Canacol Energy has announced that it has secured a 100% working interest in three new conventional gas exploration contracts in the recent bid round in Colombia. The award of these contracts increases the company’s existing position in the Lower Magdalena Valley basin where it is the leading independent producer of conventional natural gas, and also establishes a new core area in the Middle Magdalena Valley basin. The new contracts increase Canacol’s acreage by 29% to 1.4m net acres. The company expects exploration activity on these new blocks to begin in 2020, with a view to carrying out drilling in 2021 and 2022.
Canacol has been awarded conventional exploration contract VIM-33 in the Lower Magdalena Valley together with VMM-45 and VMM-49 in the Middle Magdalena Valley. Each of the three blocks requires different work commitments that must be carried out within the three-year Phase 1 of the contract. VIM-33 covers 155,310 acres and requires the acquisition of 62km2 of 3D seismic and one exploration well in Phase 1. In VMM-45, covering 12,422 acres, the company has committed to carrying out geological studies and drilling one exploration well. The largest commitment is in VMM-49 (148,244 acres), where the company must acquire 200km2 of 3D seismic and drill three exploration wells. Canacol has the option to extend the exploratory work programme by a further three years (Phase 2) on each of the exploration contracts.
The extension of its position into the Middle Magdalena Valley will allow Canacol to continue its strategy of successful conventional gas exploration to replace declining production from the mature fields of the Llanos Basin.