,510 pesos at 1:31 p.m. in Bogota after earlier gaining as much as 3.4 percent to the highest intraday level since Nov. 2. Canacol, which fell 57 percent in 2012, has gained 15 percent this year, the most on the Colcap. The index rose 0.4 percent today and is up 1.7 percent this year.
An exploration well in central Colombia confirmed an oil discovery in a shallow reservoir and “very encouraging signs” from a deeper formation, Chief Executive Officer Charle Gamba said in today in a statement. In December the company announced an oil discovery in eastern Colombia.
“It’s really a turnaround story,” Justin Anderson, an analyst at Salman Partners, said in a telephone interview from Calgary. “Cash-flow and balance-sheet risk is being reduced substantially by these near-term discoveries, and on the other side they are proving and strengthening the case that these unconventional blocks are world-class.”
Shares dropped last year as declining production at a field led to concern about the company’s liquidity, Anderson said.