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Canacol Energy Ltd. ("Canacol" or the "Company") (TSX: CNE,OTC:CNNEQ), a leading natural gas exploration and production company operating in Colombia, today announced that the Court of King's Bench of Alberta issued a decision on June 24, 2026, granting Canacol permission to disclaim natural gas supply and transportation contracts as part of its ongoing restructuring under the Companies' Creditors Arrangement Act (CCAA).
The decision, rendered by the Honourable Justice Colin C.J. Feasby, represents a significant milestone in Canacol's restructuring process and reflects a careful and respectful consideration of Colombian interests throughout.
A copy of the Court's decision can be found on the case website of Canacol's court-appointed Monitor, KPMG Inc.: https://kpmg.com/ca/en/services/advisory/deal-advisory/creditorlinks/canacol-energy-ltd.html
Court Recognizes the Unique Characteristics of the Colombian Natural Gas Market
A central feature of the decision is the Court's detailed and thoughtful examination of the Colombian natural gas market. Justice Feasby devoted substantial attention to understanding the distinctive nature of that market, recognizing that it differs fundamentally from the North American natural gas market and that those differences required a tailored analytical approach.
Protection of Regulated Consumers and Vulnerable Populations
The decision contains robust protections for Colombian consumers in the regulated market, including residential households and small businesses. Canacol made clear to the Court that the disclaimer of offtake agreements would not affect pricing in the regulated market. The Court acknowledged Canacol's intention to protect consumers in the regulated market by requiring that the disclaimer orders be revised to mandate continuation of existing pricing for counterparties serving the regulated market.
Respect for Colombian Authorities on Colombian Law and Public Policy
The decision demonstrates clear respect for Colombian sovereignty and the role of Colombian institutions within the framework of the international restructuring regime. The Court explicitly recognized that both the United States Bankruptcy Court for the Southern District of New York and the Superintendency of Companies of Colombia have acknowledged the CCAA proceedings as the foreign main proceeding.
On questions of Colombian law, the Colombian constitution, and public policy, Justice Feasby was clear that such matters are properly addressed by Colombian judicial authorities. The Court stated that to the extent questions arise about judicial recognition and public policy in the jurisdiction where the disclaimer orders take effect, those questions should be dealt with in Colombia following the determination made in the Canadian main proceeding.
Restructuring Is Designed to Secure Long-Term Gas Supply for Colombia
The Court recognized that the restructuring is aimed at preserving and ultimately growing Canacol's natural gas production in Colombia, and that the failure to restructure would pose a far greater risk to Colombian gas supply.
As the Court noted in its decision, Canacol intends to continue selling and delivering natural gas to customers to the extent gas is available and can be sold and transported under viable arrangements. After the Court's decision, Canacol's ability to deliver natural gas depends on offtake agreement counterparties in the unregulated market, and transportation agreement counterparties, working with Canacol on restructured and viable go-forward arrangements.
Good Faith Negotiations
The Court stressed that a commercially negotiated outcome was preferable to a court order, but after weeks of unsuccessful efforts between Canacol and its counterparties, a disclaimer ruling was necessary. It also made several comments encouraging the parties to bargain new terms in good faith, recognizing that the old terms are unsustainable considering the Company's insolvency and declining gas production.
While Canacol will seek recognition of the disclaiming orders before the Superintendency of Companies of Colombia, it will continue to pursue a commercial solution with its counterparties.
Quote from the Chief Restructuring Officer
"This decision reflects the thoughtful and balanced approach of the Canadian Court in navigating a complex cross-border restructuring," said Peter Laurinaitis of Breakpoint Advisory Partners LLC, Canacol's Court-appointed Chief Restructuring Officer. "We are encouraged that the Court recognized Canacol's considered approach to preserving its business and operations while protecting regulated consumers in Colombia. Canacol remains fully committed to working constructively with its Colombian counterparties, regulators, and stakeholders as we move forward with the restructuring process."
About Canacol Energy Ltd.
Canacol Energy Ltd. is a natural gas exploration and production company conducting its operational activities in Colombia.
This press release contains certain forward-looking statements within the meaning of applicable securities law. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "target", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur, including without limitation statements relating to statements regarding the CCAA Proceedings, the Company's strategic and operational objectives and providing stakeholder value. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Company cannot assure that actual results will be consistent with these forward-looking statements. They are made as of the date hereof and are subject to change and the Corporation assumes no obligation to revise or update them to reflect new circumstances, except as required by law.
For more information please contact: Investor Relations: South America: +571.621.1747 IR-SA@canacolenergy.com Global: +1.403.561.1648 IR-GLOBAL@canacolenergy.com http://www.canacolenergy.com
