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Assets Sale 'Creates a Financially Stronger, More Focused' Oil/Gas E&P

Source: Streetwise Reports

 

June 8, 2018 (Investorideas.com Newswire) An Eight Capital report reviewed the details of this company's divesting deal.


A June 5 research note indicated that Canacol Energy Ltd. (CNE:TSX; CNNEF:OTCQX) agreed to sell its conventional oil assets for CA$40 million (CA$40M). By doing so, it lowers its future development capital cost burden by CA$45M and also relieves itself of CA$25.6M of associated exploration commitments. "Overall, we believe that Canacol will be a financially stronger and more focused company after completing the sale," noted Ian Macqueen, Eight Capital analyst.

The deal terms are, for one, Arrow Exploration will acquire the outstanding shares of Carrao Energy, a Canacol-owned subsidiary, for CA$20M in cash and CA$20M of Arrow common shares. Carrao assets are the LLA 23 block, the Oso Pardo field on the Santa Isabel block, the Mono Araña field on the VMM-2 block, the Capella field on the Ombu block and other minor, nonoperated blocks.

Additionally, Arrow will acquire a 50% interest in an undeveloped block in Colombia's Llanos basin from Samaria Exploration and Production for a consideration of US$10M in Arrow shares.

The closing date of both transactions is in mid-July, on which Canacol will distribute CA$20M of Arrow stock to shareholders and put $20M of cash into the treasury.

Eight Capital has a Buy rating and a CA$7.25 per share target price on Canacol, whose stock is trading at around CA$4.20 per share. "As the company gets closer to its goal of ramping production to 230 million cubic feet per day, we expect its share price to rerate."

Disclosure:

1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.

3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

Disclosures from Eight Capital, Canacol Energy Ltd., June 5, 2018

Conflicts of Interest: Eight Capital has written procedures designed to identify and manage potential conflicts of interest that arise in connection with its research and other businesses. The compensation of each Research Analyst/Associate involved in the preparation of this research report is based competitively upon several criteria, including performance assessment criteria, the quality of research and the value of the services they provide to clients of Eight Capital. The Research Analyst compensation pool includes revenues from several sources, including sales, trading and investment banking. Research analysts and associates do not receive compensation based upon revenues from specific investment banking transactions.

Eight Capital generally restricts any research analyst/associate and any member of his or her household from executing trades in the securities of a company that such research analyst covers, with limited exception.

Research Analyst Certification

Each Research Analyst and/or Associate who is involved in the preparation of this research report hereby certifies that:

  • the views and recommendations expressed herein accurately reflect his/her personal views about any and all of the securities or issuers that are the subject matter of this research report;
  • his/her compensation is not and will not be directly related to the specific recommendations or views expressed by the Research Analyst in this research report;
  • they have not affected a trade in a security of any class of the issuer whether directly or indirectly through derivatives within the 30-day period prior to the publication of this research report;
  • they have not distributed or discussed this Research Report to/with the issuer, investment banking at Eight Capital or any other third party except for the sole purpose of verifying factual information; and
  • they are unaware of any other potential conflicts of interest.

Click here for specific disclosures.


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