Colombia Focus: Petrominerales, Gran Tierra, C&C Energia and Parex Resources

Thursday, Sep 23 2010 by
17
Colombia Focus Petrominerales Gran Tierra CampC Energia and Parex Resources

A particular highlight of this year’s excellent London First Energy event were a set of ambitious TSX-listed companies looking to have a major impact on the face of Colombian oil exploration.

For those that haven’t been following it closely, Colombia has seen dramatically improved security in recent years after more than 40 years of armed conflict, thanks mainly to the efforts of former President Alvaro Uribe. This has improved the investment climate (the sovereign S&P rating is BB+) and, in addition, there has been a strong push to stimulate foreign investment in the country's energy sector. A new petroleum fiscal regime was implemented in 2004, enshrining the Agencia Nacional de Hidrocarbon (“ANH”) as the regulatory authority and introducing significantly reduced royalties. As a result, the former SOE Ecopetrol became publicly-held in 2004 and required to compete directly with foreign and domestic companies in exploration bid rounds.

Following these changes, the oil sector received $2.95 billion in foreign investment in 2009 — up from just $1.7 million in 2003. This year, foreign investment is anticipated to increase another 19% to $3.5 billion. Over the next six years, the government expects almost $40 billion to be invested in Colombia's energy sector, so there’s a lot of interesting development and activity afoot. [1]

Petrominerales

First up for the Tuesday morning session was Petrominerales, a sizable C$2.5 billion market cap Latin America-based exploration and production company, in which Petrobank Energy and Resources (TSX:PBG) has a majority stake. Canadian-listed (TSE:PMG), the company has 2.1 million exploration acres in Colombia (100% interest) and 9.4 million acres (5.2 million net) in Peru. The business has seen four consecutive years of over 100% production growth, now amounting to production of over 44,000 bopd in Q2 2010.

In Colombia, Petrominerales is producing oil with 17 exploration blocks in the Llanos and Putumayo Basins. Situated in East-Central Colombia, the Llanos Basin is one of the country’s most prospective areas and Petrominerales' current exploration focus is on the Deep and Central Llanos. At the heart of its operations is the Corcel Block, where it has drilled 13 wells, 12 of which were successful. The Guatiquia Block (contiguous with the southwest portion of the Corcel Block) is the site of the successful Candelilla-1 and Candelilla-2 wells. Candelilla-1 was drilled and put on production late in 2009. Candelilla-2 and 3 were drilled in early…

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Amerisur Resources plc is an independent full-cycle oil and gas company. The Company's principal activity is investing in oil and gas exploration and development in South America, principally in Paraguay and Colombia. It operates through oil exploration and development segment. It operates in Colombia, Paraguay and the United Kingdom. In Colombia, it is an operator and has interest in the Platanillo block, which includes the Platanillo field, an approximately 11,341-hectare block located in the Putumayo Basin. It has interests in block Put-12, which is adjacent to Platanillo. It also has interest in Put-30, an approximately 38,514-hectare block. In addition, the Company has an interest in the CPO-5 contract, located in the Llanos basin and a working interest in the Tacacho contract, located in the Caguan-Putumayo basin. In Paraguay, it owns over 5.2 million hectares covering approximately five oil and gas permits in the Paraguayan part of the Chaco and Parana Basins. more »

LSE Price
17.48p
Change
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Mkt Cap (£m)
212.5
P/E (fwd)
10.3
Yield (fwd)
n/a

Nautilus Marine Services PLC, formerly Global Energy Development PLC, focuses on offshore subsea sector in the Gulf of Mexico through investment, consolidation and technology opportunities. The Company focuses on acquiring three offshore subsea service vessels, and a barge vessel along with eight offshore subsea service vessels and subsea equipment. The Company focuses on providing subsea oil services through the use of the vessels. The Company owns subsea equipment, a barge vessel, dynamic-positioning (DP), four-point dive support, and utility vessels located near the Gulf of Mexico. The Company holds two contract areas in the Middle Magdalena region of Colombia: the Bolivar Association Contract and the Bocachico Association Contract. In addition, the Company focuses on providing various services, including platform and pipeline inspections, underwater welding and burning and other underwater oil support services. more »

LSE Price
0.75p
Change
-6.3%
Mkt Cap (£m)
0.4
P/E (fwd)
n/a
Yield (fwd)
n/a



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25 Comments on this Article show/hide all

mallwood 25th Sep '10 6 of 25
2

I'd argue that anyone interested in Petrominerales would likely do better checking out the parent company, Petrobank (TSX:PBG).

