Get the Latest Investment Ideas Delivered Straight to Your Inbox. Subscribe


Positive Nat Gas Well Test Good Sign For Surrounding Area
Research Report

View Important Disclosures for this Article
Share on Stocktwits


The success of this one well in Colombia has the Canadian operator testing additional nearby locations that may boost production, noted a Research Capital Corp. report.

Canacol Energy Ltd. (CNE:TSX; CNNEF:OTCQX) successful recent testing of the Lulo 1 well suggests this exploration play in Colombia's Cienaga de Oro sandstone reservoir "could quickly build production capacity" close to the company's Jobo gas processing facilities, reported Research Capital Corp. analyst Bill Newman in a May 24 update note.

"The Lulo discovery has the potential to add significant reserves and production capacity within Canacol's main producing area in the Lower Magdalena Valley basin," Newman wrote.

 Compelling Return on Investment

Newman also pointed out that the potential gain for investors in Canacol is significant. The difference between the Canadian natural gas company's current share price of CA$11.19 and Research Capital's target price on Canacol of CA$32.50 implies a possible 190% return.

Canacol is a Buy.

Possible Production Increases

Newman discussed the latest events surrounding the Lulo natural gas discovery.

Canacol tested Lulo 1 over seven days at various rates, up to 22,200,000 cubic feet per day (22.2 MMcf/d), the average being 17 MMcf/d. Tubing head pressure was 2,042 pounds per square inch.

Today, Lulo 1 is producing at a controlled rate of 17 MMcf/d.

As for the Lulo 2 appraisal well, relayed Newman, Canacol spud it on May 17 and is now drilling it. The company expects it to be producing by the end of May.

If Lulo 2 is successful, combined production from it and Lulo 1 would be in the 30–40 MMcf/d range.

"This is significant when compared to the estimated corporate production capacity before the Lulo discovery of about 240 MMcf/d," Newman highlighted.

New Prospective Area

The Lulo discovery led to Canacol exploring another prospective area, close to its main production location, in the middle to lower Cienaga de Oro, Newman wrote. In this 5 square kilometer expanse, Canacol identified five projects to pursue, one of which is Piña Norte, about 300 meters from the company's Jobo facilities.

Canacol intends to spud the Piña Norte exploration well next month, June 2023, and release its first results in July.

If Pina Norte is successful, plans call for next spudding the Cereza 1 exploration well, which is further out from Jobo, about 1 kilometer away.

Want to be the first to know about interesting Oil & Gas - Exploration & Production investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter. Subscribe

Important Disclosures:

  1. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
  2. 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.

For additional disclosures, please click here.

Disclosures for Research Capital Corp., Canacol Energy Ltd., May 24, 2023

Analyst Certification I, Bill Newman, CFA, certify the views expressed in this report were formed by my review of relevant company data and industry investigation, and accurately reflect my opinion about the investment merits of the securities mentioned in the report. I also certify that my compensation is not related to specific recommendations or views expressed in this report. Research Capital Corporation publishes research and investment recommendations for the use of its clients. Information regarding our categories of recommendations, quarterly summaries of the percentage of our recommendations which fall into each category and our policies regarding the release of our research reports is available at or may be requested by contacting the analyst. Each analyst of Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.

Relevant Disclosures Applicable to Companies Under Coverage Relevant disclosures required under IIROC Rule 3400 applicable to companies under coverage discussed in this research report are available on our website at

General Disclosures The opinions, estimates and projections contained in all Research Reports published by Research Capital Corporation ("RCC") are those of RCC as of the date of publication and are subject to change without notice. RCC makes every effort to ensure that the contents have been compiled or derived from sources believed to be reliable and that contain information and opinions that are accurate and complete; RCC makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained therein and accepts no liability whatsoever for any loss arising from any use of or reliance on its Research Reports or its contents. Information may be available to RCC that is not contained therein. Research Reports disseminated by RCC are not a solicitation to buy or sell. All securities not available in all jurisdictions.

Potential Conflicts of Interest All Research Capital Corporation ("RCC") Analysts are compensated based in part on the overall revenues of RCC, a portion of which are generated by investment banking activities. RCC may have had, or seek to have, an investment banking relationship with companies mentioned in this report. RCC and/or its officers, directors and employees may from time to time acquire, hold or sell securities mentioned in our Research Reports as principal or agent. RCC makes every effort possible to avoid conflicts of interest, however readers should assume that a conflict might exist, and therefore not rely solely on this report when evaluating whether or not to buy or sell the securities of subject companies.

RC USA INC. Information about Research Capital Corporation’s Rating System, the distribution of our research to clients and the percentage of recommendations which are in each of our rating categories is available on our website at The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness is not guaranteed, nor in providing it does Research Capital Corporation assume any responsibility or liability. Research Capital Corporation, its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein. Contents of this report cannot be reproduced in whole or in part without the express permission of Research Capital Corporation. US Institutional Clients – Research Capital USA Inc., a wholly owned subsidiary of Research Capital Corporation, accepts responsibility for the contents of this report subject to the terms and limitations set out above. US firms or institutions receiving this report should effect transactions in securities discussed in the report through Research Capital USA Inc., a Broker – Dealer registered with the Financial Industry Regulatory Authority (FINRA).

Want to read more about Oil & Gas - Exploration & Production investment ideas?
Get Our Streetwise Reports Newsletter Free and be the first to know!

A valid email address is required to subscribe