C&C Energia Reports Record Fourth Quarter and Full-Year 2011 Operating and Financial Results and Increases Production 45% and Proved Reserves 52% Year-Over-Year

CALGARY, ALBERTA--(Marketwire - March 12, 2012) - C&C Energia Ltd. ("C&C Energia" or the "Corporation") (TSX:CZE.TO - News) is pleased to report its operating and financial results for the three and twelve months ended December 31, 2011 and provide its 2011 year-end reserves update.

The Corporation reported record results for the fourth quarter 2011 highlighted by a 64% increase in average daily production from the fourth quarter 2010 to 10,493 barrels of oil per day ("bopd"), a 52% year-over-year increase in proved reserves and replaced 255% of 2011 production. Average daily production for 2011 was 8,455 bopd, a 45% increase from 2010. Funds flow from operations for the fourth quarter and full-year are approximately $41.3 million and $129.0 million respectively, an increase of over 60% from the prior year. C&C has a strong balance sheet with a $75.4 million adjusted working capital surplus (including $94.2 million in cash) and no debt.

Current production is approximately 10,600 bopd.

C&C plans to file its annual audited financial statements and management's discussion and analysis as at and for the year ended December 31, 2011 and its annual information form for the year ended December 31, 2011 today, which will contain detailed information regarding the Corporation's reserves and future net revenue calculations. When filed, these documents will be available for review under C&C's profile on the SEDAR website (www.sedar.com).

FINANCIAL & OPERATIONAL HIGHLIGHTS                                          


(All references to $ are to United States dollars unless otherwise noted.)  

                                 Three months ended     Twelve months ended 

                                        December 31,            December 31,

(unaudited)                        2011        2010        2011        2010 




Operating                       (thousands of US$, except share, per share, 

                                              bbl, per bbl and bopd amounts)


Operating cash flow (1)          46,964      25,390     166,728      82,714 


Average crude oil volumes                                                   

 (before royalties)                                                         

  Production (bopd)              10,493       6,386       8,455       5,842 

  Sales (bopd)                    8,325       5,945       7,612       5,708 


Average reference price                                                     

  WTI ($ per bbl)                 94.02       83.79       94.97       79.01 


Operating netback ($ per                                                    

 bbl) (4)                                                                   

  Average realized price (4)     110.15       82.15      106.31       74.78 

  Royalties                      (14.02)     (11.21)     (12.91)     (10.39)

  Production expenses            (16.49)     (15.69)     (16.76)     (14.24)

  Transportation expenses        (15.44)      (6.03)     (14.19)      (8.55)


Operating netback                 64.20       49.22       62.45       41.60 




Oil revenues (net of                                                        

 royalties)                      73,634      38,797     259,515     134,159 

Funds flow from                                                             

 operations (2)                  41,303      25,133     129,001      79,944 

  Per share - basic ($)            0.65        0.46        2.13        1.60 

  Per share - diluted ($)          0.65        0.42        2.10        1.60 

Net income                      (11,828)      5,816      31,252      28,989 

  Per share - basic ($)           (0.19)       0.11        0.52        0.58 

  Per share - diluted ($)         (0.19)       0.11        0.51        0.58 


Capital expenditures (5)         41,774      14,744     151,454      73,138 

Total assets                    523,219     289,189     523,219     289,189 

Total long-term financial                                                   

 liabilities                     34,453      15,366      34,453      15,366 

Adjusted working capital                                                    

 surplus (3)                     75,392      82,295      75,392      82,295 


Common shares outstanding                                                   

  Basic                      63,842,503  54,297,503  63,842,503  54,297,503 

  Diluted                    69,360,005  59,475,005  69,360,005  59,475,005 

Weighted average common                                                     

 shares outstanding                                                         

  Basic                      63,842,503  54,297,503  60,469,065  49,869,054 

  Diluted                    63,967,328  55,054,911  61,457,592  50,058,245 





(1) Operating cash flow is oil revenues less royalties, operating expenses, 

    transportation expenses and administration expenses. Operating cash flow

    is not a measure recognized by GAAP (as defined herein). See "GAAP and  

    Non-GAAP Measures" (see below).                                         

(2) Funds flow from operations is cash flow from operating activities before

    changes in other non-cash items. Funds flow from operations is not a    

    measure recognized by GAAP. See "GAAP and Non-GAAP Measures".           

