C&C Energia - Cashflow and Explo

Wednesday, Apr 27 2011 by
11

Oh no, yet another Canadian company!

C&C Energia, - company website here.

This time, the company is entirely focussed on Colombia with interests in 9 blocks, operating 7 of them. C&C has been very successful sticking to its knitting and production has risen form virtually nothing to 7,300 bopd at the end of 2010.

Here is the latest presentation for more information. Note that this was before the deal mentioned below.

As with Parex Resources, the company has just announced a major deal, buying out its partner, Ranshorn’s, interests in two of their blocks for $89M. This gives them 100% of the Cachicamo and Pajaro Pinto Block in the Llanos Basin (where PXT operates).

This was funded by a $100M bought deal at $12.10 per share, and, as with Parex is very positive for the company. The bought deal has just been completed. We took part in the bought deal.

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Just like PXT, CZE will be very active this year with 23 wells planned (8 development and 15 explo) all funded with strong cash flow and a strong balance sheet.

On the matter of production, it should be noted (as can be seen from the presentation) that the company had significant behind the pipe volumes with roughly 1,000 bopd from the Cachicamo and 2,000 bopd shut in due to trucking constraints in Jan and Feb this year (there was a nationwide work stoppage by, IIRC, 180,000 truck drivers).

CZE is constructing a centralised production facility on its Carrizales field which should be starting up next month. This will allow the company to step up production from 7,300 bopd and should also cut between 20%-30% off opex. Central storage tanks are also being constructed to provide for 30k bbls of storage capacity.

So, another company with strong finances, well funded with a big explo programme to come. May be of interest to some.


Disclaimer:  

The opinions expressed by the author are those made by him personally as an individual and not in any professional capacity. 


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33 Posts on this Thread show/hide all

djpreston 7th Oct '11 14 of 33
1

In view of the weakness in the SP, somemay be more interested in the company (theres not been anythign that detracts from my positive view of the company). If so, then there's this webcast comign up next week for those who want to know more:

 

CALGARY, ALBERTA--(Marketwire - Oct. 7, 2011) - C&C Energia Ltd. ("C&C Energia" or the "Corporation") (TSX:CZE) is pleased to announce that the Corporation will be presenting at the Canaccord Genuity Global Energy Conference in Miami

Mr. Richard Walls, President & CEO of C&C Energia, is scheduled to present on Thursday, October 13, 2011 at 9:20 A.M. EST (7:20 A.M. Mountain Standard Time). There will be a live webcast of the presentation. To listen and view this online event, please visit http://www.wsw.com/webcast/canaccord5/.

A copy of the presentation will be available on the Corporation's web site at www.ccenergialtd.com on the day of the conference.

For more information on the webcast please visit www.canaccordgenuity.com.

Fund Management: European Wealth
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Fangorn 15th Oct '11 15 of 33

Hi DJP,

Commented on Parex thread about this and PXT.

So nothing untoward behind their significant drop to C$7.85 then I see. Was quite surprised as some of the stuff I was reading, dating back to May'11 had them at C$12.38 or so, with NAV estimated in the region of C$15.89

****
Copied from Parex thread

As for C&C Energia - similar situation, from my point of view, as to why it looks interesting as an investment. Again it has decent production underpinning it at the Llanos basin, centering mainly on Cravoveijo, and it seems there's plenty of development and explo potential there alone. Add to that another 7 high impact blocks(presumably at Putumayo and Middle Magdalena basin) The former is according to my readings, highly prospective with a potential 3bn bbls OIP. Perhaps I misread that.

Coupled to underlying production, it seems management is fairly lucky(as well as experienced), remember reading somewhere that they've an 85% drill success rate. Which is pretty impressive considering some of the shockers other companies consistently have....This year alone has seen explo successes at Cravoviejo(Zopilote-1), Cachicamo(Guacharaca-1, Hoatzin Norte 3).

Their September presentation summed it up succinctly for me - rich portfolio of opportunities, decent explo track record, strong balance sheet with free cash flow of $120m, underlying production(with both Cravoviejo and Cachicamo seeing significant increases in daily production, namely 1900bopd and 1100bopd respectively. Add to that the high impact explo potential and again it ticks similar boxes to Parex.

I take it that the Coati-1 explo well is due to spud this month, unless I've already missed the announcement. Talking of which where is the best place to set up alerts for Canadian oilies. I use investgate for UK companies,and the alerts go straight to my inbox. Appreciate your thoughts here.

