Canacol operates over 1.4 million net acres in 8 exploration and production gas contracts in Colombia, located in the Lower & Middle Magdalena Basins of Colombia, near the Caribbean coast and the cities of Cartagena and Barranquilla. Our gas assets, which comprise discovered 2P gas reserves of 624 billion cubic feet with a before tax value of $2.1 billion dollars2, and 162 identified future exploration and development drilling locations containing 4.7 trillion cubic feet of new potential gas resource1, include 15 prolific producing gas fields.
In Colombia, the ANH is the administrator of the hydrocarbons in the country and therefore is responsible for regulating the Colombian oil and gas industry, including managing all exploration lands. Each of our 8 contracts contain an exploration phase and a production phase. The exploration phase contains a few exploration periods and each period has an associated work commitment. The production phase lasts several years (usually 24) from the declaration of a commercial hydrocarbon discovery.
During the 2019 ANH bid round we successfully secured 100% operated working interest in three conventional gas exploration contracts. We were awarded conventional exploration contract VIM 33 in the Lower Magdalena Valley basin, and conventional exploration contracts VMM 45 and VMM 49 (in the Middle Magdalena Valley basin). On a net acreage basis, these conventional exploration contracts increased Canacol´s land position for conventional natural gas in Colombia by 29 % from 1.1 mm net acres to 1.4 mm net acres1.
1. Source: Independent resources report prepared by Gaffney, Cline & Associates, effective December 31, 2019.
2. Source: Independent reserves report prepared by Boury Global Energy Consultants Ltd., effective December 31, 2019. A full description of the calculation of FD&A costs and Recycle Ratios is provided in our press release dated February 19, 2020.