Canacol Intends to Complete Private Placement Equity Financing
Canacol intends to complete a non-brokered private placement of up to $1,500,000 in units ("Units") at a price of $0.17 per Unit (the "Offering"). Each Unit will consist of one common share of the Corporation and one-half common share purchase warrant ("Warrant"), with each whole Warrant entitling the holder to acquire one common share of the Corporation at a price of $0.30 for a period of 18 months from the closing date of the Offering. The Corporation may pay commissions or finder's fees of 8% in accordance with the TSX Venture Exchange policies. Management of the Corporation may increase the size of the Offering to $2,250,000 in Units.
The Corporation intends to use the proceeds from the Offering to fund a portion of its operated development drilling and workover program at the Rancho Hermoso and Entrerrios oil fields in Colombia, fund the drilling of a horizontal well at its non-operated Capella heavy oil field, and fund part of the acquisition of Groundstar Resource Corporation's working interest in the Takutu exploration contract located onshore Guyana. A portion of the funds will also be used for working capital and general operating expenses.
The Corporation plans to drill three development wells and work over three existing oil producers in the Entrerrios and Rancho Hermoso fields and expects to add an initial 3,150 gross bopd (1,050 net bopd) of net royalty interest production and an initial 4,000 gross barrels a day of new tariff production. These planned activities will increase the Corporation share of production from the current 1,800 bopd to greater than 6,000 bopd exiting 2009. The Corporation plans to spud the first development well, Rancho Hermoso 3A, in mid July.
At Capella, the operator Emerald Energy Plc., plans to drill the Capella 7 well, the first horizontal well in the field, in late Q3 or early Q4, which will test the deliverability of the upper Mirador reservoir sand. The remaining capital for both the operated and non-operated programs will come from the US$ 9,000,000 advanced by Gemini Oil and Gas Advisors, as announced in April, 2009, and from the proceeds of the CAN$ 6,000,000 private placement closed in May 2009.