Add to all of the above, it was trading close to NAV (just noticed that it's trading at C$7,82 or so, down significantly from the C$12.85 it was in May this year when NAV was estimated at C$15.89 according to Canaccord)

What on earth happened there? Can't seem to get any info from TD at the current time for some reason. "



Plenty to look forward to here,and at the current levels, seems very inviting :)

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djpreston 2nd Nov '11 16 of 33
2

Update issued on the Zopilote Discovery and Appraisal campaign as well as a general production/action update.

C&C Energia Ltd. Provides Zopilote Discovery/Appraisal and Production Update
CALGARY, ALBERTA--(Marketwire - Nov. 2, 2011) - C&C Energia Ltd. ("C&C" or the "Corporation") (TSX:CZE) is pleased to provide an update of its Zopilote discovery in Colombia.

Appraisal drilling is continuing in C&C's 100% working interest Zopilote field located on the west side of the Cravoviejo block. Zopilote-1, drilled in March 2011, has produced just over 240,000 barrels of 32.7 degrees API oil and the well remains on natural flow of 1,400 bbls/d on a 30/64" choke at 150 PSI flowing tubing pressure. Production is from 37 feet of net pay in a C-5 reservoir. Additionally, the Gacheta formation tested 800 bbls/d of 17 degrees API oil from 20 feet of net pay in the Zopilote-1 well. Both zones have been completed and the well currently is only producing from the C-5 Formation.

C&C recently drilled two wells, Zopilote-2 and Zopilote-5, both south of the Zopilote-1 discovery well to appraise the size of the Zopilote field. Zopilote-2 discovered 26 feet of net pay in the C-5 Formation and 62 feet of net pay in the Gacheta Formation. The C-5 reservoir has been completed and is producing 800 bbls/d of 33 degrees API oil on a 16/64" choke at 300 psi flowing tubing pressure. Additionally, the Gacheta Formation in the Zopilote-2 well tested approximately 400 bbls/d of 17 degrees API oil. Both zones have been completed and the well is currently producing from the C-5 reservoir.

C&C's latest appraisal well, Zopilote-5, was drilled and cased to a total depth of 10,192 feet. The Gacheta formation was completed and tested at 420 bbls/d over the interval of 9,736-9,748 feet. C&C plans to also complete the two C-5 sands between the interval 8,810-8,838 feet within 7 to 10 days.

Before the end of the year C&C plans to drill and complete two additional wells on the north end of the Zopilote field. The Corporation will finalize its production plans for the Zopilote field after full appraisal of all test results to determine how to most effectively produce both the C-5 and Gacheta reservoirs.

C&C's production for the month of October averaged 10,250 bbls/d.

In other developments, C&C recently commenced construction of civil works for the Tardigrado-1 and Cacholate-1 wells to be drilled on two separate prospects on C&C's Andaquies block in the Putumayo basin, C&C is the operator with 54% working interest. C&C plans to spud the first well in December 2011. On the Llanos 19 block C&C has received drilling permits for two wells, Langur-1 and Tormento-1, and civil works for these locations have commenced. C&C has 100% working interest in the Llanos 19 block.

C&C Energia plans to release its unaudited interim operating and financial results for the three months ended September 30, 2011 on November 10, 2011.

 

Fund Management: European Wealth
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Fangorn 2nd Nov '11 17 of 33

Hi DJP,

Interesting to see that the production numbers are up for Zop-1(C5 formation) from April's 1003bopd@ 32 Api to the current 1400bopd. The gacheta formation flows@ 800bopd 17Api were known back in April right? Results from Zop 2 and Zop 5 are on par with expectations or better than expected out of interest?

I also have down in my notes that Coati 1 was due to spud in October but have seemingly missed any news on that front. Where is the best place to keep track of canadian oily news - is there a specific web site or should I be checking TD news alerts?

Production rising a tad I see from 9500bopd to the currrent 10,250. Splendid. Lots to hope for here it seems

I've not got round to investing here yet, waiting for the saga that is Encore to play out.

Was there any reason by the way that it has been trading at C$7,82 or so(mid October) , which was down significantly from the C$12.85 it was in May this year when NAV was estimated at C$15.89 according to Canaccord)

Cheers.

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djpreston 2nd Nov '11 18 of 33

Evening Fangorn

I know, that was quite some fall and there wasn't any real reason for it. Then again, we saw very much the same reaction in many other names - look at the other Colombian names (let alone many of the UK issues).

Only possible reason is the lack of infrastructure, which has not kept up with the discoveries made in country. Trucking has been the solution but that's expensive compared to pipelines. Many new pipelines are being implemented though and trucking capacity has increased markedly. There have been some disputes as well, albeit minor.

