Canacol Energy (CNE) Q3 2024 earnings summary

Executive summary

• Achieved record EBITDAX of $86 million, up 38% year-over-year, driven by strong pricing, operational efficiency, and a $14.2 million arbitration gain.

• Realized natural gas prices rose 24% year-over-year to $6.69 per MCF, with netbacks up 27% to $5.25 per MCF and operational margins at 78%.

• Maintained robust performance and profitability despite a 10% decline in sales volumes, supported by tight Colombian gas supply and effective commercial strategy.

• Drilled seven wells year-to-date, with six successes, and expanded the 2024 drilling program to 11 wells while keeping CapEx at the low end of guidance.

• Net income for Q3 2024 was $10.3 million, reversing a net loss in Q3 2023; nine-month net loss was $7.3 million due to a $48.4 million non-cash deferred tax expense from peso devaluation.

Financial highlights

• Total revenues net of royalties and transportation reached $87.9 million in Q3 2024, up 15% year-over-year despite lower volumes.

• Adjusted EBITDAX increased 38% to $85.8 million, aided by a $14.2 million arbitration settlement.

• Adjusted funds from operations rose 18% to $57.9 million in Q3 2024.

• Capital expenditures dropped to $23.9 million in Q3, reflecting capital efficiency.

• Cash and equivalents stood at $67.1 million with a working capital surplus of $62.1 million as of September 30, 2024.

Outlook and guidance

• 2024 capital program revised to drill 11 wells (5 exploration, 6 development/appraisal) with CapEx of $138 million.

• Three exploration wells and one appraisal well planned for the remainder of 2024, with high-impact prospects targeted.

• Reserve replacement ratio targeted at approximately 120% for full year 2024.

• Bolivia investment of $12 million planned for the second half of 2025, focused on reactivating the Tita gas field.

• Focus remains on maintaining production, cash flow, and reserves in the Lower Magdalena Valley.