Canacol Energy Ltd

Good morning and welcome to Canacol’s First Quarter 2018 Conference Call. This is Carolina Orozco, Director of Investor Relations.

I’m joined with Mr. Charle Gamba, President and Chief Executive Officer; Mr.

Jason Bednar, Chief Financial Officer. Mr.

Gamba joins the call from Bogotá, Colombia and Mr. Bednar, joins the conference call from Calgary, Canada.

Before we begin, it is important to mention that the comments involved on this call by Canacol senior management can include projections of the corporation’s future performance. These projections neither constitute any commitment as to future results nor take into account risks and uncertainties that could materialize.

As a result, Canacol assumes no responsibility in the event that future results are different from the projections shared on this conference call. Please note that all financial figures on this call are denominated in U.S.

dollars. We will begin the presentation with our President and CEO Mr.

Charle Gamba covering operational highlights for the first quarter 2018. Mr.

Jason Bednar our CFO will discuss financial highlights and Mr. Gamba will close with his strategy and outlook for the remainder of the year, a Q&A session will follow Mr.

Gamba’s closing segment. I will now turn the call to Mr.

Charle Gamba, President and CEO of Canacol Energy.

Thanks, Caroline. And welcome to the Canacol’s First Quarter 2018 conference call.

The first quarter of 2018 was a very important milestone for Canacol, as it represents the first full-quarter where the corporation had access to newly completed gas, Sabanas gas flowline. And hence yet another step change in our natural gas sales levels, which saw gas sales increase by 25% from $85 million cubic feet per day for Q4 2017 to 106 million cubic feet per day for Q1 2018.

We continue to ramp up our gas sales. Current gas sales as of yesterday are 120 million standard cubic feet per day.

We continue to work diligently towards our next goal of 230 million standard cubic feet per day of gas sales by December 01, 2018 for which the corporation is fully funded to achieve. Additional achievements for the first quarter included the sale of our oil assets in Ecuador, two successful new gas wells and a successful notes offering.

Since our move into gas in December 2012, the corporation has added over 400 billion cubic feet of 2P reserves from our highly successful exploration programs. In fact, the corporation has achieved an industry leading 86% chance of exploration success, the highest of any operator in Columbia.

Canacol had a solid first quarter with average realized contractual natural gas sales before royalties of 160 million cubic feet of natural gas per day, representing a 25% increase from Q4 of 2017. This level marks the first quarterly average of triple digit natural gas production for Canacol and our shareholder.

The corporation had average oil production of 2,460 barrels per day, 88% of the corporations 21,115 barrels of oil equivalent in gas production during the first quarter of 2018 was produced from the Esperanza VIM-5 and VIM-21 natural gas blocks, located in the Lower Magdalena Basin of Colombia. As previously announced, forecast realized contractual gas and oil sales, which include contractual gas downtime for 2018, are anticipated to average between 21,700 and 24,300 barrels of oil equivalent per day, which include 114 and 129 million standard cubic feet of gas respectively, and approximately 1,700 barrels of oils per day of annualized oil production.

Upon a successful sale of the Colombian oil assets, this annualized oil production forecast would be revised accordingly. The upper range for gas production assumes that the Promigas S.A.

expansion occurs on December 01, 2018, as is currently planned, and that the Corporation sells additional natural gas into the interruptible market throughout 2018. This increase of 100 million cubic standard feet per day will represent a 75% year-over-year growth or approximately four times of that of our peer group average here in Columbia.

The base range assumes that the Promigas expansion will not be completed in December 2018, but as it currently stands Promigas is on track to complete their project on time. Based on the corporation's current portfolio of 2018 gas contracts, the average sales price net of transportation costs were applicable.

It is approximately $4.75/Mcf priced in the United States dollars. The Corporation has awarded a contract to build and install a new gas processing module at its Jobo gas facility to process an additional 130 million standard cubic feet per day of gas, which will raise the gas treating capability of the Jobo facility to 330 million standard cubic feet per day by October of 2018.