For a market cap of $3.9b you get:
$2.2bn Petrominerales shares (TSX:PBN)
$1.6bn Petrobakken shares (TSX:PMG)

= $3.8bn in listed shares (taken from the September presentation)

in addition to this, there is:
669mmbbls 2P and contingent heavy oil at May river PV10 value >$30 / share

Ownership of the Toe to Heel Air Injection (THAI) patents - lots of info about this on their website (www.petrobank.com). If claims can be realised (currently production-scale testing at May River property - 10,000bbpd modular design, planned to go up to 100,000 bbpd) then there is considerable worldwide licensing potential. Not quite sure what to value this at if it works, but has the potential to be a massive source of value - the company is already citing interest from multiple parties.

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muckshifter 26th Sep '10 7 of 25
2

Thanks Marben, I'm relieved to hear that!

Not quite correct on THAI mallwood , the current testing of the oil sands (bitumen sands really) is at Whitesands which has been on the operational for about four years now, but remains a test bed / experimental situation where they have ironed out various bugs and tested various potential systems intended to improve performance. As a result, the Whitesands production still does not figure in the company's output figures, the income is offset against the expense - ie, it is still treated as an experimental installation.

The May River project is the intended conversion to full scale, and scaleable, production, but it has been bogged down in Albertan bureaucracy for what seems like years and will probably not be up and running for another year. However, that delay does allow any lessons learned at Whitesands to be incorporated into May River. The other one which is up and running is Kerrobert, which is a heavy oil prospect, rather than oil sands. There are huge heavy oil reserves throughout the world to which this technique could be applied and, I suspect that Kerrobert in good old Saskatchewan will be seen to succeed (with the corresponding huge reserves increase as the oil recovery increase from 10%ish to 80% ish is recognised) way before the Albertan oil sands.
Regards.

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mallwood 26th Sep '10 8 of 25
2

Thanks muckshifter - I knew that they hadn't started actually producing anything yet and were still waiting for approval, I counted that as a stage of 'production testing', as while it is a preliminary stage, it shows they are ready to move on from lab scale/pilot plant testing. I acknowledge in retrospect that it could be easily misinterpreted that they could already be producing from that location which, as you highlighted, isn't the case.

Of course, as previously mentioned, the potential roll-out of THAI at Petrominerales' Llanos basin prospect may well give more data to prove up the process, but as they are still drilling explo wells for the next 2 years, it could be some time coming.

Also, in my brief sum-of-parts above (nicked from their latest presentation at http://www.petrobank.com/wp-content/uploads/2009/06/PBG-2010-09-CorpPres-WEB-VIEW.pdf), reserves at their Kerrobert and Dawson properties weren't included (the co. states 'internal estimates', but I guess that this isn't at a high enough standard for official classification and publication). They do say that they hope for 7,200 bopd from Kerrobert from a 12 well program, though. No production estimates were given for Dawson, but they state the possibility for a 25 well program after the initial 2 well pilot.

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muckshifter 26th Sep '10 9 of 25
2

Any reserves declared on their heavy oil projects presently have to be based on existing proven recovery techniques and their ability to produce oil economically using those methods (SAGD, huff & puff etc). The Canadians have strict criteria for what may be classified as reserves and who may carry out that classification. The company carrying out the reserves appraisals on both the oil sands projects and the heavy oil at Kerrobert are therefore currently basing those reserves on methods which we are not using.

It is the huge change in reserves which will occur when the reserves "engineers" recognise THAI that I'm waiting for. The last reserves report, IIRC, effectively said that this recognition would occur when PBG achieved steady state production exceeding 250BOPD from each well for a sustained period exceeding 3 months. In the case of Kerrobert, for example, I'm fairly sure that recovery using existing techniques is less than 20% of oil in place, compared to THAI with a claimed 70 - 80%, so you can see the sort of uplift this declaration would give to the reserves, and how much more attractive to potential JV partners it would become as presenting a costed THAI based recovery proposal would enable them, once accepted, to declare a substantial reserves increase.
Regards.

