Canacol Energy Ltd. said Sept. 21 that it upsized its 2016 capital plan by $34 million, leaving it at $92 million instead of $58 million to accelerate its natural gas opportunities in Colombia with three new gas wells.

Also, one new well will be drilled over the remainder of the year.

In August, Canacol raised $35 million from long-term strategic investors to accelerate gas drilling, including Cavengas Holdings SRL, which provided a follow-on investment. Cavengas is its largest shareholder, Canacol said.

Canacol expects 2016 to have near-record EBITDAX of about $135 million.

Canacol has fixed-price gas contracts to mitigate impact from oil volatility, and said that about 86% of 2016 corporate production is “insensitive to world oil prices.”

It’s general and administrative costs were reduced by 40% for 2016.

Canacol estimated that oil and gas sales before royalty will be between 16,000 barrels of oil equivalent per day (Mboe/d) and 17 Mboe/d for 2016. Third-quarter 2016’s oil and gas sales before royalty will be about 18,200 boe/d.

Over the past three years, Canacol made four gas discoveries and added 302 billion cubic feet (Bcf) of 2-P reserves on the Esperanza and VIM 5 blocks in Colombia’s Lower Magdalena Basin. Recently, a second rig was added to these blocks.

The expanded gas drilling program will target management's estimate of more than 100 Bcf of new potential recoverable resource in 2016 to secure new gas sales contracts, and increase the productive capacity of Canacol’s gas assets to more than 190 MMcf/d in anticipation of new sales contracts.

Canacol said a large inventory of prospects and leads target between 2.4 Tcf and 2.8 Tcf of unrisked mean estimate resource potential.

Wells

On the Esperanza contract, offset to the Nispero-1 gas discovery, the Trombon-1 well was spudded on Sept. 13 and should take about six weeks to drill and flow test. With Trombon-1, Canacol is targeting the same primary Cienaga de Oro (CDO) sandstones as the Nispero-1 well, which tested 28 MMcf/d of dry gas with no water and encountered 79 ft measured depth of net gas pay. Trombon-1 could hold 40 Bcf of potential recoverable resource.

Canacol plans to spud the Nelson-6 well in Esperanza in October. It could contain 31 Bcf of potential recoverable resource and the opportunity to book reserves against bypassed pay within the shallow Porquero Sandstone reservoirs in the Nelson gas field.

Also in Esperanza, Nelson-8 will be spudded in November and will target Nelson Field’s CDO reservoir sandstones.

In the VIM-5 contract, the Clarinete-3 well, which could provide the potential to reclassify reserves and 10 MMcf/d to 12 MMcf/d of productive capacity, will be spudded in Clarinete-3.

In the VMM-2 contract in the Middle Magdalena Basin, the Mono Capuchino-1 will be spudded in October. It could contain 9 MMbbl of potential recoverable resource.