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Energy Summary for April 29, 2016

2016-04-29 20:23 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for June delivery lost 11 cents to $45.92 on the New York Merc, while Brent for June lost one cent to $48.13 (all figures in this para U.S.). Western Canadian Select traded at a discount of $13.40 to WTI ($32.52), down from a discount of $13.30. Natural gas for June added 10 cents to $2.178. The TSX energy index added a fraction to close at 187.14.

Colombia-focused Canacol Energy Ltd. (CNE) added 16 cents to $4.03 on two million shares, closing above $4 for the first time since February, 2015, after slightly boosting its 2016 capital program and adding more details about what the program will entail. The company had previously said it would spend $52-million (U.S.) this year, mainly targeting its gas opportunities in Colombia. Gas once made up less than one-quarter of Canacol's production: less than 16 million cubic feet a day (or about 2,600 barrels of oil equivalent a day) out of total production of 10,900 barrels of oil equivalent a day in the quarter ended March 31, 2014. That was the year that Canacol began announcing big plans for gas. These plans, after a few delays, finally came to fruition last week, when Canacol announced that it had achieved gas production of 90 million cubic feet a day as of April 21. Full-year average gas production is thus expected to be 75 million cubic feet a day. That is nearly 80 per cent of this year's total forecast production of 16,500 barrels of oil equivalent a day, according to the guidance that Canacol released last night. Last night's update also showed a budget boost to $58-million (U.S.) from $52-million (U.S.). Canacol's prior releases about the $52-million (U.S.) budget had not detailed how the money would be spent, but in an interview earlier this month with a local news outlet (El Tiempo), president and chief executive officer Charle Gamba said the program would include three gas wells and one contractually committed oil well. One of the gas wells, Oboe-1, has already been drilled and is now awaiting a reserve report. The other two gas wells, as Canacol announced last night, are Nispero-1, which will be drilled next quarter, and Nelson-6, which will be drilled in the fourth quarter. The company is hoping that the wells will demonstrate enough reserves to sign new sales contracts, beginning in 2018, for another 100 million cubic feet a day of gas production. It already seems very confident that they will. Last month, it said it had started planning a new pipeline project to increase its gas production by 100 million cubic feet a day in 2018. It has yet to award the pipeline contract to anyone, but in a research note last week, Scotia Capital analyst Gavin Wylie predicted an award announcement "in the coming month or so."

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