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muckshifter 27th Sep '10 10 of 25
1

Apologies by the way for going slightly off topic by posting essentially about Petrobank, even though it has relevance to Petrominerales (and perhaps in the future some of the other Colombian stories where heavy oil is concerned).
Regards.

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djpreston 27th Sep '10 11 of 25

In reply to post #48428

Not at all Muck. Thanks for the comments.

Please feel free to post away. PBG is very useful to have as a comparison based on underlying interests that it holds.

Besides, it was you who "discovered" PBG many many years ago - if only we'd bought then!!

Cheers

D

Fund Management: European Wealth
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Mattybuoy 28th Sep '10 12 of 25
1

One possible PBG lookalike is TAO.V (Tag Oil), who are looking to introduce fraccing and other advanced recovery techniques to New Zealand, thus far with success. They have a rather large Bakken like property which has an estimated 40bn of OOIP. The first well happens early next year.

BTW I don't think O/T really matters when you're talking about non-LSE stocks.

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djpreston 26th Oct '10 13 of 25
3

Just an interesting aside to show how some companies are just lucky.

Gran Tierra were planning (in Sept?) to sell their interest in the Garibay Block in the Llanos Basin. Solana (which was bought by GTE in 2008) had previously drilled a dry well there.

Unfortunately (or fortunately) some of the conditions relating to closing the sale were never completed so the sale fell through and GTW retained its 50% WI in the block.

Fast forward to yesterday and results from the Jilguero-1 well on the block. Finds net pay in different formations of 19ft, 15ft, 31ft and 46ft. Tests from three of the formations (not tested the second) and produces approx 5000 bopd of light crude, a stonking result compared to other typical wells.

Sometimes you are just lucky eh?



Fund Management: European Wealth
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Mattybuoy 27th Oct '10 14 of 25
1

Here is TAO, which I mentioned earlier.

I know, it's in New Zealand not Colombia. That's actually less risky though, or at least I think.

The company raised $60m today, without batting an eyelid (or issuing warrants). This is in order to accelerate exploration and development activities, including attempting to answer the question as to whether the 40bn barrels or so of OOIP in the East Coast basin shales will be recoverable via fraccing.

http://www.marketwirecanada.com/mw/release.do?id=1342254&k=tag%20oil

After this raising there will be 55m shares out fully diluted, so the market cap will be around $300m or so.

Disclaimer: I have both PBG and TAO. Core holdings.

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ManSiarad 6th Nov '10 15 of 25
1

Another Colombian player, albeit very small - Loon Energy (LNE.V) has announced a good result in Colombia:

 

http://www.stockhouse.com/News/CanadianReleasesDetail.aspx?n=7937317

CALGARY, ALBERTA, Nov 4, 2010 (Marketwire via COMTEX News Network) --

Loon Energy Corporation (TSX VENTURE:LNE) ("Loon") announces today a new exploratory success at its Visure-1X well, located in the Buganviles Block, Upper Magdalena Valley Basin, Colombia.

The Visure-1X well, drilled on the southwestern flank of the Visure Prospect near to the southeastern border of the Buganviles Block, was drilled to evaluate a structural trap, similar to the trap at the nearby Abanico Field to the northeast. The well had three main exploratory objectives: the Cretaceous Lower and Upper intervals of the Guadalupe Formation and the Tertiary Barzalosa Formation. The well was spud on October 16, 2010 and reached a final depth of 3,380 feet measured depth ("MD") or 2,205 feet true vertical depth subsea ("TVDSS") on November 1st, 2010. The well was drilled slightly deviated at an angle of 9 degrees and found the top of the Barzalosa Formation at 2,206 feet MD (1,040 feet TVDSS), the Upper Guadalupe at 2,995 feet MD (1,825 feet TVDSS), the Lower Guadalupe Interval at 3,079 feet MD (1,908 feet TVDSS), and the top of Villeta Formation at 3,272 feet MD (2,099 feet TVDSS).