The Corporation will purchase and operate the new gas processing module with funds sourced from existing cash and cash flows including the release of funds from the prior credit facility’s debt service reserve account, which is no longer required under the new senior unsecured notes. The remainder of the drilling program includes three exploration wells and one development well.

The first of these three remaining exploration wells, Breva-1, was spud in late April 2018 and is currently being cased and completed as a new Porquero gas discovery. The Corporation will be releasing details of this important new discovery shortly.

The remaining exploration wells include the Borojo-1 well, which will spud in early June of 2018, followed immediately by the Canahuate-East well. The final development well in the 2018 drilling program is Canahuate-West, to be drilled following the Canahuate-East exploration well.

With respect to the drilling program during the first quarter of 2018, the corporation successfully drilled and completed the Pandereta-3 and Chirimia-1 appraisal wells as gas producers, with the Gaiteros-1 exploration well resulting in a dry hole. The Pandereta appraisal well located on our VIM-5 block encountered 103 feet of net gas pay within the main Cienago de Oro reservoir and tested at a client rate of 79 million standard cubic feet per day from four separate intervals, a very big well.

The Chirimia-1 well, the exploration well also looked great on our VIM-5 block, encountered 90 feet of gas pay within the main Cienago de Oro reservoir and it is currently being tied into production manifold on the Clarinete drilling platform, ahead of being placed on permanent production. As stated previously, we are currently in the process of disposing of our remaining conventional oil assets in Colombia, which we anticipate to complete by June 2018.

This transaction will complete the transformation of Canacol into a Colombia focused gas an exploration commercialization company with over two trillion cubic feet of unrisked prospective gas resource identified in 44 drill prospects and leads on operator 1.1 million net acres. To recap the first quarter of 2018 was a very important milestone for Canacol, as it represents the first full quarter where the corporation had access to the newly completed Sabanas flowline.

And hence yet another step change in our natural gas sales though from 85 million standard cubic feet per day in fourth quarter 2017 to 106 million standard cubic feet per day in the first quarter of 2018, a 25% increase in production. Current gas sales as I noted previously, as of yesterday are 120 million standard cubic feet per day.

I would now like to turn the call over to Mr. Jason Bednar, Chief Financial Officer of Canacol, to discuss some of the financial highlights associated with our first quarter 2018, when he is done I'll provide our strategic outlook.

Thanks, Charle. Thanks, everyone for joining.

Please bear with me and my voice as I too seem to have attracted a spring cold here. Financial highlights for the three months ended March 31, 2018 include realized contractual sales volumes increasing 17% to 21,115 boe per day for the three months ended March 31, 2018 compared to 18,043 boe per day for the same period in 2017.

The increase is primarily due to a 28% increase in realized contractual gas sales resulting from the completion of the Sabanas pipeline. The overall decrease in crude production volumes during the three months ended March 31, compared to the same period in 2017 is primarily due to the corporation selling its interest in the Ecuador IPC investments, which closed on February 15, 2018.

Total production in natural gas revenues for the three months ended March 31, increased 24% to 51.8 million compared to 41.6 million for the same period in 2017. Adjusted funds from operations increased 12% to $23.5 million for the three months ended March 31, 2018 compared to $20.9 million for the same period in 2017.

Adjusted funds from operations are inclusive of results from the Ecuador IPC. Adjusted funds from operations excluding Ecuador increased 35% to $21.5 million for the three months ended March 2018, compared to $15.9 million for the same period in 2017.

The Corporation recorded a net income of $8.3 million for the three months ended March 31, 2018 compared to a net loss of $7.9 million for the same period in 2017. The Corporation recorded a 5% sequential uptick in natural gas netbacks for the three months ended March 31, 2018, compared to the year ago period.

The natural gas business delivered strong 72% netback margins for the quarter. In total, the Corporation registered at $22.68 per boe corporate netback for the three months ended March 31, 2018.

