Category: Colombia

Colombia energy

Frontera To Commence Solicitation Related To 9.7% Senior Unsecured Notes

(Frontera Energy Corporation, 12.Nov.2018) — Frontera Energy Corporation intends to commence a consent solicitation to amend the indenture governing its outstanding 9.7% Senior Unsecured Notes due 2023.

The company is proposing to amend certain restrictions relating to “Limitations on Restricted Payments” in the Indenture to, among other changes, replace an existing basket permitting Restricted Payments (as such term is defined in the Indenture), of up to $40 million with a new basket permitting payments of up to $100 million per year, on a cumulative basis, subject to meeting certain financial ratio tests and add a new basket permitting Restricted Payments in respect of certain proceeds from the sale of Unrestricted Subsidiaries (as such term is defined in the Indenture), subject to meeting certain financial ratio tests. These proposed amendments would be in addition to other existing provisions in the Indenture permitting the Company to make additional Restricted Payments in various circumstances, including a provision related to its Consolidated Net Income (as such term is defined in the Indenture).

The company is seeking these amendments to give the company flexibility to use existing cash resources and expected future cash resources to implement measures expected to enhance shareholder value. These measures may include accelerating or increasing share buyback programs, dividend payments and Investments (as such term is defined in the Indenture). No decision has been made by the company to make any such payments at this time, other than its existing share buy-back program.

Additional details about the consent solicitation will be provided in the Consent Solicitation Statement which will be sent to noteholders at the time of launch.

***

#LatAmNRG

Ecopetrol Activates Contingency Plans In Cedeño District

(Energy Analytics Institute, Piero Stewart, 11.Nov.2018) — Ecopetrol announced it has activated contingency plans after a new attack on the Caño Limón-Coveñas pipeline located in the Cedeño district, in the municipality of Toledo, Norte de Santander.

Image of affected area. Source: Ecopetrol

“At Ecopetrol, we reiterate our rejection to any type of activity that endangers the lives of people in any of the surrounding communities and threatens the environment and natural resources,” the state oil company announced in a twitter post on Nov. 11.

***

#LatAmNRG

Related Stories

New Attack On Colombia’s Caño Limón-Coveñas Pipeline

Colombia’s Cano Limon Pipeline Hit By New Bomb Attack

(Reuters, 10.Nov.2018) — Colombia’s state-run oil company Ecopetrol said on Saturday it was mounting another cleanup operation after a bomb attack on the Cano Limon pipeline.

The attack is the 78th this year on the 485-mile (780-km) pipeline, which has been out of service for much of 2018 because of bombings and illegal taps.

The pipeline, which can transport up to 210,000 barrels per day, was not functioning at the time of the attack. It was also bombed on Thursday.

The latest bombing took place in Toledo municipality in Norte de Santander province, Ecopetrol said on Twitter.

The company did not say who it held responsible, but military sources have blamed previous attacks on the pipeline on fighters from the National Liberation Army (ELN) rebel group.

The ELN, considered a terrorist group by the United States and the European Union, has about 1,500 combatants and opposes multinational companies that its leaders accuse of seizing natural resources without benefiting Colombians.

Colombian President Ivan Duque has demanded the group free all its hostages and cease criminal activities before he will consider restarting peace talks that began last year under his predecessor, Juan Manuel Santos.

***

#LatAmNRG

New Attack On Colombia’s Caño Limón-Coveñas Pipeline

(Energy Analytics Institute, Aaron Simonsky, 8.Nov.2018) — Colombia’s state oil company Ecopetrol revealed video coverage of the most recent attack on the company’s Caño Limón-Coveñas oil pipeline located in Boyacá.

No further details are available yet, but the company has initiated a contingency plan, announced Ecopetrol official Mauricio Tellez in a twitter posts. To-date in 2018, there have been 77 attacks on the pipeline, Tellez said in his twitter post.

***

#LatAmNRG

Frontera Energy Announces 3Q:18 Ops, Financial Results

(Frontera Energy, 7.Nov.2018) — Frontera Energy Corporation released its Interim Condensed Consolidated Financial Statements for the third quarter of 2018, together with its Management, Discussion and Analysis (MD&A).

These documents will be posted on the Company’s website at www.fronteraenergy.ca and SEDAR at www.sedar.com. All values in this news release and the Company’s financial disclosures are in United States dollars unless otherwise stated.

THIRD QUARTER 2018 OPERATIONAL AND FINANCIAL HIGHLIGHTS

— Cash provided by operating activities of $189.4 million in the third quarter generated $65.4 million of cash in excess of capital expenditures of $124.0 million and contributed to a total cash position of $786.5 million at quarter end. Cash and cash equivalents, unrestricted, increased 6% quarter-over-quarter to $586.6 million. Long term debt and obligations under finance lease were $352.3 million at quarter end.

— The Company has a significant cash position as well the opportunity to generate additional excess cash going forward. In addition to the existing normal course issuer bid (the “NCIB”) implemented by the Company during the third quarter, the Company will evaluate additional strategic initiatives designed to enhance shareholder returns.

— Oil and gas sales and other revenue in the quarter of $382.2 million were up 38% from the prior year period and down 9% from the prior quarter. Net sales of $300.0 million increased 12% compared to the prior year period and were 8% lower than the second quarter of 2018.

— Net income of $45.1 million ($0.45/share) compared with a net loss of $141.1 million ($1.41/share) in the prior year period, and a net loss of $184.4 million ($1.84/share) in the prior quarter. Operating EBITDA of $93.5 million was down 12% from prior year period and 25% from the prior quarter. Operating Netback of $23.81/boe was 12% lower than the second quarter of 2018 and 2% higher than the third quarter of 2017.

— Net production averaged 58,558 boe/d during the third quarter, down 18% and 9% from prior year period and prior quarter, respectively, reflecting a three-month suspension of production from Block 192 in Peru due to a force majeure event on the NorPeruano pipeline. This impacted quarterly production by approximately 5,700 bbl/d.

— Current net production is over 65,000 boe/d and is expected to grow throughout the fourth quarter. Production from Block 192, which restarted in early September, has consistently produced over 9,500 bbl/d since coming back on stream, reflecting the benefits of a work-over and well service program undertaken during the downtime. Production in Colombia is expected to increase in the fourth quarter, with the startup of the first phase of the water handling expansion project at Quifa SW on October 30, 2018, and the full 450,000 bbl/d increase in water handling capacity expected to be on stream by year end adding between 2,000 and 3,000 bbl/d of oil net to Frontera.

— The Company’s 2018 oil hedges, which capped the benefit of higher Brent oil prices through October 2018 (realized price after risk management contracts of $58.00/boe versus an average Brent oil benchmark price of $75.84/bbl during the third quarter), have now expired. The expiry of these hedge contracts is expected to have a positive impact on operating EBITDA and cash flow in the fourth quarter.

— General and administrative expenses of $23.0 million in the third quarter were 12% lower than the second quarter of 2018 and 14% lower than the third quarter of 2017 as the Company implements efficiency change projects throughout the organization.

— Substantial progress was achieved in managing long-term transportation costs during the quarter, with the termination of agreements representing a reduction in future commitments.

— The Company has maintained 2018 Operating EBITDA and transportation cost guidance while updating daily net production, capital expenditure, general and administrative expense and production cost guidance to reflect year to date results and expected results for the balance of the year.

Richard Herbert, Chief Executive Officer of Frontera, commented:

“Frontera performed well in the third quarter, generating significant cash flow and further strengthening our balance sheet, in spite of production interruptions. We also made good progress toward our 2018 and long-term goals for growth, efficiency and value creation. Going into the fourth quarter, I am encouraged by the resumption of production at Block 192 in Peru at higher levels, as a result of the service work we were able to accomplish during the pipeline suspension, and by growing production in Colombia from our drilling program as we ramp up activity and bring additional water handling capacity on-line.

We are also making progress securing Frontera’s growth with the discovery at Acorazado-1, our fourth exploration success in Colombia this year. Plans are well advanced to initiate a long-term test in the well before year-end. We have continued to accelerate our drilling activities within our existing portfolio. During the fourth quarter we expect to drill 36 wells, with 22 development wells at Quifa SW, seven water injection wells, two light and medium oil development wells on the Guatiquia block, two development wells at Zopilote Sur on the Cravo Viejo block and three exploration and appraisal wells.

We are excited by the opportunity of capturing higher oil prices after the expiration of our hedging contracts at the end of October. While a necessary risk management strategy during the Company’s restructuring in 2016, they have limited our ability to benefit from rising oil prices this year. Without a cap on our realized prices for the last two months of this year, we expect our exposure to Brent oil prices to increase by nearly $12 per barrel, based on recent prices, directly benefiting Frontera’s earnings and cash flow.

We are well positioned for 2019 with our strong cash position and balance sheet which will provide further opportunities for disciplined capital allocation into strategic growth projects and to enhance shareholder returns going forward.”

Gabriel de Alba, Chairman of the Board of Directors of the Company, said:

“The Frontera Board believes there are multiple opportunities to increase shareholder value. First, through a disciplined exploration and development investment plan together with initiatives to improve performance in order to support Frontera’s long-term free cash flow. Second, with Frontera trading at a significant discount to its asset value and relative to its peers, we are taking steps to close the valuation gap, including by enhancing trading liquidity. Last, we are actively evaluating additional strategic initiatives designed to enhance shareholder returns.”

Board of Directors Update:

The Company is announcing a number of changes to the composition of its Board of Directors. One of the Company’s Board members, Camilo Marulanda, has elected to resign from the Board as a result of increased demands since being named President of ISAGEN S.A. in Colombia. Mr. Marulanda will be replaced by Orlando Cabrales Segovia, a leader in the public and private energy sector in Colombia with over 30 years experience, including as Vice Minister of Energy of the Ministry of Mines and Energy in Colombia between 2013 and 2014 and as the President of the Agencia Nacional de Hidrocarburos (ANH) from 2011 to 2013. Mr. Cabrales held senior roles at BP in Latin America and has been on the Boards of numerous companies in Colombia including; ISAGEN S.A., Tuscany Drilling, Cenit Transporte y Logistica de Hidrocarburos S.A. (CENIT), and ISA. Mr. Cabrales earned an undergraduate degree in Law from Pontifical Javeriana University and a Masters degree in Philosophy from Boston College.

The Company is also pleased to announce the appointment of Veronique Giry to the Board of the Directors. With this appointment, the Company’s Board is back to seven members, all of whom are independent. Ms. Giry has an impressive track record in the global oil and gas industry and currently serves as Vice President and Chief Operating Officer of ISH Energy Limited in Calgary, Alberta, Canada. Ms. Giry’s 29 year career has included senior management roles at the Alberta Energy Regulator and Total Exploration & Production where she has held roles in Latin America, Canada, Asia, Europe and the UK. Ms. Giry earned a Masters in Engineering degree from Ecole Centrale de Paris, France, with a major in Mechanics and sits as a volunteer on the Board of Alliance Francaise of Calgary.

Mr. de Alba continued: “Frontera is excited to add Orlando’s and Veronique’s best-in-class regulatory and technical expertise to our Board of Directors. Their diverse operational knowledge and experience within the global upstream industry will be a significant benefit to the Company as we position for growth and cash flow generation. They will complement the skills of the other Board members. We would like to thank Camilo Marulanda for his valuable contribution to the Board over the past two years as we repositioned Frontera to be the leading publicly traded upstream oil and gas company in Latin America.”

The average Brent oil benchmark price increased by $0.87/bbl, or 1%, in the third quarter of 2018 to an average of $75.84/bbl, compared to $74.97/bbl in the second quarter of 2018. Brent oil benchmark price averaged $52.17/bbl in the third quarter of 2017. The Company’s realized oil price of $70.87/bbl in the third quarter of 2018 excludes the impact of $10.02/bbl of realized losses on risk management contracts. The Company had hedges in place for October 2018 on 1.2 million barrels of oil at an average Brent price of $59.22/bbl. The Company is unhedged in November and December 2018.

During the third quarter of 2018, net income attributable to equity holders of the Company was $45.1 million or $0.45/share, compared with a net loss of $184.4 million or $1.84/share, in the second quarter of 2018. Higher net income was mainly attributable to a reduction in fees paid on suspended pipeline capacity, a reversal of provision of high price clause, a reduction in depletion, depreciation and amortization, a reduction in general and administrative expenses, and the recognition of a deferred tax asset offset by an increase in oil and gas operating costs and impairments on assets and investments in associates.

For the third quarter of 2018, net sales of $300.0 million were 8% lower than $326.6 million in the second quarter of 2018 and 12% higher than $267.0 million the third quarter of 2017.

Cash provided by operating activities of $189.4 million for the third quarter was 75% higher than in the second quarter of 2018 as a result of strong operating netbacks combined with timing benefits within the cash management process. The Company generated $65.4 million of excess cash in the quarter as cash provided by operating activities of $189.4 million exceeded capital expenditures of $124.0 million.

Operating EBITDA of $93.5 million in the third quarter of 2018 was 25% lower in comparison with $124.7 million achieved in the second quarter of 2018, and 12% lower than $105.9 million in the third quarter of 2017, as a result of lower oil and gas sales volumes and higher oil and gas operating costs in the current period, partially driven by inflation linked to higher oil prices.

Frontera continues to focus on improving its cost structure and recently completed a project to increase organizational efficiency and reduce costs. This focus on cost helped the Company deliver lower general and administrative expenses of $23.0 million in the third quarter of 2018, a decrease of 12% from the second quarter of 2018, and a decrease of 14% from the third quarter of 2017. Going forward, the Company will look to further improve operational efficiency to drive additional cost savings.

Strong Balance Sheet:

The Company continued to build cash during the quarter, with a total cash position of $786.5 million, as of September 30, 2018, an increase of 8% and 31% from the end of the second quarter of 2018 and of the third quarter of 2017, respectively. Unrestricted cash increased to $586.6 million as at September 30, 2018, from $550.8 million as at June 30, 2018. The increase in unrestricted cash during the third quarter of 2018 was due to cash flow from operations in excess of capital expenditures, offset by an increase in restricted cash and share repurchases. In October 2018, $45 million of restricted cash became unrestricted following the satisfaction of terms relating to the sale of Petroelectrica de los Llanos.

Working capital, or current assets less current liabilities, increased 4% to $331.2 million during the third quarter of 2018, compared to $317.4 million at June 30, 2018.

The Company has hedged 1.9 million barrels of production between January 2019 and September 2019 using a Brent put price of $55/bbl, which protects the Company from lower oil prices while retaining the upside from potentially higher oil prices.

On October 4, 2018, S&P Global Ratings reaffirmed its ‘BB-’ global scale long-term issuer credit rating on the Company and its ‘BB-’ issue-level rating on the Company’s $350 million senior unsecured notes due 2023.

During the third quarter of 2018 the Toronto Stock Exchange (TSX) accepted the Company’s notice of intention to initiate a NCIB for its common shares. The notice provides that Frontera may purchase, during the twelve-month period commencing July 18, 2018 and ending July 17, 2019, up to 3,543,270 Common Shares, representing approximately 3.5% of the Company’s 100,011,664 issued and outstanding Common Shares as at July 9, 2018. Under the Company’s NCIB 315,512 shares were repurchased for cancellation at a cost of $4.5 million (C$18.68 per share) during the third quarter of 2018. Subsequent to September 30, 2018, a further 165,049 shares were repurchased at a cost of $2.2 million (C$17.49 per share).

The NCIB, in addition to the two for one stock split undertaken earlier in 2018 has helped improve the average daily trading volume in the Company’s equity by over three times compared to what it was at the beginning of 2018.

Update on Transportation Costs:

On July 13, 2018 the Company announced the successful settlement of the Ocensa transportation arbitration concerning the P-135 Project. As a result, the Company has reduced future transportation commitments in the Ocensa pipeline by over $178.3 million during the life of the contracts (June 2017 through June 2025). The Company also announced that it had terminated its contractual commitment with CENIT to transport oil through the Caño Limón-Coveñas pipeline (CLC) and its contractual commitment with Oleoducto Bicentenario de Colombia S.A.S. to transport oil through the Bicentenario pipeline (“BIC”). As a consequence of these terminations, the Company is no longer contractually committed to payments of ship-or-pay fees on these pipelines; these terminated contracts represented $1.36 billion in future transportation commitments through to October 2028.

During the third quarter of 2018, the Company realized $5.6 million of fees paid on suspended pipeline capacity, for the period between July 1 and July 12, 2018 before the contracts were terminated. These costs are excluded from the Company’s transportation costs, consistent with their historical reporting. A further third quarter charge of $15.6 million was taken for prepayments and standby letters of credit (“SBLCs”) on the BIC pipeline, representing (i) $5.3 million of SBLCs which were drawn by Bicentenario and (ii) a further $10.3 million of prepayments to Bicentenario and accounts receivables by the Company related to the Bicentenario transportation contracts. Under the Company’s unsecured letter of credit facility, a total of $64.4 million of SBLCs were issued relating to the Company’s transportation contract with Bicentenario. The remaining $59.1 million were drawn after the end of the third quarter and will be recognized as an expense in the fourth quarter of 2018. The Company has reimbursed issuing banks the full amount drawn under the Bicentenario SBLCs. The Company is of the view that the drawdown of the SBLCs was wrongful and is evaluating its remedies with respect thereto.

The Company has alternative transportation agreements in place which provide sufficient capacity for the evacuation and sale of its oil production in Colombia.

Current net production is over 65,000 boe/d and is expected to continue to increase during the fourth quarter as the Quifa SW water handling expansion project comes on stream. Net production in the third quarter of 2018 averaged 58,558 boe/d, a decrease of 9% compared with the second quarter of 2018. The decrease in quarterly net production was a result of a suspension of production from Block 192 in Peru due to the declaration of force majeure by Petroperu S.A. on the NorPeruano pipeline which transports crude oil from Block 192 to the export terminal at Bayovar. The pipeline was out of service between June 4, 2018 and August 30, 2018 when it was restarted. Since the pipeline was restarted, average net production has been approximately 9,500 bbl/d or 12% higher than before the force majeure event, reflecting benefits from work-over and other maintenance activities which were undertaken while production was suspended.

Production from Colombia decreased 4% during the third quarter of 2018 compared with the previous quarter, as a result of temporary water injection restrictions encountered on the Casimena block, and natural production declines in the Company’s natural gas assets in the country.

Sales volumes for the three months ended September 30, 2018, were lower than the comparable prior year period primarily due to lower production in Colombia and higher inventory in Peru, resulting in lower volumes available for sale. During the third quarter of 2018, the Company sold more barrels than it produced in Colombia, resulting in an overlift liability position of 809 Mbbl at the end of the quarter.

During the third quarter of 2018, total capital expenditures were $124.0 million, 43% higher than $86.8 million in the previous quarter and 155% higher in comparison with $48.6 million in the third quarter of 2017. The increase during the third quarter relates to drilling operations for the Acorazado-1 exploration well on the Llanos 25 block in Colombia, the drilling of the Delfin Sur-1 well offshore Peru on block Z-1, and the start up of construction of additional water handling facilities in the Quifa area. Increased facilities spending in the quarter also connected the Alligator discoveries in the Guatiquia block to the main crude oil and water processing facilities on the block.

A total of 39 wells were drilled in the third quarter of 2018, in line with 40 wells planned. Thirty-one heavy oil development wells and two water injection wells were drilled in the Quifa SW area in connection with the increased fluid handling capacity that is expected to come on stream in the fourth quarter. Three light oil development wells were drilled on the Guatiquia block, two at Avispa and one at Alligator. A second Alligator well, Alligator-5, encountered the edge of the field and was uneconomic. The Company also completed the drilling of two exploration wells, the Acorazado-1 well on the Llanos 25 block onshore Colombia and the Delfin Sur-1 well on block Z-1 offshore Peru, the results of which have been previously disclosed.

