Fitch Ratings has affirmed and withdrawn Canacol Energy Ltd.'s (CNE) Long-Term Local and Foreign Currency Issuer Default Ratings (IDRs) of 'CCC', as well as the rating of the senior secured notes due in 2028 of 'CCC'/'RR4'.

At the time of the withdrawal, CNE's ratings reflected the deterioration of CNE's liquidity after reporting a cash balance of $25 million in 1Q24, falling below the $40 million negative rating sensitivity.

The ratings have been withdrawn for commercial reasons. Fitch will therefore no longer provide rating or analytical coverage on CNE.

Key Rating Drivers

Key Rating Drivers are not applicable as the ratings have been withdrawn.

RATING SENSITIVITIES

Rating Sensitivities are not applicable as the ratings have been withdrawn.

Issuer Profile

Canacol Energy Ltd. (CNE) is a publicly listed exploration and production company focused on onshore natural gas in Colombia. The company's average production was 32,366 boe/d in 2023YE, 98% corresponded to natural gas. As of 2023, CNE had 52mmboe of 2P natural gas reserves and 1P reserve life of 4.4 years.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

Canacol Energy Ltd. has an ESG Relevance Score of '4' for Exposure to Social Impacts due to the potential impact of social pressures and possible pushback from the communities in the region where it operates. This has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

Canacol Energy Ltd. has an ESG Relevance Score for Management Strategy of '4' given the change it their contract strategy as it is no longer consistent with our previous assessment of the company's business profile as a utility-like company. In Fitch's view, this change will bring higher volatility to cash flows and profitability. This has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

Canacol Energy Ltd. has an ESG Relevance Score for Financial Transparency to '4' due to untimely disclosure of unexpected production capacity restrictions the Jobo gas treatment facility as well as certain of its producing wells that commenced in August 2023. This has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.

Following the withdrawal of ratings for CNE Fitch will no longer be providing the associated ESG Relevance Scores.

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