Case Number: CV-2301-16781

Court: Court of King's Bench of Alberta

Ticker Symbol: CNE (TSX)

CUSIP: 134808302

This securities class action seeks to protect investors that purchased Canacol Energy Ltd.’s (“Canacol“) securities between March 27, 2023 and October 19, 2023 (the “Class Period“).

Canacol is a natural gas exploration and production company incorporated pursuant to the laws of Alberta with its headquarters in Calgary, Alberta and with operations focused in Colombia and other locations in South America. 

Cancol is a reporting issuer for the purposes of Alberta securities laws and subject to the continuous disclosure requirements of the ASA. The Corporation’s shares are traded on the Toronto Stock Exchange under the symbol CNE and several foreign stock exchanges. 

On August 30, 2021, Canacol announced that the Medellin Project contract (being negotiated for over 1-year) with the government of central Columbia, EPM, was signed.  Under the terms of the contract, Canacol would deliver natural gas to EPM in Medellin starting on December 1, 2024, with an initial minimum volume of approximately 21 million standard cubic feet per day (“MMscfpd”) escalating to approximately 54 MMscfpd on December 1, 2025, and remaining at this level until the sales contract expired on November 30, 2035.

Market participants viewed this as a positive material fact, which was followed by a positive market impact and an increased share price and corresponding bullish equity research reports published from Canadian banks, such as Eight Capital and Scotiabank. 

On October 24, 2022, Canacol announced that it had executed an agreement with SETCO to construct a 289 km long, 22 inch diameter, gas pipeline from its Jobo gas processing facility (“Jobo Station”) south to the city of Medellin, Colombia.Thereafter, and as recently as September 2023, Canacol only reported additional bullish material facts about the Medellin Project. Canacol never reported or published any negative material facts about the Medellin Project, its relationship with EPM, its relationship with SETCO, being investigated by the SIC for conduct that may have breached competition laws that could delay the Medellin Project (or cancelling the Medellin contract with EPM), the or the negotiations and process of the required environmental license from Columbia.  

However, on October 19, 2023, Canacol published a news release reporting that it was cancelling its contract with EPM and disclosed that:  (a) Canacol still had not received the necessary environmental license, which it had expected to receive by July 2023; and (b) Canacol observed “a pattern of ever increasing legal, social, and security obstacles that have arisen in the past months.”

The negative market impact of this Public Corrective Disclosure  caused the price of Canacol’s shares to diminish from $10.23 down to $6.75, or a drop of 34%, erasing over $118 million in market capitalization. 

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