Canacol Nears Liquidation as Colombia’s Top Gas Producer Runs Dry
Markets · Energy
—The cliff. Canacol says its cash lasts only until July 10, after which it cannot keep operating without a deal or fresh funding.
—The status. The company has been under court protection from creditors in Canada since November, with the current shield running to June 27.
—The sale. Four offers came in, but no buyer had been chosen as of mid-June, leaving liquidation as the backup plan.
—The stakes. Canacol supplies almost a third of the gas on Colombia’s Caribbean coast, so its fate reaches far beyond shareholders.
—The suitor. State oil company Ecopetrol has confirmed interest in buying the business.
—The verdict from bondholders. Its 2028 notes trade at around twenty cents on the dollar, a market bet on heavy losses.
A Canacol Energy liquidation has moved from worst-case scenario to live possibility, with Colombia’s largest private gas producer warning a court it will run out of cash within weeks.
A Canacol Energy liquidation moves into view
Canacol Energy, a Toronto-listed company whose entire business is gas production in Colombia, has told a court in Alberta that it is almost out of money. Its own filings say the cash on hand will not stretch past early July.
The chief financial officer and interim co-chief executive, Jason Bednar, set out the bind plainly. Without an immediate cash injection or a completed sale, he said, the company cannot keep running.
The court-appointed monitor, the accountancy firm KPMG, put the same point in starker terms. If the sale process collapses, the business faces a forced shutdown.
Liquidation is now the formal fallback. The company is drawing up a plan to sell off its assets piece by piece should no rescue arrive in time.
How the gas producer ran out of road
The trouble has been building for more than a year. Canadian producer Canacol entered creditor protection in November, using a Canadian process broadly similar to Chapter 11 in the United States, with parallel recognition by courts in New York and Colombia.
The roots lie in the gas itself. The company blames a natural depletion of reserves in its fields, rising fixed costs, and failed attempts to strike new gas at exploration wells.
A bondholder group threw it a lifeline late last year. They agreed to provide emergency financing of about $67 million, the kind of super-priority loan that ranks ahead of older debts and is meant to keep a distressed firm alive.
That money has not been enough. With around $500 million in bonds outstanding and production falling, the rescue financing only bought time rather than fixing the underlying gap.
Why a buyer has been hard to find
The sale itself has stumbled. An adviser ran a process that drew four offers, but the binding-bid stage was pushed back more than once and no winner had emerged by the middle of June.
One obstacle keeps surfacing. Canacol is locked into long-term contracts to ship gas through pipelines run by Promigas, paying a fixed monthly fee whether or not it uses the capacity.
As production has slumped, those fixed bills have become a millstone. The company is asking the court for permission to tear up the contracts early, precisely because would-be buyers see them as a deal-breaker.
The clock and the state’s role
The calendar is now driving events. Court protection from creditors is set to expire in late June, days before the company says its cash runs dry, so any rescue has to come together in a matter of weeks.
The most-watched name is Ecopetrol. Colombia’s state-controlled oil giant has signalled interest in acquiring the business, which would fold a struggling private supplier into the public sector at a moment of national gas shortage.
Such a deal would carry political weight. The Petro government has leaned on state firms to plug gaps in energy and infrastructure, and a Canacol purchase would extend that pattern into upstream gas.
For creditors, the choice is stark. A clean sale, even at a knock-down price, would likely return more than a piecemeal liquidation of fields, wells and contracts sold separately.
Why it matters for investors and Colombia
The story is bigger than one company’s balance sheet. Canacol supplies almost a third of the gas consumed on Colombia’s Caribbean coast, so a sudden shutdown would ripple through households, power plants and industry.
That strategic weight is also why a rescue is plausible. Ecopetrol, the state-controlled oil company, has confirmed it is interested in buying the business, and analysts see a sale as the cleanest path for creditors.
For bond investors, the market has already passed judgment. Canacol’s 2028 notes change hands at around twenty cents on the dollar, pricing in steep losses whatever the outcome.
The wider lesson is about Colombia’s gas squeeze. The country is already short of domestic gas, and the possible loss of a major supplier sharpens a supply problem that the next government will inherit.
Frequently Asked Questions
Why is a Canacol Energy liquidation possible?
The company has told an Alberta court that its cash runs out around July 10. If no buyer is chosen and no extra emergency financing arrives, it has said it will not have the liquidity to keep operating, leaving liquidation as the fallback.
What does Canacol do, and why does it matter?
Canacol is Colombia’s largest private natural gas producer, supplying almost a third of the gas on the Caribbean coast. A shutdown would hit households, power generation and industry across the region.
Could someone still rescue the company?
Possibly. Four offers were submitted in a sale process, and the state oil company Ecopetrol has confirmed interest.
A sticking point has been long-term pipeline contracts that the company is now seeking court permission to cancel.
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