Focusing specifically on our core natural gas business netback components, I'm pleased to report that our average gas sales price net of transportation was US$4.72 per Mcf, which is in line with our 2018 guidance of $4.75 per Mcf and higher than the $4.65 per Mcf reported in Q4 2017. Additionally, total natural gas production expenses for the first quarter were $0.40 in Mcf, less than the mid $0.40 level that I had provided guidance on previous calls.

And considerably less than the $0.54 in Mcf, we reported in Q4 of 2017. Due to, a, the increase in our natural gas production this quarter and b, Q4 of last year had some one-time expenses associated with the start-up of three new fields and the Sabanas flowline as I discussed on our last call.

As Charle stated earlier on the call, the Corporation achieved a key milestone during the first quarter of 2018. The quarter represented the first quarter in corporate history that Canacol delivered a triple-digit realized contractual gas sale of 106 million cubic feet of gas per day.

This marked the second straight quarter of solid gas sales growth. Q1 gas production was generally in line with internal company estimates as such you heard Charle reaffirmed our production guidance earlier.

I'm also pleased to report that our gas production yesterday for instance, was 120 million cubic feet a day. In addition, the company remains discipline with G&A expenses, the Corporation recorded a 24% reduction in G&A expenses per boe compared to that period a year ago.

And we expect that number to fall further as our production expenses – as our production base continues to increase. Next page, please.

Capital expenditures for the three months ended March 31, 2018 was $40.2 million, while adjusted capital expenditures inclusive amounts related to Ecuador was $42.6 million. Net capital expenditures and adjusted capital expenditures included non-cash costs of the second compression lease station of $13.9 million.

This finance lease will be paid out over 10 years but of course is set up as a capital expenditure and corresponding debt on the date of its commissioning which was during Q1. For the three months ended March 31, 2018, CapEx also included the drilling cost of three wells at VIM-5 being Pandereta-3, Chirimia-1 and Gaiteros-1.

The pre-drilling cost at VIM-21 for Breva-1 and at Esperanza for Borojo-1. It also included facility that Esperanza and VIM-5 and land seismic in communities at VIM-5 also.

At March 31, 2018, the Corporation had $61 million in cash and $13 million in restricted cash. The Corporation ended the quarter with a very healthy working capital surplus of $94.5 million.

During the three months ended March 31, 2018, the Corporation has sold its remaining shares of Interoil for proceeds of $1.9 million resulting in an overall realized cash gain of $3.8 million on the Corporation's original $3.2 million investment. The Corporation also received $30.4 million of a total of $36.4 million cash proceeds from the sale of its equity interest in the Ecuador IPC.

The remaining $6 million of cash proceeds have been classified as a long-term receivable as we will be received in June 2019. Subsequent to March 31, the Corporation completed an offering of senior unsecured notes for the principal amount of $320 million.

Canacol used the net proceeds to fully repay the outstanding amounts borrowed under its existing credit facility in the amount of $305 million plus accrued interest. By replacing the current credit facility of $305 million, the Corporation benefits from: one, replacing the current term loan that bears interest rate at a fluctuating three month LIBOR plus 5.5% which currently would total approximately 8%, as the three month LIBOR has been increasing materially during the last 14 months, down to a fixed coupon bond rate of 7.25%.

This of course provides both a reduction and certainty of debt expenses in an extremely volatile interest rate environment. Number two, at deferred quarterly $23.5 million amortization of the prior credit facility which was scheduled to begin in March 2019, for a bullet maturity in May 2025.

Number three, an administratively less burdensome note indenture that will not require collateral or quarterly certification of maintenance covenants as the bond has incurrence-based covenants. And lastly number four, no cash is required to be held in a debt service reserve account as was required under the prior credit facility, these amounts was scheduled to total approximately $25 million later in 2018 under the prior credit facility.

In summary, for the quarter ended March 31, 2018, it was the first quarter in corporate history of triple-digit realized contractual sales, which totaled 106 million cubic feet a day. The Corporation has a special asset base supporting 72% margins, our 2018 CapEx program will be well within cash flow and existing cash, yet we plan on doubling our exit production.

