Canadian oil company Canacol Energy announced that it has closed the sale of its conventional oil assets in Colombia to Arrow Exploration Ltd for US $40 million, to focus on exploration and production of natural gas.
The sale includes six oil producing fields with a net production of 1,375 barrels of crude oil per day and about 8.6 million barrels of proven and probable reserves after royalties, in addition to five exploration and production contracts, which have current commitments in exploration and transportation of UD $66 million over the next three years.
In addition to the payment, if within the five years following the closing of the transaction the proved and probable reserves associated with the properties sold increase to at least 18 million barrels of oil equivalent, subject to certain adjustments, Arrow will pay Canacol US $5 million more.
Arrow Exploration Ltd., incorporated under the laws of Alberta, is a junior oil and gas exploration and development company with operations in Colombia.
“This sale essentially completes our transformation to the main exploration and production company focused on natural gas in Colombia and allows us to focus our capital and our talent on the development of our material gas business and high potential,” said Charle Gamba, President of Canacol, quoted in a statement.
With the sale, Canacol avoids expenses of some 66 million in exploration and transportation commitments that would have been required in the next three years and achieves a 20% reduction in its general and administrative expenses.
Canacol currently produces 120 million cubic feet per day of natural gas in Colombia, which it expects to increase to 220 million cubic feet per day by 2019.