During the fourth quarter of 2018, the Company plans to drill 36 wells including 22 development wells in the Quifa SW area, four development wells in its light and medium oil areas, three exploration wells, five water injection wells at Orito and Neiva, and two water injection wells in the Quifa SW area. The Company will keep 10 rigs active throughout the fourth quarter.

Exploration and Development Update:

On October 30, 2018 the Company started the commissioning of the water handling expansion project at the Quifa SW block. The project is expected to add approximately 450,000 bbl/d of new water handling capacity or a 40% increase to the current capacity. The Company plans to start the project in phases throughout the fourth quarter with full capacity on stream by the end of the year. The increased water handling capacity is expected to be able to deliver between 2,000 and 3,000 bbl/d of incremental net production by year end.

During the fourth quarter of 2018, the Company plans to drill three exploration wells compared to the prior plan of five wells: the Coralillo-3 well on the Guatiquia block which follows on from the successful Coralillo-1 well drilled and completed earlier in the year; the Chaman-2D commitment well on the Sabanero block; and the Jaspe-7D well in the Jaspe field within the Quifa area, a follow up to the successful Jaspe-6D well drilled in January 2018. The Cocodrillo-1 and Jaspe-8D wells will now be drilled in the first half of 2019 as a result of permitting delays.

The Company will commence the expansion of the waterflood pressure maintenance project in the Neiva field by drilling six water injector wells in the fourth quarter. Upon completion of the drilling of the injector wells it is expected that pressure response and increased production will be encountered in the following six to twelve months. The expansion of the Neiva waterflood project will be the second pressure maintenance project to be implemented at Frontera post restructuring, following the pressure maintenance project at the Company’s Copa field in the Cubiro block.

The Company continues to drill additional development wells in various blocks identified by ongoing technical reviews of its assets. In June 2018, the ANH granted an extension of acreage to the Cravo Viejo block allowing the Company to capture additional acreage containing a mapped extension to the Zopilote field. This additional acreage has allowed the Company to commence the drilling of Zopilote Sur-1, to be followed by Zopilote Sur-2 subject to ANH approval. Additionally, the Company will drill two development wells on the Candelilla field in the Guatiquia block following the identification of separate Lower Sand-1 and Guadalupe formation opportunities which were previously thought not to be present. The Company was also recently successful in drilling a well in the Alligator field to more than 12,000 feet using only two casing strings. This new well design will now be used in certain future development wells, thereby contributing to a reduction in overall drilling costs.

The Company has received approval from its partner Ecopetrol to commence the long-term testing of the Jaspe-6D exploration well in the Quifa area that was initially drilled and tested in January 2018. The results of the test will provide the information required to evaluate the declaration of commerciality in 2019. The Company has secured approval from Ecopetrol to commence a cost cutting pilot drilling program in the Quifa field, which if successful will permit the drilling of the future horizontal development wells in a more cost-effective manner.

The Company is in advanced discussions with Ecopetrol in the Quifa SW block to implement a pilot multi-lateral horizontal development well program for 2019, with the expectation that, if successful, drilling costs will be lower with resulting increased production and recovery rates.

Annual Guidance Update:

The Company is affirming 2018 Operating EBITDA guidance of $400 to $450 million, and transportation costs per boe, while updating its annual guidance for net production, capital expenditures and production costs to reflect year-to-date results. The midpoint of average annual daily net production guidance is lowered by 5% to 64,000 boe/d (from 67,500 boe/d) with a corresponding 5% decrease to the midpoint of capital expenditures guidance to $450 million (from $475 million). Production cost guidance is increased to a midpoint value of $14.25/boe (from $13.00/boe), to reflect lower daily production volumes and inflationary pressures due to higher oil prices. General and administrative cost guidance for the year was decreased by 5% to a midpoint of $100 million (from $105 million), to reflect the benefit of recent cost savings initiatives. The guidance reflects an assumed average annual oil price of $73/bbl Brent (4% increase) and a realized oil price differential of $5 bbl (5% decrease).

Third Quarter 2018 Conference Call Details:

As previously disclosed, a conference call for investors and analysts is scheduled for Thursday, November 8, 2018 at 8:00 a.m. (MST) and 10:00 a.m. (EST,GMT-5). Participants will include Gabriel de Alba, Chairman of the Board of Directors, Richard Herbert, Chief Executive Officer, David Dyck, Chief Financial Officer and select members of the senior management team.

A presentation and webcast link will be available on the Company’s website prior to the call, which can be accessed at www.fronteraenergy.ca.

Analysts and interested investors are invited to participate using the following dial-in numbers:

Participant Number (International/Local): (647) 427-7450
Participant Number (Toll free Colombia): 01-800-518-0661
Participant Number (Toll free North America): (888) 231-8191
Conference ID: 4789788
Webcast: www.fronteraenergy.ca

A replay of the conference call will be available until 11:59 p.m. (EST, GMT-5), Thursday, November 22, 2018 and can be accessed using the following dial-in numbers:

Encore Toll Free Dial-in Number: 1-855-859-2056
Local Dial-in-Number: (416)-849-0833
Encore ID: 4789788

The following table provides a complete reconciliation of net income (loss) to operating EBITDA:

—————-

***

#LatAmNRG

Scania Announces Record Gas Bus Delivery To Bogotá

(Scania, 6.Nov.2018) — In its largest gas bus delivery ever, Scania will supply 481 Euro 6 gas buses – the cleanest and most silent buses on the market – for the renewal of Bogotá’s TransMilenio Bus Rapid Transit system.

Bogotá is replacing its earlier Euro 2 and Euro 3 buses with the latest in low-emission technology. Scania’s Euro 6 gas buses represent a huge leap in cleaner technology compared with these older-generation buses but also in relation to the more recent Euro 5 emissions standards. In operations with the new Scania gas buses, carbon emissions will be up to 20 percent lower while emissions of particulate matter will be two to three times lower. Emissions of nitrogen oxide are four to five times lower than Euro 5.

“We are very pleased with the outcome because this translates into significantly less pollution in Bogotá,” says Juan Carlos Ocampo, Scania Colombia’s Managing Director. “The reduced emissions of particulate matter, nitrogen oxide and noise will contribute to a higher quality of life for Bogotá’s residents.”

The bus network, originally established in the early 1990s, encompasses 12 lines totalling 112 kilometres, with 1.7 million passenger journeys every day. The public tender for the renewal programme has focused on six of the 12 lines and following the tendering process, the operator SI18 will now provide services for the three lines Suba, Calle 80 and Norte with 481 Scania buses. They will go into operation during the first half of 2019.

The 179 articulated Scania K320 IA 6x/2, (320 hp engines), buses have a capacity for 160 passengers and the 302 bi-articulated Scania F340 HA 8×2 (340 hp engines) have a capacity for 250 passengers. All buses will be bodybuilt by Busscar.

***

#LatAmNRG

Ecopetrol Attends Oil Spill In Tibú River

(Energy Analytics Institute, Aaron Simonsky, 5.Nov.2018) — Colombia’s state oil company Ecopetrol installed a series of barriers in a rural area of the Tibú municipality (Norte de Santander) in an effort to contain an oil spill in the Tibú River.

The spill originated over the weekend when stolen crude oil that was being stored in a pool overflowed into the river, reported the daily newspaper El Tiempo. Armed groups in the area often illegally store stolen oil in pools, which they later used to process cocaine, according to the daily.

Ecopetrol personnel conducted a fly over of the affected area and verified the spill occurred near the village of Campo Seis, and to confirm the spill didn’t correspond to an criminal act directed against its infrastructure.

The environmental emergency was reported on Saturday Nov. 3 by communities officials from the Catatumbo region, according to the daily.

***

#LatAmNRG

Related Stories

Ecopetrol Cleans Spill After Bomb Attack On Cano Limon Pipeline

 

Canacol Energy 3Q:18 Results Release, Conference Call Date

(Canacol Energy Ltd., 2.Nov.2018) — Canacol Energy Ltd. will announce its third quarter 2018 financial results after the market close on Tuesday, November 13, 2018. Senior Management will hold a conference call to discuss results on Wednesday, November 14 at 8:00am MST / 10:00am ET.

The conference call may be accessed by dial in or via webcast:

Pre-register here: http://dpregister.com/10125537

Webcast link: https://services.choruscall.com/links/cne181114.html

All remarks made during the conference call will be current at the time of the call and may not be updated to reflect subsequent material developments.

Third quarter 2018 financial results will be available through the Investor Relations section of the company’s website. A replay of the webcast will be available on our website until November 21. The transcript of the webcast will be posted on the website within five days after the call is completed.

***

#LatAmNRG

Ecuadorian Armed Forces Discover Fuel Tanks Destined For Smuggling

(Energy Analytics Institute, Aaron Simonsky, 2.Nov.2018) — Ecuador’s Joint Task Force Armed Forces discovered 38 tanks filled with 55 gallons of fuel in an operation carried out on October 31, 2018. The tanks were being stored in a house in El Caucal, in the parish of Ancon de Sardinas in San Lorenzo, located along Ecuador’s border with Colombia, reported the daily newspaper El Comercio.

The 2,090 gallons of fuel were to be destined for smuggling and to supply cocaine processing laboratories that operate in Colombia, the daily reported citing task force investigations.

***

#LatAmNRG

Ecopetrol Could Invest $3-3.5 Bln In 2019, Same As This Year

(Reuters, 1.Nov.2018) — Colombian state-run oil company Ecopetrol will likely invest between $3 billion and $3.5 billion in 2019, the same figure as forecast for this year, its chief executive officer said on Thursday.

The spending is the backbone of an ambitious plan to boost production and explore for more oil to replenish dwindling reserves. The company has said it will drill 620 wells and double the number of rigs in operation this year.

Ecopetrol still plans to reach $3 billion to $3.5 billion in investments this year, though it had spent just $1.79 billion through the third quarter, executives said on an investor call after the company released third-quarter results on Wednesday.

“We need to keep doing more work internally, but the idea is that we will be in that range of $3 to $3.5 billion for this year. It’s the range with which we’ll possibly enter next year and which in some way denotes stability in operations,” CEO Felipe Bayon said.

Ecopetrol’s board is still in the process of approving that investment for 2019, a spokesman said.

The company is working to lessen the effects of social protests, which temporarily shuttered three fields in February and kept the first-quarter investment to just over $400 million, Chief Financial Officer Jaime Caballero said on the call.

“We are implementing initiatives to quickly execute projects and to mitigate the impact of the social and environmental contingencies that materialized in the first half of the year,” Caballero said.

The company had cut its investment forecast for 2018 from $3.5 billion to $4 billion in August because of the protests and other spending delays.

Net profit jumped 177 percent to more than $866 million in the third quarter, while consolidated oil and gas production climbed to 724,000 barrels per day (bpd), just under the company’s 725,000-bpd goal for the year.

Output has so far not been affected by nearly continuous attacks on the Cano Limon-Covenas pipeline from leftist guerrilla group the National Liberation Army.

The pipeline, which can transport up to 210,000 bpd, has been offline for much of this year because of bombings and illegal taps.

Production from the Cano Limon field, operated by Occidental Petroleum Corp, has been routed through a second pipeline.

Ecopetrol has reserves equivalent to about seven years of production, well below the average of nearly 12 years for the world’s top oil and gas companies.

(Reporting by Julia Symmes Cobb and Nelson Bocanegra; Editing by Helen Murphy and Jeffrey Benkoe)

***

#LatAmNRG

Ecopetrol Boasts 67% Exploration Success Rate To-date In 2018

(Energy Analytics Institute, Piero Stewart, 1.Nov.2018) — Colombia’s state oil company Ecopetrol is boasting a 67% exploration success rate based on six completed wells thus far in 2018.

Of the six wells, two were abandoned and 4 were successful, reported the company in its third quarter results update. Three other wells are still under evaluation.

Ecopetrol aims to drill a 12 exploratory wells in 2018.

###

#LatAmNRG

Related Stories

Ecopetrol Profit Nearly Triples On Oil Price Boost

Ecopetrol Business Group Reports 3Q:18, Year-To-Date 2018 Results

(Ecopetrol S.A., 31.Oct.2018) — Ecopetrol S.A. announced the Business Group’s financial results for the third quarter and year-to-date 2018, prepared in accordance with International Financial Reporting Standards applicable in Colombia.

The figures included in this report are not audited. Financial information is expressed in billions of Colombian pesos (COP) or US dollars (USD), or thousands of barrels of oil equivalent per day (mboed) or tons, and is so indicated where applicable. For presentation purposes, certain figures in this report were rounded to the nearest decimal place. Further information on the Business Group’s financial figures may be consulted in Ecopetrol’s Consolidated Financial Statements, published on our website.

In words of Felipe Bayón Pardo, CEO of Ecopetrol:

“For the first nine months of the year, Ecopetrol is reporting the best financial results of the past four years. Net income attributable to owners of Ecopetrol rose to 8.9 trillion pesos, EBITDA totaled 23.8 trillion pesos and EBITDA margin was at 48%. These solid financial results were achieved due to the good operating performance of all segments, which brought about an increase in crude oil and gas production, lower crude oil imports for the Downstream segment as well as of refined products to supply the local market. In summary, we were able to capture the profit coming from the higher international oil prices.

The flexibility of the Group’s commercial strategy allowed us to take advantage from the higher demand for crude oil from refiners in Asia to create more value. In the third quarter of 2018, sales to Asia accounted for a 45% share of total crude exports, versus 25% during the same quarter in 2017. Thanks to this initiative, the discount price of the crude basket versus Brent remained at approximately 11%.

In the third quarter of 2018, Ecopetrol Group’s average production totaled 724,000 barrels of oil equivalent per day, the highest in the last 10 quarters. Year-to-date average production was 716,000 barrels of oil equivalent per day. The increased production for the quarter is in line with the target set for 2018 and it was possible due to the positive results from our drilling campaign and the greater demand for natural gas in the thermal power and industrial sectors. At the end of the quarter, we had drilled 421 development wells and had 41 rigs in operation.

This increase in activity is reflected in larger investments during the quarter, totaling 789 million dollars and representing 80% of what was invested in the first half of the year and more than 50% over the investment in the third quarter of 2017.

In the exploration segment Ecopetrol entered into one of the highest-potential oil basins in the world. The Pau-Brasil block, located in the central region of the Santos basin, in the Brazilian pre-salt, was awarded to the joint venture between BP Energy (50% – Operator), Ecopetrol (20%) and CNOOC Petroleum (30%). This milestone is consistent with our long-term growth strategy and demonstrates Ecopetrol’s ability to develop strategic alliances with leading companies in world-class industry opportunities.

During the third quarter, we drilled five exploratory wells, for a total of nine during the course of the year, and had an exploratory success rate of 44%. These results are in line with the goal of drilling 12 wells in 2018, and materialize our strategy of building a solid base of assets for the company’s future sustainability.

In the Midstream segment, we saw increased volumes of crude oil and refined products transported, primarily due to the optimization of certain systems, such as Galán – Bucaramanga and Coveñas – Cartagena and the beginning of operation of San Fernando-Apiay-Monterrey system along with the expansion of Ocensa P135. Moreover, it is important to highlight the transportation tests carried out at a higher viscosity of 700 centistokes (cSt — a measure of viscosity) with positive operating results, which are now under economic evaluation.

During the third quarter, the oil pipeline network continued to suffer from third-party disruptions, especially on the Caño Limón- Coveñas system; nevertheless, the Bicentenario oil pipeline was able to mitigate those impacts, resulting in five reversion cycles during the quarter. Year to date, 35 reversion cycles have been carried out on the Bicentenario oil pipeline. This flexible operation has prevented deferred production from Caño Limón field.

In the Downstream segment, the two refineries jointly achieved a new historic maximum of 380,000 barrels of stable throughput per day. The third quarter was the best of the year in terms of throughput and gross refining margin for each of our refineries.

In line with the optimization process, the Cartagena refinery continued to generate value by achieving an average throughput of 158,000 barrels per day for the quarter, with a throughput composition of 80% domestic and 20% imported crude. This result contributed significantly to the reduction of the Group’s cost of sales. In August, a record was attained at the refinery by using 100% local crudes during nine days, getting an average throughput of 164,000 barrels per day. Gross refining margin for the quarter was 12.1 dollars per barrel which represents a 17.5% increase vis-à-vis the third quarter of 2017.

Additionally, the Barrancabermeja refinery showed an 11% increase in throughput versus the third quarter of 2017. This outcome was primarily due to the stable operation of its units and the segregation of light and intermediate crudes. The average refining margin for the quarter was 13.9 dollars per barrel, largely impacted by the increase in the prices of the crude basket vs. Brent.

Ecopetrol continues to work on fuel quality. In line with this commitment, we have taken advantage of the greater synergies between the Cartagena and Barrancabermeja refineries, as well as operational adjustments in the transport and logistics systems, to produce cleaner fuels.

In September, diesel distributed in Colombia had an average sulfur content between 15 and 20 parts per million (ppm), below the maximum of 50 ppm of sulfur permitted by local regulation. Specifically, we delivered diesel with an average sulfur content between 12 and 14 ppm to the city of Medellin that complies with international reference markets standards as those in the United States (10 to 15 ppm sulfur content).

Our reducing cost strategy through efficiency measures allowed us to account for 1.8 trillion pesos of higher efficiencies across the Group during the first nine months of 2018, up 26% versus those reported during the same period of 2017. We remain committed with cost efficiency and capital discipline, which are now embedded in our corporate culture.

These accomplishments had enhanced the financial position of the Group. At the end of the third quarter, we increased our cash position from 15 trillion at the end of the second quarter, to 18 trillion pesos, despite the payment of the second installment of dividends to the Government for 1.6 trillion pesos and the prepayments of debt for a total amount of 637 million dollars. This financial strength is essential to support the profitable growth plans of the Group and secure long-term sustainability through crude oil price cycles.

In September, Ecopetrol completed the negotiation of a new Collective Bargaining Agreement that will apply for four and a half years and cover aspects such as education, health, food, loans and transport services, among other worker benefits. The New Collective Bargaining Agreement is aligned with the business strategy that seeks to maintain efficiency, capital discipline and collective labor in the new phase of Ecopetrol’s growth. We believe it will contribute positively to the workers wellbeing and the country’s development.

Talking about our ESG initiatives, year-to-date efforts have been focused on activities such as the recycling of 63.3 million cubic meters of water used in our operations. This amount represents an additional saving of 20% compared with the same period last year, enabling us to optimize the water requirement. On another front, we have advanced towards the incorporation of non-conventional renewable energy into the matrix of energy resources, with the announcement of the construction of a solar farm that will supply part of the energy consumption of Castilla field. This is in addition to the existing renewable energy supply from biomass.

Ecopetrol remains committed to generating value, and caring for environment, safe operations, ethics and transparency. Maintaining positive results and growing profitably will remain our focus as we continue to operate as a sustainable company that generates value for its shareholders.”

To review the full report please visit the following link:

***

#LatAmNRG

Ecopetrol Profit Nearly Triples On Oil Price Boost

(Reuters, Julia Symmes Cobb, 31.Oct.2018) — Ecopetrol, Colombia’s state-run oil company, said on Wednesday its third-quarter net profit rose to 2.77 trillion pesos ($866.5 million), up 177 percent from the same period last year, thanks to higher global crude prices and increased output.

The company plans to invest between $3 billion and $3.5 billion during 2018 to boost production and explore for more oil to replenish dwindling reserves, drilling 620 wells and doubling the number of rigs in operation from last year.

Consolidated oil and gas production in the third quarter rose to 724,000 barrels per day (bpd), Ecopetrol said in a regulatory filing. That is the highest figure of the last ten quarters.