We remain highly disciplined with our capital base having reduced G&A year-over-year for the quarter ended Q1 2018. With our financial house in order having deferred all debt principal repayments to 2025 and a working capital surplus of approximately $95 million, we are well positioned to achieve our corporate objectives.

I'll hand it back to Charle now, at this point, pleased to close with strategy and outlook for the remainder of 2018. Thank you everyone.

Thanks Jason. Management’s objectives for the remainder of 2018 remain to sell an average of 114 to 129 standard cubic feet per day of gas and 1,700 barrels of oil per day.

To execute the necessary investments in drilling, facilities, and flowlines to ensure that the productive capacity of the Corporation is greater than 230 million standard cubic feet a day of gas by December 1, 2018. To execute a four well exploration and appraisal drilling program to increase reserves.

And finally to divest the Corporation’s non-core Colombian conventional oil assets in order to focus on the exploration and commercialization of our significant Colombian gas reserves and resource base. Highlights of the capital spending program aimed at ensuring that the Corporation achieves 230 million standard cubic feet per day of gas sales capability in December 2018 include the drilling of four exploration and appraisal wells and three development wells.

The expansion of the Corporation’s gas gathering and processing facilities at Jobo, various workovers of its existing gas wells. And the Corporation also expects to initiate the acquisition of new 3D seismic data on its VIM-5 contract in order to continue to build its gas exploration drilling portfolio.

Approximately 97% of the originally announced $80 million budget for 2018 is dedicated to spending on the Corporation’s gas assets, with the remainder on its oil assets, and will be fully funded from existing cash and cash flows. For 2019, the Corporation is targeting realized contractual gas volumes of 230 million standard cubic feet per day.

These volumes would represent the 75% year-over-year growth in gas sales versus the 122 million cubic feet of natural gas per day for the Corporation's planned 2018 average natural gas sales and we remain highly focused on achieving this goal this year. With that said, we are now ready to answer any questions that you might have.

Good morning and thank you for taking my question. And apologies if I missed anything but regarding this $30 million received from the private investors, regarding the Sabanas flowline.

And I couldn’t see it in the cash flow or balance sheet, am I missing something or was it received in after the quarter end?

Yes, thank you, Adam. It's Jason obviously.

So that pipeline was finished in Q4 of 2017, the bulk of the cash was received from our investment partner in Q4 of 2017, what was not received in Q4 of 2017 are sat in the small balance was in accounts receivable in Q4 and was simply transferred to, received in cash in Q1.

Okay, that’s clear. Thank you.

Hi, Charle. Congratulations for the good quarter.

I just have a question on your oil asset, you mentioned you won’t divest or spin-off the oil asset, do you have any timing of that spin-off – potential spin-off or divest anything – any light on that transaction?

Yes, Chen, thank you. As I mentioned, we are involved right now in the disposition of all of our conventional oil assets, we are retaining our non-conventional assets are operated by ConocoPhillips.

But the conventional oil assets that we are working right now on with a third-party who has made an offer. And we expect to close on the disposition in late June or early July.

So by that period of time, we expect to be rid of our conventional asset, the oil asset portfolio in Colombia.

Thank you. So you retain the non-conventional assets, my understanding last year, I haven't follow that very closely the major – when the major was fracking that what was the lighting now on the fracking?

Yes. As you may recall, we own a 20% interest in two non-conventional blocks, VMM 2 and VMM 3 operated by ConocoPhillips, who hold the other 80%.

We participated last year in a highly successful small fracking job in one of the wells we drilled on VMM 3 with extremely good results. And ConocoPhillips is currently in the process of obtaining an environmental permit from the ANLA in Columbia to execute a drilling program mid- to late-year 2019, which we’ll see the drilling of the first horizontal multi-stage massively hydraulically fractured well in the Laguna in Colombia.

So that’s a very exciting project. The numbers associated with the OOIP in La Luna shale, the non-conventional shale those two blocks are very large and hence our interest to retain our interest in those assets.

Thank you. That’s very encouraging.

Do you know when they will expect that horizontal wells result to come out, I mean…

Yes. The environmental permit was submitted in November of last year.

