Canacol: Second pipeline to double export capacity

Canacol has executed a major agreement with Promigas to expand the gas transmission network from Jobo to the Colombian coast by constructing a second pipeline. The project will be fully funded by Promigas and expected to commence by the end of this year. Permitting is planned to take up to 18 months with construction taking 6 months - the pipeline should be commissioned in 2018/19. The pipeline will more than double Canacol's capacity from 90mmcfpd to 190mmcfpd. Gas supply contracts have been secured for this additional capacity and the company will now need to find additional reserves to fulfil the contracts.

During 2016 Canacol raised USD36 million to accelerate drilling targeting c.100bcf reserves in the Lower Magdalena basin‎. So far the company has successfully drilled the Nispero-1, Trombon-1 and Nelson-6 near field exploration wells. By year end, the Clarinete-3 and Nelson-8 development wells are scheduled to be drilled and tested.

Canacol plans to keep one rig active in 2017 to drill through the company's prospect inventory. This drilling campaign is crucial to establish the gas reserves necessary to underpin the long term contracts. Canacol's reserve base of 79mmboe has a RLI of 12 years at current production levels, but would fall to 6 years if production rises to 190mmcfpd.