Protests in the first quarter closed three fields and lowered production to 701,000 bpd, before it rebounded to 721,000 bpd in the second.

Ecopetrol is targeting output of 725,000 bpd of crude and gas equivalent by the end of 2018, up from 715,000 bpd last year.

Strong performance across the company “has allowed an increase in the production of crude and gas, a reduction in crude imports for our refinery sector and in products for the local market and additionally, allowed us to enjoy the benefits of higher international prices,” Chief Executive Felipe Bayon said in the statement.

The company spent $789 million in investment in the third quarter, the statement said, concentrating on exploration and production, where spending was up 57 percent over the same period in 2017.

It has spent $1.79 billion through September, meaning investment during the fourth quarter will need to be substantive to meet the predicted total spending for the year.

Colombia has struggled to attract investment and maintain oil output as bombings and protests have frequently interrupted operations.

Ecopetrol’s Cano Limon-Covenas pipeline, which can transport up to 210,000 bpd, has been off-line for much of this year because of bombings and illegal taps.

The company has reserves equivalent to about seven years of production, well below the average of nearly 12 years for the world’s top oil and gas companies.

Earnings before interest, taxes, depreciation and amortization for July to September increased by 36.7 percent compared with the same quarter in 2017, to 7.99 trillion pesos, Ecopetrol said.

Total sales in the third quarter were up 34.2 percent compared with the same period last year, to 17.87 trillion pesos. ($1 = 3,202.44 Colombian pesos)

(Reporting by Julia Symmes Cobb; editing by Helen Murphy and Rosalba O’Brien)

***

#LatAmNRG

 

Colombia Plans Mexico-Style Oil Hedge After Recent Volatility

(Bloomberg, Matthew Bristow, 31.Oct.2018) — Colombia is planning to hedge its oil exports to protect the government from the violent swings in revenue it suffered in recent years.

The financing bill to be presented to Congress Wednesday proposes the creation of a fund that can buy derivatives from “foreign entities specialized in operations of this type,” according to a copy of the bill seen by Bloomberg. The bill needs to be passed by Congress to become law, and would take effect on Jan. 1.

Oil is Colombia’s largest export accounting for about a third of the total. The crash in prices in 2014 and 2015 forced the government to raise value added tax to cover the hole in its fiscal accounts, and led in 2017 to the nation’s first rating downgrade in 15 years. Colombia produces about 860,000 bopd.

The fund can’t issue debt, and the nature of hedging operations means that losses are possible, according to the bill.

Mexico buys options which gives it the right to sell oil at a certain price, protecting the country from a sudden price drop. In 2015, Mexico pocketed a record payout of $6.4 billion after crude prices crashed. For next year, the country has already spent $1.2 billion on hedging.

The government of President Ivan Duque, which took office in August, has a strong alliance to get laws through Congress. At the same time, it’s not clear that lawmakers will grasp the benefits of a stabilization fund, said Camilo Perez, chief economist of Banco de Bogota.

In the past, Colombian governments have been deterred from operations of this kind for fear of being accused of causing losses to the nation, Perez said. Other measures in the bill, such as the extension of value added tax to food staples, are likely to face opposition.

***

#LatAmNRG

Pioneer Energy Services Reports 3Q:18 Results, Updates On Colombia

(Pioneer Energy Services, 30.Oct.2018) — Pioneer Energy Services reported financial and operating results for the quarter ended September 30, 2018. Third quarter and recent notable items include:

— Domestic drilling fleet was fully utilized during the third quarter, and generated an average margin per day of $10,237, up 7% from the prior quarter.

— In Colombia, we expect to execute a contract with a new, multi-national client to begin operations later in the fourth quarter.

— Steady improvement in well servicing activity as the outlook for completion-related services in our operating areas continues to strengthen.

Consolidated Financial Results

Revenues for the third quarter of 2018 were $149.3 million, down 4% from revenues of $154.8 million in the second quarter of 2018 and up 27% from revenues of $117.3 million in the third quarter of 2017 (“the year-earlier quarter”). The decrease from the prior quarter is primarily attributable to weaker activity levels in wireline, which was partially offset by increased revenues in all other segments.

Net loss for the third quarter of 2018 was $5.2 million, or $0.07 per share, compared with net loss of $18.2 million, or $0.23 per share, in the prior quarter and net loss of $17.2 million, or $0.22 per share, in the year-earlier quarter. Adjusted net loss(1) for the third quarter was $5.6 million, and adjusted EPS(2) was a loss of $0.07 per share as compared to adjusted net loss of $14.8 million, and an adjusted EPS loss of $0.19 per share in the prior quarter, and adjusted net loss of $11.3 million, and an adjusted EPS loss of $0.15 per share in the year-earlier quarter.

Third quarter adjusted EBITDA(3) was $28.6 million, up from $16.9 million in the prior quarter and up from $14.0 million in the year-earlier quarter. The increase from the prior quarter was primarily due to a $9.7 million decrease in phantom stock compensation expense associated with the decrease in the fair value of the awards. Phantom stock compensation benefit during the third quarter was $3.7 million, while expense during the prior quarter was $6.1 million. The increase in adjusted EBITDA from the prior quarter was also due to improved margin per day in domestic drilling, and improved gross margin in both coiled tubing and well servicing. The increase from the year-earlier quarter was due to higher demand and pricing for all of our service offerings.

Operating Results

Production Services Business

Revenue from our production services business was $89.6 million in the third quarter, down 8% from the prior quarter and up 20% from the year-earlier quarter. Gross margin as a percentage of revenue from our production services business was 24% in the third quarter, up from 23% in the prior quarter and up from 22% in the year-earlier quarter. Despite the sequential decrease in revenue, which was attributable to softer wireline services activity and exacerbated by weather conditions in Texas, gross margin improved due to increased utilization in our coiled tubing segment and slightly improved utilization and pricing in our well servicing segment. During the third quarter, demand for our large-diameter coiled tubing services increased. Our well servicing segment also saw modest increases in completion-related services.

The decrease in production services revenues from the prior quarter was attributable to certain wireline customers that delayed completion activities in various regions in which we operate as well as a reduction in activity from weather-related events in the Gulf Coast region. This decline in wireline revenues was partially offset by increased demand for our coiled tubing and well servicing operations, both of which also experienced revenue growth sequentially. As compared to the year-earlier quarter, revenue rates have improved for all of our production services business segments, resulting in revenue growth of 20%.

Well servicing average revenue per hour was $552 in the third quarter, up from $540 in the prior quarter and up from $529 in the year-earlier quarter. Well servicing rig utilization was 51% in the third quarter, up from 49% in the prior quarter, and up from 43% in the year-earlier quarter. Coiled tubing revenue days totaled 362 in the third quarter, as compared to 350 in the prior quarter and 368 in the year-earlier quarter. The number of wireline jobs completed in the third quarter decreased 11% sequentially and decreased 3% as compared to the year-earlier quarter.

Drilling Services Business

Revenue from our drilling services business was $59.7 million in the third quarter, reflecting a 4% increase from the prior quarter and a 40% increase from the year-earlier quarter.

Our domestic drilling fleet was fully utilized during the current, prior and year-earlier quarters. Domestic drilling average revenues per day were $25,076 in the third quarter, up from $24,508 in the prior quarter and up from $23,873 in the year-earlier quarter. Domestic drilling average margin per day was $10,237 in the third quarter, up from $9,550 in the prior quarter and up from $9,084 in the year-earlier quarter. Revenue per day increased as compared to the prior and year-earlier quarters primarily due to certain contracts that re-priced at higher dayrates. Margin per day increased primarily from improvement in supplies, repair and maintenance costs that returned to normalized levels, as well as improvement in average dayrates from several rigs which repriced higher between $2,000 per day and $5,000 per day, offset by two rigs which re-priced lower by approximately $5,000 per day in August and September.

International drilling rig utilization was 76% for the third quarter, down from 85% in the prior quarter and up from 38% in the year-earlier quarter. International drilling average revenues per day were $41,158, up from $35,061 in the prior quarter and up from $26,155 in the year-earlier quarter, while average margin per day for the third quarter was $7,327, down from $7,583 in the prior quarter and up from $2,773 in the year-earlier quarter. Utilization and margin per day in the third quarter were down sequentially as one rig was released in early September as a client made adjustments to its drilling program, and another rig incurred non-revenue days as it changed operators in August. The increase in revenue per day was primarily due to the recognition of demobilization revenues during the third quarter. Utilization is based on daywork days and mobilization days between wells, but does not include initial mobilization days on new contracts or demobilization days when contracts end, which impacted our utilization for the third quarter.

Currently, all 16 of our domestic drilling rigs are earning revenues, 14 of which are under term contracts, and five of our eight rigs in Colombia are earning revenue under daywork contracts, and one is earning revenue during demobilization. We expect to execute a contract for the one rig in Colombia that was idle for most of September, and it is expected to begin mobilizing in mid-November and begin drilling in early- to mid-December. A second rig was released in late October and is currently demobilizing; however, we are finalizing a new contract, and the rig is also expected to begin mobilizing in mid-November with an anticipated start date in early- to mid-December. In our domestic drilling operations, we continue to expect our contracted new-build drilling rig to be deployed to West Texas and begin operations in the first quarter of 2019.

“Our third quarter results were driven by steady improvement in our domestic drilling operations, which are benefiting from strong demand and upward trending dayrates,” said Wm. Stacy Locke, President and Chief Executive Officer. “Our fleet of top performing drilling rigs is securing new contracts at higher rates and staying fully utilized. The last remaining legacy new-build contract will reprice downward approximately $5,000 in the fourth quarter, but will be offset by three rigs repricing at higher dayrates between $2,000 per day and $5,000 per day. Our new-build rig is expected to mobilize to the Permian in the first quarter of 2019 to begin a three-year term contract with an existing client. Similar to our most recent new-builds, this rig can walk 150 feet, pass over wellheads 21 feet high, contains two 2,000 horsepower mud pumps, a 7,500 psi mud system, a 500-ton high torque topdrive and can rack approximately 25,000 feet of five inch drill pipe. We believe it will be one of the highest margin and top performing rigs in the U.S. The outlook for domestic drilling operations remains very bright.

“In Colombia, we had one rig idle for the month of September but we expect to execute a contract with a multi-national client to begin mobilizing the rig in mid-November and to commence drilling operations in early- to mid-December. This new opportunity reflects our efforts in expanding our client base in Colombia and our growing reputation as a provider of excellent service and safety. In late October, we experienced another round of dayrate adjustments where several rigs re-priced upward between $1,000 per day and $3,000 per day. We are seeing improvement in rig utilization and dayrates in Colombia across the industry, and we remain optimistic that our international drilling operations will experience stronger pricing and demand trends in 2019.”

“In our production services business, our high-spec well servicing rig fleet activity is gradually improving with modest increases in 24-hour work which includes drill-out completion work. We will be slowly adding the ancillary equipment necessary to provide operators with a complete drill-out solutions package and, as we add, we expect margins will improve. We see drill-out opportunity in a number of geographic areas. Similarly, coiled tubing activity and margins are improving as we adjust our fleet mix to more large-diameter coiled tubing units. Our new 2-3/8” unit delivered in July performed well during the quarter and, in December, we expect to deploy an additional new 2-3/8” coiled tubing unit that we anticipate will immediately begin contributing. Once this unit is delivered, five of our nine actively marketed units will be large-diameter pipe serving two good markets.”

“Although we anticipate the normal seasonal slowdown in the fourth quarter and some impact from operators’ exhausted capital budgets, we expect overall activity to remain healthy and improve as we enter into 2019.”

Fourth Quarter 2018 Guidance

In the fourth quarter of 2018, revenue from our production services business segments is estimated to be flat to down 4% as compared to the third quarter of 2018. Margin from our production services business is estimated to be 20% to 23% of revenue. Domestic drilling services rig utilization is expected to be 100% and generate average margins per day of approximately $9,700 to $10,200. International drilling services rig utilization is estimated to average 67% to 72%, which is impacted by initial mobilization and demobilization days, and generate average margins per day of approximately $8,000 to $9,000. We expect to have seven rigs operating on daywork rates in Colombia by the end of the fourth quarter.

We expect general and administrative expense to be $19 million to $20 million in the fourth quarter of 2018, which as it relates to phantom stock compensation expense, is based on the closing price of our common stock at September 30, 2018, which was $2.95.

Liquidity

Working capital at September 30, 2018 was $120.1 million, down from $130.6 million at December 31, 2017. Cash and cash equivalents, including restricted cash, were $53.5 million, down from $75.6 million at year-end 2017. During the nine months ended September 30, 2018, we used $48.8 million of cash for the purchase of property and equipment, and our cash provided by operations was $21.5 million.

Capital Expenditures

Cash capital expenditures during the nine months ended September 30, 2018 were $48.8 million, including capitalized interest. We estimate total cash capital expenditures for 2018 to be approximately $70 million, which includes $23 million for two large-diameter coiled tubing units, one of which was delivered in early July, three wireline units, two of which were delivered in January, high-pressure pump packages for completion operations, and the construction of the new-build drilling rig expected to be completed in 2019.

***

#LatAmNRG

Colombia’s Ecopetrol Advances With Fracking Plans, Seeks License

(Energy Analytics Institute, Piero Stewart, 30.Oct.2018) — Colombia’s state oil company Ecopetrol has requested an environmental license over an area where it plans to begin a pilot project to explore crude oil in unconventional deposits with the hydraulic stimulation technique known as fracking.

If a permit from Colombia’s National Environmental Licenses Authority (Anla by its Spanish acronym) is approved, the pilot project would be carried out in coming months in the Magdalena Medio region where the La Luna and Tablazo geological formations converge, and which holds shale potential estimated between 2,000 and 7,000 million barrels of original oil in site, reported the daily newspaper El Tiempo, citing Ecopetrol President Felipe Bayón.

Colombia currently has oil reserves that total 1,782 million barrels of crude oil, the daily reported.

***

#LatAmNRG

Ecopetrol Seeks License To Start Fracking Tests In Colombia

(Reuters, Luis Jaime Acosta, 29.Oct.2018) — Colombia’s state oil company Ecopetrol has requested an environmental license to launch a pilot plan to explore for crude oil from unconventional deposits using fracking technology, its chief executive said.

Felipe Bayon told Reuters late on Friday the plan, which could triple Colombia’s proven reserves, would be supervised by local communities and environmentalists to ensure it meets safety standards.

Colombia does not currently carry out oil exploration or exploitation activities with fracking, but President Ivan Duque favors the technique, used to extract oil and gas from unconventional deposits in rock formations that do not allow the movement of fluid.

Hydraulic fracturing, or fracking, technology fractures rock formations with pressurized liquid. Its use is credited for booming oil and gas production in the United States, but environmental activist have blamed it for water pollution. Local communities and environmentalists in Colombia have opposed the technology.

If the permit is granted the pilot would begin in the coming months in Magdalena Medio, an area where the La Luna and Tablazo geological formations converge and which could have between 2 billion to 7 billion barrels of oil, Bayon said during a visit to the Barrancabermeja refinery in central Colombia.

This would triple the nation’s reserves. Colombia has 1.78 billion barrels of proven reserves of crude.

“The Magdalena Medio zone has a potential to be determined, but it could continue to help the country’s energy security and self-supply,” he said.

Bayon declined to say how much money would be invested in the pilot.

Colombia, which produced 854,121 barrels of oil per day in 2017, was hurt in recent years by the drop in international oil prices, hitting hard at the economy.

***

#LatAmNRG

Related stories:

Colombia’s Ecopetrol Advances With Fracking Plans, Seeks License

Caño Limón-Coveñas Has Suffered 1,470 Attacks In Ten-Plus Years

(Energy Analytics Institute, Piero Stewart, 27.Oct.2018) — Throughout its history, the Caño Limón-Coveñas pipeline in Colombia has suffered an estimated 1,470 attacks and has been out of operation the equivalent of more than 10 years, according to figures from Colombia’s state oil company Ecopetrol.

Attacks against the oil infrastructure have hurt the country in two ways through the following: 1) destruction of the environment and 2) undermining the country’s finances to the tune of about $277.5 million, reported the daily El Espectador.

Colombian terrorist groups such as ELN continue to use dynamite attacks along the country’s main oil pipeline as a manner to pressure dialogue between them and government leaders, the daily reported.

To date in 2018, Caño Limón-Coveñas has suffered 76 attacks, some 13 less than in the same year ago period.

***

#LatAmNRG

Related stories:

Ecopetrol Cleans Spill After Bomb Attack On Cano Limon Pipeline

Cano Limon-Covenas Pipeline Restarts After 180 Days

Frontera Sets Date For 3Q:18 Financial and Ops Update, Conference Call

(Frontera Energy, 26.Oct.2018) — Frontera Energy Corporation announces that its third quarter 2018 results will be released after market on Wednesday, November 7, 2018 followed by a conference call and webcast for investors and analysts on Thursday, November 8, 2018 at 8:00 a.m. (MST), 10:00 a.m. (EST, GMT-5).

Participants will include Gabriel de Alba, Chairman of the Board of Directors, Richard Herbert, Chief Executive Officer, David Dyck, Chief Financial Officer and select members of the senior management team.

A presentation will be available on the company’s website prior to the call, which can be accessed at www.fronteraenergy.ca.

Analysts and investors are invited to participate using the following dial-in numbers:

Participant Number (International/Local): (647) 427-7450
Participant Number (Toll free Colombia): 01-800-518-0661
Participant Number (Toll free North America): (888) 231-8191
Conference ID: 4789788
Webcast: www.fronteraenergy.ca

A replay of the conference call will be available until 11:59 p.m. (EST, GMT-5) Thursday, November 22, 2018 and can be accessed using the following dial-in numbers:

Encore Toll Free Dial-in Number: 1-855-859-2056
Local Dial-in Number: (416) 849-0833
Encore ID: 4789788

***

#LatAmNRG

Ecopetrol Announces Timing Of 3Q:18 Earnings Report, Conference Call

(Ecopetrol, 25.Oct.2018) — Ecopetrol S.A. announces that on October 31st, 2018 after market close, it will release its financial and operating results for the third quarter of 2018.

On Thursday, November 01st, Ecopetrol’s senior management will host two conference calls to review the results. Please find below the timing, dial-in and links to access the conferences:

Spanish Conference Call English Conference Call
08:00 a.m. Col Time (09:00 a.m. NYC) 09:30 a.m. Col Time (10:30 a.m. NYC)
   
US Dial-in #: 1 (847) 585-4405 US Dial-in #: 1 (847) 585-4405
US Dial-in # (Toll Free): 1 (888) 771-4371 US Dial-in # (Toll Free): 1 (888) 771-4371
Local Colombia Dial-in #: 57 1 380 8041 Local Colombia Dial-in #: : 57 1 380 8041
Local Colombia Dial-in #

(Free Toll):  01 800 9 156 924

 Local Colombia Dial-in #

(Free Toll):  01 800 9 156 924
Passcode: 47752172 Passcode: 47752183

Participants from different countries may look for different international numbers to the ones mentioned above by consulting the following link: http://web.meetme.net/r.aspx?p=12&a=UDWttmnRSqdRpg

The earnings release, slide presentation and live webcast of the conference calls will be available on Ecopetrol’s website: www.ecopetrol.com.co and at the following links:

http://event.onlineseminarsolutions.com/wcc/r/1860357-1/DC064C359529BAB504745883599DDE54 (Spanish)

http://event.onlineseminarsolutions.com/wcc/r/1860384-1/9677D33EF14DF374F0373FF46368B3AE (English)

Please verify in advance proper operation of the webcast in your browser. We recommend the usage of the latest versions of Internet Explorer, Google Chrome y Mozilla Firefox.

The replay of the calls will be available on Ecopetrol’s website (www.ecopetrol.com.co).

