2016 was a strong year for Canacol (CNE), generating US$135.5m of EBITDAX (+101%) and a 43% increase in adjusted revenues to US$173m. Management guidance for 2017 implies another step-up in both production and cash generation. Primary targets include: 1) the delivery of an exit rate of 130mmscfd via the construction of a new, privately owned gas pipeline; 2) the drilling of three additional gas exploration wells in order to add behind-pipe resource; and 3) the drilling of two oil exploration wells. Consensus expects US$177m EBITDA in 2017; Canacol continues to trade at a meaningful discount to its disclosed post-tax NPV10 of US$945m 2P (C$5.82/share) based on contracted gas prices – this excludes the EMV of prospective gas resource recently estimated at US$789m by Gaffney Cline.

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