Fitch Ratings AnnouncementFitch Ratings-New York/San Jose-11 October 2023: Canacol Energy Ltd.’s (CNE; BB/Stable) announcement of unexpected production capacity restrictions raises some concerns, according to Fitch Ratings. In the event there are further disruptions that are not reported in a timely matter and that affect the company’s production, reserves, and contracted gas sales, a negative rating action is likely.
Fitch’s rating case remains unchanged since the last review, which does not incorporate any changes in production and or reserves. Fitch’s base case assumes that FY2023 total production will average 185MMcf/d, a 4% reduction compared with the agency’s previous estimate. EBITDA is estimated to be USD230 million, above Fitch’s previous estimate of USD205 million, supported by higher expected realized prices in 2H23. EBITDA leverage should be below 3.0x and the coverage ratio is forecast at 7.0x by YE 2023, within Fitch’s rating case sensitivities.
On Sept. 5 2023, CNE announced that it had experienced unusual and unexpected production
capacity restrictions at some of its gas fields as a result of issues at the Jobo gas treatment facility, as well as
certain of its producing wells. These restrictions affected nearly 11% of CNE’s sales, according to Fitch estimates. October to date production was 162 million standard cubic feet per day (MMcf/d), 14% below its 2Q23 average.