We submitted that along with ConocoPhillips. And this will be the very first environmental permits granted in Colombia which allows for the use of massive multi-stage hydraulic fracking.

We expect the permit to come out – it takes approximately a year to come out, all the early indications are very good. So with the permit out close to year end 2018, we expect that the operational aspect of drilling the horizontal 7,000 foot horizontal well will commence probably in Q3 of 2019.

So we anticipate results sometime in Q4 of 2019 assuming that the environmental permit comes out as anticipated in late 2019.

Thank you, Charle.

Good morning. I have a couple of questions, if I may.

The first was on sustaining CapEx beyond 2009 since. I just really wanted to get your view on how much CapEx needs to be deployed to 230 million scf a day.

And secondly on free cash flow, have you tried to mark it on privatization of using free cash flow once you get to that 230 million scf a day target?

Yes, I’ll let Jason discuss the sort of maintenance cash flow which was I believe your first question, and then I’ll step in with respect to potential uses of excess cash.

Yes, thank you. So with respect to sustaining cash flow, our models are roughly in the range of $60 million a year for maintenance capital.

That of course includes budgeted in the potential for dry holes which we typically don’t have, it includes tie in cost assuming some of these things are farther away; some of these new discoveries are farther away from the Jobo gas plant than we’ve typically drilled. The only thing that could increase that by any material amount would be the addition of new 3D seismic to the company’s portfolio.

As you’re aware, we’ve recently purchased an operating interest in the Northern block, the SSJN-7 block, and that has very little seismic; so at some stage we’ll clearly be looking to add to our 3D seismic base. But in the absence of that we can have maintenance capital as a small fraction of our realized cash flow.

Great. And do you have [indiscernible] Go ahead, Charle.

No, please go ahead. Please go ahead with the question.

I was just going to ask in relation to that; do you have any guidance on roughly how much the 3D would cost?

I’ll let Charle answer that.

Yes, the 3D will cost – we’re looking at a cost of approximately $10 million to $12 million, given the size of the three programs.

Okay, thanks.

Good morning, everyone, and congratulations on a good quarter. First on the Sabanas side, you’ve increased production there from 106 to 120.

Are you at capacity right now or is there still more to ramp up in Q2? And can you add more compression to add on top of that?

So just the pipeline on the Sabanas side first.

Yes, the Sabanas pipeline was designed to transport a minimum of $40 million standard cubic feet per day. So it’s fairly close to that at the moment.

We typically produced $30 million to $35 million down that pipeline in a given time. We have however conducted the test.

Each compressor station has two compressors; one is used on a daily basis, and the second compressor is for standby should the main compressor go down. So what we’ve done is we’ve done tests we’ve turned on all four compressors and so two compressors at each station, the regular compressor in the backup.

And with all four compressors turned on, we’ve been able to deliver flow through the Sabanas of $59 million cubic standard feet per day, so about 50% higher than the rated capacity of $40 million. So we’re looking to use that, that’s fair transportation capacity that might be to push up gas sales, daily gas sales volumes.

Would you need to put in one more backup compressor if you wanted to run that at a regular basis at those higher rates?

Yes. We wanted to run that great consistently.

We would need all four compressors on, but of course with their new Promigas expansion coming on in December of this year, there will be 100 million cubic feet per day of additional transportation between Jobo and Sincelejo. So we will have more than sufficient transportation capacity.

We’ll probably look at – when the new 100 design, and we have 230 million standard cubic feet per day of transportation capacity, we’ll have if you will swing $20 million available if we need – if we need to push up to $250 million and that additional $20 million would go through Sabanas with all four compressors lit up.

Okay. Now going to the expansion at Jobo with the Promigas, you’ve given a timeline with some room in that.

Is there delays in terms of receiving permits? Is it just – what are the relative issues that might delay the construction?

What it is right now in terms of widening timeline of when it’s going to be on functional and fully utilize it all?

Yes. The timeline remains December 1.

So Promigas is on schedule with that completion date. And there are sort of two things required to hit that date.