***

#LatAmNRG

Ecopetrol Cleans Spill After Bomb Attack On Cano Limon Pipeline

(Reuters, 25.Oct.2018) — Colombia’s state-run oil company Ecopetrol is carrying out a clean-up operation after a bomb attack on the Cano Limon pipeline spilled crude into a waterway, the company said in a statement on Thursday.

The attack on Wednesday, the seventy-sixth on the pipeline this year, had no immediate effect on exports or production at the Cano Limon field, operated by Occidental Petroleum, Ecopetrol said.

Though the pipeline was not functioning at the time of the attack, some oil spilled into a creek in the La Blanquita area of Boyaca province, the company said.

The 485-mile (780-km) pipeline, which can transport up to 210,000 barrels per day, has been off-line for much of this year because of bombings and illegal taps.

The company did not name the group responsible for the bombing, but the pipeline is a frequent target of National Liberation Army (ELN) rebels.

The ELN, considered a terrorist group by the United States and the European Union, has about 1,500 combatants and opposes multinational companies, claiming they seize natural resources without benefiting Colombians.

The ELN and the administration of former President Juan Manuel Santos began peace talks in February 2017, but current right-wing President Ivan Duque has said he will not continue dialogue until the group frees all its hostages and ceases criminal activities.

(Reporting by Julia Symmes Cobb; Editing by Helen Murphy and Bernadette Baum)

***

#LatAmNRG

Colombian Court Rules Community Referendums Cannot Block Mining, Oil Projects

(TeleSur, 13.Oct.2018) — The Colombian Constitutional Court has ruled to restrict the power of popular consultations to halt extractive projects.

Colombia’s Constitutional Court ruled in favor of a Mansarovar Energy, a transnational oil and natural gas company, and against Indigenous communities in the municipality of Cumeral Thursday.

The judgment, however, has far-reaching consequences since it will limit Indigenous communities from using popular consultations or referendums to block extractive industry projects & programs in their territories.

Mansarovar Energy, a Colombian-based company backed by India’s ONGC and Chinese oil firm Sinopec, presented a request for legal protection before the Constitutional Court, calling on it to overrule a decision by a local court of the department of Meta that had given the green light for a popular consultation that effectively halted the extraction of oil in the municipality of Cumeral.

With a five to one vote, the court ruled that Indigenous communities cannot use popular consultations as a mechanism to stop extractive projects arguing the state is the owner of all the resources in the countries subsurface.

This ruling contradicts previous rulings by Colombia’s highest court in which the body validated the mechanism.

The Court also called on Congress to develop a mechanism for citizen participation and “instruments for nation-territory coordination and concurrence,” thus disregarding the existence of popular consultations and citizens’ right to exercise a form of direct democracy. Many have accused Congress and government officials of responding to the interests of transnational companies.

Throughout Colombia, communities have organized nine popular consultations, in which the communities have voted against extractive projects by private companies.

Environmental activists and territorial leaders have said the ruling is an attack on democracy. The Foundation for the Protection and Human Development (Fudopres) condemned the ruling via Twitter saying “democracy is over in Colombia after the Constitutional Court gagged popular consultations.”

Campesino communities have also protested the ruling and accused the justices of being “captured” by corporations. Conflicts over territory are at the core of long-running violence against communities and social leaders, who resist oil and mining project in Colombia’s rural areas.

***

Energy Analytics Institute (EAI): #LatAmNRG

IFC, Related Funds Exercise Rights Under the Pacific Midstream Limited Agreement

(Frontera Energy, 10.Oct.2018) — Frontera Energy Corporation announced the International Finance Corporation (IFC) and related funds have provided notice to the Company that they have exercised their right under the Pacific Midstream Limited (PML) shareholders agreement to receive without further payment additional shares in PML, as a result of certain historical milestones on the Petroeléctrica de los Llanos transmission line not being met. Upon issuance of the additional PML shares to IFC, Frontera will be a 59.93% shareholder in PML (previously 63.64%), with the IFC holding the remaining 40.07% interest (previously 36.36%).

In addition, on September 11, 2018 the IFC provided a form of notice exercising PML’s Bicentenario Put Option which requires Frontera to purchase from PML its ownership interest in the Bicentenario pipeline. This option is exercisable by the IFC pursuant to the PML shareholders agreement solely in the event that the Bicentenario pipeline is non-operational for six consecutive months, and as a result, the Bicentenario ship or pay contracts with the Company’s affiliates are terminated. The notice from IFC refers to the actions Frontera took to terminate those ship or pay contracts in July. The purchase price is determined by a formula and is currently approximately US$85 million. Frontera is reviewing the form of notice and the transaction would be subject to documentation and prior approval of the Toronto Stock Exchange. If the transaction is completed it would increase Frontera’s aggregate indirect ownership interest in the Bicentenario Pipeline to 43.03% (currently 26.39%) at a net cash cost expected to be approximately US$34 million after the proceeds of the put transaction are distributed by PML to its shareholders (Frontera’s share of those proceeds is expected to be approximately US$51 million).

***

Frontera Energy Announces Exploration Discovery in Colombia

(Frontera Energy, 10.Oct.2018) — Frontera Energy Corporation announced a light oil discovery from its Acorazado-1 exploration well on the 100% owned and operated Llanos-25 block in Colombia. Frontera also provided an operational update highlighting current production, major project activities and details regarding the fourth quarter drilling campaign.

Richard Herbert, Chief Executive Officer of Frontera, commented:

“The Acorazado-1 exploration well is the fourth exploration discovery in Colombia so far in 2018, adding to the discoveries at Alligator and Coralillo on the Guatiquia block, and Jaspe in the Quifa area. This maintains our 100% track record of discoveries in Colombia in 2018.

The Acorazado-1 well encountered a number of potential hydrocarbon zones in the target Mirador Formation reservoir and two drill-stem tests were conducted. As a result, I am pleased that we have made a light oil discovery in our first deep well in the Llanos foothills trend. Data collected during testing show the Acorazado reservoir pressure to be lower than that expected in an undrained reservoir, indicating a probable hydraulic connection with the adjacent Cusiana structure to the north. While the lowered reservoir pressure impacts potential flow rates, the well has identified a part of the structure which contains resources which have never been previously drilled and developed. We plan to put the Acorazado-1 well on long-term test in the near future.

Operationally, current production has returned to planned levels above 65,000 boe/d, with Block 192 production in Peru averaging over 10,000 bbl/d since the block was restarted in September. We expect to add to production during the fourth quarter as the water handling expansion project at Quifa SW is brought on-stream. Frontera’s strong production profile is well-timed with the upcoming expiration of our oil hedges at the end of October which will increase our exposure to Brent oil prices by nearly $25 per barrel based on recent prices.

Additionally, we will be drilling some exciting exploration and appraisal wells during the fourth quarter including Coralillo-3 and Cocodrilo-1 on the Guatiquia block and additional Jaspe appraisal wells in the Quifa North area. Frontera will be presenting its 2019 operating plan and guidance in the second week of December, targeting production growth for the first time since restructuring in late 2016.”

Exploration Discovery in Colombia

The Acorazado-1 exploration well was drilled to a total measured depth of 15,470 feet (15,197 feet true vertical depth) and encountered 356 feet of gross thickness in the Mirador formation sandstone reservoir. Open-hole wireline logging operations identified five separate, potentially hydrocarbon-bearing sections of the Mirador formation (Mirador I, II, III, IV and VI) with an estimated total net thickness of 82 feet. A drill-stem test (DST) program with a tubing conveyed perforating system (TCP) was designed to evaluate the potential hydrocarbon bearing sections in two separate tests, the first testing the Mirador VI section and the second testing the Mirador I, II, III and IV sections, commingled.

The Mirador VI reservoir, was tested from 20 feet of perforations, using a DST-TCP tool with an average 2,360 psi drawdown for 52 hours during the main flow test prior to a pressure buildup test at an average rate of 455 barrels of fluids per day at natural flow. The average oil rate was 427 bbl/d of 36.9-degree API crude with an average natural gas rate of 896 mcf/d during the test. In total there were 1,003 bbls of oil and 2.1 Mmcf of natural gas produced during the Mirador-VI main flow test period, with oil gravity varying from 35.2 to 37.6-degree API. The maximum average flow rate over a 24-hour period at a choke size of 36/64th of an inch was 606 barrels of fluid per day, with a maximum average rate of 570 barrels of oil per day and average gas rate of 1.06 Mmcf/d.

The main flow test period was followed by a pressure buildup test which ended with a short flow period at restricted flow rates to collect bottomhole and separator fluid samples for lab analyses. The Company will now proceed with completing the Mirador VI reservoir in the coming months and is in the process of applying to the Agencia Nacional de Hidrocarburos (ANH) for a long-term testing license which will allow the Company to produce the well for six months with the potential for a further six-month extension while production facilities are placed at the well site.

The Mirador I to IV commingled reservoir was tested from 79 feet of total perforations, using a DST-TCP tool with an average 940 psi drawdown for 16 hours at an average rate of 370 barrels of fluids per day with a small volume of oil and natural gas.

Based on an evaluation of the results from both tests the Company believes that the intervals tested may have incurred formation damage from drilling and production testing operations which has limited the flow potential of the reservoir. Therefore, the Company will conduct an evaluation to identify potential methods to stimulate the Mirador I to IV and Mirador VI intervals to improve flow rates in the near-future. Any future development activities will be planned according to the results of the long-term test and further evaluation of the Mirador I to IV and Mirador VI intervals.

Operational Update

Current production after royalties is above 65,000 boe/d and is expected to increase throughout the fourth quarter. As part of the Company’s measures to sustain production from its core Quifa SW field, the first stage of the water handling expansion project is expected to start up by the end of October with full implementation by the end of the year, providing an additional 3,000 to 4,000 bbl/d of net oil production. The Company remains on track to deliver annual production at or close to the low end of the guidance range of 65,000 to 70,000 boe/d, despite three months of downtime related to pipeline issues in Peru (over 2,000 bbl/d impact on 2018 average production), a blockade in the first quarter at Cubiro in Colombia (approximately 500 bbl/d impact on 2018 average production) and higher than planned high price royalty payment volumes at Quifa (over 2,000 bbl/d impact on 2018 average production).

Fourth Quarter and 2019 Drilling Update

During the fourth quarter of 2018, the Company expects to drill 34 wells, with 18 development wells at Quifa SW, seven water injection wells, two development wells at Candelilla on the Guatiquia block, two development wells at Zopilote Sur on the Cravo Viejo block and five exploration and appraisal wells including;

Coralillo-3 (Guatiquia block): follow up appraisal well to the Coralillo-1 exploration well which tested over 1,000 bbl/d from the Lower Sand-1 formation and 800 bbl/d from the Guadalupe formation. The well was spud on October 8, and is expected to take 30 days to drill and 15 days to test.

Cocodrilo-1 (Guatiquia block): the third exploration target on the Guatiquia block in 2018, is targeted to spud in mid-November with drilling and testing operations complete by year end.

Jaspe-7D and Jaspe-8D (Quifa North area): two appraisal wells following up on the Jaspe-6D well drilled in January which tested at 187 bbl/d for 11 days. Jaspe 7D is expected to spud in the second half of December. With success, these appraisal wells will open up another large field development area in North Quifa adjacent to the Cajua field.

In 2019, the Company is planning to drill up to 10 exploration wells that will appraise recent new discoveries or target new prospects. New exploration projects include two exploration prospects on the Guama block, two exploration prospects on the Mapache block and two exploration prospects on the Sabanero block. The Company is considering participation in the Intracampos Bid Round in Ecuador, and any license round activities from the ANH in Colombia.

***

Cutting India’s Dependence on Middle-East Oil: 60% More Oil Lifted from Colombia

(Financial Express, Huma Siddiqui, 9.Oct.2018) — With the India-Colombia bilateral trade $1.5 bn, India lifted oil close to $ 400 million from January to July this year– an increase of 60% in the same period of the previous year.

With the India-Colombia bilateral trade $1.5 bn, India lifted oil close to $ 400 million from January to July this year– an increase of 60% in the same period of the previous year.

Speaking to FE ONLINE, on condition of anonymity, a very senior diplomat said that, “As US imports of Colombian and of other origin continue to decline, impending sanctions on Iran next month, supply constraints of OPEC, India is expected to look at other markets.”

“Imports of oil from Colombia and Ecuador will go up substantially in the coming months,” the senior diplomat added.

India has been looking at other countries for its energy security due to impending second round of US sanctions in November targeting Iran’s energy sector, and political unrest in South American nation Venezuela.

India has been gradually planning to increase the crude imports from Latin American nations to 50% over the next few years, sources confirmed to FE ONLINE.

There are four areas of cooperation in the oil sector identified by oil companies of both countries which cover:  exploration and production of oil; activities of refining, processing and purification of hydrocarbons; and looking for more oil in the country.

ONGC Videsh has operations in the Llanos field in Colombia’s Orinoco and explored five wells. The same company owns 50% of the Mansarovar, in a joint venture with the Chinese company Sinopec, in the region of Magdalena Medio.

During the last week’s visit of Minister of State for External Affairs, Gen VK Singh (Retd) to Colombia, it was decided that the Joint Study for negotiating Partial Scope Agreement to enhance bilateral trade will be finalised soon between the two countries.

The two countries are seeking for expansion of bilateral trade and investment in areas including IT, pharmaceuticals, automobiles, agriculture, urban planning & development, and Start ups.

India and Colombia in 2019 will be celebrating 60 years of establishment of diplomatic relations and decided that this historic milestone be celebrated in a befitting manner.

As reported by FE earlier, ONGC Videsh has discovered hydrocarbon reserves in its Mariposa-1 well, which is under drilling in CPO-5 block of Colombia. Also, Ecuador has inked a confidentiality agreement with ONGC Videsh and has been in discussion about the new blocks available in that country.

The Indian company which is already present in Colombia is exploring the possibility of expanding their footprints in Ecuador and has been looking at buying a stake in oil fields there. ONGC is looking for fields with a minimum 25,000 barrels per day of oil production.

***

Solar Array Will Make Bogota Airport the Greenest in Latin America

(Efe, 21.Sep.2018) — El Dorado International Airport will become the greenest terminal in Latin America when an array of 10,369 solar panels enters operation next year, Colombian officials said Friday.

The installation of the panels began on Friday during an event headed by Energy Minister Maria Fernanda Suarez and executives from the companies implementing the project, Celsia and Odinsa.

“Since 2016, Celsia and Odinsa have worked together on a plan based on the best sustainability practices in the sector, and today, we are pleased to announce the start of the installation of the solar panels in El Dorado,” Odinsa president Mauricio Ossa said.

The panels, which will occupy an expanse the size of 20 Olympic swimming pools, are part of a wider plan to make the airport the greenest in the region.

Suarez said that this plan is itself part of a government initiative to promote projects that will help “break the barriers related to the use of energy.”

According to the president of Celsia, Ricardo Sierra, “in eight months, 12 percent of the electricity used by the airport will be based on solar energy.”

El Dorado International is the third-busiest passenger airport in the region and was named in March as the best airport in South America by the World Airport Awards.

***

Ecopetrol: Fracking Likely In Colombia, Business Prospects Are Positive

(Seeking Alpha, Dylan Quintilone, 14.Sep.2018) — Ecopetrol SA is a Colombian oil and gas company with headquarters in Bogotá, Colombia. The company is listed by Forbes as the 300th largest enterprise by profits and is the second oil company in South America behind Petrobras from Brazil.

Ecopetrol’s operations are divided between exploration and production; Refining, Petrochemical & Biofuels, Oil Transportation and Logistics. The company has around 8,500 kilometers of transportation pipelines which commercializes crude oil and all kinds of derivatives such as fuel oil, aviation gasoline, cracked naphtha, virgin naphtha, polypropylene resin, and masterbatches. The company offers refined and petrochemical products to multiple markets and has a large presence in Colombia.

The company has almost ten thousand employees and is experiencing a rising period of revenues due to the increase in oil prices in the first half of 2018. Ecopetrol has increased production in recent years and the company produces roughly 730 million barrels per year, which is an 83% production increase over 2010 levels. The company expects to surpass the billion barrel mark within the coming years because of additional discovery of oil reserves of the northern coast of Colombia and new exploration/extraction methods.

Fracking in Colombia? Most likely

Fracking in Colombia has been a big debate since the recently inaugurated president Ivan Duque was proposing the possibility during his election campaign. Upon securing the presidency, his fracking project is moving forward with a majority of the senators in the Colombian Congress who are collaborating with him for the proposal. The fracking issue has long been debated and now with the government reaching a consensus and backing the fracking industry, the approval for the controversial extraction method is likely.

***

Ecopetrol Gets Approval for Contingent Credit Line for $665 Million

(Ecopetrol S.A., 10.Sep.2018) — Ecopetrol S.A. announced that as part of its integral debt management strategy, it will sign a contingent line of credit for $665 million with Scotiabank ($430 million) and Mizuho Bank ($235 million).

Under this type of facility, known as a committed line of credit, Scotiabank and Mizuho Bank agree to disburse funds as and when Ecopetrol requires them, under terms and conditions previously agreed between the parties. This facility would increase the Company’s indebtedness only when the disbursements are made.

The contingent line will have a two (2) year availability period for disbursements, subject to the following conditions: (i) principal amortizable upon maturity after a five-year term as from the signing date of the agreement, and (ii) an interest rate of 6-month LIBOR + 125 basis points and an annual fee of 30 basis points on principal not disbursed during the availability period.

Resources to be deployed under this contingent line may be used for general corporate purposes, among them to strengthen Ecopetrol’s liquidity position in the face of eventual growth opportunities, to mitigate risks associated to unexpected fluctuations in crude prices, as well as to reduce refinancing specific needs in the coming years, with flexibility and low financing costs.

To obtain the committed line of credit, the Company complied with all required internal and external procedures and approvals, including the corresponding Authorization Resolution by the Ministry of Finance and Public Credit

**.

The conditions obtained confirm the local international financial sector’s confidence in the Company.

** This administrative act can be subject to clarifications or changes, ex officio or at request of a party, in accordance with the legal mechanism that are applicable to the effect.

***

Frontera Receives Global Compact Awards from UN

(Frontera Energy Corporation, 7.Sep.2018) — Frontera Energy Corporation has been named a Canadian Sustainable Development Goals award winner for the second consecutive year by the Global Compact Network Canada, the Canadian network of the United Nations Global Compact.

Frontera was awarded the SDG Leadership Award in the large organizations category, through public voting, for its outstanding efforts in adopting and implementing the United Nations Sustainable Development Goals in its engagement with indigenous communities in Colombia and Peru.

The public also voted Frontera as the winner of the ‘Partnership Award’ for its excellent work in engaging stakeholders through ongoing partnership and advancement towards the Sustainable Development Goals.

“We are proud of our commitments and continuing a legacy of sustainable growth for our stakeholders. We congratulate the United Nations Global Compact Network Canada on their five-year anniversary and the large impact they have made on promoting Sustainable Development Goals in Canada,” said Frontera Chief Executive Officer Richard Herbert.

These awards intend to encourage all Canadian organizations to embed the 17 Sustainable Development Goals within their organizations and highlights the progress that both private and public sectors have made towards solving pressing environmental, social and economic challenges. Since its inception in 2013, the Canadian Chapter of the United Nations Global Compact has been dedicated to assisting over 150 Canadian organizations with the advancement of the United Nations Global Compact’s 10 Principles and 17 Sustainable Development Goals.

***

Pentanova to Change Name to CruzSur Energy Corp.

(PentaNova, 30.Aug.2018) — PentaNova Energy Corp. announced that effective at the market opening on September 4, 2018, the company will change its name to “CruzSur Energy Corp.” and its common shares and listed share purchase warrants will commence trading on the TSX Venture Exchange on a consolidated basis of one (1) new share for ten (10) existing shares under the symbols “CZR” and “CZR.WT” respectively.

