Canacol Energy Provides Gas Sales and Drilling Update

Source: 2/3/2021, Location: South America

Canacol Energy Ltd. is pleased to provide the following information concerning its January 2021 natural gas sales, drilling program, and credit rating.

Gas sales averaged 177 MMscfpd for January 2021
Realized contractual natural gas sales (which are gas produced, delivered, and paid for) were 177 million standard cubic feet per day for January 2021.

Drilling Flauta 1 and Oboe 2
The Corporation spud the Flauta 1 exploration well and the Oboe 2 development well in January 2021. Both wells are targeting gas within the Cienega de Oro (“CDO”) sandstone reservoir. Upon completion of the drilling and testing of the two wells, the Corporation will mobilize the rigs to drill the Canahuate 4 development well and Siku 1 exploration well, both targeting gas within the CDO sandstone reservoir.

Rating Agency Update
On January 19, 2020, Fitch Ratings affirmed Canacol Energy Ltd.'s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BB-', and the Corporations senior unsecured notes at 'BB-'/'RR4'. The Rating Outlook has been revised to Positive from Stable.

The Fitch Ratings report noted the following key rating drivers as factors for the rating and outlook revision to Positive:
- Contracted revenues, noting Canacol’s long-term, take-or-pay contractual structure at fixed prices with strong credit quality off-takers significantly lowers the company’s business risk as this mitigates exposure to price and volumes risk.
- Predictable cash flow generation
- Strong capital structure
- Growing production profile
- Regional importance, noting Canacol is a key gas producer and supplier for the highly dependent Caribbean coast of Colombia.

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