Canacol Energy Ltd.

Canacol Energy Ltd.

June 02, 2009 15:57 ET

Canacol Energy Ltd. Releases F2009 Q3 Results

CALGARY, ALBERTA--(Marketwire - June 2, 2009) - Canacol Energy Ltd. (formerly BrazAlta Resources Corp.) ("Canacol" or the "Corporation") (TSX VENTURE:CNE) announces that it has filed its interim quarterly financial statements for the three and nine months ended March 31, 2009 ("Financial Statements") and its Management Discussion and Analysis ("MD&A"). Copies of the filed documents may be obtained via SEDAR at

Charle Gamba, President and CEO of the Corporation, commented "Over the past 6 months the Corporation has made significant progress at reducing its level of debt exposure, sold its operated BCH drilling subsidiary in Brazil, and sold its producing assets in Canada in order to position itself to focus exclusively on its upstream E&P activities in Colombia, Brazil, and Guyana. The Corporation is well positioned to realize significant production and reserves growth with its planned development and exploration drilling programs in the remainder of 2009 and into 2010."


Selected financial and operational results for the quarter are outlined below and should be read in conjunction with the Corporation's Financial Statements and related MD&A.

3rd Quarter Highlights

- Continued its drilling program at its Capella heavy oil discovery in Colombia with the drilling and testing of the Capella 3, 4, and 5 wells, plans for the remainder of 2009 include additional delineation wells.

- Added Mark Teare as Vice President of Exploration (former Country Lead for Brazil with Encana Petroleum) and Brian Hearst as CFO (former CFO Canoro Resources and Vision 2000 Exploration). Both individuals bring a wealth of international E&P related experience to the Corporation's management team.

- Restructured its Board of Directors to include Michael Hibberd (Chairman, and current Chairman of Heritage Oil), Alvaro Barrera (former President of the Colombian State Oil Company Ecopetrol), David Winter (President of Excelsior Energy Ltd.), Jason Bednar (former CFO of Pan Orient Energy), Stuart Hensman (former Chairman and CEO of Scotia Capital USA), Luis Baena (former President of Superview, a Colombian telecommunications company) , and Charle Gamba (former VP Exploration, Occidental Petroleum in Colombia).

Highlights Subsequent to 3rd Quarter

- The Corporation closed a CAN$ 6,000,000 private placement and announced the execution of a series of agreements with Gemini Oil and Gas Advisors for US$ 9,000,000. These funds will be used to execute the Corporations drilling and workover programs on its operated oil producing assets in Colombia set to commence this summer, as announced in April 2009.

- With respect to its operated assets in Colombia, the Corporation since last quarter has increased production of tariff oil to approximately 1450 barrels of oil per day ("bopd") and net oil to approximately 350 bopd through a well workover at its Rancho Hermoso Field and the expansion of its disposal capacity at the Entrerrios Field. Together with its share of net production from the Capella heavy oil field, the Corporation this quarter has increased its share of daily production by approximately 25% since last quarter.

- The Corporation completed the drilling and testing of its 6th well in its non-operated Capella heavy oil discovery in Colombia, as announced in April 2009. Using the oil column height information obtained from the 6 wells drilled to date, and the structural interpretation derived from the existing 2D seismic, the accumulation has a mapped area of approximately 89 square kilometres (22,000 acres). The Corporation plans to drill additional wells throughout the remainder of 2009 to further delineate the extent of this significant oil discovery.

- The Corporation executed an agreement with Groundstar Resources Corp. ("Groundstar") whereby Canacol will purchase 35% of Groundstar's 45% working interest for a consideration of US$ 3.5 mm, increasing its working interest in the block to 90%, as announced on May, 2009. The management of the Corporation believe that this transaction is accretive to the shareholders of the Corporation and provides the Corporation with exposure to a greater interest in a material frontier oil appraisal project and exploration prospect within a basin which has been proven to contain a light oil hydrocarbon system.

- The Corporation eliminated its Brazilian debt facility with Standard Bank Plc. and cured the event of default announced in its 2nd Quarter Results. The Corporation also paid in full the remaining balance of its Mezzanine debt facility held with Standard Bank Plc. in late May, 2009.

As At and For the Three and Nine Three Months Ended Nine Months Ended
Months Ended March 31, March 31,
FINANCIAL RESULTS 2009 2008 2009 2008
($000s), except share data
Petroleum and natural gas sales, net
Colombia (2) 1,200 - 2,071 -
Brazil 767 1,487 2,942 3,285
Canada - 8 70 106
1,967 1,495 5,083 3,391
Tariff revenue 1,069 - 2,039 -
Interest and other 123 101 490 232
Total revenue, recurring operations 3,159 1,596 7,612 3,623
Cash from (used in) recuring
operating activities (2,446) 27 1,736 (1,665)
Per share - basic and diluted (0.02) 0.00 0.02 (0.00)

Net loss from continuing operations (5,050) (2,620) (16,542) (6,173)
Per share - basic and diluted (0.04) (0.03) (0.16) (0.07)

