Financial Statements and Related Announcement::Full Yearly Results

Issuer & Securities

Issuer/ Manager
CANACOL ENERGY LTD.
Securities
CANACOLENE US$500M5.75%281124A - US134808AD63 - PNTB
CANACOLENE US$500M5.75%281124R - USU13518AC64 - YW0B
Stapled Security
No

Announcement Details

Announcement Title
Financial Statements and Related Announcement
Date &Time of Broadcast
28-Mar-2023 07:00:50
Status
New
Announcement Sub Title
Full Yearly Results
Announcement Reference
SG230328OTHRMSWN
Submitted By (Co./ Ind. Name)
Canacol Energy
Designation
Canacol Energy
Description (Please provide a detailed description of the event in the box below - Refer to the Online help for the format)
Canacol Energy Ltd. Reports Net Income of $147 million for the Year Ended December 31, 2022

CALGARY, ALBERTA - (March 27, 2023) - Canacol Energy Ltd. ( Canacol or the Corporation ) (TSX:CNE; OTCQX:CNNEF; BVC:CNEC) is pleased to report its financial and operating results for the three months and year ended December 31, 2022. Dollar amounts are expressed in United States dollars, with the exception of Canadian dollar unit prices ( C$ ) where indicated and otherwise noted.
Highlights for the three months and year ended December 31, 2022
Realized contractual natural gas sales volumes decreased 6% to 175.6 MMcfpd for the three months ended December 31, 2022 and increased 1% to 182.4 MMcfpd for the year ended December 31, 2022, compared to 185.9 MMcfpd and 181.4 MMcfpd for the same periods in 2021, respectively. The decrease for the three months ended December 31, 2022 is mainly due to temporary lower demand for natural gas during the quarter as a result of the region experiencing high reservoir levels caused by heavy rain. The increase for the year ended December 31, 2022 is mainly due to an increase of natural gas sales volumes contracted under firm contracts in 2022.
Total natural gas revenues, net of royalties and transportation expenses decreased 3% to $65.1 million for the three months ended December 31, 2022 , compared to $67 million for the same period in 2021. Total natural gas revenues, net of royalties and transportation expenses increased 9% to $264.9 million for the year ended December 31, 2022, compared to $243.4 million for the same period in 2021. The decrease for the three months ended December 31, 2022 is mainly due to lower sales volume during the quarter, offset by higher average sales prices, net of transportation expenses. The increase for the year ended December 31, 2022 is mainly due to higher sales volumes and higher average sales prices, net of transportation expense.
Adjusted EBITDAX increased 6% and 9% to $52 million and $212.9 million for the three months and year ended December 31, 2022, compared to $49.2 million and $194.4 million for the same periods in 2021, respectively.
Adjusted funds from operations was an outflow of $17 million for the three months ended December 31, 2022, compared to an inflow of $43.7 million for the same period in 2021. Adjusted funds from operations decreased to $94.6 million for the year ended December 31, 2022, compared to $153.8 million for the same period in 2021. The decrease for the three months and year ended December 31, 2022 is entirely driven by the additional current tax expense relating to Canacol s Corporate Restructuring (see below for further explanation).
The Corporation realized a net income of $133.7 million and $147.3 million for the three months and year ended December 31, 2022, compared to a net income of $7 million and $15.2 million for the same periods in 2021, respectively, which is mainly attributable to the recognition of income tax recovery of $135.5 million during the quarter as a result of Canacol s Corporate Restructuring (see below for further explanation).
The Corporation s natural gas and LNG operating netback increased 4% and 8% to $3.73 per Mcf and $3.68 per Mcf for the three months and year ended December 31, 2022, compared to $3.59 per Mcf and $3.40 per Mcf for the same periods in 2021, respectively. The increase is mainly due to an increase in average sales prices, net of transportation expenses of $4.81 per Mcf and $4.74 during the three months and year ended December 31, 2022, compared to $4.61 per Mcf and $4.37 per Mcf for the same periods in 2021, respectively.
Net cash capital expenditures for the three months and year ended December 31, 2022 were $50.4 million and $166.3 million, respectively.
As at December 31, 2022, the Corporation had $58.5 million in cash and cash equivalents and $22.6 million in working capital deficit, largely as a result of increased current tax expense driven by Canacol s Corporate Restructuring (see below for further explanation).
