November 26, 2010 / 2:26 PM / 7 years ago

UPDATE 3-C&C Energia halts Colombia drilling on local protests

3 Min Read

* Company shuts drill, service rigs, sees cash flow losses

* Production halted since Nov 20, no date for restart

* Locals ease protests,; plan talks with company

* Stock down 2 percent (Adds CFO comments, background, updates share movement)

By Bhaswati Mukhopadhyay and Patrick Markey

TORONTO/BOGOTA, Nov 26 (Reuters) - Oil resources developer C&C Energia Ltd CZE.TO said on Friday it suspended production at two of its blocks in Colombia due to protests and road blockades, but talks have resumed to resolve the issue.

C&C Chief Financial Officer Kenneth Hillier told Reuters that the company was likely losing C$250,000 a day in cash flow due to the protests. But two of four blockades had been lifted and there was no risk the company would declare force majeure.

"We know that the negotiations between the various government agencies are ongoing and we are participating to the extent we can," he said. "There are additional meeting planned. We are encouraged by the fact that two of the four blockades have come down."

An official at a local mayor's office said local communities had lifted their protests and plan talks on Sunday with local authorities and company representatives. [ID:nN26115012]

Calgary-based C&C produces 7,000 barrels of oil per day from its Cravoviejo and Cachicamo blocks in Colombia, which is Latin America's No. 4 oil producer with October output of 797,000 bpd.

It said it had halted sales from Nov. 19 and shuttered production on Nov 20, when storage facilities filled up.

"Cost impact is negligible," Hillier said of the disruption. "At 7,000 barrels a day, you are probably losing C$250,000 a day in cash flow."

C&C NOT A DIRECT TARGET

C&C said the demonstrators were protesting against Colombia's new royalty regime and its impact on local revenues, and had not targeted C&C specifically. "We are impacted because they blockaded the road which we use," Hillier said.

C&C, which sells its oil in the open market, would not speculate about how long the disturbances would last.

Small protests against oil companies are common in Colombia, with local communities seeking jobs or compensation for damages they say oil operators cause to roadways and the environment.

A lot of Colombia's crude is still transported by truck from remote oilfields.

Shares of C&C, which has stakes in nine blocks in Colombia, were down 2 percent at C$10.24 on the Toronto Stock Exchange on Friday afternoon.

The company completed its initial public offering in May this year.

The protests were in Colombia's sweltering Los Llanos region, where investment has soared as violence from the country's long rebel war ebbed. (Reporting by Bhaswati Mukhopadhyay in Toronto and Patrick Markey in Bogota; editing by Pav Jordan and Janet Guttsman)

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