I thought Coati had spudded but I haven't got my notes to confirm sorry. There's certainly lots of wells going down at the moment.

As for news, we have our own systems but google news alerts and conpany website email alerts are usually good. One criticism is that some Canadian cos don't communicate too well. Niko is a good case in point here and with their massive multi well campaign getting set to launch, that's a real niggle.

Overall, a very solid positive update from CZE I thought.

Cheers

D

Fund Management: European Wealth
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Fangorn 3rd Nov '11 19 of 33

Appreciate your comments DJP - will set up some news alerts on company websites as I seem to miss them all. My "Newsnow" is just set for UK markets.

Certainly a very interesting company and one I will invest in when I get some new funds available(Encore proceeds etc)

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djpreston 10th Nov '11 20 of 33
1

And, following GTE and PXT's good Q3 figures, along comes C&C Energia with its Q3 figures.

Yes, its another set of record figures.

Some extracts:

production for the quarter of 9,572 bbls/day, a 40% increase in the average daily production from third quarter 2010 and a 16% increase over the second quarter 2011. Current production rates are approximately 10,250 bbls/day.

Operating cash flow for the third quarter 2011 was $47.6 million while funds flow from operations was $37.6 million ($0.59 per share). Operating netback for the third quarter 2011 was $63.65 per barrel.

During the quarter, C&C invested $30.9 million (excluding acquisitions) including, facilities installation and the drilling of two development, one exploration and one appraisal well resulting in four (four net) oil wells.

The Corporation has a strong balance sheet with a $69.7 million adjusted working capital surplus (including $74.4 million in cash) and no debt at the end of the third quarter.

And this is why I love the Colombian trio (admitedly CZE is the only "pure" Colombian of the three):

CAPITAL & OUTLOOK

The Corporation will invest approximately $40 to $50 million in the fourth quarter 2011 on drilling, completions and facilities, as well as civil works, casing and tubulars in preparation for the 2012 drilling program. C&C plans to drill at least four (3.5 net) wells for the fourth quarter 2011, including the first exploration well (Tardigrado-1) on the Andaquies block in the Putumayo basin. 

Current production is approximately 10,250 bbls/day. Management continues to give considerable attention to ensure production volumes move unabated. Production in Colombia will continue be exposed to the potential impact of restricted access to offloading terminals and available pipeline capacity. Despite these challenges, the Corporation expects production to average approximately 10,000 to 10,500 bbls/day for the remainder of 2011 and expects 2011 annualized average production of 8,300 to 8,400 bbls/day. 

The Corporation is pleased to announce its planned capital budget for 2012 of between $140 and $150 million. C&C will invest funds on the following operations: seismic $4 to $6 million; drilling completions and testing $87 to $92 million; workovers, field development and health and safety costs $17 million; equipping, pipelines and facilities costs $27 to $30 million; and $5 million for various other projects. Production for 2012 is expected to average between 10,000 and 10,500 bbls/day, a 20% increase over the 2011 estimated annual average daily production.  

With a strong balance sheet and robust cash flow, Management believes the Corporation has sufficient resources to fund its ongoing programs.

Fund Management: European Wealth
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Fangorn 10th Nov '11 21 of 33

Hmmm I don't seem to have been GTE's Q3 results....received Parex's yesterday,and C&C's just now.

Have to say C&C's look pretty enticing. :)

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Fangorn 11th Jan '12 22 of 33
2

C&C Energia Operational update out yesterday evening I see DJP.

Since Q3 results C&C have:
- Completed the drilling of two additional wells in the Llanos Basin
- Production averaged approximately 10,550 bopd for the month of December 2011

On the Cravoviejo Block (100% working interest), C&C recently drilled two wells, Zopilote-3 and Zopilote-4, to appraise the size of the Zopilote field.

- Zopilote-3 discovered 25 feet of net pay in the C-5 Formation and 38 feet of net pay in the Gacheta Formation. Both zones have been completed and the well is currently producing approximately 660 bopd of 32 degrees API oil from the C-5 reservoir and 315 bopd of 17 degrees API oil from the Gacheta reservoir.

- Zopilote-4, was drilled and cased prior to year-end to a total depth of 8,904 feet. The well encountered 24 feet of net pay in the C-5 and 41 feet of pay in the Gacheta Formation and is currently being completed and tested in the Gacheta Formation over the interval of 8,710 to 8,734 feet.