Following the consolidation, the company will have approximately 24,220,160 common shares and 5,625,001 listed warrants issued and outstanding. No fractional shares or warrants will be issued. Instead, all resulting fractional shares and warrants of less than one-half will be rounded down to the nearest whole number, and of one-half or greater will be rounded up to the nearest whole number.

The new CUSIP number for the consolidated shares is 22889C103 and the new ISIN number is CA22889C1032. The new CUSIP number for the consolidated warrants is 22889C111 and the new ISIN number is CA22889C1115.

***

PentaNova Energy Provides Financial, Ops Update

(PentaNova Energy Corp., 24.Aug.2018) — PentaNova Energy Corp. filed its financial and operating results for the three and six months ended June 30, 2018. All dollar values in this news release and the Company’s financial disclosures are in United States dollars, unless otherwise stated. All production figures are measured in barrels of oil equivalent (boe).

Financial Statements

Revenues for the periods presented were obtained from the working interest in the Llancanelo, Mariposa, and Sur Rio Deseado assets which represent 90 and 92 days of production during Q1 2018 and Q2 2018, respectively.

Highlights

Llancanelo

The Llancanelo net production recorded for each of the periods is for the 39% working interest held during Q1 2018 and Q2 2018. Subsequent to the closing of the Roch acquisition on October 27, 2017, which included an additional 10% working interest in Llancanelo, the Company’s Llancanelo net production increased to 39% working interest.

During Q2 2018, the Llancanelo concession produced a total of 41,057 net boe (105,302 gross boe) compared to 43,827 net boe (111,024 gross boe) in Q1 2018, representing roughly a 5% decrease in production. This equated to average daily production of 451 net boe/d in Q2 2018 compared to 481 net boe/d in Q1 2018. The reduction in production can be attributed to scheduled maintenance that required certain wells on the concession to be shut in during the maintenance period.

Impairment Loss

During the six months ended June 30, 2018, the Company recognized impairments relating to the Llancanelo Asset of $25.0 million. These impairments were the result of the difference between the period‐end net book value and management’s assessment of the recoverable amount of the Llancanelo Asset as of June 30, 2018 on account of the formal notification received from YPF regarding the relinquishment of the Company’s working interest in the Llancanelo Asset and the termination of the YPF Farm‐In. Following completion of the write‐down, the Llancanelo Asset had a carrying value of approximately $10.6 million.

Mariposa

The Company holds a net working interest in the Estancia La Mariposa block of 18%, entitling it to 18% of the oil, natural gas and condensate sales, while the operator carries 100% of the capital expenditures and field operating costs. The net revenue figures associated with the Mariposa Asset are presented net of any applicable royalties and certain operating costs of transportation, treatment and processing. Oil and natural gas production is sold on behalf of the Company, for which the Company receives proceeds from the operator, net of the aforementioned royalties and operating costs. The net revenue generated from this asset has not been included in any “per barrel” pricing herein. Mariposa revenue, net of royalties, of $189,049 and $351,606 were realized in Q2 2018 and Q1 2018, respectively. These revenue amounts were derived from net production of 11,653 boe and 16,210 boe during the respective periods. Reduction of net revenue in Q2 2018 is the result of decreased production from the Mariposa Asset due to a workover campaign on some of the wells that was carried out by the operator during the quarter.

Financial Results & Balances

— The Company had a working capital deficiency of $12.6 million as of June 30, 2018

— Impairment loss of $25.0 million was recognized during the three months ended June 30, 2018

***

Ecopetrol to Focus Spending on Drilling: CEO

(Reuters, Devika Krishna Kumar, 24.Aug.2018) — Colombia’s state-run oil company Ecopetrol SA will focus spending for the rest of the year on increased drilling activity and securing operational licenses, its chief executive said on Friday.

Spending delays earlier this year will make it harder for the company to achieve its 2018 $3 billion to $3.5 billion capital plan, CEO Felipe Bayon said in an interview at the New York Stock Exchange, where company officials observed the 10th anniversary of its NYSE listing.

“It’s a challenge” to hit spending targets, Bayon said, adding the company plans to have 41 working rigs at year end, up from 33 at the end of June. Acquiring drilling rights consumes “a lot of the capex we invest,” he said.

Last week, Ecopetrol said it will invest $3 billion to $3.5 billion during 2018, below the initial target of up to $4 billion because of spending delays and protests that closed three fields in the first quarter.

“It’s never going to be smooth sailing in this industry. There’s always uncertainty, there’s things that are going to hit you that you don’t know.”

Ecopetrol faced dozens of attacks on its Cano Limon-Covenas oil pipeline this year by the National Liberation Army (ELN) guerrilla group, military sources previously said.

The Cano Limon pipeline is operating now, Bayon said, adding that production impacts this year were marginal due to rerouting the Bicentenario pipeline which connects to the Cano Limon line.

Last year, the attacks and pipeline closure led to production losses of more than a million barrels, Bayon said.

The company aims to boost reserves through exploration, squeezing more oil from existing wells, drilling in unconventional basins and through acquisitions, he said. Colombia’s reserves are estimated at about 2 billion barrels.

Ecopetrol is seeking deals in areas where it already has operations, including Mexico, Brazil, Peru and the United States, he said.

“We have a very healthy cash position with 15.8 trillion pesos ($5.3 billion) at the end of the quarter,” Bayon said. “That gives us flexibility if we wanted to invest.”

Crude oil production in Colombia reached an average of 860,401 barrels per day (bpd) in July, the Mines and Energy Ministry said this week, up 0.5 percent from the same month a year ago.

The spending plans and higher rig counts come as oil prices have recovered since the company cut drilling and shuttered an oil field when it lost more $1 billion in 2015 after oil prices crashed.

This summer, oil prices climbed to the highest in 3 1/2 years.

“Four years ago we needed $65 per barrel to break even, today we need $35,” Bayon said.

Reporting by Devika Krishna Kumar in New York; Editing by Marguerita Choy, Susan Thomas and David Gregorio

***

Trinidad Energy Infrastructure Unaffected by Earthquake

(Energy Analytics Institute, Aaron Simonsky, 22.Aug.2018) – Energy infrastructure on the twin-island nation of Trinidad and Tobago appears to be OK after an earthquake yesterday in Venezuela.

The August 21, 2018 earthquake hit the northern coast of Venezuela, and was felt in neighboring Colombia, Trinidad and Tobago and Guyana.

“Buildings stood up. Industrial plants stood up. Energy infrastructure stood up. Most of the electricity supply, internet services, telecoms, water supply were uninterrupted. No lives lost. No serious injuries. Yes, we had some property damage but lots to be grateful for T&T,” wrote Strategic Energy Advisor Kevin Ramnarine, who is also the Former Energy Minster of Trinidad and Tobago, in a twitter post.

***

Frontera Confirms Discovery at Acorazado-1 Well in Colombia

(Energy Analytics Institute, Jared Yamin, 19.Aug.2018) – Canada’s Frontera Energy Corporation confirmed the presence of hydrocarbons in the Mirador reservoir in the Acorazado-1 exploration well in Colombia.

The well is located on the 100% owned and operated Llanos 25 block onshore Colombia. As a result, the well is being cased in preparation for testing, announced Frontera in an official statement. The testing program, depending upon results, is expected to take several weeks, the company said.

The Acorazado-1 exploration well reached a total measured depth of 15,470 feet into the target formation where the company recorded hydrocarbon shows in a Mirador Reservoir section with 356 feet of gross thickness.

Frontera says the well was drilled ahead of schedule and under budget. The pre-drill cost estimate to drill the well was $35 million to$50 million.

Next, Frontera plans to run and cement a liner in preparation for testing, bringing the well cost to date to $40 million, excluding future testing costs.

Wireline logging operations combined with a limited pressure and sampling program have confirmed the presence of hydrocarbons in several potentially productive zones. Total hydrocarbon column and potential net pay is still under evaluation, the company said.

***

PentaNova Energy Updates on SINU-9 Farm Out

(PentaNova Energy Corp., 17.Aug.2018) — PentaNova Energy Corp. announced the SINU-9 Farm Out Agreement with Panacol Oil & Gas, a wholly owned subsidiary of LATAM Oil & Gas failed to close by the agreed closing date. Extensions to the closing dates were given, but Panacol was unable to complete the financing commitments required as closing conditions of the Agreement and, as a consequence, the Agreement has been terminated.

Under the terms of the Agreement the $2.4 million security placed by Panacol as guarantee in front of the ANH for the SINU-9 license commitments will remain in place until the commitments are deemed complete by the ANH. These commitments of a minimum of 127.75 km2 of 3D seismic and one exploration well with a minimum spend of $22.4 million have to be completed by December 22, 2020.

The company has offered to continue discussions with Panacol to negotiate an alternative agreement and also intends to initiate discussions with a number of other interested parties.

Additionally, the company received a letter from Clean Energy Resources S.A.S as party to the SN-9 Purchase and Sale Agreement (SINU-9 PSA) by which the company received its 80% economic beneficial interest in January 2017, alleging that the company was in breach of certain obligations under the SINU-9 PSA and that as a consequence the SINU-9 PSA was immediately terminated.

The company also received an identical letter from ColPan Oil & Gas Limited, as counterparty to the Tiburon Purchase and Sale Agreement (Tiburon PSA) by which the company received its 60% economic beneficial interest in February 2017 alleging that the company was in breach of certain obligations under the Tiburon PSA and that as a consequence the Tiburon PSA was immediately terminated.

The company, in consultation with legal counsel, considers that the alleged breaches are without merit and that the unilateral termination by Clean and/or ColPan is not legally valid or enforceable. The company has requested that Clean and ColPan retract these letters and have advised of the consequences of failure to do so, but without success. The company will take all legal measures to make Clean and ColPan fully aware of their inability to terminate the PSAs, that the alleged breaches are without merit, and that Clean and ColPan will be held fully responsible for any and all damages arising from their actions. The company intends to vigorously defend itself and will pursue all means available to protect its interests in the SINU-9 and Tiburon Blocks.

SINU-9 Block

The 313,638 acre SINU-9 block is located in the northern province of Cordoba, in the Lower Magdalena Basin of Colombia.

The company has completed the prior consultation process required to acquire seismic in the block and is currently receiving bids for the acquisition of 140km2 of 3D seismic and related services. The company expects to delay the acquisition of the 3D seismic to the dry period starting in January 2019, which although being later than initially planned, should result in reduced acquisition costs.

The prior consultation and permitting process required for drilling on the block has started with bidding for the required services. On completion of this process, anticipated for the third quarter of 2019, civil works will commence with a view to spudding the first exploration well before the 2019 year end.

***

PentaNova Tiburon Phase Suspended Due to Force Majeure

(PentaNova Energy Corp., 16.Aug.2018) — PentaNova Energy Corp. says the Tiburon E&P Contract is currently in Phase 3 of the exploration period with an existing minimum work obligation to acquire 200 km of 2D seismic, which can be replaced with an equivalent minimum commitment to acquire 69.75 km2 of 3D seismic.

The phase commitment is currently suspended due to “Force Majeure and Third-Party Acts.”

The Tiburon Block currently covers an area of approximately 245,850 acres in the northern most area in the department of La Guajira, Colombia.

***

Ecopetrol Cuts Planned 2018 Spending To $3-$3.5 Bln

(Reuters, Nelson Bocanegra & Julia Symmes Cobb, 15.Aug.2018) – Colombia’s state-run oil company Ecopetrol said it will invest $3 billion to $3.5 billion during 2018, less than previously estimated, because of spending delays and protests which closed three fields during the first quarter.

Ecopetrol originally planned to invest $3.5 billion to $4 billion this year, mostly in exploration and production. The company spent $1 billion during the first half, it said in an earnings report on Tuesday.

“The reduction in the plan is due to the rescheduling of maintenance, the movement of some activities to next year, the impact of protests that caused the temporary closure of some fields in the first quarter and larger savings that reduce the need for investment,” Chief Executive Felipe Bayon said on a call with investors.

“That’s why we’re giving a capex guidance of between $3 and $3.5 billion,” he added.

Savings from “efficiencies” and “lower perforation costs” account for $260 million of the reduction, Jaime Caballero, Ecopetrol’s vice president of corporate finances specified, while $240 million in spending will be moved to 2019 because of maintenance rescheduling and to allow an extension of studies on some wells.

First-quarter investment was stymied by February protests at the Castilla, Chichimene and CPO-09 fields in Meta province which led to temporary closures, Caballero said, as well as the suspension of licenses for new exploration in the La Lizama area of Santander province because of an oil spill.

Second-quarter net profit rose to 3.5 trillion pesos (about $1.1 billion), Ecopetrol said in its earnings report on Tuesday, up 170 percent from the same period in 2017 thanks to higher crude prices.

The company has pledged to boost production and explore for more oil to replenish dwindling reserves this year, drilling 620 wells and doubling the number of rigs in operation from 2017.

Consolidated oil and gas production in the second quarter rose to 721,000 barrels per day (bpd), the company said. The first-quarter protests had lowered the figure to 701,000 bpd.

Ecopetrol is targeting output of 725,000 bpd of consolidated output by the end of the year, up from 715,000 bpd in 2017.

President Ivan Duque, who took office this month, has promised to invest in Ecopetrol’s refineries and crack down on guerrilla groups that attack pipelines.

Pumping through the Cano Limon-Covenas pipeline was stopped for six months this year due to repeated attacks by Marxist ELN rebels.

(Reporting by Julia Symmes Cobb and Nelson Bocanegra; Editing by Helen Murphy and Andrea Ricci)

***

Guyana to Become 5th Largest Oil Producer in LAC Region

(Energy Analytics Institute, Piero Stewart, 15.Aug.2018) – If all goes off as planned, by 2025, Guyana will be the 5th largest oil producer in the Latin American and Caribbean region.

Source: Trading Economics

That’s according to an analysis of data posted by Trading Economics, and extrapolation of estimates of Guyana’s future oil production, as announced by Kevin Ramnarine, the former Energy Minister of Trinidad and Tobago.

“Oil production in Guyana is expected to come online at 120,000 barrels per day in 2020 and peak at 750,000 barrels per day by 2025, according to Exxon,” said Ramnarine, now an international petroleum consultant, during a webinar with Guyana’s Minister of Finance, the Honorable Winston Jordan and hosted by Caribbean Economist Marla Dukharan.

Considering initial production of 120,000 barrels per day in 2020, Guyana will first occupy the spot as the 7th largest oil producer in the LAC region, assuming no drastic changes in the other countries’ production profiles over the next couple of years.

However, in the process, by the time peak production is reached five years latter, Guyana will have surpassed OPEC producer Ecuador, assuming production in that country, as well as others, doesn’t experience a drastic decline, as has been the case in Venezuela in recent years.

***

 

Ecopetrol Reports Higher Sales, EBITDA in 2Q:18

(Ecopetrol, 14.Aug.2018) – Ecopetrol S.A. announced the Business Group’s financial results for the second quarter and the first half of 2018, prepared in accordance with International Financial Reporting Standards applicable in Colombia.

The figures included in this report are unaudited. Financial information is expressed in billions of Colombian pesos (COP), US dollars (USD), thousands of barrels of oil equivalent per day (mboed) or tons, as noted where applicable. For presentation purposes, certain figures in this report have been rounded to the nearest decimal place.

In words of Felipe Bayón Pardo, CEO of Ecopetrol:

“During the second quarter of 2018, we saw significant operational and financial achievements for the Business Group. We posted an EBITDA margin of 51%, the highest in the business group’s history, and had the highest production of the past seven quarters, at 721,000 barrels of petroleum equivalent per day, up 2.8% from the first quarter of 2018. We were able to take advantage of the favorable environment for crude prices and at the same time confirm our technical, operational and financial capacity and our commitment to safe and environmentally responsible practices.

“Net profit in the first half of 2018 totaled 6.1 trillion pesos, with cumulative EBITDA of 15.8 trillion pesos. This achievement was possible thanks to the optimal operation of the different business segments and the financial discipline of the Group’s companies, combined with better crude prices during the period. At the close of the quarter, we succeeded in maintaining a solid cash position of 15.8 trillion pesos, even after paying out 2 trillion pesos as dividends on 2017 earnings. Risk rating agencies acknowledge our successes and have confirmed our investment-grade credit rating. Indeed, Moody’s upgraded our baseline credit assessment from ba3 to ba1.

“Our commercial strategy, announced in 2015, has succeeded in yielding tangible benefits. In the first half of 2018, we succeeded in maintaining levels close to those of the first half of 2017, even with the 35% increase in the price of Brent crude and challenging environment. For the first half of 2018, the spread on the crude sales basket was -7.7 dollars per barrel, versus -7.5 for the same period in 2017.

“Average production for the quarter totaled 721,000 barrels of oil equivalent per day, some 0.6% above the same period the previous year and 2.8% over the first quarter of 2018. We succeeded in recovering from the operational issues in the first quarter, thanks to the results of the drilling campaign in fields such as La Cira, Rubiales, Caño Sur, Dina, Quifa and Castilla. The increased activity will lead us to the path of growth and ensure meeting our annual production goal at a range of 715,000 to 725,000 barrels of petroleum equivalent per day. On the other hand, the pilot recovery programs are also advancing satisfactorily; currently 21 pilots are in operation, 16 of which are still in the expansion phase.

“In the exploratory campaign, we scored a success during the quarter by confirming the presence of dry gas and light crude at the Bufalo-1 well, in the Valle Medio del Magdalena basin. We have also completed drilling of the Coyote-2 and Coyote-3 appraisal wells, located in the Valle Medio del Magdalena, as well as Capachos Sur-2, located in the Piedemonte. These three wells are undergoing assessment to determine their commercial feasibility. We expect to drill at least 12 exploratory wells in 2018.

“As part of our Near Field Exploration strategy, in late May the Infantas Oriente field in Barrancabermeja (Santander) was declared commercial. This allowed us to incorporate in record time the reserves associated with the Infantas Oriente-1 discovery, the assessment of which was carried out at the start of the year.

“In the transport segment, I would like to note the resumption of operations on the Caño Limón – Coveñas oil pipeline in June and the stability of the transport system for heavy crudes with viscosity greater than 600 centistokes (cst – a measure of viscosity), thereby structurally reducing dilution requirements.

“The reversal strategy implemented since 2017 on the Bicentenario oil pipeline allowed for reducing the impact of the attacks and illegal valves affecting the Caño Limón – Coveñas oil pipeline, preventing deferred production in its surrounding fields. In the first half of 2018, 30 reversal cycles were completed on the Bicentenario oil pipeline.

“The Refining segment saw outstanding operational performance in the second quarter, achieving stable throughput of 374,000 barrels per day.

“In the second quarter of 2018, the Cartagena refinery continued to demonstrate the consolidation and optimization of its operations with average throughput of 153,000 barrels per day and throughput composition of 79% domestic crude and 21% imported crude, thus contributing significantly to reducing the Business Group’s cost of sales. In June, it achieved a record in the use of local crudes, at 83% of its diet. The gross refining margin for the Cartagena refinery during the quarter was USD 11.1/bl, up 44% over the same period the previous year (USD 7.7/bl), thus posting 10 consecutive months with gross margins in the double digits.

“Throughput and production at the Barrancabermeja refinery was up over 9% for the quarter versus the same quarter of 2017, thanks to the implementation of initiatives to segregate light and intermediate crudes, thus increasing their availability. The average refining margin for the quarter was USD 10.5/bl, affected primarily by the increase in the price of the crude basket versus Brent.

“In line with the Business Group’s Efficiencies strategy, in the second quarter of the year we incorporated efficiencies representing 429 billion pesos, up 17% over the second quarter of 2017. Thus, cumulative efficiencies in the first half of 2018 totaled 892 billion pesos, for a total of 8 trillion pesos since the launching of the Transformation Program in 2015.

