Canacol Energy Provides Medellin Pipeline Update

Source: 5/6/2022, Location: South America

Canacol Energy Ltd. ("Canacol") (CNEC) is pleased to provide the following information concerning its April 2022 natural gas sales, near term drilling plans, and its Medellin gas pipeline project.

Gas sales averaged 179 MMscfpd for April 2022

Realized contractual natural gas sales (which are gas produced, delivered, and paid for) were approximately 179 million standard cubic feet per day (“MMscfpd”) for April 2022.

Near term drilling program

The Corporation completed the drilling of the Chirimia 1 sidetrack well, which spud on April 6, 2022 and reached a TD of 9,412 feet measured depth on April 14, 2022. The well encountered approximately 20 feet true vertical depth of net gas pay within the Cienaga de Oro (“CDO”) sandstone reservoir with average porosity of 23 percent. The well will be completed and placed on production within the next 4 weeks.

The drilling rig has just spud the Alboka 1 exploration well located on the VIM 5 Exploration and Production (“E&P”) contract. Alboka 1 is targeting gas bearing sands within the CDO sandstone reservoir.

A second drilling rig has been contracted and is currently being mobilized to drill the Cornamusa 1 exploration well located on the VIM 21 E&P Contract, which is expected to spud in the second half of May 2022. The Cornamusa 1 exploration well is targeting gas bearing sands within the CDO sandstone reservoir.

Both the Alboka 1 and Cornamusa 1 exploration wells should take approximately 5 weeks to drill, test, and complete.

Medellin pipeline update

On March 30, 2022, the Corporation's Jobo-Medellin Gas Pipeline project was declared as a Project of Strategic National Interest (PINE) by the Government of Colombia. This means that the entities of the Colombian state that have any influence or jurisdiction over matters that impact the project must support its efficient management and timely completion. In practice this designation should drastically improve the timing of the delivery of items critical to the project, including the issuance of the environmental license.

The Corporation has received binding offers from four different international pipeline construction consortiums which are currently under evaluation. Several of the proposals have an option to upsize the initial 100 MMscfpd of transportation capacity to 200 MMscfpd at Canacol´s request.

As previously announced in August 2021 the Corporation executed an 11 year take or pay gas sales contract with Empresas Publicas de Medellin for 54 MMscfpd of the pipelines´ initial capacity. The Corporation is currently negotiating additional long term take or pay contracts with clients located in the interior of Colombia to fill the remaining 46 MMscfpd of initial capacity.

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