The petrophysical evaluation of the well in the Barzalosa, Upper Guadalupe and Lower Guadalupe Formations indicated a total net pay of liquid hydrocarbons of 114 feet in the three intervals, ranging from 24.5 to 45.5 feet of net pay and 16% to 26% average porosity. In addition to the oil bearing sandstones, the well also showed gas saturated sandstones in the Barzalosa Formation. A summary of the petrophysical evaluation for each interval is presented below which was supplied to Loon by the operator of the Visure-1X well:

Up 20 per cent yesterday and has just about tripled since the announcement.

Website here:

http://www.loonenergy.com/

which explains the history of the company: it was originally part of a company of the same name which also held interests in Brunei and Syria, these interests being spun off into Kulczyk Energy, controlled by its major shareholder (and, allegedly, Poland's richest businessman, Mr.Kulcyzk), which is quoted on the Warsaw exchange.

A concession in Peru expires on 15th November, Loon having failed to find a farm-in partner and having decided to let it go. Thus they revert to being a purely Colombian play.

Another well on a different structure in the same Colombian block due to spud soon.

Pacific Rubiales Energy (t.pre) is the operator and they own 20%.  
Petrodorado (v.pdq) owns about 50% and is paying for the first 2 wells. 

Loon have historically had virtually no production - net O & G sales for the 3 months ending September 2009 being  $ 10,025, so this Visure 1X well looks like being pretty significant for them

Man Siarad

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ManSiarad 7th Nov '10 16 of 25
1

from Energy-pedia

Gran Tierra's Q3 results

http://www.energy-pedia.com/article.aspx?articleid=142846

This of Colombian relevance

Successfully drilled and tested the Moqueta-2 and Moqueta-3 delineation wells in the Moqueta oil discovery in Colombia; Initiated drilling location construction for the Moqueta-4 delineation well, and Pacayaco-1 and Taruka-1 exploration wells in Colombia;

 

and this is the Pacific Rubiales announcement on the Visure well - see post 15, above:

http://www.energy-pedia.com/article.aspx?articleid=142835

Man Siarad

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ManSiarad 10th Nov '10 17 of 25
1

and the Tuqueque-1 X well has now been spudded by Pacific Rubiales, (operator), Loon and others

http://www.energy-pedia.com/article.aspx?articleid=142895

TD is approximately 50 days from 4th November

 

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ManSiarad 18th Nov '10 18 of 25
1

an update from Alange Energy on work in their Topoyaco block.

http://www.energy-pedia.com/article.aspx?articleid=143016

The block is on trend with Gran Tierra's prolific fields to the southwest.

testing about to start

website here:

http://www.alangeenergy.com/

Welcome to Alange Energy Corp

Alange Energy is a Canadian-based oil and gas exploration and production company with working interests in 12 properties in Colombia and over 1.2 million acres of property. The Company is focused on increasing and optimizing production from its producing assets, while undertaking a comprehensive exploration program on its entire portfolio to identify targets and increase reserves. The Company plans to increase its net production from the current approximately 4,100 barrels of oil equivalent per day ("boe/d") to approximately 10,000 boe/d (before deduction of royalties) in Q2 of 2011.

That's a fairly healthy increase in net production over the next eight months, if they can achieve it.

Anyone know anything about this lot?

and an update from Gold Oil on their Colombian operations too.

http://www.energy-pedia.com/article.aspx?articleid=142987

 

Man Siarad

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adam 19th Nov '10 19 of 25
1

I held these briefly, I'm trying to recall why I sold them. I think it was to do with Capex and commitment wells and their plans for raising cash.

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ManSiarad 23rd Nov '10 20 of 25

Pacific Rubiales update

http://www.energy-pedia.com/article.aspx?articleid=143066

Pacific Rubiales Energy and Ecopetrol have announced the beginning of operations of the CPF-2 crude treatment facility at the Rubiales field, and of the CPF treatment facility at the Quifa field, allowing for a substantial increase in crude processing at these two fields. 