“In addition to the above, we are particularly proud of our success in implementing operational and logistics adjustments in record time throughout the entire supply chain, in order for diesel deliveries to Medellin and its Metropolitan area to have a sulfur content of below 25 parts per million. This is in line with our commitment to the environment, thus contributing to the improvement of the city’s air quality.

“We have also committed to the massive transportation system Transmilenio S.A. to supply natural gas and B2 diesel with a maximum sulfur content of 10 parts per million for the renovation of the bus fleet of phases I and II, thus enabling the entry of EURO VI technologies.

“Together with the national and local institutions, Ecopetrol will continue to improve the quality of fuels for the whole country as set in the enhancement path established in the CONPES document for the improvement of air quality.

“In order to achieve a significant effect, it is not only necessary to improve fuels, but it is also necessary to carry out other actions such as improving the technology and age of the vehicle fleet, as well as promoting other initiatives related to road maintenance, mobility and the reduction of emissions in fixed sources, among others.

“Ecopetrol remains focused on operational excellence, value creation, a commitment to ethics and transparency, safety as a pillar of its operations and care for the environment. We are committed to profitable growth in production and reserves to deliver results that benefit the company’s sustainability and the country’s energy security.”

To review the full report please visit the following link:

https://www.ecopetrol.com.co/english/documentos/Ecopetrol%20-%20Reporte%202Q%202018%2013%2008%202018%20english%20VF.pdf

***

Colombia Says Odebrecht Bribes Larger Than Previously Known

(Bloomberg, Ezra Fieser, 15.Aug.2018) – Odebrecht SA, the Brazilian construction giant, paid at least $32.5 million in bribes in Colombia — three times the amount it confessed to almost two years ago when it admitted to carrying out one of the largest graft schemes in corporate history, Colombia’s attorney general said.

Nestor Humberto Martinez speaks to the press in Cali, Colombia. Photographer: Luis Robayo/AFP via Getty Images

In an interview in his Bogota office, Attorney General Nestor Humberto Martinez described a deeper and more pervasive scandal than the one Odebrecht admitted to in a 2016 plea agreement with Brazilian and U.S. authorities. That agreement listed $11.1 million in bribes paid to win two Colombian infrastructure projects as part of a plot that reached a dozen countries in the Americas and Africa. Martinez said the $11.1 million came from Brazil and the rest from Colombian contracts, making a new total of $32.5 million.

Odebrecht bribed dozens of Colombian officials and executives to win six government contracts from 2009 to 2014, Martinez said. Almost three dozen people have already been indicted and five convicted, including an ex-senator and a former deputy minister. The prosecutor’s office has also submitted evidence to the supreme court against an additional nine politicians.

$3.5 billion

The exceptional global scope of Odebrecht’s bribery emerged in 2016 when the company reached a $3.5 billion settlement with U.S., Brazilian and Swiss authorities. It admitted to having paid $788 million in a dozen countries for more than 100 contracts in what the U.S. Justice Department called the largest foreign graft case in history.

The company has since reached settlements with several Latin American governments, including the Dominican Republic, Peru and Panama. In Colombia, the case has dragged on and Odebrecht has implied that the delay is a result of self-protective foot-dragging. In addition, Odebrecht is seeking compensation of as much as $1.3 billion for the work it did on the nation’s biggest highway before the bribery scandal stopped it. Hearings in that case have been delayed until Sept. 11.

Martinez said the probe has taken so long because it’s complex and deep, and Colombia wanted to do its own investigation. Alone in the region, Colombia rejected offers from Brazil to share evidence because they came with the condition that neither Odebrecht nor its executives could be implicated in the crimes.

“Colombia was the only country that did not agree to receive evidence from the Brazilian prosecutors,” he said. “That’s why we were able to get this investigation to the point where it is. That’s why there are three Brazilians indicted with arrest orders pending.”

The three — Amilton Hideaki Sendai, Eder Paolo Ferracuti and Marcio Marangoni — all held positions with Odebrecht or a subsidiary and are believed to be in Brazil, prosecutors said.

Calls to Odebrecht Colombia seeking comment have gone unanswered.

Conflict of Interest?

Martinez, a cabinet member in three Colombian governments, has been accused of conflict of interest in the case because before becoming attorney general in 2016, he was a key lawyer for Grupo Aval, the parent company of Odebrecht’s Colombia partner on one of its contracts. The implication has been that he’s protecting his previous employer.

Grupo Aval, Colombia’s biggest banking group and controlled by Luis Carlos Sarmiento Angulo, partnered in 2010 with Odebrecht to build a section of a 1,000-km (621-mile) road called Ruta del Sol connecting the Bogota region with the Caribbean coast. It did so through Corficolombiana SA, which it controls. A family-held construction company, Solarte Group, also took a minority stake.

Martinez rejected the conflict-of-interest accusation. He said that on the two occasions that Odebrecht cases came across his desk, he recused himself, with court permission. He showed a copy of one such court decision, dated June 21. Martinez said he would similarly step aside for any future Odebrecht cases.

Maria Paulina Riveros, the deputy attorney general who has stood in for Martinez, said one of those arrested is Jose Elias Melo, former chief executive officer of Corficolombiana. The trial against Melo, who is under house arrest, is expected to begin this month.

“It surprises me that there’s a perception of different treatment for those linked to the case,” Riveros said. Prosecutors have charged “well-known people such as Mr. Melo, as well as members of congress.”

Final Stretch

Riveros said the case against Odebrecht is in its final stretch, and most of the investigation should conclude before the end of the year.

Odebrecht was building Ruta del Sol and had five other contracts in Colombia. Prosecutors said it set up shell companies that submitted invoices for work they never did, used the proceeds to pay expenses and middle men, and channeled whatever was left over into bribes.

The scheme began to unravel when prosecutors received cooperation from former Senator Otto Nicolas Bula Bula and ex-Deputy Minister of Transportation Gabriel Garcia Morales, both of whom were charged.

“It was like a chain,” Riveros said. “When they began to cooperate, all of these other lines of the investigation started to unfold.”

— With assistance by Matthew Bristow, and Jose Enrique Arrioja

***

Andrade Calls Out to Duque Over Odebrecht Case

(TheAndradeStory.com, 13.Aug.2018 – On Thursday (8/9) afternoon, the Office of the Attorney General of Colombia announced two new charges against the former head of the National Infrastructure Agency (“ANI”), Luis F. Andrade. These are in addition to eight previous charges placed against him last year related to the Odebrecht corruption scandal.

Mr. Andrade, a U.S. citizen, led the creation of ANI in 2011 and served as its President for six years. Previously, he was a Senior Partner at McKinsey & Co., where he worked for 25 years. Since December, Mr. Andrade has been serving in preventive detention with a possible sentence of up to 30 years. In the meantime, the executives of Odebrecht and Grupo AVAL, who might have authorized or might have known about the illegal payments are not being charged or being charged with lesser offenses by the Prosecutor.

The Attorney General, the nation’s highest legal officer, has close ties to Odebrecht and its local partner, Grupo AVAL. He worked as external counsel for the Odebrecht PPPs in Colombia and for two decades was external counsel to Grupo AVAL. At the time he issued a favorable legal opinion for the decision, which is the main object of charges against Andrade. Then, as President Santos’s Chief of staff, he participated in the approval process for which Andrade is being charged. The Attorney General’s close involvement in the charges involving Mr. Andrade’s case make him uniquely unqualified to render legal judgement absent of bias. An independent investigator is needed to oversee all cases and charges involving Odebreht or Grupo AVAL.

With the new charges, Andrade continues to fall victim to an aggressive persecution by the Attorney General’s office and its conflicted interests. For this, Mr. Andrade is calling for newly elected President Duque to appoint an independent investigator to oversee the cases involving Odebrecht and Grupo AVAL. It is only tenable to investigate thoroughly those who might have authorized or might have known about the illegal payments through an independent investigator given the evident conflicts of interest in the Attorney General’s office.

The following statement can be attributed to Mr. Luis F. Andrade:

“I am concerned for my family and Colombia. The aggressive persecution by the Attorney General’s office is founded in bias and contrary interests. I believe an independent and thorough investigation into the Odebrecht contracts in Colombia – including my case – is necessary. Transparency is required to strengthen Colombia’s institutions if the United States and Colombia want to achieve the mutual interest of putting an end to drug-trafficking and organized crime. I look forward to continuing to correct the record as my reputation and innocence are besmirched – this is why I chose to launch a website with the facts of the case as they occurred.”

More details here: http://www.theandradestory.com/

***

Mexico’s CNH to Speak at EnerCom Conference

(Energy Analytics Institute, Jared Yamin, 9.Aug2018) – The 23rd annual EnerCom conference will take place in the Denver Downtown Westin Hotel on Aug. 19-22, 2018.

Companies with exposure to Latin America that will participate in special panels during the event include the following:

Oil & Gas in Mexico Panel

— Talos Energy Inc. – Gulf Coast region and Gulf of Mexico offshore operations

— International Frontier Resources – drilling the Tecolutla Block onshore Mexico

— Mexican Commission National Hydrocarbons (CNH) – Mexico’s national oil and gas regulator

International Panel

— Jadestone Energy, Inc. – Asia Pacific E&P

— Valeura Energy Inc. – Canadian E&P with principal operations in Turkey

— GeoPark – Latin oil and gas company developing assets in Chile, Colombia, Brazil, Peru and Argentina

***

Ecopetrol Announces 2Q:18 Earnings, Conference Call

(Ecopetrol, 9.Aug.2018) – Ecopetrol S.A. announced that on August 14, 2018 after market close, it will release its financial and operating results for the second quarter of 2018. On Wednesday, August 15th, Ecopetrol’s senior management will host two conference calls to review the results. Please find below the timing, dial-in and links to access the conferences:

Participants from different countries may look for different international numbers to the ones mentioned above by consulting the following link:

http://web.meetme.net/r.aspx?p=12&a=UXzQuWKCgSyMQL

The earnings release, slide presentation and live webcast of the conference calls will be available on Ecopetrol’s website: www.ecopetrol.com.co and at the following links:

http://event.onlineseminarsolutions.com/wcc/r/1806327-1/E934C8DEA7B6C6E444887579EE01B359 (Spanish)

http://event.onlineseminarsolutions.com/wcc/r/1806354-1/B163754F8BF385987B8E2BFC078C5A8F (English)

Please verify in advance proper operation of the webcast in your browser. We recommend the usage of the latest versions of Internet Explorer, Google Chrome and Mozilla Firefox.

The replay of the calls will be available on Ecopetrol’s website (www.ecopetrol.com.co).

***

Ecopetrol Names New Corporate VP of Finance

Jaime Caballero Uribe. Source: Ecopetrol

(Ecopetrol, 8.Aug.2018) – Ecopetrol S.A. announced appointment of Jaime Caballero Uribe as the new Corporate Vice President of Finance (Chief Financial Officer).

The appointment is effective as of August 7, 2018.

Mr. Caballero has more than 20 years of experience with companies in the oil and gas sector, both in Colombia and abroad. He has served as Ecopetrol’s CFO for the Downstream Segment since July 2017. During this period he has also represented Ecopetrol at the Board of Directors of Propilco and Gases del Caribe, among other companies.

His experience prior to Ecopetrol includes 17 years at BP plc, where he held leadership positions in Colombia, North America, Africa and Europe, most recently as CFO for the Brazil region (encompassing Brazil, Uruguay, Colombia and Venezuela).

Mr. Caballero is an attorney with a degree from the Universidad de los Andes (Colombia). He has an MBA in Energy Business from the Fundação Getulio Vargas (Brazil), and has carried out executive studies in advanced financial management at Duke University and Wharton School of Business (University of Pennsylvania).

Mr. Caballero will be the compliance agent for financial reporting to the Colombian Finance Superintendency and the international markets.

***

Ecopetrol Reports Resignation of María Fernanda Suárez

(Energy Analytics Institute, Piero Stewart, 6.Aug.2018) – María Fernanda Suárez has resigned from Ecopetrol.

The state oil company announced in an official statement that the resignation was due to her appointment as the Republic of Colombia’s Minister of Mines and Energy, effective August 6, 2018.

***

Frontera Announces Second Quarter 2018 Results

(Frontera Energy Corporation, 3.Aug.2018) – Frontera Energy Corporation released its Interim Condensed Consolidated Financial Statements for the second quarter of 2018, together with its Management, Discussion and Analysis (MD&A). These documents will be posted on the Company’s website at www.fronteraenergy.ca and SEDAR at www.sedar.com. All values in this news release and the Company’s financial disclosures are in United States dollars unless otherwise stated.

SECOND QUARTER 2018 AND OTHER OPERATIONAL HIGHLIGHTS

Exploration and Development Update

— Acorazado-1 exploration well in the Llanos 25 block has reached total depth of 15,470 feet, a week ahead of schedule and under budget. Wireline logging operations are ongoing and depending upon results, testing is expected to be completed by the end of August.

— Delfin Sur-1 exploration well offshore Peru on Block Z-1 started drilling on July 14, 2018, is currently drilling at 6,000 feet and is expected to reach total depth by the middle of August.

— Alligator-4 development well in the Guatiquia block is producing at 1,370 bbl/d of 19.5 degree API oil.

Strong Financial Position and Results

— In July 2018, the Company exercised its right to terminate the Caño Limón (“CLC”) and Bicentenario (“BIC”) pipeline transportation agreements. As a consequence of these terminations, the Company is no longer committed to payments of ship-or-pay fees on these pipelines. As at June 30, 2018, these terminated contracts represented $1.36 billion in future transportation commitments.

— Separately Frontera reduced future transportation commitments on the Ocensa pipeline by over $178.3 million as a result of the successful settlement agreement in an arbitration on tariffs concerning the P-135 Project.

— The Company’s total cash position, including restricted cash, increased 5% quarter-over-quarter to $730.1 million at the end of Q2 2018.

— Total sales (after realized loss on risk management contracts) of $350.1 million were 40% higher than Q1 2018 and 17% higher than Q2 2017.

— The Company generated cash flow provided by operating activities of $108.4 million, an excess of $21.6 million above capital expenditures of $86.8 million.

— Net loss of $184.4 million, or $1.84/share, which includes an impairment of $107.7 million relating to the carrying value of the investment in Bicentenario, as a result of the termination of the BIC pipeline ship-or-pay agreement. This compares to a net loss of $3.1 million or $0.03/share, in the first quarter of 2018 and a net loss of $51.5 million or $0.52/share in the second quarter of 2017.

— Operating EBITDA of $124.7 million was 45% higher than Q1 2018 and 44% higher than Q2 2017.

— Operating Netback of $26.76/boe was 10% higher than Q1 2018 and 32% higher than Q2 2017.

— Adjusted FFO of $121.3 million was 254% higher than Q1 2018 and 163% higher than Q2 2017.

— The Company successfully completed an offering of $350 million senior unsecured notes at a coupon rate of 9.7%, due 2023 (“Senior Unsecured Notes”). Proceeds of the offering were used to repurchase its $250 million senior secured 10.0% coupon notes due 2021 (“Senior Secured Notes”) and for general corporate purposes.

— Implemented a Normal Course Issuer Bid (“NCIB”) for the repurchase of approximately 3.5% of the Company’s issued and outstanding common shares of which 33,100 shares were repurchased in July 2018 at a cost of $0.4 million.

Production

— Net production decreased 3% quarter-over-quarter to 64,140 boe/d in Q2 2018 as a result of reduced production from Block 192 relating to a force majeure event on the NorPeruano pipeline in Peru and increased high-priced participation payment (“PAP”) royalty volumes at Quifa SW block in Colombia.

— The NorPeruano pipeline in Peru, which caused the force majeure event for production on Block 192 is expected to resume normal operations by the end of August.

— The Company completed the drilling of 24 development wells during Q2 2018, compared to 33 development wells and three exploration wells in Q1 2018.

— Total capital expenditure of $86.8 million during Q2 2018, were 10% higher than Q1 2018 as a result of spending related to exploration drilling of the Acorazado-1 exploration well on Llanos 25 block, preparation for the Delfin Sur-1 exploration well on Block Z-1 and the start of the water handling expansion project in the Quifa area.

Updated 2018 Guidance

— The Company is increasing annual Operating EBITDA guidance by 6% at the midpoint to $400 to $450 million from $375 to $425 million and reiterates annual guidance for production of between 65,000 boe/d and 70,000 boe/d. This is in the context of year to date production of 65,178 boe/d which has been negatively impacted by third party events which include the force majeure event on the NorPeruano pipeline in Peru, increased PAP royalties at Quifa SW, and a now resolved community dispute on the Cubiro block.

Richard Herbert, Chief Executive Officer of Frontera, commented:

“Frontera had a very strong quarter. The recent terminations of our ship-or-pay contracts on the Caño Limón and Bicentenario pipelines will significantly reduce our future commitments by $1.36 billion and eliminate fees paid on suspended pipeline capacity. In 2017, suspended pipeline capacity fees totalled $122.5 million in addition to total company transportation costs of $346.3 million.

We successfully refinanced our secured $250 million, 10% coupon senior exit notes due in 2021 with unsecured $350 million, 9.7% coupon senior notes due in 2023. The refinancing provides the Company with additional capital as well as the increased financial flexibility needed to execute and deliver on our strategy and plans for 2019 and beyond. This flexibility has already enabled Frontera to execute a normal course issuer bid for 3.5% of the outstanding shares of the Company.

I am also pleased to report that we delivered strong financial results in the second quarter which generated nearly $125 million of Operating EBITDA and cash flow from operations in excess of capital expenditures. We are optimistic that improved operating efficiencies combined with continued strong international Brent oil prices will enable the Company to deliver strong financial results for the second half of 2018, which is reflected in our revised Operating EBITDA guidance. At Guatiquia we have had continued success on the Alligator field with the Alligator-4 well currently producing in excess of 1,300 bbl/d, in addition to the Alligator-3 well which is producing at over 1,400 bbl/d. We have drilled the Acorazado-1 exploration well ahead of schedule and under budget. We have also begun drilling the Delfin Sur-1 exploration well offshore Peru with results expected towards the end of August.”

Net production in the second quarter of 2018 totalled 64,140 boe/d, a decrease of 3% compared with the first quarter of 2018. The decrease in the quarterly production was primarily a result of reduced production from Block 192 in Peru due to the declaration of force majeure by Petroperu S.A. (“Petroperu”) on the NorPeruano pipeline which transports crude oil from Block 192 to the export terminal at Bayovar. Prior to the force majeure event, which suspended operations on June 4, 2018, the block was producing approximately 8,600 bbl/d net to Frontera. Petroperu began repairing the pipeline in mid-June with repairs expected in August. Upon reactivation of the pipeline, Frontera will commence pumping crude oil from storage and ramp production back up to pre-force majeure levels.

Production from Colombia remained stable during the quarter, with increasing production in the light and medium oil business unit offsetting reduced production in heavy oil, a result of higher PAP royalty volumes at Quifa SW. Positive production impacts included the resumption of normal operations from the Cubiro block during the second quarter and production from new exploration discoveries at the Alligator and Coralillo wells on the Guatiquia block which were connected to production facilities during the quarter. In addition, an intensive work-over campaign was conducted in June which has provided for the recovery of deferred production volumes for the remainder of 2018. These gains helped offset the impact of approximately 700 bbl/d of volumes lost as a result of PAP royalty volumes at Quifa SW.

During the second quarter of 2018, total capital expenditures were $86.8 million, 10% higher than $78.8 million in the previous quarter and 130% higher in comparison with $37.8 million in the second quarter of 2017. The increase during the second quarter relates to the initiation of drilling operations for the Acorazado-1 exploration well on the Llanos 25 block in Colombia, preparation relating to the drilling of the Delfin Sur-1 well offshore Peru on Block Z-1 and the start up of construction of additional water handling facilities in the Quifa area. Increased facilities spending in the quarter also connected the Alligator discoveries in the Guatiquia block to the main crude oil and water processing facilities on the block.