Capital expenditures
Colombia (2) 1,597 - 4,411 -
Brazil 40 3,317 1,804 9,787
Canada 15 8 (513) 284
1,652 3,325 5,702 10,071
Total assets 87,958 49,861 87,958 49,861

Total long-term liabilities 13,828 2,986 13,828 2,986

Weighted average shares outstanding
Basic and diluted (000s) 117,041 90,031 103,562 83,580

Three Months Ended March 31,
Production Colombia(2) Brazil Canada(3) Brazil Canada
Crude oil and NGLs (bbl/d) 318 133 - 201 -
Natural gas (mcf/d) - - - - 19
Total (boe per day) 318 133 - 201 3
Total tariff production
(bbl/d) 1,157 - - - -

Average sale prices
Crude oil ($/bbl) 47.87 71.79 96.86 -
Natural gas ($/mcf) - 11.23
Oil equivalent ($/boe) - 71.79 - 96.86 67.38

Operating netback ($/boe)
Commodity sales revenue 47.87 71.79 - 96.86 67.38
Tariff revenue 10.27
Non-refundable sales taxes - (1.78) - (7.81) -
Realized gain (loss) on
financial derivative - 44.90 - (7.90) -
Royalties (3.83) (6.05) - (7.59) (39.84)
Transportation &
processing (4) (4.75) (23.59) - (12.46) -
Well workover & repair (0.03) (2.38) - (7.85) -
MEP work unit provision - (4.61) - (32.40) -
Operating expenses (3) (10.11) (37.41) - (20.76) (61.41)
Netback (1) 39.42 40.87 - 0.09 (33.87)

Nine Months Ended March 31,
Production Brazil Canada(3) Brazil Canada
Crude oil and NGLs (bbl/d) 134 1 159 1
Natural gas (mcf/d) - 48 - 66
Total (boe per day) 134 9 159 12
Total tariff production (bbl/d) - - - -

Average sale prices
Crude oil ($/bbl) 90.98 88.92 -
Natural gas ($/mcf) - 9.86
Oil equivalent ($/boe) 90.98 46.82 88.92 54.23

Operating netback ($/boe)
Commodity sales revenue 90.98 46.82 88.92 54.23
Tariff revenue - - - -
Non-refundable sales taxes (3.59) - (7.40) -
Realized gain (loss) on financial
derivative 57.29 - (6.17)
Royalties (7.54) (5.17) (6.60) (15.21)
Transportation & processing (4) (21.63) - (12.54) -
Well workover & repair (2.12) - (8.60) -
MEP work unit provision (4.56) - (13.49) -
Operating expenses (3) (36.79) (11.48) (26.55) (23.67)
Netback (1) 72.04 30.17 7.57 15.35
(1) "Netback " per boe is calculated as revenues net of sales taxes and
royalties, less transportation & processing charges, well workover and
repair, operating expenses and then divided by boe produced. Netbacks
do not have a standard meaning prescribed by GAAP and therefore may not
be comparable to similar measures used by other companies. Managment
feels this is a useful metric as it is a common metric used by other
companies operating in the oil and gas industry in order to provide a
comparison of relative overall performance between companies. Managment
uses the metric to assess the Corporation's overall performance
relative to that of its competitors and internal planning purposes.
(2) Colombian operations commenced in October 30, 2008
(3) Colombian operating expenses relate to both tariff and non-tariff oil
production volumes
(4) Colombian transportation and processing charges relate to non-tariff
production (5) The majority of the Canadian producing properties were
sold January 1, 2009.

Canacol is a Canadian based international oil and gas corporation with operations in Colombia, Brazil and Guyana. Canacol is publicly traded on TSX Venture Exchange (TSX VENTURE:CNE). The Corporation's public filings may be found at

This press release may contain statements within the meaning of safe harbour provisions as defined under Securities Laws and Regulations. The above statements are based on the current expectations and beliefs of Canacol's management and are subject to a number of risks and uncertainties that may cause the actual results to differ materially from those described above.

This press release contains certain forward-looking statements within the meaning of applicable securities law. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Corporation cannot assure that actual results will be consistent with these forward looking statements. They are made as of the date hereof and are subject to change and the Corporation assumes no obligation to revise or update them to reflect new circumstances, except as required by law. Prospective investors should not place undue reliance on forward looking statements. These factors include the inherent risks involved in the exploration for and development of crude oil and natural gas properties, the uncertainties involved in interpreting drilling results and other geological and geophysical data, fluctuating energy prices, the possibility of cost overruns or unanticipated costs or delays and other uncertainties associated with the oil and gas industry. Other risk factors could include risks associated with negotiating with foreign governments as well as country risk associated with conducting international activities, and other factors, many of which are beyond the control of the Corporation. A barrel of oil equivalent (boe) is derived by converting gas to oil in the ratio of six thousand cubic feet of gas to oil and may be misleading, particularly if used in isolation. A boe conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead, especially in various international jurisdictions.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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