Mr. Charle Gamba reports

CANACOL ENERGY LTD. REPORTS NET INCOME OF $86 MILLION FOR THE YEAR ENDED DECEMBER 31, 2023

Canacol Energy Ltd. has released its financial and operating results for the three months and year ended Dec. 31, 2023. Dollar amounts are expressed in U.S. dollars, with the exception of Canadian-dollar unit prices where indicated and otherwise noted.

Highlights for the three months and year ended Dec. 31, 2023:

• Adjusted EBITDAX (earnings before interest, income taxes, depreciation, amortization and exploration expense) increased 2 per cent and 11 per cent to $53.1-million and $236.8-million for the three months and year ended Dec. 31, 2023, respectively, compared with $52-million and $212.9-million for the same periods in 2022.
• Conventional natural gas and crude oil proven plus probable reserves and deemed volumes before tax, discounted at 10 per cent, increased 10 per cent to $2.1-billion at Dec. 31, 2023, compared with $1.9-billion at Dec. 31, 2022.
• Proven plus probable after-tax NPV-10 increased 34 per cent to $1.8-billion at Dec. 31, 2023, compared with $1.3-billion at Dec. 31, 2022. The significant increase in 2P after-tax NPV-10 value is primarily impacted by the corporation's restructuring in the fourth quarter of 2022, the results of which are first incorporated into this year's reserves report.
• The corporation's natural gas and liquefied natural gas operating netback increased 18 per cent and 12 per cent to $4.39 per thousand cubic feet and $4.11 per Mcf for the three months and year ended Dec. 31, 2023, respectively, compared with $3.73 per Mcf and $3.68 per Mcf for the same periods in 2022. The increase is mainly due to an increase in average sales prices, net of transportation expenses, offset by an increase in operating expenses and royalties.
• Total revenues, net of royalties and transportation expenses, for the three months and year ended Dec. 31, 2023, increased 17 per cent and 11 per cent to $79.7-million and $304.9-million, respectively, compared with $68-million and $274.2-million for the same periods in 2022, mainly due to higher average sales price, net of transportation expenses.
• Adjusted funds from operations increased to $31-million for the three months ended Dec. 31, 2023, compared with an outflow of $17-million for the same period in 2022. Adjusted funds from operations increased to $146.3-million for the year ended Dec. 31, 2023, compared with $94.6-million for the same period in 2022. The increase is mainly due to an increase in EBITDAX combined with a decrease in current income tax expense.
• Realized contractual natural gas sales volume decreased 6 per cent and 2 per cent to 164.8 million cubic feet per day and 178.3 MMcfpd for the three months and year ended Dec. 31, 2023, respectively, compared with 175.6 MMcfpd and 182.4 MMcfpd for the same periods in 2022. The decrease is due to the unusual and unexpected decrease in the corporation's production capacity.
• The corporation realized net income of $29.9-million and $86.2-million for the three months and year ended Dec. 31, 2023, respectively, compared with net income of $133.7-million and $147.3-million for the same periods in 2022.
• Net cash capital expenditures for the three months and year ended Dec. 31, 2023, were $72.2-million and $215.2-million, respectively, compared with $50.4-million and $166.3-million for the same periods in 2022.
• As at Dec. 31, 2023, the corporation had $39.4-million in cash and cash equivalents and $10-million in working capital deficit.

Dividend

The corporation has discontinued the quarterly dividend to strengthen its balance sheet.

Outlook

Charle Gamba, president and chief executive officer of Canacol, stated: "As we previously stated, the corporation's long-term plan is focused on: (i) maintaining and growing our reserve base and production from our core assets in the Lower Magdalena Valley basin, targeting the full use of existing transportation infrastructure; (ii) exploring high-impact exploration opportunities in the Middle Magdalena Valley basin; (iii) strategic entrance into the gas market in Bolivia; and (iv) continuing to develop and improve in the area of [environmental, social and governance]."

For 2024, the corporation is focused on the following objectives:

1. In line with maintaining and increasing Canacol's reserves and production in its core gas assets in the LMV, the corporation has planned comprehensive development and exploration programs. The corporation aims to optimize its production and increase reserves by drilling up to five development wells, installing new compression and processing facilities as required, and conducting workover operations of producing wells in the corporation's key gas fields. The corporation is expected to also drill four exploration wells, complete the acquisition of 85 square kilometres of 3-D seismic to add new reserves and production, and identify new drilling prospects. These development and exploration activities are planned to support Canacol's robust earnings before interest, taxes, depreciation and amortization generation and allow the corporation to capitalize on strong market dynamics in 2024. Toward this end, the corporation drilled the Clarinete-10 development well, which entered production in February, 2024, and has made a gas discovery at the Pomelo-1 exploration well, which encountered 96 feet of gas pay and is currently being tied into production.
2. The corporation will maintain a low cost of capital, cash liquidity and balance sheet flexibility to invest for the long term. In a year of expected, highly supportive gas market dynamics, the corporation is tactically prioritizing investments in the LMV and has therefore decided to postpone drilling of the Pola-1 exploration well located in the MMV to 2025.
3. Bolivia: The corporation will achieve the government's approval of a fourth exploration and production contract that covers an existing gas field reactivation, begin development operations with a view to adding reserves and production, and commence gas sales in 2025.
4. The corporation will continue with its commitment to its environmental, social and governance strategy.

This press release should be read in conjunction with the corporation's audited consolidated financial statements and related management's discussion and analysis. The corporation has filed its audited consolidated financial statements, related MD&A and annual information form as at and for the year ended Dec. 31, 2023, with Canadian securities regulatory authorities. These filings are available for review on SEDAR+.

Canacol is a natural gas exploration and production company with operations focused in Colombia. The corporation's shares are traded on the Toronto Stock Exchange under the symbol CNE, on the OTCQX in the United States under the symbol CNNEF and on the Bolsa de Valores de Colombia under the symbol CNEC.

We seek Safe Harbor.