Canacol Energy secures CCAA protection amid liquidity crisis and impending debt payments

Canacol Energy Ltd. and a group of related entities secured an Initial Order under the Companies’ Creditors Arrangement Act on November 18, 2025 from the Alberta Court of King’s Bench, initiating a cross-border restructuring process intended to preserve operations and prevent cascading defaults across their capital structure. The 10-day stay provides immediate protection while the group prepares a broader restructuring strategy centered on stabilizing Colombian production assets and evaluating strategic alternatives.

The Canacol group operates an integrated natural gas exploration, development, and production platform in northern Colombia, supported by 13 onshore properties and a portfolio of long-term, fixed-price offtake agreements. The corporate headquarters remains in Calgary, while nearly all field activity occurs in the Llanos and Magdalena regions. According to the Pre-Filing Report, these assets historically generated strong cash flow but now suffer from the natural depletion of reserves. Sales volumes declined materially through 2024 and 2025, and despite intensive drilling investment, the company was unable to confirm new commercially recoverable reservoirs. Revenue for the 12 months ended September 2025 fell by approximately $57 million, accompanied by a $42 million drop in income before finance charges.

The production downturn was compounded by heavy capital expenditures and substantial debt service payments that steadily eroded liquidity. By November 17, the group held approximately $17.2 million in cash, including $6.7 million restricted within the Promigas Trust. The liquidity picture further deteriorated with the issuance of an arbitral award of roughly $22 million in favour of VP Ingenergia. Although Canacol continues to assert offsetting claims exceeding $76 million, the immediate obligation heightened short-term cash pressure.

The most urgent constraint is a tight cluster of November maturities. The Pre-Filing Report identifies approximately $25.4 million in debt payments falling due before month end. These include a $6.7 million amortization payment to Macquarie Bank under its secured term facility, a $4.5 million interest payment on the fully-drawn $200 million revolving credit facility, and a $14.2 million semi-annual coupon payment on $495 million of outstanding senior notes. Without CCAA protection, Canacol lacked sufficient liquidity to meet these obligations, and any missed payment would have triggered cross-defaults across the group’s financing arrangements.

The restructuring strategy will be shaped around maintaining operational stability, continuing production, and preparing a sale and investment solicitation process or recapitalization. The group also intends to pursue Chapter 15 recognition in the United States and parallel recognition in Colombia, ensuring continuity across bank accounts, DACA-controlled funds, and cross-border debt arrangements.

Professionals involved at this stage include Gowling WLG as Canadian counsel to the Applicants, Nelson Mullins as United States counsel, and Duarte García for Colombian matters. KPMG serves as Monitor, supported by Bennett Jones. Pachulski Stang Ziehl & Jones assists the Monitor on foreign recognition. Major creditor constituencies are represented by Goodmans and Skadden (Macquarie), Blakes and Clifford Chance (Revolving Credit Facility lenders), Osler, Cassels, Davis Polk, and Houlihan Lokey (senior noteholder groups). Miller Thomson advises Canacol’s board, while Berger Montague appears for plaintiffs in the proposed class action.