The first is that the remaining two out of three licenses are granted this month, the month of May. And that construction occurs on five separate fronts which is what Promigas is planning to do.

So any delay related with the issue of the licenses will have a direct impact on the level of the project. And any delay associated with weather with inclement weather, particularly high risk fall could potentially delay the construction of the projects.

So to mitigate that that second potential for delay, Promigas has planed to commence work on five separate fronts. Yes, there would be five separate construction fronts going simultaneously, but at the moment everything is on course.

Okay. And if something did occur with any of those licenses that would be imperial, so you would disclose if something unfortunate that happened there?

Yes, we would basically provide an update on that eventually certainly in the next quarterly conference call. We will provide a very detail updated status of Promigas pipeline.

Well, congratulations on a great quarter and I look forward to seeing this massive ramp up and of course cash flow generation for shareholders. You guys have done a great job in building this company and refocusing it.

And it looks like it’s coming together by early sometime next year. And I think the shareholders will be very well rewarded, so congratulations.

Many, thanks.

Thanks, Josef. I appreciate the comments.

Good morning, everyone. Thank you very much for the conference.

I have got three questions. First is, as you are now in the sale process of most of the oil conventional assets, I would like to know how much progress you’ve made from these transactions and whether or not you’re planning to sell an contractual rights in any of the exploration wells you currently process?

If so, which wells are they? Second question is what is the transport price Promigas will be charging Canacol for the use of the new gas pipeline?

And also if possible to know, and what applies legally in favor of the company in case of delay and longer than five months? And then finally, who did you actually considered to be your gas peers in Columbia?

Thank you very much.

Okay, thanks for the questions. With respect to the oil assets, again we’re currently in the process of disposing all of our conventional oil assets which would include our conventional oil production from the Llanos 23 block, from the VMM 2 block and from the Santa Clara block.

So with respect to your first question, all of the contractual rights to those blocks will be sold as well as the commitments associated with those blocks. All of our exploration blocks of course have remaining exploration commitments and those will also be transferred over to the buyer of these assets.

And as I mentioned a little earlier, we are currently in the process of selling these blocks to a third-party and we expect to close the transaction in late June or early July. So that process is moving along the well.

With respect to your second question on the transportation rate applied to the new pipeline, to the new Promigas expansion, these rates of course are regulated by the CREG. CREG is a regulator of gas and electricity in Colombia.

They regulate specifically gas transportation, not gas price, but we anticipate in this CREG, the transportation tariffs change on a yearly basis, but we anticipate that the transportation tariff from Jobo to Cartagena and Barranquilla associated with the new pipeline will be approximately $1.40 per MMbtu. With respect to any anticipated delays associated with the startup of the Promigas gas pipeline, as you know, there’s a ship-or-pay commitment that we have with Promigas, which obviously will not become – will come into effect given that pipeline if it’s not available on December 1, will not be physically capable of shipping anything of course.

And then our take-or-pay contracts with the off-takers have a five-month window within them, whereby there is no penalties on either side. So we have a fairly wide window, we can maneuver in with respect to a pipeline not starting on time.

However, I would remind you that Promigas’s motivation to complete the pipeline is very high. Promigas will obviously be receiving a fee for every molecule of gas that they transport down that pipeline.

So our interest those at Canacol, those at Promigas are completely aligned with respect to hit in the December 1, 2018 timeline. And finally with respect to gas peers in Columbia, we have none.

We have none and outside Columbia? Okay.

And what about outside of Columbia?

Gas peers outside of Columbia, I really can’t think of any of significance.

Okay. I’m just – curious, I’m just wondering here which companies are you then using as peers for your – at current analysis?

I can’t say that we – you know that we certainly have no peers in Colombia. The only other gas producers in Colombia would include Ecopetrol of course, which is not really a peer given that that the majority of their production is oil.

And then Frontera, and again, primarily an oil weighted peer, and then Equión, which is the joint venture between Repsol and Ecopetrol, which is a pure gas producer, but on a financial basis it’s zero growth base essentially. So we don’t ourselves compare our numbers to peers given the fact that we had variable sensitivity to oil price fluctuation and our gas sales contracts, 97% of our gas sales contracts are sold under long-term take-or-pay contracts in U.S.

dollars, so quite different than any of the other operators here in Colombia.

