Financial Statements and Related Announcement::Third Quarter 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
08-Nov-2024 06:04:29
Status
New
Announcement Sub Title
Third Quarter Results
Announcement Reference
SG241108OTHRRGBG
Submitted By (Co./ Ind. Name)
Canacol Energy Ltd.
Designation
SGX-SE
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 Record Adjusted EBITDAX of
$86 Million for the Third Quarter of 2024
CALGARY, ALBERTA - (November 7, 2024) - Canacol Energy Ltd. ( Canacol or the Corporation ) (TSX:CNE; OTCQX:CNNEF; BVC:CNEC) is pleased to report its financial and operating results for the three and nine months ended September 30, 2024. Dollar amounts are expressed in United States dollars, with the exception of Canadian dollar unit prices ( C$ ) where indicated and otherwise noted.

Highlights for the three and nine months ended September 30, 2024
Adjusted EBITDAX increased 38% and 20% to $85.8 million and $220.1 million for the three and nine months ended September 30, 2024, respectively, compared to $62.1 million and $183.7 million for the same periods in 2023, respectively. The increase is mainly due to a) an increase in realized sales price of natural gas and liquefied natural gas ( LNG ), which averaged $6.69 and $6.71 per Mcf, net of transportation, for the three and nine months ended September 30, 2024, respectively, representing a 24% and 29% increase from the same periods in 2023, respectively, and b) a $14.2 million gain related to an arbitration settlement during the three months ended September 30, 2024.
The Corporation was in arbitration with Promigas S.A. ( Promigas ), a natural gas transportation company in Colombia, regarding a dispute in the amount of transportation costs charged. During the three months ended September 30, 2024, the arbitration tribunal ruled in the Corporation s favor and ordered Promigas to reimburse Canacol for the amount overcharged plus interest, totaling $14.2 million (the Settlement ). The Settlement was recorded as other income for the three months ended September 30, 2024, and was collected in full on November 6, 2024.
Adjusted funds from operations increased 18% and 36% to $57.9 million and $157.3 million for the three and nine months ended September 30, 2024, respectively, compared to $49.0 million and $115.3 million for the same periods in 2023, respectively, mainly due to an increase in EBITDAX.
The Corporation s natural gas and LNG operating netback increased 27% and 28% to $5.25 per Mcf and $5.17 per Mcf for the three and nine months ended September 30, 2024, respectively, compared to $4.14 per Mcf and
$4.03 per Mcf for the same periods in 2023, respectively. The increase is due to an increase in average sales prices, net of transportation expenses, offset by an increase in operating expenses and royalties.
Total revenues, net of royalties and transportation expenses for the three and nine months ended September 30, 2024 increased 15% and 13% to $87.9 million and $253.9 million, respectively, compared to $76.6 million and $225.1 million for the same periods in 2023, respectively, mainly due to higher average sales price, net of transportation expenses, offset by a decrease in realized natural gas and LNG sales volume.
Realized contractual natural gas sales volume decreased 10% and 15% to 159.8 MMcfpd and 156.3 MMcfpd for the three and nine months ended September 30, 2024, respectively, compared to 178.2 MMcfpd and 182.8 MMcfpd for the same periods in 2023, respectively.
The Corporation realized a net income of $10.3 million for the three months ended September 30, 2024 compared to a net loss of $0.5 for the same period in 2023. The increase in net income in the three months ended September 30, 2024 is the result of an increase in EBITDAX and the recognition of a non-recurring asset impairment of $32.6 million in Q3 2023. For the nine months ended September 30, 2024, the Corporation realized a net loss of $7.3 million, compared to a net income of $56.3 million for the same period in 2023, mainly due to a non-cash deferred income tax expense of $48.4 million in the nine months ended September 30, 2024 as compared to a non-cash deferred income tax recovery of $72.0 million for the same period in 2023. The $48.4 million non-cash deferred income tax expense is mainly driven by the devaluation of Colombian peso.
Net cash capital expenditures for the three and nine months ended September 30, 2024 was $23.9 million and
$93.7 million, respectively, compared to $43.8 million and $142.9 million for the same periods in 2023, respectively.
As at September 30, 2024, the Corporation had $67.1 million in cash and cash equivalents and $62.1 million in working capital surplus.

Outlook
For 2024, the Corporation remains focused on the following objectives:
1. In order to maintain and grow Canacol s reserves and production in its core gas assets in the Lower Magdalena Valley Basin, the Corporation is executing comprehensive development, exploration, workover, and infrastructure programs. The Corporation aims to optimize its production and increase reserves by drilling five development wells, six exploration wells, installing new compression and processing facilities, and the execution of workover operations on producing wells in the Corporation s key gas fields. To date in 2024, the Corporation has completed the drilling of two successful exploration wells, one unsuccessful exploration well, and four successful development wells, the workover of 15 existing wells, and the installation of 10 new gas compressors. Through these activities, the Corporation has managed to stabilize its gas sales at an average rate of 160 MMcfpd during Q3 of 2024. These development and exploration activities are planned to support Canacol s robust EBITDA and allow the Corporation to capitalize on strong market dynamics in 2024. The Corporation has also spud the high impact Natilla-2 exploration well on its 100% operated SSJN-7 E&P contract and anticipates the results by year-end 2024. The Corporation has completed the drilling of the Nispero-2 development well, which will enter production within the next week, and is mobilizing two drilling rigs to drill the Kite-1 and Pibe-1 exploration wells which, if successful, could be rapidly tied into production;
2. Maintaining a low cost of capital, cash liquidity and balance sheet flexibility to invest for the long term. As at September 30, 2024, the Corporation had a cash balance of $67 million;
3. The Corporation has secured approval of the fourth E&P contract in Bolivia, Tita, that covers an existing gas field reactivation. The next steps will be to sign all four contracts and begin development operations with a view to adding reserves and production and commencing gas sales in 2025; and
4. To continue with the Corporation s commitment to its environmental, social and governance strategy.

Additional Details

For Financial Period Ended
30/09/2024

Attachments

TRR NG CNEFS Sep 30 2024.pdf
TRR NG CNEMDA Sep 30 2024.pdf
TRR NG CNEPR Sep 30 2024.pdf
Total size =1010K