Current production from four wells (Zopilote-1, 2, 3 and 5) in the Zopilote field is approximately 3,400 bopd. Zopilote-4 will be tied in and placed on production in the coming weeks. All of the C-5 producers are on natural flow, including the discovery well (Zopilote-1) which was placed on production in April, 2011. The Gacheta producers are on artificial lift.


Over the next six months the Corporation intends to drill at least eight exploratory wells in Colombia. These wells are located on the following blocks: Cravoviejo - two wells; Cachicamo - three wells; Llanos-19 - one well; Pajaro Pinto - one well; and, Andaquies - one well.

$200m credit facility lined up with BNP / banking syndicate replacing existing $100m facility with a borrowing base of $20m.

Richard Walls, the Corporation's President and Chief Executive Officer commented: "We are pleased with the successful negotiation of the credit facility. The facility, together with our current cash position and future cash flows provides the Corporation with the flexibility to fund any future development programs and allows us to be proactive in seeking out various new investment opportunities."

Corporate Presentation available on its website at www.ccenergialtd.com.

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djpreston 11th Jan '12 23 of 33

Another solid update, fangorn.

Steadily rolling out the wells and production headed nicely upwards. Am intrigued by the facility though, looks like possibly M&A our farm ins on the card?

Fund Management: European Wealth
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Fangorn 11th Jan '12 24 of 33

Indeed, solid, and boring :)
Just what I like. Just hope it doesn't run away before I get to sell my GKP

Interested to see further comment on the reasons for the facility as they emerge.Will keep eyes peeled.

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Fangorn 18th Jan '12 25 of 33
1

Update on Cashalote-1 well, the first explo well in Andaquies block

CZE reports that the Cachalote-1 well, on its Andaquies block, has been drilled to a measured total depth of 6,133 ft. (true vertical depth of 5,970 ft.) and the Corporation has recently completed running electric logs and collecting numerous sidewall cores. C&C and its partner Canacol Energy Ltd. will run 7 inch production casing in the well to total depth, complete and production test the Neme Formation within the interval 5,640 ft. to 5,766 ft. Completion and testing results are expected within the next 2 to 3 weeks.

Looking forward to the results in a fortnight or so

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djpreston 18th Jan '12 26 of 33
1

Update on the Cachalote-1 Well:

http://ccenergialtd.com/investor-relations/news/news-release.html?news_url=http%3A%2F%2Fwww.thepressreleasewire.com%2Fclient%2Fccenergia%2Frelease_xml.jsp%3FactionFor%3D1557220&releaseSeq=0

Completing and testing results in 2-3 weeks but looks a very good start for the programme on this new block.

Fund Management: European Wealth
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Fangorn 4th Feb '12 27 of 33

Not the results one was hoping for....Well to be abandoned.

"C&C Energia reports that it has finished the completion and testing of the Neme Formation in the Cachalote-1 well in Colombia and will abandon the well.

The Cachalote-1 well encountered 271 feet of Neme sandstone that contained oil shows over an interval of approximately 130 feet with average porosity of 21%. The Neme reservoir was perforated in the interval from 5,676 feet to 5,718 feet and between 5,642 to 5,660 feet and on a swab test flowed from the lower perforations traces of oil with a gravity of 13.8 degrees API and fresh water at rate of 1,280 bbls/per day. The upper perforations tested traces of oil and 1,020 barrels of fresh water per day.

The data collected from the test of Cachalote-1 indicates that the oil recovered from these excellent reservoirs most likely represents a residual oil accumulation in a structure that has been either breached or flushed by fresh water. The Cachalote-1 well is the first exploration well on the Andaquies block (114,875 gross acres) located in the northern Putumayo Basin in Colombia. C&C has a 64% working interest and is the operator."


On to the next well:
"Moving of drilling rig at Cachalote-1 in the coming days to the Tardigrado prospect located on the Northern portion of the Andaquies block and spud the Tardigrado-1 well within 2 to 3 weeks. The Tardigrado prospect is a three-way structural closure against a fault with potential in the Neme and Caballos formations."

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djpreston 23rd Feb '12 28 of 33
1

Hmmm, just spotted the sharp rise in the price. Don't know what's caused that as I'm in the pub.

Fund Management: European Wealth
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Fangorn 24th Feb '12 29 of 33

Indeed, just spotted it was up 9.9% overnight myself. Nice move.
No operational updates form what I can see.

Find anything more yourside?

Any thoughts on Parex btw - they gave an update earlier this month and suffered a 15% fall! Whilst there were some disappointments on the well front I was surprised at the severity of the pull back. Hence my view that I must have missed something.