(3) Adjusted working capital surplus includes current assets less current   

    liabilities excluding risk management contracts (unrealized gains       

    (losses) on commodity swaps) and deferred taxes. Adjusted working       

    capital surplus is not a measure recognized by GAAP. See "GAAP and Non- 

    GAAP Measures".                                                         

(4) Excludes impact of risk management contracts (unrealized gains (losses) 

    on commodity swaps). See "GAAP and Non-GAAP Measures".                  

(5) Excludes net acquisition costs of $1.7 million and 97.0 million for the 

    three and twelve months ended December 31, 2011, (2010-nil).            


FINANCIAL HIGHLIGHTS                                                        

--  Increased average fourth quarter production to 10,493 bopd, an increase

    of 64% from the prior year and increased 2011 annual average production

    to 8,455 bopd, an increase of 45% over the prior year. 

--  Funds flow (after tax) from operations for the fourth quarter was $41.3

    million, an increase of 65% compared to the fourth quarter of 2010, and

    for the full-year 2011 was $129.0 million, an increase of 61% compared

    to 2010. 

--  2011 net income increased by 8% to $31.3 million. During the fourth

    quarter the Corporation had an $11.8 million loss as compared to net

    income of $5.8 million in 2010. The loss resulted primarily from a $21.2

    million unrealized loss on commodity hedges and deferred tax expense of

    $10.7 million related to accelerated deductions to reduce current taxes


--  Operating netbacks for 2011 were $62.45 per barrel. 

--  In 2011, the Corporation completed a major facilities construction

    project, costing approximately $40 million on the Cravoviejo block at

    the Carrizales Field. This facility will handle up to 120,000 barrels

    per day of total fluids, has 35,000 barrels of oil storage, a 6.4

    megawatt power plant, water disposal, and three new truck loading

    facilities. The completion and commissioning of the facilities is

    expected to result in approximately 10% operating costs savings. 


C&C Energia has received a report from its independent reserves evaluators, Lonquist & Co. LLC ("Lonquist"), effective as at December 31, 2011, evaluating the oil reserves of the Corporation's properties in Colombia. Lonquist's report did not include an evaluation of the Corporation's drilling prospects on exploration acreage. All reserve estimates stated herein are derived from Lonquist's evaluation.

The Corporation completed a successful 2011 drilling campaign delivering significant reserves additions, highlighted by the following:

--  During the fourth quarter 2011, the Corporation drilled three Zopilote

    successful appraisal wells and spud the Cachalote-1 exploration well on

    the Andaquies block. For full-year 2011, C&C drilled 20 gross wells

    (19.6 net) including seven exploration wells, four appraisal wells,

    seven development wells, one injector well and the spudding of the

    Cachalote-1 exploration well. This drilling program resulted in 12 (12

    net) oil wells, three (2.6 net, including the Cachalote-1 well) dry and

    abandoned wells, and four (four net) wells suspended and awaiting work-

    over or recompletions. 

--  On May 9, 2011 the Corporation closed the acquisition of certain

    producing and non-producing assets from Ramshorn Holdings Ltd. for $88.5

    (net) million. 

--  Total working interest proved oil reserves ("1P"), before royalties,

    increased 52% to 14.0 million barrels. 

--  Total working interest proved plus probable oil reserves ("2P"), before

    royalties, increased 26% to 18.4 million barrels. 

--  Production replacement of 255% on proved reserves. Production

    replacement is calculated as reserve additions divided by total year

    production in barrels. 

--  Based on 2011 capital investment in oil and gas exploration and

    development of $150.3 million finding and development costs ("F&D") for

    2011 were $26.86 per barrel for 1P reserves and $38.19 per barrel for 2P

    reserves, excluding future capital. F&D costs are calculated as

    exploration and development costs incurred during the year, divided by

    reserve additions for the year, net of revisions. 

--  Including $88.5 million in acquisitions, finding, development and

    acquisition costs ("FD&A") for 2011 were $30.38 per barrel for 1P and

    $34.88 per barrel for 2P reserves, excluding future capital. Acquisition

    costs relate to the $88.5 million expended for the Ramshorn Acquisition

    but excludes approximately $6.8 million related to the acquisition of a

    third party royalty interest, which did not impact reserves. 

