C&C Energia Ltd : C&C Energia Ltd. Provides Operational Update

JAN 10, 2012 - 18:12 ET

CALGARY, ALBERTA--(Marketwire - Jan. 10, 2012) - C&C Energia Ltd. ("C&C Energia" or the "Corporation") (TSX:CZE) is pleased to provide an operations update on its current activities in Colombia.

The Corporation continues to benefit from high oil prices generating operating netbacks of $63.06 per barrel and funds flow from operations for the eleven months ended November 30, 2011 of approximately $115 million. Working capital as at November 30, 2011 was approximately $72.7 million, including cash of $84.3 million.

The Corporation has completed the drilling of two additional wells in the Llanos Basin since releasing its third quarter results in November 2011. 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 32º API oil from the C-5 reservoir and 315 bopd of 17º API oil from the Gacheta reservoir.

C&C Energia's latest appraisal well, 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.

On the Andaquies Block, the Corporation acquired an additional 10% working interest from a minority partner to increase its working interest to 100%. C&C Energia's working interest will be reduced to 64%, subject to Canacol Energy Ltd. earning under the previously announced farm-in agreement. The Corporation's first exploration well in the block, Cachalote-1, was spud on December 21, 2011 and is currently drilling. Drilling results are expected by mid to late January 2012.

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.

C&C Energia is also pleased to announce that it has completed negotiations on a $200 million credit facility (the "Facility") with a syndicate of banks led by BNP Paribas and including ScotiaBank and Société Generale (Canada Branch). This is a reserve base facility with a current borrowing base set at $35 million. The Facility replaces the existing $100 million credit facility with a borrowing base of $22 million.

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."

The Corporation today announced that it has updated its Corporate Presentation on its website at www.ccenergialtd.com.

The website has comprehensive information on C&C Energia including our corporate profile, a listing of our Management team, a listing of our Directors, as well as financial reports, news, information request, etc.

ABOUT C&C ENERGIA LTD.

The Corporation, through its subsidiary Grupo C&C Energia (Barbados) Ltd., is engaged in the exploration for, the development and production of, oil resources in Colombia. Its strategy is to develop producing oil assets by appraising and developing existing discoveries and exploring in areas assessed by management to be of low to moderate risk. With a total of eight blocks (seven operated) and over 560,000 net acres in Colombia, the Corporation's management expects that C&C Energia has considerable upside for future production and reserve growth.

LEGAL ADVISORIES

NON-GAAP MEASURES

This press release makes reference to the terms "funds flow from operations", "netbacks" and "working capital", which are not recognized measures under GAAP and do not have a standardized meaning prescribed by GAAP. Accordingly, the Corporation's use of these terms may not be comparable to similarly defined measures presented by other companies. Funds flow from operations is cash flow from operating activities before changes in non-cash working capital. Netbacks are calculated by subtracting royalties, production expenses, transportation expenses, administrative expense, interest and taxes paid by the Corporation from crude oil revenue and dividing by sales volumes. Working capital surplus includes current assets less current liabilities and is used to evaluate the Corporation's financial leverage. Management uses these non-GAAP measurements for its own performance measures and to provide its shareholders and potential investors with a measurement of the Corporation's efficiency and its ability to fund a portion of its future growth expenditures.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This press release contains forward-looking information within the meaning of applicable Canadian securities laws that involves known and unknown risks and uncertainties. Forward-looking information typically contains statements with words such as "anticipate", "estimate", "expect", "potential", "could", "will", "plans" or similar words suggesting future outcomes. The Corporation cautions readers and prospective investors in the Corporation's securities to not place undue reliance on forward-looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by C&C Energia.

Forward-looking information in this press release includes, but is not limited to, information concerning the expectations of the Corporation with respect to expectations of the Corporation's future production and reserve growth, the Corporation's drilling plans (and timelines associated with those drilling plans), the Corporation's interest in the Andaquies Block following Canacol Energy Ltd. earning its interest, plans and expectations regarding the completion of certain of the Corporation's wells, expected future production from such wells and the Corporation's ability to fund future development programs from its current cash position, future cash flows or otherwise. These forward-looking statements are subject to assumptions regarding the Corporation's operations and the operating environment in Colombia. The Corporation's drilling and seismic plans are subject to change if circumstances change or if management of the Corporation determines that other business plans are more appropriate.

Forward-looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated by C&C Energia including, but not limited to, general risks associated with the oil and gas industry (e.g. operational risks in exploration; inherent uncertainties in interpreting geological data; changes in plans with respect to exploration or capital expenditures; the uncertainty of estimates and projections in relation to costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with the ANH or with other third parties in countries other than Canada, the risk associated with international activity and certain other risks detailed from time to time in the Corporation's public disclosure documents including, in the Corporation's annual information form for the year ended December 31, 2010, copies of which are available on C&C Energia's SEDAR profile at www.sedar.com. The forward-looking information included in this news release is expressly qualified in its entirety by this cautionary statement. The forward-looking information included herein is made as of the date hereof and C&C Energia assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances, except as required by law.