During the three months and year ended December 31, 2022, in an effort to better align the operational needs of the business and to create a more efficient and cost-effective organizational structure, the Corporation began a corporate restructuring process with the transfer of its Esperanza and VIM-21 assets from one wholly-owned subsidiary to another ( Corporate Restructuring ). The assets were transferred at fair market value, generating an additional current tax expense of $64.7 million and a deferred tax asset of $202.2 million for the three months and year ended December 31, 2022.
Sustainability
As indicated in the Corporation s 2021 Environmental, Social and Governance ( ESG ) Integrated Report, Canacol currently leads the industry as one of the cleanest oil and gas producers in both Colombia and North America with Scope 1 and 2 greenhouse gas ( GHG ) emissions that are 80% lower than our oil focused peers and 50% lower than our gas focused peers, on average. Canacol s ambition is to continue to lead the oil and gas industry in Colombia in terms of supplying the increasing energy demands of Colombians while reducing carbon emissions, exploring avenues for renewable energy generation, fostering national energy self-sufficiency, and catalyzing the growth and development of Colombia s economy and its people. Canacol enthusiastically supports global goals to meet the Paris Agreement targets as well as Colombia s commitment to a 51% reduction in emissions by 2030, of which, natural gas will play a crucial role in a fair and equitable energy transition. The Corporation s objective on ESG is to improve the quality of life of millions of people through the exploration, production and supply of conventional natural gas in Colombia. Alongside this, Canacol is focused on generating value for its stakeholders in a sustainable, collaborative, co-responsible, respectful and transparent way. With the Corporation s transition to natural gas, it now has an environmentally friendly value proposition that contributes to the reduction of CO2 emissions in Colombia and provides for a more efficient use of resources.
The Corporation continues to support its communities in essential social projects such as access to water and utilities, local economic projects, construction and improvement of public and community infrastructure, technical and university scholarships, amongst others.
The Corporation has strong corporate governance standards and procedures, which are aligned with best global practices, and uses control mechanisms that protect shareholder s interests, respect and promote human rights, guarantee ethical behavior, integrity and transparency, ensure regulatory compliance and minimize risk.
For 2022 and beyond, the Corporation is committed to continue developing and maintaining a robust ESG strategy and, as such, is implementing a plan with the following four priorities:
1. A cleaner energy future - deliver natural gas under the highest environmental and operational efficiency standards.
2. A safe and committed team - maintain best-in-class health and safety practices and promote a diverse and inclusive culture.
3. Transparent and ethical business - adopt best practices, incorporate governance, encourage respect for human rights and ensure ethics and integrity in everything Canacol does.
4. A society guided by sustainable development - promote and maintain close and transparent relationships that guarantee communities growth and quality of life.
Outlook
For the remainder of 2023, the Corporation is focused on the following objectives: 1) the drilling of up to 10 exploration and appraisal wells in a continuous program targeting a 2P reserves replacement ratio of more than 200%; 2) the acquisition of 282 square kilometers of 3D seismic on the VIM-5 block to expand the Corporation s exploration prospect inventory; 3) continue to progress the new gas pipeline project from Jobo to Medellin which will add 100 MMcfpd of new gas sales to the interior in late 2024, allowing Canacol to increase gas sales to over 300 MMcfpd; 4) continue to return capital to shareholders in the form of dividends and share buybacks; and 5) continue with our commitment of strengthening our environmental, social and governance strategy and reporting with the objective of improving the Corporation s ranking on various sustainability indices.


Additional Details

For Financial Period Ended
30/12/2022

Attachments

27.03.2023 - Canacol Energy Ltd. AIF YE22.PDF
27.03.2023 - Canacol Energy Ltd. Financial Statements.pdf
27.03.2023 - Canacol Energy Ltd. MDA.pdf
27.03.2023 - Canacol Energy Ltd. Reports Net Income of $147 million.pdf
Total size =3238K