An anonymous director reports

CANACOL ENERGY LTD. ADDRESSES CONCERNS REGARDING DEBT OBLIGATIONS AND LIQUIDITY

Canacol Energy Ltd. has provided comments regarding certain concerns of its debt obligations.

As announced on March 22, 2024, during the corporation's fourth quarter 2023 conference call, the corporation is in compliance with all of its debt covenants and there is no indication of any possible breach. As of Dec. 31, 2023, the corporation's consolidated leverage ratio was 2.85 times. The 2028 senior notes consolidated leverage ratio covenant is 3.25 times (incurrence based), and the revolving credit facility covenant is 3.5 times (maintenance based), as such the corporation is well inside those covenant restrictions.

Any speculation that the corporation may not be paying its next coupon is completely false, and Canacol reaffirms its commitment to meet all its future financial obligations.

Canacol's recently completed corporate restructuring will result in a significant reduction of current tax expense in 2024 and forward, providing enhanced liquidity which could be used for debt reduction, including potential repurchasing of senior notes should the pricing remain supressed.

The corporation is prioritizing cash liquidity and balance sheet preservation, and, as announced in a press release on March 21, 2024, the corporation has made the decision to discontinue the quarterly dividend. Discontinuing the dividend increases balance sheet flexibility and cash liquidity in the short term, and is in the best interest of all stakeholders. In addition, the corporation has access to additional sources of liquidity, if needed, such as the sale of non-core, non-gas assets.

As previously announced in Canacol's corporate guidance press release, given strong natural gas market dynamics in Colombia, the corporation expects to generate between $250-million to $290-million in EBITDA (earnings before interest, taxes, depreciation and amortization) during 2024, which is between 6 per cent and 22 per cent higher than 2023's EBITDA.

Gas scarcity in Colombia and limited options to import gas, as reported by multiple sources in recent months, are expected to continue for the foreseeable future, which is supportive of high natural gas prices and the corporation's ability to generate additional EBITDA.

The corporation will be prepaying its 2024 tax instalments as required by Colombian regulation in the first half of the year; however, cash requirements are expected to decline in the second half of 2024 and into 2025.

As per the corporation's audited reserves report as of Dec. 31, 2023, Canacol maintains a strong reserves base of 295 billion cubic feet on the proved category and 607 billion cubic feet on the proved plus probable category, with a reserve life index (RLI) of 4.8 and 9.9 years, respectively. Also, the corporation has 161 billion cubic feet of proved developed not producing (PDNP) reserves derived from proved developed producing (PDP) reserves technical revisions, as certain wells in Nelson, Clarinete and Alboka that were producing as of Dec. 31, 2022, were not producing and awaiting workovers to restart production at Dec. 31, 2023.

The corporation is preparing a press release concerning its most recent gas discovery, Pomelo 1, which shall be issued shortly.

About Canacol Energy Ltd.

Canacol is a natural gas exploration and production company with operations focused in Colombia. The corporation's common stock trades on the Toronto Stock Exchange, the OTCQX in the United States of America and the Colombia Stock Exchange under ticker symbol CNE, CNNEF and CNEC, respectively.

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