The start-up of operations at the Rubiales CPF-2 facility will result in an increase in crude treatment capacity of 70,000 barrels, allowing the field to reach a gross production of 170,000 barrels per day by the end of the year, and with enough flexibility to allow for further growth from the field in 2011. The opening of the new CPF plant at Quifa will allow for the processing of 30,000 barrels per day of crude oil. The Quifa facility is the first step in a development plan that calls for production of 60,000 barrels per day by year-end 2011. The production potential necessary to reach the targeted levels for the year 2010 has already been developed at the well head, and will start being progressively brought on line.

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ManSiarad 18th Dec '10 21 of 25
1

An update from Alange

 

http://www.energy-pedia.com/article.aspx?articleid=143450

Colombia: Alange Energy confirms heavy oil discovery at Topoyaco-2

 

16 Dec 2010

Photo - see caption

Alange Energy has confirmed a heavy oil discovery in the Topoyaco-2 exploration well, which tested net 310 barrels per day of 10.5 degrees API oil with 20% BS&W, completed with an electro-submersible pump (ESP). The Topoyaco-2 well was drilled to explore Prospect C, with prospective resources certified by Petrotech Engineering in its report dated effective April 30, 2010 of 19.26 MMbbl (best estimate). 

Photo - see caption

Luis E. Giusti, the Company's Chief Executive Officer, stated, 'The discovery of an unanticipated heavy oil reservoir at Topoyaco Prospect C, in what appears to be the Rumiyaco formation, has diverted us from the original targeting of Villeta and Caballos, which hold the best promise. It is a case of unexpected good news, delaying what we expect to be even better news in the near future.'

No opinion, no views, not held. Just for those following what seems to be developing gradually into a rather interesting set of plays in Colombia.

 

Man Siarad

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djpreston 5th Jan '11 22 of 25

Ho hum, another PMG well, another 10,000 bopd.......

http://www.marketwire.com/press-release/Petrominerales-Yatay-1-Exploration-Well-Produces-10440-Bopd-TSX-PMG-1375894.htm

Also updates re operations and production levels.

Production currently just under 35,000 bopd with Yatay to come. Problem now is bottlenecking and capacity to produce more.

Fund Management: European Wealth
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djpreston 5th Jan '11 23 of 25

Also worth remembering that PMG is now completely free floating following the closing of the scheme on 31 Dec whereby PBG's stockholders received pro-rata share in the PMG stake held by PBG.

Fund Management: European Wealth
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thegreatgeraldo 6th Jan '11 24 of 25
1

Another TSX company with a S American focus for the list.... Canecol (TSX:CNE) which has ops in Colombia, Guyana & Brazil. (all onshore). Currently drilling the Apoten K-2 explo/app well targeting net prospective recoverable resources of 83mmbbls

Published its 2011 CAPEX plans last week...

a US$ 106 million capital budget in 2011 for exploration and development activities in Colombia, Guyana, and Brazil. The budget includes the drilling of 39 gross wells (13 net wells), which include 6 exploration wells and 33 appraisal and development wells. The budget also includes the acquisition of 650 kilometers ("km") of 2D exploration seismic, the building of an early production facility at the Capella discovery, the continued expansion of its operated Rancho Hermoso production facilities, and funding of the Corporations share of the OBC pipeline project in Colombia. The budget consists of US$ 52 million to fulfill exploration work program and pipeline commitments in Colombia, Guyana, and Brazil, and US$ 54 million in discretionary spending dedicated primarily to development drilling and production programs in Colombia. The Corporation anticipates to average between 10,000 to 11,000 barrels of oil per day ("bopd") of net after royalty production in 2011, which excludes any production resulting from exploration success.

http://tmx.quotemedia.com/article.php?newsid=36982097&qm_symbol=CNE

Current m/cap C$709 mill

Disclosure.... no position

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schober 24th Aug '13 25 of 25

Anyone still follow this sector?

Parex looks a lot stronger today
mc 540m$
netback 58$ @ $100 oil
2012 cflow 240m$
self funding growth
year 2p bopd
2010 5.9 77
2011 10.7 5345
2012 16 11407
2013 23.7 15000

3p 36mmb

the 1000d performance chart is quite entertainig
http://stockcharts.com/freecharts/perf.php?PXT.TO,GTE.TO,CNE.TO
will cne rise to its former glory i wonder?

we wont mention PMG

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