Canacol Energy Penny Oil in South America

Canacol Energy

(CNE : TSX : $0.33)

An awful chart may get better as a result of Canacol’s  news that its Agueda 1ST light oil discovery tested 1,837/1,470 b/d (gross/net) on LLA23 block (80% working interest).

The discovery is on the same fault as the original Rancho Hermoso discovery. The company has far better contract terms on LLA23 and has identified 5 additional leads/prospects. The company has assessed LLA23 resources of 11 million barrels (management estimate over the total 6 leads/prospects) and estimates the pre-tax value of $242 million (at 10% discount rate).

Charle Gamba, President and CEO of Canacol, commented “We are pleased by these positive results, which set up the potential to access meaningful near term light oil production and cash flow from the LLA23 contract. The Labrador discovery is one of 6 prospects that we have identified on the LLA23 block on the basis of recently acquired 3D seismic, and we are very satisfied that the first one we drilled encountered a significant light oil
accumulation. Once we have the proper drilling permits in hand, we plan to aggressively drill this block to grow our production base in Colombia during 2013.”

Looking ahead, production testing of the Lower Gacheta will continue in the short term, with produced oil being transported to the nearest point of sale. Upon completion of the production test of the Lower Gacheta, the deeper Ubaque reservoir will be production tested, and the well placed on permanent production from either zone.