A total of 24 development and appraisal wells were drilled in the second quarter of 2018, in line with 25 wells planned. A number of development wells at Quifa SW originally planned for the first half of 2018 have been deferred to the second half of 2018 to match the start up of the increased water handling capacity project in the fourth quarter of 2018. The Company currently has nine drilling rigs operating, five in our Quifa SW heavy oil area, two at our Guatiquia light oil block, one on the Llanos 25 block and one on Block Z-1 offshore Peru. The Company expects to see a significant ramp-up of development well drilling from August until the end of the year. During the third quarter of 2018 the Company plans to drill 39 development wells and one exploration well. Over 32 development wells and two water injector wells are targeted to be drilled in the Quifa SW area.

Exploration and Development Update:

On July 23, the Acorazado-1 exploration well on the Llanos 25 block in Colombia reached total depth of 15,470 feet, a week ahead of schedule and under budget. Wireline logging activity used to evaluate and analyze the reservoir section is ongoing.

During the second quarter, the Company continued to have good results in the Alligator development in the Guatiquia block. Alligator-3 was drilled to a depth of 12,416 feet and started production on May 10, 2018 with an electrical submersible pump. During June 2018, the well produced at an average rate of 1,691 bbl/d, of 17.6 degree API crude with a 42% water cut and an average bottomhole pressure of 2,692 psi from the Lower Sand-1A reservoir.

On June 18, 2018, the Company began drilling the Alligator-4 development well on the Guatiquia block. On July 15, 2018, the well reached a total depth of 12,800 feet (12,315.4 feet TVD), encountering 12 feet of net pay in the Lower Sand-1A formation. The well was completed in the Lower Sand-1A formation with an electrical submersible pump. The Lower Sand-1A formation has been flow tested for three days at an average rate of 1,370 bbl/d of 19.5 degree API oil with an average water cut of 21% at stabilized bottom-hole flowing pressure with an approximate 21% drawdown. The well has produced a total of 3,368 bbls of oil over two days of testing.

The Company has received approval from its partner, Ecopetrol S.A. (“Ecopetrol”) to commence the long-term testing of the Jaspe-6D exploration well in the Quifa area that was initially drilled and tested in January 2018. This test is expected to allow the Company to move ahead with the drilling of two additional appraisal wells in late 2018, with the potential for declaring commerciality in early 2019.

The Company is in advanced discussions with its partner Ecopetrol in the Quifa SW block to implement a pilot multi-lateral horizontal development well program for 2019, with the expectation, that if successful drilling costs will be lower with resulting increased production and recovery rates.

In our offshore Peru operations in Block Z-1, mobilization of the Petrex-10 drilling rig was completed and the drilling of the Delfin Sur-1 exploration well began on July 14, 2018. The well is currently drilling at over 6,000 feet and is planned to be drilled to a total depth of 9,750 feet by the middle of August 2018.

The average Brent oil benchmark price increased by $7.74/bbl, or 12%, in the second quarter of 2018 to an average of $74.97/bbl, compared to $67.23/bbl in the first quarter of 2018. Brent oil benchmark price averaged $50.79/bbl in the second quarter of 2017. The Company’s realized oil price of $70.44/bbl in the second quarter of 2018 excludes the impact of $11.12/bbl of realized losses on risk management contracts. The Company remains hedged on approximately 60% of net daily production volumes until the end of October 2018 at an average ceiling price of $60.05/bbl compared to an average ceiling price received of $55.60/bbl in the first half of 2018. The Company is unhedged in November and December 2018.

For the second quarter of 2018, total sales after realized risk management contracts, increased 40% to $350.1 million compared to $249.5 million in the first quarter of 2018 and increased 17% from $299.5 million in the second quarter of 2017. Sales volumes were 6% higher than net production volumes as result of the 500,000 barrel benefit (approximately 5,500 bbl/d) from the oil cargo that was sold with crude oil inventory that had built up from prior periods. Sales in Peru decreased $24.3 million compared to the first quarter of 2018 as a cargo scheduled to load in June was not loaded until July. Oil sales in Peru continue despite the interrupted production on Block 192 as a result of a force majeure event. Historically, sales volumes trend between 3% and 5% below production volumes as a result of internal consumption.

During the second quarter of 2018, net loss attributable to equity holders of the Company was $184.4 million or $1.84/share, compared with a net loss of $3.1 million or $0.03/share, in the first quarter of 2018. The majority of the loss was attributable to an impairment of $107.7 million the Company recorded on its investment in Bicentenario, as a result of the termination of the BIC pipeline ship-or-pay agreement. In addition, other non-recurring losses included increased losses on realized risk management contracts of $26.2 million, a loss from the extinguishment of debt of $25.6 million and the reclassification of a currency translation adjustment relating to the sale of Petroelectrica de los Llanos of $50.8 million.

Operating EBITDA of $124.7 million or $1.25/share for the second quarter of 2018, was 45% higher in comparison with $86.0 million or $0.87/share achieved in the first quarter of 2018, and 44% higher than the second quarter of 2017, as a result of higher realized oil prices and higher sales volumes as noted above.

Adjusted FFO totalled $121.3 million or $1.21/share for the second quarter of 2018, an increase of 254% compared to $34.3 million or $0.34/share achieved in the first quarter of 2018, and 163% higher than the second quarter of 2017. The $87.0 million increase in adjusted FFO in the second quarter of 2018 was attributed to higher Operating EBITDA of $38.7 million and $48.4 million of dividends received from investments in associates ($0.0 million in the first quarter of 2018).

Strong Balance Sheet:

The Company continued to build cash during the quarter, with a total cash position of $730.1 million, as at June 30, 2018, an increase of 5% and 35% from the previous quarter and the second quarter of 2017, respectively. Unrestricted cash increased to $550.8 million as at June 30, 2018, from $515.8 million as at March 31, 2018. The increase in cash during the second quarter of 2018 was due to cash flow from operations in excess of capital expenditures and the refinancing of the Senior Secured Notes with Senior Unsecured Notes.

Working capital decreased 8% to $317.4 million during the second quarter of 2018, compared to $343.2 million at March 31, 2018.

The Company has reduced future transportation commitments in the Ocensa pipeline by over $178.3 million as a result of the successful settlement agreement in an arbitration on tariffs concerning the P-135 Project. Furthermore, the Company exercised its rights to terminate the CLC and BIC pipeline transportation agreements. As a consequence of these terminations, the Company is no longer contractually committed to payments of ship-or-pay fees on these pipelines. As at June 30, 2018, these terminated contracts represented $1.36 billion in future commitments.

The Company is hedged on approximately 60% of production between July and October 2018 with ceiling prices between $58.31/bbl and $61.83/bbl. Starting in November, the Company will be unhedged on 100% of production with current forward strip Brent oil prices in excess of $72/bbl.

In June 2018, as part of the refinancing of the Company’s Senior Secured Notes, Fitch Ratings Inc. assigned an initial rating of “B+/RR4” to the Company’s Senior Unsecured Notes, and maintained the “B+/Stable” Long Term Foreign Currency IRD. Standard & Poor’s assigned an initial rating of “BB-” to the Senior Unsecured Notes along with a reaffirmed Corporate Credit Rating of “BB-/Stable”.

The Company implemented an NCIB for the repurchase of approximately 3.5% of the Company’s issued and outstanding common shares of which 30,100 shares were repurchased in July 2018 at a cost of $0.4 million.

Annual Guidance Update:

The Company has increased its annual Operating EBITDA guidance by 6% at the midpoint to $400 to $450 million from $375 to $425 million as a result of increasing the Brent oil price assumption from $63/bbl to $70/bbl. As a result of the recent arbitration settlement on the P-135 Project pipeline tariffs combined with year to date results, the Company is narrowing the estimated range of transportation costs to $12.50/bbl to $13.50/bbl from $12.50/bbl to $14.50/bbl. Original 2018 Operating EBITDA guidance assumed uptime on the BIC pipeline of 50% in the first half of 2018 and the implementation of a revised ship or pay agreement in the second half of 2018. Guidance metrics for net production, production costs, general and administrative expenses and capital expenditures remain unchanged.

Frontera Energy Corporation is a Canadian public company and a leading explorer and producer of crude oil and natural gas, with operations focused in Latin America. The Company has a diversified portfolio of assets with interests in more than 30 exploration and production blocks in Colombia and Peru. The Company’s strategy is focused on sustainable growth in production and reserves.

***

Frontera Announces 2Q:18 Conference Call

(Frontera Energy Corporation, 3.Aug.2018) – Frontera Energy Corporation scheduled a conference call for investors and analysts for 3 August 2018 at 8:00 a.m. (MDT), 9:00 a.m. (GMT-5) and 10:00 a.m. (EDT). Participants will include Gabriel de Alba, Chairman of the Board of Directors, Richard Herbert, Chief Executive Officer, David Dyck, Chief Financial Officer and select members of the senior management team.

A presentation and webcast link will be available on the Company’s website prior to the call, which can be accessed at www.fronteraenergy.ca

Analysts and interested investors are invited to participate using the following dial-in numbers:

Participant Number (International/Local): (647) 427-7450
Participant Number (Toll free Colombia): 01-800-518-0661
Participant Number (Toll free North America): (888) 231-8191
Conference ID: 2755797

Webcast: www.fronteraenergy.ca

A replay of the conference call will be available until 10:59 p.m. (GMT-5) and 11:59 p.m. (EDT), Friday, August 17, 2018 and can be accessed using the following dial-in numbers:

Encore Toll Free Dial-in Number: 1-855-859-2056
Local Dial-in-Number: (416)-849-0833
Encore ID: 2755797

***

Colombia Must Boost Investments 55% to Maintain Output

Oil field in Colombia. Source: Ecopetrol

(Energy Analytics Institute, Piero Stewart, 27.Jul.2018) – The South American country needs to boost investments from an projected $4.5 billion in 2018 to a level of $7 billion over the next four years in order to maintain oil production and also increase proven reserves.

The investments are needed in order for Colombia’s oil sector to continue to play a leading role in terms of national finance contributions, reported the daily newspaper El Tiempo.

Additionally, conditions must be met to produce a sustained upturn in investment in exploration and production activities, which will assist the country maintain its current production level of some 860,000 barrels per day, reported the daily, citing Colombian Petroleum Association (ACP) President Francisco José Lloreda.

The increased investments will also allow Colombia to increase its proven crude oil reserves — which amounted to 1.782 billion barrels in 2017 — by an additional 2 billion barrels, and sustain revenues to guarantee macroeconomic stability and meet the goals of the Medium-Term Fiscal Framework.

Lloreda estimates that between 2018 and 2022 that the hydrocarbon sector could generate around 100 trillion pesos in tax revenues for the country through contractual economic rights, dividends and royalties, which would leverage initiatives to continue generating progress and improve the quality of life of Colombians.

***

Colombia Could Create New Oil Bid System

Orlando Velandia, head of Colombia’s National Hydrocarbons Agency (ANH), speaks to Reuters in Bogota, Colombia July 23, 2018. REUTERS/Carlos Julio Martinez

(Reuters, Luis Jaime Acosta, 24.Jul.2018) – Colombia is preparing changes to its bidding process for oil areas in an effort to increase investment and find new reserves, the head of the oil regulator said, after repeated cancellations of its latest oil round.

The changes, including contracts adjusted to international crude price fluctuations and the chance for companies to propose exploration on land not yet on offer, will help attract spending and nearly double reserves to at least 10 years of consumption, Orlando Velandia of the National Hydrocarbons Agency (ANH) said.

“We’re looking to improve conditions for the country, to achieve competitiveness and motivate companies to make proposals about areas,” Velandia said in an interview on Monday.

The ANH in April postponed the deadline to receive offers for 15 onshore areas at its Sinu-San Jacinto auction until the second half of the year. It was the sixth time the round was delayed.

Colombia is the third Latin American country hosting oil auctions this year, after Mexico and Brazil. Its bidding round comes after a four-year pause when low oil prices stopped many Latin American countries from offering acreage.

Colombia has been awarding blocks to the highest bidder every two to three years, but bidding in the new system will privilege the first company that requests access to additional areas, Velandia said, likely improving the offers of other bidders.

“Once we evaluate the areas and they’re added to the map, companies can make offers in a continual competitive process,” Velandia said. Companies would no longer be required to outline planned investments or compensate the government if spending falls short, he added.

Colombia could offer at least 20 onshore and offshore Caribbean blocks with the changes, Velandia said.

Companies having problems with social protests or delays in environmental licensing could be offered alternative areas, he said.

Protests, along with pipeline bombings, are a major headache. State-run Ecopetrol lost some $100 million earlier this year because of blockades.

The country has 1.78 billion barrels of reserves, equivalent to about 5.7 years of consumption. Colombia produces about 860,000 barrels per day (bpd) of crude, half for export.

The proposed changes must be approved by the ANH’s directive counsel, which includes the ministers of energy and finance.

Changes not approved before Aug. 7 will go to the government of President-elect Ivan Duque, who has promised tax cuts, investment in Ecopetrol’s refineries and a crackdown on attacks by rebel groups.

Reporting by Luis Jaime Acosta; Writing by Julia Symmes Cobb; Editing by Helen Murphy and Richard Chang

***

Moody’s Upgrades Ecopetrol Rating

(Energy Analytics Institute, Piero Stewart, 18.Jul.2018) – The risk-rating agency Moody’s increased the baseline credit assessment (BCA) two notches, to ba1 from ba3 for Colombia’s state oil company.

The agency said the higher BCA was primarily due to Ecopetrol’s “solid metrics and progress in its strategy of growth and adding to reserves, with a reserves replacement index of 126% at the end of 2017,” reported Ecopetrol in an official statement, citing a Moody’s press release.

In the release, Moody’s highlighted Ecopetrol’s four areas of growth:

1. Implementation of improved recovery and infill projects,

2. Exploration,

3. Assessment of opportunities in non-conventional deposits, and

4. Inorganic growth leveraged on its strong cash position.

Moody’s also stressed “Ecopetrol’s solid liquidity and the management team’s commitment to protecting credit metrics.”

The agency maintained Ecopetrol’s rating at Baa3 with a stable outlook.

***

Duque Names Maria Fernanda Suarez Energy Minister

(Reuters, 18.Jul.2018) – Colombia’s President-elect Ivan Duque on Wednesday named Maria Fernanda Suarez as mining and energy minister when he takes office in August, a role that will require her to bolster oil production to help weak economic growth and settle messy mining disputes.

Suarez, 44, is currently executive vice president at state oil company Ecopetrol. She served as director of public credit at the finance ministry and as vice president of investments for the Porvenir pension fund. She has also held senior positions at Citibank, ABN AMRO and Bank of America.

Suarez has a Masters degree in public policy from Georgetown University. She will replace German Arce.

“She has a brilliant resume in the public and private sectors,” Duque said in a statement.

As mines and energy minister, Suarez faces a difficult task as Colombia struggles to increase oil production to help increase revenue and bolster the weak economy after years of weak international oil prices.

“With her, we will promote greater diversification of national energy, efficiency and competitiveness in the sector, provide energy security for Colombia, and social and environmental responsibility in all energy mining production sectors,” Duque said.

At current rates of production, Colombia has less than six years worth of oil reserves, the energy ministry says, and urgent investment in exploration is needed to replace reserves.

Duque’s solution to dwindling oil reserves is to encourage investment in exploration, which he says could provide years more oil production, and give tax relief to the sector.

He has also pledged additional investment at state-run Ecopetrol’s refineries to allow exports of more higher-value derivatives.

Still, with the economy growing at an expected pace of just 2.7 percent this year and a budget deficit that needs to be reduced, funding such expenditure may be tough.

The Colombian Petroleum Association (ACP), says the industry needs to spend up to $7 billion a year just to keep output between 800,000 and 860,000 barrels per day.

Oil companies are already grappling with security concerns as well as local referendums – on whether to allow mining in certain areas – and environmental court rulings that have stymied major mining projects in Latin America’s fourth-largest economy.

A recent paper by the ACP, which represents private crude producers, warned that planned referendums put one-fifth of oil production at risk.

Private oil companies plan to invest up to $4.9 billion this year, ACP said, while Ecopetrol plans to spend up to $4 billion.

(Reporting by Helen Murphy Editing by Nick Zieminski)

***

Colombia Names New Mining Minister

Colombia new Mining Minister. Source: Mining Ministry.

(Energy Analytics Institute, Piero Stewart, 18.Jul.2018) – Colombia’s President elect Iván Duque named Ecopetrol Executive Vice President María Fernanda Suárez as the country’s new mining minister, according to reports in the daily newspaper La Republica.

***

Cano Limon-Covenas Pipeline Restarts After 180 Days

(Reuters, 17.Jul.2018) – Pumping through the Colombia’s Cano Limon-Covenas oil pipeline restarted after a 180-day stoppage due to repeated attacks by Marxist ELN rebels, military and industry sources said on Tuesday.

The 485-mile (780-km) pipeline has been attacked 58 times this year by the National Liberation Army (ELN), the country’s largest active guerrilla group, according to military sources.

Apart from bombing damage, 41 illegal valves used to steal crude were found on the pipeline, said state-owned Ecopetrol SA, which owns the pipeline via its subsidiary Cenit.

Although this is one of the most extensive paralyses since the pipeline opened in the mid-1980s, activity in the Cano Limon field, operated by Occidental Petroleum Corp and located in the northern Arauca province, has not been affected.

Crude from the field had been transported using a smaller pipeline, which is still at risk of attack, sources said.

Ecopetrol which produces around 60 percent of Colombia’s 866,000 barrels a day of oil.

The ELN, considered a terrorist group by the United States and European Union, has about 1,500 combatants and opposes multinational companies, claiming they seize natural resources without benefiting Colombians.

Outgoing President Juan Manuel Santos and the ELN launched peace negotiations in 2017 but the talks, which shifted from Ecuador to Cuba in May, have been fraught. The guerrillas stepped up their attacks after the end of a bilateral ceasefire in January.

President-elect Ivan Duque, who was voted in last month, has said he will halt the talks unless the ELN declares a unilateral ceasefire and concentrates its forces into a single area.

Cano Limon has been bombed more than 1,400 times during its 32-year history. The attacks have kept it offline for the equivalent of 11 years and spilled about 2 million barrels of crude.

Writing by Helen Murphy

***

Colombia’s Cano Limon Pipeline Restarts

(Seeking Alpha, Carl Surran, 17.Jul.2018) – Colombia’s Cano Limon-Covenas pipeline has resumed pumping oil after a 180-day stoppage due to repeated attacks by Marxist ELN rebels, according to loval military and industry sources.

Apart from bombing damage, 41 illegal valves used to steal crude were found on the pipeline, says Ecopetrol (NYSE:EC), which owns the pipeline.

While this was one of the most extensive stoppages ever for the 485-mile pipeline, activity in the Cano Limon field, operated by Occidental Petroleum (NYSE:OXY), reportedly has not been affected, as crude from the field had been transported using a smaller pipeline, which is still at risk of attack.

***

FDI in LAC Region Falls for Third Straight Year

(Energy Analytics Institute, Ian Silverman, 12.Jul.2018) – Foreign Direct Investment (FDI) in Latin America and the Caribbean fell for a third straight year in 2017, reported the Economic Commission for Latin America and the Caribbean or CEPAL by its Spanish acronym.

The details were revealed in CEPAL’s annual report titled “FDI in Latin America and the Caribbean 2018.”