--  F&D costs, including future development costs, were $30.53 per barrel

    for 1P and $35.42 per barrel for 2P reserves. F&D cost including future

    development cost, is calculated as exploration and development cost

    incurred in the year along with the change in estimated future

    development costs divided by the applicable reserve additions, net of


--  FD&A costs, including future development costs, were $32.99 per barrel

    for 1P and $33.29 per barrel for 2P reserves. FD&A cost including future

    development cost, is calculated as exploration, development and

    acquisition cost incurred in the year along with the change in estimated

    future development costs divided by the applicable reserve additions,

    net of revisions. 


C&C has 8 blocks (7 operated) in Colombia with a total of 648,309 acres (529,844 net acres). The Corporation's lands are located in the Llanos Basin (4 blocks), Middle Magdalena Valley (1 block), and Putumayo Basin (3 blocks).

During the fourth quarter of 2011, the Corporation invested $41.8 million (excluding $1.7 million in acquisition costs) and full year 2011 capital investment was $151.5 million (excluding $97.0 million in acquisition costs). Drilling and completion costs were $16.9 million for the fourth quarter 2011 and $96.4 million for full year 2011. In the fourth quarter the Corporation also invested approximately $22.8 million ($43.6 million for the year 2011) primarily in facilities and production equipment. Seismic programs accounted for $2.2 million for the full year, and the balance of expenditures of $2.1 million in the fourth quarter ($9.3 million for the full year) relates to capitalized general and administration expenses and general property.

Llanos Basin

All of the Company's current production in the Llanos Basin is on the Cravoviejo and Cachicamo blocks with the Cravoviejo block accounting for approximately 80% of the Corporation's current production. Of the 20 wells (19.6 net) drilled in 2011 all but one were in the Llanos basin with 15 in Cravoviejo, three in Cachicamo and one in the Pajaro Pinto block.

The largest exploration success in the Llanos in 2011 occurred on the west side of the Cravoviejo block with the discovery of the Zopilote field. The field was discovered in March of 2011 (the Zopilote-1 well) with oil pay in both the Carbonara (C-5 sandstone) and Gacheta Formations. During 2011, four appraisal wells were drilled in Zopilote and all the wells in this oil pool are now on production at current rates of approximately 3,600 bopd. C&C plans to drill at least two additional development wells in 2012.

In 2011, C&C also completed its central production facility on the Cravoviejo block located at the Carrizales Field. This facility has 35,000 barrels of oil storage capacity 120,000 barrels per day of total fluid handling capacity, and a 6.4 megawatt power plant. The completion and commissioning of the facilities is expected to result in approximately 10% operating costs savings.

The Corporation plans to drill 12 or 13 wells in the Llanos Basin in 2012. These are comprised of four wells at Cravoviejo, five or six wells at Cachicamo, two wells at Llanos 19 and one well at Pajaro Pinto. In early March, 2012 one of the planned wells at Cachicamo, IVF-2, reached total drilling depth and has now been plugged and abandoned.

Middle Magdalena Valley

On the Morpho block (50% working interest), the Corporation commenced an extended production test of the Morpho-1 well in February 2011. The Morpho-1 well was originally completed and fracture stimulated in late 2010 in four oil bearing low permeability sandstone reservoirs between 4,600 feet and 6,530 feet, within the Colorado Formation. The Morpho well produced 38 degrees API oil at stable rates between 65 and 70 bopd with less than 2% water cut until year end 2011, when the well was shut-in for an extended pressure build-up test. The pressure build-up test data indicated no pressure depletion and there was no production decline during the year. C&C recently has applied for commerciality of the Morpho discovery with the ANH and is currently reviewing future development options.

Putumayo Basin

In 2011, the Corporation completed a 220 kilometer 2D seismic program on the Andaquies block and, in December, 2011, it spudded the Cachalote-1 well on the east side of the block. The well was drilled to a total depth of 6,133 feet and subsequently completed in the Neme Formation in late January and early February, 2012. On a completion test the Neme sandstone reservoir produced minor amounts of heavy oil and high rates of fresh water, and the well was abandoned in early February of 2012. On February 22, 2012, C&C spudded the Tardigrado-1 well on a separate structure approximately 10 km north of Cachalote-1 and plans to evaluate this well sometime in late March, 2012.

In 2012, C&C plans to acquire approximately 120 km2 of 3D seismic on the Nasua prospect on the Coati block as well as spud, likely in the fourth quarter of this year, the Coati-1 well on the Coati prospect.

