Canacol eyes high-impact gas discovery in Colombia

South America-focused energy firm Canacol aims to drill nine additional wells in Colombia this year, including a 100Bf3 (billion cubic feet) prospect that could bolster natural gas supply to Bogotá and Medellín, CEO Charle Gamba said on Friday. 

The Canadian company said the plans followed a first-quarter exploration campaign in which five of the six wells drilled delivered commercially viable results. 

The upcoming program – most of which will be exploration targets – includes the Valiente prospect in the Middle Magdalena valley basin, located near previous gas-producing areas but at shallower depths, according to Canacol.

"It [Valiente] is a very large target, much larger than those we are drilling in the Lower Magdalena Valley," Gamba told investors in a quarterly earnings call. 

"The target is well in excess of 100Bf3 of gas and condensate. The prospect is located very close to the TGI gas pipeline, so the connection into the interior market of Bogotá and Medellín will be very quick and efficient if we encounter gas. We are currently executing the preparations necessary to access the location and build the platform."

Gamba said the well had a target depth of around 6,000ft, ensuring relatively low costs. He added that the company planned to maintain its 100% working interest in the area.

Canacol reported first-quarter net income of US$31.8mn, up from US$3.7mn in the same period last year. It partly attributed the increase to the recognition of a non-cash deferred income tax recovery of US$19.5mn.

The company maintained its US$143mn capital expenditure guidance for 2025, of which around US$53mn was disbursed in the first quarter.

LNG 

Gamba said Canacol was unfazed by a raft of new regasification projects in Colombia following an overhaul of market rules aimed at guaranteeing the country's gas supply. 

Key provisions included flexible pricing and contractual terms for gas purchased on the international market, a move designed to facilitate long-term supply agreements and infrastructure expansion projects. 

Under previous rules, gas imports could only be used to fuel the country's backup thermoelectric power plants.

"We expect to see significantly better pricing for our domestic gas sales," Gamba said. "Currently, imported landed and commercialized regasified gas prices are in the US$16-18 range, which is four-times higher than domestic prices historically."