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Fangorn 9th Mar '12 30 of 33
3

The Strength in CZE share price continues.....

I see they had a Corporate presentation the other day...

Corporate highlights -
Production: Dec'11 10550 bopd ( 2011 Aver: 8400bopd)
Dec'10 7275 bopd
Didn't see any mention of expected Dec'12 Exit rate ?

Capital budget of $140 to $150m for 2012 funded by cash flow from llanos basin revenue.

16 to 19 well drilling program in 2012 targeting 222 mmbbls net unrisked and 60 mmbbls net risked(

*Licence Area* *Wells to be drilled*
Llanos basin ( Cravoviejo, Cachicamo, Pajaro Pinto) Llanos 19(2 Wells), Crav(4 wells), Cachi(5 wells)
Putumayo (Andaquies, Coati, Putumayo 8) Andaquies(2 wells), Putamayo(1 well)
Middle Magdalena(Morpho) *Heavy Oil, Api 38

Core Drilling program 2012
- Llanos 19 (Q2 Tormento-1 Mid March'12 spud) and Q3(Langur-1)
- Andaquies (Q1 Cacholete-1 Feb'12 P&A'd and Tardigrado-1 Results due April'12)
- Cachicamo (Q1 IVF-2, Q2 Maquito-1,narval-1, Q3 Xray-1, Cachicamo-1x)
- Cravoviejo(Q1 Abedus-3, Q2 Saimiri-1, Q3 Zopilote2)

Investment attractions:
• Strong cash flow from Llanos Basin production
• Extensive explo program for 2012 with large potential reserve additions funded entirely from cash flow
• Balance sheet with $84 MM cash and no debt, leaving capacity for additional growth opportunities
• Experienced management and operating team

Strong Financials:
- Average pre-Tax Operating Netback over $62/bbl for 2011
- Estimated cash flow of ~$120 million for 2011
- Adjusted working capital ~$73 million (at Nov 30th, 2011)
- Cash balance at ~$84 million with no debt (at Nov 30th, 2011)
- EV/bbl (2P)(3) $25.65


Plenty to like still. Explo funded from cash flow which I find very attractive. A significant numbr of wells to be drilled in 2012, here's hoping some of them come in unlike the Cacholete-1 which was P&D in Feb. http://ccenergialtd.com/investor-relations/presentations.html
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Fangorn 12th Mar '12 31 of 33
1

C&C Energia: Record Q4 results and FY2011 Operating results.
Highlighted by a 64% increase in average daily production from Q4 2010's to 10,493bopd
Reserves rose 52% YoY.
Average Daily production 2011 8455bopd (up 45%)
Current Production: 10,600bopd

Operational Cash Flow of $41.3m Q4, $129m 2011
Strong balance Sheet, Adjusted working capital surplus of $75.4m.No debt


The Corporation completed a successful 2011 drilling campaign delivering significant reserves additions, highlighted by the following:

For full-year 2011, C&C drilled 20 gross wells(19.6 net) including seven exploration wells, four appraisal wells,seven development wells, one injector well and the spudding of the Cachalote-1 exploration well.

*Upshot of drilling campaign
- 12 Oil wells, 3 dry and abandoned wells, 4 suspended awaiting further dev work.

Total working interest proved oil reserves ("1P"), before royalties,increased 52% to 14.0 million barrels.
Total working interest proved plus probable oil reserves ("2P"), before royalties, increased 26% to 18.4 million barrels

http://ccenergialtd.com/investor-relations/news/news-release.html?news_url=http%3A%2F%2Fwww.thepressreleasewire.com%2Fclient%2Fccenergia%2Frelease_xml.jsp%3FactionFor%3D1582791&releaseSeq=0

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djpreston 19th Nov '12 32 of 33
1

Bringing an old thread back to life.

Well, finally someone has seen the value in CZE and today we have a deal with Pacific Rubiales. Actually it is the producing Llanos Basin assets with shareholders retaining the other fields and some cash. Nice premium and a steal for PRE IMO.

http://www.menafn.com/menafn/d1e70faf-722a-4229-9afd-b1117bc33838/CC-Energia-Ltd-Announces-Acquisition-Pacific-Rubiales-Energy-Corp--Creation-of-A-New-Colombia-Focused-Junior-Exploration-Company?src=main

Fund Management: European Wealth
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djpreston 19th Nov '12 33 of 33
1

Should have said that the obvious other target will be Parex. Very similar but with some other non Columbian assets as well.

Fund Management: European Wealth
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