On the Putumayo 8 block, C&C plans to shoot 100 km2 of 3D seismic over the Aguti prospect in the second quarter of 2012.


The Corporation has approved a capital investment budget for 2012 of between $140 and $150 million. The Corporation expects to invest funds as follows: seismic, approximately $4 million to $6 million; drilling, completions and testing approximately $87 million to $92 million; field development and work-overs approximately $17 million; facilities and equipment approximately $27 million to $30 million; and $5 million for various other projects. Production for 2012 is expected to average between 10,000 and 10,500 bopd, a 20% increase over the 2011 annual average daily production.


The Corporation, through its subsidiary Grupo C&C Energia (Barbados) Ltd., is engaged in the exploration for and the development and production of oil resources in Colombia. Its strategy is to develop producing oil assets by appraising and developing existing discoveries and exploring in areas assessed by management to be of moderate risk. With a total of eight blocks (seven operated) and over 648,000 acres (530,000 net acres) in Colombia, the Corporation's management expects that C&C Energia has considerable upside for future production and reserve growth.


This press release contains forward-looking information within the meaning of applicable Canadian securities laws that involves known and unknown risks and uncertainties. Forward-looking information typically contains statements with words such as "anticipate", "estimate", "expect", "potential", "could", "will", "plans" or similar words suggesting future outcomes. The Corporation cautions readers and prospective investors in the Corporation's securities to not place undue reliance on forward-looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by C&C Energia.

Forward-looking information in this press release includes, but is not limited to, information concerning the expectations of the Corporation with respect to the expectations of the Corporation's future production growth, the Corporation's capital program for the remainder of 2012, plans for the completion of production facilities, the Corporation's drilling plans in each of its principal properties, plans for obtaining seismic data, management's estimates of the effect of the completion and commissioning of the new Carrizales facility on operating costs and the planned development of the OBC pipeline project. These forward-looking statements are subject to assumptions regarding the Corporation's operations and the operating environment in Colombia. In particular, estimates of 2012 production and the Corporation's expected drilling plans and capital expenses are based on the assumptions that the Corporation's plans will be completed without any undue difficulty, that costs will not rise significantly and that events will not cause disruptions in the delivery of the Corporation's oil production to market. The Corporation's capital program and drilling and seismic plans are subject to change if circumstances change or if management of the Corporation determines that other business plans are more appropriate.

Forward-looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated by C&C Energia including, but not limited to, general risks associated with the oil and gas industry (e.g. operational risks in exploration; inherent uncertainties in interpreting geological data; changes in plans with respect to exploration or capital expenditures; the uncertainty of estimates and projections in relation to costs and expenses and health, safety and environmental risks, potential risks arising from trucking and other delivery disruptions), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with the negotiating with the ANH or with other third parties in countries other than Canada and the risk associated with international activity. The forward-looking information included in this news release is expressly qualified in its entirety by this cautionary statement. The forward-looking information included herein is made as of the date hereof and C&C Energia assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances, except as required by law.


The Corporation's financial statements have been prepared in accordance with international financial reporting standards which are Canadian generally accepted accounting principles, or Canadian GAAP, as applied to its financial statements.

This report makes reference to the terms "funds flow from operations", "operating netbacks", "netbacks" and "adjusted working capital", which are not recognized measures under Canadian GAAP and do not have a standardized meaning prescribed by Canadian GAAP. Accordingly, the Corporation's use of these terms may not be comparable to similarly defined measures presented by other companies. Funds flow from operations includes all cash flows from operating activities before changes in non-cash working capital. Operating netback is determined by dividing oil sales revenues less royalties, production expenses and transportation expenses by sales volumes. Management considers operating netback important as it is a measure of profitability per barrel sold and reflects the quality of production. Netbacks are calculated by subtracting royalties, production expenses, transportation expenses, administrative expense, interest and taxes paid by the Corporation from crude oil revenue and dividing by sales volume. Adjusted working capital surplus includes current assets less current liabilities excluding risk management and future taxes and is used to evaluate the Corporation's financial leverage. Management uses these non-GAAP measurements for its own performance measures and to provide its shareholders and potential investors with a measurement of the Corporation's efficiency and its ability to fund a portion of its future growth expenditures. Reference is made to the Corporation's management's discussion and analysis for the year ended December 31, 2011, for a reconciliation of the non-GAAP measures above to the nearest comparable measure.