Net Income of $2.4 million in Q2 2021 CALGARY, Alberta, Aug. 05, 2021 (GLOBE NEWSWIRE) -- Canacol Energy Ltd. (“Canacol” or the “Corporation”) (TSX:CNE; OTCQX:CNNEF; BVC:CNEC) is pleased to report its financial and operating results for the three and six months ended June 30, 2021. Dollar amounts are expressed in United States dollars, with the exception of Canadian dollar unit prices (“C$”) where indicated and otherwise noted.
Highlights for the three and six months ended June 30, 2021
(Production is stated as working-interest before royalties)
Financial and operational highlights of the Corporation include:
- Realized contractual natural gas sales volumes increased 13% to 171.5 MMscfpd for the three months ended June 30, 2021, compared to 152.2 MMscfpd for the same period in 2020. Average natural gas production volumes increased 15% to 173.1 MMscfpd for the three months ended June 30, 2021, compared to 151.1 MMscfpd for the same period in 2020. The increase is mainly due to increased firm contract and spot market sales as a result of the COVID-19 pandemic restrictions being gradually lifted during the three months ended June 30, 2021. Realized contractual natural gas sales volumes decreased 1% to 174.5 MMscfpd for the six months ended June 30, 2021, compared to 176.9 MMscfpd for the same period in 2020. Average natural gas production volumes were 176.3 MMscfpd for the six months ended June 30, 2021 and 2020.
- Total natural gas revenues, net of royalties and transportation expenses decreased 1% and 10% to $52.6 million and $110.9 million for the three and six months ended June 30, 2021, respectively, compared to $53.3 million and $123.2 million for the same periods in 2020, respectively, mainly attributable to lower natural gas realized sales prices, net of transportation expense.
- Subsequent to June 30, 2021, the demand for spot market volumes has increased, as evidenced by the July 2021 realized contractual natural gas sales volumes of approximately 190 MMscfpd, mainly due to the following: i) the recent political unrest in Colombia has improved, ii) the COVID-19 vaccination roll-out in Colombia is well underway and iii) the La Nia climate phenomenon has weakened, all of which, results in the higher demand of natural gas. As such, the spot market average natural gas and LNG sales prices, net of transportation has been significantly higher since mid-July 2021, as compared to the three and six months ended June 30, 2021.
- Adjusted funds from operations increased 8% to $33.6 million for the three months ended June 30, 2021, compared to $31.2 million for the same period in 2020. Adjusted funds from operations decreased 6% to $71.9 million for the six months ended June 30, 2021, compared to $76.5 million for the same period in 2020. Adjusted funds from operations per basic share increased 12% to $0.19 per basic share for the three months ended June 30, 2021, compared to $0.17 per basic share for the same period in 2020. Adjusted funds from operations per basic share decreased 5% to $0.40 per basic share for the six months ended June 30, 2021, compared to $0.42 per basic share for the same period in 2020.
- EBITDAX increased 10% to $44.6 million for the three months ended June 30, 2021, compared to $40.4 million for the same period in 2020. EBITDAX decreased 8% to $91.4 million for the six months ended June 30, 2021, compared to $99.3 for the same period in 2020.
- The Corporation realized a net income of $2.4 million for the three months ended June 30, 2021, compared to a net income of $17.7 million for the same period in 2020, resulting in a 86% decrease year over year. The decrease is mainly due to a deferred tax recovery realized during the three months ended June 30, 2020 as a result of the recovery of the Colombian Peso (“COP”) relative to the USD as at June 30, 2020 as compared to March 31, 2020. The Corporation realized a net loss of $0.6 million for the six months ended June 30, 2021, compared to a net loss of $8.3 million for the same period in 2020. The net loss realized during the six months ended June 30, 2021 is primarily due to a deferred tax expense of $9.7 million, which is mainly due to the effect of the reduction in the COP exchange rate on the value of unused tax losses and cost pool.
- The Corporation’s natural gas operating netback decreased 13% and 10% to $3.14 per Mcf and $3.25 per Mcf in the three and six months ended June 30, 2021, compared to $3.63 per Mcf and $3.60 per Mcf for the same periods in 2020, respectively. The decrease is mainly due to the lower average realized prices, net of transportation expense due to lower priced fixed contracts for the 2021 contract year as compared to the 2020 contract year. The Corporation’s royalties per Mcf increased by 11% and 3% to $0.71 per Mcf in the three and six months ended June 30, 2021, compared to $0.64 per Mcf and $0.69 per Mcf for the same periods in 2020, respectively. The increase is due to higher production at the Corporation’s VIM-5 block, which is subject to a higher royalty rate.
- Net capital expenditures for the three and six months ended June 30, 2021 were $26.4 million and $54.2 million, respectively. Net capital expenditures included non-cash adjustments related to decommissioning obligations and right-of-use leased assets of $1.9 million and $1.4 million for the three and six months ended June 30, 2021, respectively.
- On June 17, 2021, the Corporation entered into a three year term credit agreement with Banco Davivienda (“Colombia Bank Debt”) for a principal amount of $12.9 million denominated in COP, which is subject to an annual interest rate of Reference Bank Indicator (“IBR”) plus 2.5% (IBR was 1.86% at the agreement date). The Colombia Bank Debt was used to repay the Corporation’s litigation settlement liability, which was subject to an 8.74% annual interest rate. As a result of a lower interest rate, the Corporation will realize annual interest savings of approximately $0.6 million (lower interest rate of 4.38% at the agreement date).
- As at June 30, 2021, the Corporation had $34.8 million in cash and cash equivalents and $44.7 million in working capital surplus. During the three months ended June 30, 2021, the Corporation made cash payments as follows: i) the 2020 income tax remaining installment of $11.3 million, ii) prepaid 2021 tax installments of $10.7 million and iii) the semi-annual Senior Notes interest payment of $12.1 million. The Corporation expects that a portion of its 2020 prepaid tax installments totaling $9.3 million will be returned from the Colombian tax authorities by the end of Q3 2021.
https://www.globenewswire.com/news-release/2021/08/05/2276160/0/en/Canacol-Energy-Ltd-Reports-a-13-Increase-in-Realized-Contractual-Natural-Gas-Sales-Volumes-and-Net-Income-of-2-4-million-in-Q2-2021.html