Okay, thanks. Now that you mentioned Ecopetrol, I also wanted to ask you if there’s any concern in regarding to the offshore – the development of offshore wells in the Caribbean coast by this company?

Yes, Anadarko over the past two years have announced the offshore discoveries for gas in the Caribbean Sea. These discoveries were made in 2,000 meters of water depths which makes them the deepest water gas discoveries in the world, and as such they probably – look, where they would probably represent the most expensive gas in the world to potentially develop.

So should Anadarko choose to try and commercialize those fields they would first require a bunch of appraisal drilling to assess the size of the discovery through our one well discoveries. And secondly, then have to build a commercialization program, which would probably take 5 years to 10 years to execute at a cost of several billions of dollars.

And so again, that the size of these gas discoveries is uncertain, they’re in ultra deepwater and their commercialization is likely unfeasible.

Okay, excellent. And last question is then same thing about the regasification plants.

What are your thoughts about it?

Yes, there is a proposal to construct the regas – a permanent land-based regasification terminal on the Pacific coast of Colombia. This proposal would see that plant being installed in 2024 or 2025 and this gas would be supplied primarily to the interior and Southwest of Colombia.

So the Pacific coast of Colombia, obviously is not connected to the Caribbean coast of Colombia by any pipeline. So any regasification terminal built on the Pacific coast would be for the internal market of Colombia, which we do not sell into.

Our market is exclusively the Caribbean coast of Columbia to which that regasification plant should the government decide to build it, would not be connected.

Okay, perfect. Thank you, Mr.

Gamba.

Hi, everyone, thanks for the call, and congratulations for the quarter. I just have one question.

Could you please tell us until when we are going to see oil production on your financial statements?

Yes, I can simply answer to that, I mean, so Ecuador obviously was disposed on February 15 that Ecuador is no longer on the financial statements so you will not see that in Q2 forward. And with respect to our oil assets, as Charle alluded to the notion that we believe we will have that done by the end of June so at which point in time our Colombian oil would largely disappear.

Okay, thanks.

Hi, guys, I have only one question and that is regarding the elections. We know there is leading votes for the right wing over the leftist, what I would like to know how do you guys see things moving forward with a potential candidate against the oil and gas industry in Columbia, and how management could work to mitigate these risks in the future?

Thanks.

Yes, thank you. As you know there is a Presidential Election coming up on May 27 of this month, the main candidates would be the Democratic candidate Iván Duque, who is currently enjoying a very healthy margin in all of the recent polls followed by the second candidate, Socialist candidate, Gustavo Petro who’s trailing behind Duque in the polls.

So obviously very different perspectives on foreign investments and production in Colombia. The Democratic candidate of course would like to keep foreign investment open and grow oil and gas production to generate export revenues and internal revenues from royalties and – so very positive candidate with respect to the oil and gas sector in particular as well as mining.

The Socialist candidate has a different idea, would like to focus primarily on stimulating the agricultural section – sector of Colombia and diminish the oil and gas industry in terms of overall contributors to the economy, so it’s like a change in focus away from oil and gas towards stimulating agriculture. So very different type of proposal obviously and certainly not good for the oil and gas industry in Colombia, however, I must say that the leading candidate in the poll by a very wide margin would be Iván Duque and it’s very likely that he will certainly win the Presidential Election if not in the first round which is May 27, if any candidate does not gain more – we see more than 50% of the votes on May 27, it automatically goes to a second round between the two top candidates from the election in late July.

So if Iván Duque does not win in the first round, he will certainly win in the second round. So that I think our look remains very stable with respect to the oil and gas industry in Colombia under Democratic candidate such as Iván Duque.

Thanks, thanks, thanks.

Thank you for participating in Canacol’s first quarter conference call. Please join us again in August for our second quarter conference call.

Thanks again and have a great day.