***

Frontera Ends Pacific Midstream Sale Agreement

(Frontera Energy Corporation, 9.Jul.2018) – Frontera Energy Corporation announced that, effective July 6, 2018, it has terminated its agreement to purchase 36.36% of Pacific Midstream Limited (PML).

Frontera elected to terminate its share sale agreement with the International Finance Corporation (IFC) and related funds to purchase the IFC’s 36.36% stake in PML, which had an acquisition price of $225 million. As a result of the termination, the company will be required to pay the IFC a $5 million break fee.

With the termination of the Share Sale Agreement, Frontera will continue to be a 63.64% shareholder in PML, with the IFC holding the remaining 36.36% interest. PML currently holds interests in Oleoducto Bicentenario de Colombia S.A.S (43% ownership) and Oleoducto de los Llanos Orientales S.A (35% ownership).

Frontera does not expect this transaction to have any impact on previously disclosed 2018 guidance metrics.

***

Frontera’s Intent to Implement Course Issuer Bid

(Frontera Energy Corporation, 9.Jul.2018) – Frontera Energy Corporation intends to implement a normal course issuer bid (NCIB) for its common shares.

The NCIB will be made in accordance with the policies of the Toronto Stock Exchange (TSX) and the commencement of purchases under the NCIB is subject to approval of the TSX.

Under the NCIB, Frontera intends to purchase, during a 12 month period, up to 3,543,270 Common Shares, representing approximately 3.5% of the Company’s 100,011,664 issued and outstanding Common Shares as at July 9, 2018.

In connection with its NCIB, Frontera also intends to enter into an automatic share purchase plan with a designated broker to facilitate the purchase of Common Shares under the NCIB at times when Frontera would ordinarily not be permitted to purchase its Common Shares due to regulatory restrictions or self-imposed blackout periods. Frontera self-imposes regular blackouts during the period commencing 15 days prior to the end of each fiscal quarter (and 30 days prior to the end of each fiscal year) and ending at the opening of trading on the first business day following public release of its financial results for such periods. Pursuant to the Plan, before entering a blackout period, Frontera may, but is not required to, instruct the designated broker to make purchases under the NCIB based on parameters established by Frontera. Such purchases will be determined by the designated broker based on Frontera’s parameters in accordance with the rules of the TSX, applicable securities laws and the terms of the Plan.

Frontera believes that, from time to time, the market price of its Common Shares may not fully reflect the underlying value of its business and future prospects and financial position. In such circumstances, Frontera may purchase for cancellation outstanding Common Shares, thereby benefitting all shareholders by increasing the underlying value of the remaining Common Shares.

The average daily trading volume of Frontera’s Common Shares was 56,920 Common Shares over the period between January 1, 2018 and June 30, 2018. Consequently, under TSX rules, Frontera would be allowed under its NCIB to purchase daily, through the facilities of the TSX or alternative trading systems, if eligible, a maximum of 14,230 Common Shares representing 25 per cent of the average daily trading volume, as calculated per the TSX rules. In addition, Frontera would be able to make, once per week, a block purchase of Common Shares not directly or indirectly owned by insiders of Frontera, in accordance with TSX rules.

***

Ecopetrol to Operate Dina Gas Plant

(Energy Analytics Institute, Piero Stewart, 8.Jul.2018) – The gas plant has treatment capacity of 10 million cubic feet per day (MMcf/d) of natural gas.

Ecopetrol initiated direct operation of Dina gas treatment plant (PTGD by its Spanish acronym), located in Huila, which since April 2010 has been operated by Masa Storkdesde.

The latter company was responsible for its construction, operation and maintenance, announced Ecopetrol in an official company statement.

***

Ecopetrol to Prepay Loan of COP$ 1.4 Tln

(Energy Analytics Institute, Piero Stewart, 6.Jul.2018) – Colombia’s state oil company Ecopetrol will prepay the entire syndicated loan it entered into in 2013 with local banks.

The loan was scheduled to be amortized up to 2025, announced Ecopetrol in an official statement.

As stipulated in the loan agreement, Ecopetrol can at any time pay off all the principal voluntarily, with no penalty whatsoever, subject to at least 30 calendar days’ advance notice to the lenders. Pursuant thereto, the prepayment will be made August 6, 2018 in the total amount of COP$1,430,333,333,333, which includes principal and interest.

***

Ecopetrol Finds New Oil in Cundinamarca

(Energy Analytics Institute, Piero Stewart, 5.Jul.2018) – A find at the Búfalo-1 well confirmed the presence of oil in the Valle Medio del Magdalena, located near the town of Guaduas, Department of Cundinamarca.

The well is the first discovery in the VMM32 Exploration Contract and is located very close to Ecopetrol’s transport infrastructure, which could facilitate its commercial production stage, the company announced in an official statement

The finding recorded a depth of 1,153 meters, in the Middle Magdalena Valley basin, where the presence of dry gas and light crudes was evident in the Grupo Honda.

Ecopetrol holds a 51% interest in the Bufalo-1 well and is the operator. Its partner, CPVEN E&P Corp, holds the remaining 49% interest.

***

Pipeline Releases 125 Bbls into Magdalena River

(Energy Analytics Institute, Ian Silverman, 30.Jun.2018) – Ecopetrol announced an oil spill of 125 barrels into the Magdalena River.

The spill occurred while repair activities were being conducted to an underwater pipeline that transports crude from the auxiliary station of the municipality of Cantagallo (Bolívar) to the Isla 6 station located in the town of Puerto Wilches (Santander). The incident, which occurred on June 13, 2018, caused oil to spill into the Magdalena River, reported the daily newspaper El Tiempo.

The estimates, of the barrel amounts, were made utilizing hydraulic simulation computer tools, data about the length and altitude of the pipeline, pressure, the observed failure area of the pipeline, fluid characteristics, water cut of the transported fluid, the time at which the event started, as well as filling volume during commissioning.

***

Ecopetrol Director to Divest of Shares

(Energy Analytics Institute, Ian Silverman, 28.Jun.2018) – Authorization has been granted to a director to sell shares of Ecopetrol S.A.

The Board of Directors of the Ecopetrol has unanimously authorized company Director Dr. Héctor Manosalva Rojas to sell 49,380 of his shares in Ecopetrol.

The transaction was authorized under Article 404 of the Colombian Commercial Code (Código de Comercio), reported the state oil company in an official statement.

***

S&P Affirms Ecopetrol Rating

(Energy Analytics Institute, Ian Silverman, 28.Jun.2018) – The rating agency affirmed the investment rating for Ecopetrol, S.A.

Standard & Poor’s kept Ecopetrol’s long-term international rating at BBB-, with stable outlook, and stand-alone credit rating at bb+, reported Ecopetrol in an official statement.

In a recent report, the agency highlighted Ecopetrol’s solid financial results, with strengthened credit metrics, thanks to the capital discipline and efficiencies it has implemented, according to Ecopetrol. The rating agency noted the positive performance of the downstream and midstream segments, emphasizing the Cartagena refinery’s operating results during its stabilization stage. S&P also recognized Ecopetrol’s focus on increasing reserves, with the positive results posted on the 2017 balance sheet.

***

Ecopetrol Files Collective Labor Claim

(Energy Analytics Institute, Ian Silverman, 28.Jun.2018) – Colombia’s state oil company has filed a collective labor agreement claim with the Ministry of Labor.

As prescribed by law, signatories of collective labor agreements are authorized to state their intentions to amend them through a claim and, if petitions are filed by the unions, the company, in this case Ecopetrol, and the union organizations would have to initiate negotiations for a new collective labor agreement, reported the company in an official statement.

The collective labor agreement between Ecopetrol and its direct employees is for a four (4) year period that began in 2014 and expires on June 30, 2018. Therefore, as explained in the paragraph above, the purpose of the claim filed by Ecopetrol is to state its intention to modify certain provisions of the agreement, consistent with the company’s growth and future prospects.

***

Colombia Preps for Hammer Time

(Renews, 26.Jun.2018) – The Colombian government will next month publish the initial heads of terms for the South American country’s first ever auction for renewables other than large hydro.

Energy regulator CREG and mining and energy planning unit UPME are finalising rules and regulations ahead of the auction slated to take place by the year-end.

Deputy head of mission at the Colombian Embassy to the UK German Espejo said more than 300 projects across onshore wind, solar, biomass and small hydro have registered to participate in the initiative.

Of those projects, around 215 with a combined capacity of 1.2GW had been certified as viable by UPME, he added at the Canning House Latin America renewables conference in London.

European participants are set to include Paris-based outfit Voltalia, which is developing three wind farms rated between 50MW and 200MW in the windy Caribbean region of La Guajira.

The developer said there was limited information about the possible market design of the auction, which is expected to back at least 1GW across all technologies.

CREG has previously announced four options for incentivising renewables in its wholesale market, including a green premium added to the spot price or a sealed bid auction similar to the UK’s Contracts for Difference regime.

Renewables trade association SER Colombia has proposed auctions offering fixed priced, 20-year contracts with a centralised buyer.

Solar, wind and biomass comprise less than 5% of Colombia’s 17GW installed renewables capacity. Large hydro dominates, but is suffering from reliability problems due to dwindling water levels.

In a further effort to boost its nascent clean power sector, Bogota is offering 50% annual reduction of taxable income for the first five years of investment in renewables projects.

The country has also introduced exemptions of import duties and VAT plus accelerated depreciation for accounting purposes on equipment and machinery for use in renewables.

***

Frontera Closes $350 Mln Notes Offering

(Energy Analytics Institute, Ian Silverman, 25.Jun.2018) – The Canadian company plans to use majority of proceeds to repurchase notes due in 2021.

Frontera Energy Corporation completed the offering of $350 million in senior unsecured notes due 2023 at a coupon rate of 9.70% pursuant to Rule 144A and Regulation S of the U.S. Securities Act of 1933, as amended, the company announced in an official statement.

Certain proceeds from the offering were used to repurchase, at a premium, the company’s $250 million 10.0% senior secured notes due 2021 pursuant to a tender offer. The remaining proceeds will be used for general corporate purposes.

***

Frontera Prices $350 Mln Notes at 9.7%

(Energy Analytics Institute, Piero Stewart 22.Jun.2018) – Canada’s Frontera Energy Corporation successfully priced an offering of $350 million.

The offering was comprised of senior unsecured notes due 2023 at a coupon rate of 9.70% pursuant to Rule 144A and Regulation S of the U.S. Securities Act of 1933, as amended, with closing expected to occur on or about June 25, 2018. There is no guarantee issuance and sale of the notes will be consummated, announced Frontera in an official statement on its website.

Frontera, a public company, has operations focused in Latin America that consist of portfolio of assets with interests in more than 30 exploration and production blocks in Colombia and Peru.

Proceeds from the offering will be used for the following purposes: 1) to repurchase, at a premium, the company’s $250 million 10% senior secured notes due 2021 pursuant to a tender offer, and 2) for general corporate purposes.

The Notes have been assigned a rating of BB-(EXP) by S&P Global Ratings and B+(EXP)/RR4 by Fitch Ratings.
***

Colombia Boosts Exploration Drilling 77% During 2010-2017

(Energy Analytics Institute, Aaron Simonsky, 22.Jun.2018) – Colombia boosted the number of exploration wells drilled by 77% during the most recent seven years compared to the earlier seven.

Colombia drilled 697 exploration wells during the seven-year period 2010-2017, representing 303 more wells when compared to the 394 exploration wells drilled during the seven-year period 2002-2009, Colombia’s National Hydrocarbon Agency (ANH by its Spanish acronym) reported in a Twitter post.

Additionally, the ANH reported that a maximum 131 exploration wells were drilled in 2012 during the 2010-2017 time frame compared to a maximum of just 99 exploration wells that were drilling in 2008 during the 2002-2009 time frame.
***

Frontera Aims to Lower Costs in Colombia

(Energy Analytics Institute, Ian Silverman, 22.Jun.2018) – Frontera Energy Corporation aims to lower certain costs in Colombia.

The Canadian company continues with efforts to reduce its transportation costs, including those associated to the Bicentenario pipeline, which has been continuously affected by attacks directed at the Caño Limon pipeline, the company announced in an official statement.

Frontera expects talks involving Colombia’s state owned or majority state owned companies (such as Bicentenario) will continue past the second quarter of 2018 due to the ongoing presidential elections.

***

Colombia to Connect 1,360MW of Energy Capacity

(Energy Analytics Institute, Aaron Simonsky, 22.Jun.2018) – Wind capacity in Colombia will add 1,360 megawatts of generation capacity to its energy grid.

The South American country’s Mines and Energy Ministry reported in a Twitter post that the energy source would be connected to the National Interconnected System through specialized connections, without providing further details.
***

Pentanova Announces Farmout Agreement in Colombia

(PentaNova Energy Corp., 21.Jun.2018) – PentaNova Energy Corp. announced signing of the SN-9 Farm Out Agreement with Panacol Oil & Gas, a wholly owned subsidiary of LATAM Oil & Gas.

“The SN-9 block has all the hallmarks of being an exceptional core asset for PentaNova being adjacent to the prolific Canacol Energy Ltd. gas producing assets. By entering into this Agreement with Panacol, PentaNova is in a position to execute the exploration program required to confirm the gas potential of the block,” said PentaNova President and CEO Ralph Gillcrist.

Under the terms of the Agreement, Panacol will fully fund the company’s commitments during the first phase of the SN-9 Exploration and Production Contract for the amount of $22.29 million, which will give Panacol the right to earn up to a 40% economic beneficial interest in the SN-9 Block from the company’s 80% economic beneficial interest. Assignment of working interests for both parties is subject to approval from the National Hydrocarbon Agency of Colombia.

The Agreement is expected to close within the next 30 days during which time Panacol will be required to place $3 million in escrow to fund near-term activities. In addition, Panacol is required to provide a standby letter of credit for $3.0 million to guarantee further payments into the escrow account and pay approximately $650,000 in past costs. Under the terms of the Agreement, Panacol will recover 50% of the funds invested from 70% of the proceeds of the company’s net production.

“We look forward to leveraging the abundant experience of the Panacol team to complement the PentaNova team and accelerating our operational activities,” said Gillcrist.

SN-9 Block

The 313,638 acre SN-9 block is located in the northern province of Cordoba, in the Lower Magdalena Basin of Colombia directly adjacent to, and west of, the major gas producing area operated by Canacol. Canacol produces 88% of its 106 million cubic feet per day (MMscf/d) gas production from this area and reported aggressive expansion plans in their Q1 2018 investor update on May 16, 2018, reflected in their 1Q 2018 Conference Call Transcript published on the Canacol website (www.Canacolenergy.com). PentaNova believes that the gas play being developed by Canacol extends into the south eastern portion of the SN-9 block. The SN-9 block has over 736 km of 2D seismic lines and one discovery well, Hechizo-1, drilled in 1992 that tested a combined rate of 10.3 MMscfd, confirming the likely extension of the gas play from Canacol’s area into SN-9. Given the proximity to the gas infrastructure that supplies the north of Colombia, the south eastern structures of the SN-9 block will be the focus of immediate activities for the Company.

SN-9 Future Planned Activities

The company anticipates completing the prior consultation process required to acquire seismic in the block by the end of June 2018 and plans to issue tenders for the acquisition of 140km2 of 3D seismic, and related services, over the next two weeks. The company expects to acquire the 3D seismic in October and November of 2018.

The prior consultation and permitting process required for drilling on the block is expected to start in July 2018, as soon as the prior consultation for seismic is complete. On completion of this process, anticipated for mid 2019, civil works will be initiated with a view to spudding the first exploration well midyear 2019.

***

Uncertainty Looms Large Over LatAm Oil

(Oilprice.com, Tsvetana Paraskova, 20.Jun.2018) – While oil industry analysts and market participants are watching Venezuela closely for clues about how low its oil production will go, several other countries in Latin America are holding key elections this year, elections that will no doubt shape the countries’ short and medium-term oil policies. These developments could spell trouble for oil supply and oil investment in South America’s biggest crude-producing nations.

A populist leftist candidate pledging to undo energy reforms is widely expected to win Mexico’s presidential election in two weeks. There has been recent turmoil in Brazil’s fuel sector policies ahead of a wide-open presidential race for the October elections. A newly elected president in Colombia is vowing to amend a historic peace deal with the FARC rebels.

All these events add uncertainties to how politics will influence Latin American countries’ oil policies and investment climate for foreign oil companies, Paul Ruiz and Jena Merl write for The Fuse.

In Colombia, a conservative political newcomer, Iván Duque, won the presidential election this past weekend in the traditionally conservative country. The new president, however, has pledged to revise the 2016 deal with the Revolutionary Armed Forces of Colombia (FARC) rebels that put an end to 50 years of armed conflict. Duque wants to re-write the deal that guaranteed the rebels seats in Congress and allowed them to run in elections.

The new president, like the outgoing president Juan Manuel Santos, will have to face another rebel group, the National Liberation Army (ELN)—a Marxist guerrilla group that sabotages oil industry facilities to protest against foreign companies operating in Colombia. In January this year, Colombia suspended talks with ELN after bombings killed police officers. ELN has repeatedly attacked the second-largest oil pipeline in Colombia, Cano Limon-Covenas, causing oil spills and shutdowns.

Mexico is holding a presidential election on July 1, and a few weeks ahead of the vote, all polls point to populist leftist candidate Andrés Manuel López Obrador having a comfortable lead over other candidates. López Obrador pledges to roll back the landmark 2013 energy reform of outgoing president Enrique Peña Nieto, who opened Mexico’s oil sector to private investment for the first time in seven decades. The jury is still out as to whether López Obrador will backtrack entirely on the oil reforms, but uncertainties remain regarding the investment environment in the country—at least for this year.

Brazil is holding elections in October and the race is still wide open.

But in recent weeks, the country came to an economic standstill due to widespread truckers’ strikes over high fuel prices. President Michel Temer announced subsidies on diesel at the end of May, freezing prices for 60 days.

The recent turmoil in the country’s oil industry and renewed anxiety over political meddling in the energy sector add an uncertainty ahead of the election later this year. Pedro Parente, chief executive at state-run oil company Petrobras, resigned on June 1, after the strikes forced the government to cut diesel prices and after oil workers demanded that Brazil end the one-year-old policy to allow fuel prices be dictated by the market and international crude oil benchmarks.

Yet, some of the world’s biggest oil companies—including Exxon, Chevron, Shell, BP, and Equinor—bid aggressively in Brazil’s latest offshore bid round on June 7, snapping up acreage in three blocks in the coveted pre-salt layer.

Nevertheless, uncertainty over how Brazil will handle oil sector policies until and immediately after the October elections has increased.

Brazil is still expected to be one of the largest contributors to non-OPEC oil supply growth in the coming years. According to the International Energy Agency’s (IEA) Oil 2018 outlook from March, oil production growth from the United States, Brazil, Canada, and Norway “can keep the world well supplied, more than meeting global oil demand growth through 2020.”

According to OPEC’s latest Monthly Oil Market Report, non-OPEC oil supply in the second half of this year is expected to increase by 2.0 million bpd year on year, with the United States leading the pack, contributing 1.4 million bpd to growth, followed by Canada and Brazil.

While uncertainties mount in the political shifts and oil policy choices in other Latin American countries, there’s only one uncertainty left for Venezuela—how fast production from the collapsing oil industry will sink to as low as 1 million bpd. Some analysts reckon the plunge to 1 million bpd is imminent.
***

Ecopetrol to Prepay $156 Mln in Loans

(Energy Analytics Institute, Ian Silverman, 20.Jun.2018) – Colombia’s state oil company Ecopetrol S.A. announced it will prepay all loans entered into in 2013 with international banks and guaranteed by the US Export-Import Bank, which had been subject to a payment schedule to 2023.

The loan agreements allow Ecopetrol to prepay without penalty all principal on the interest payment dates, which are scheduled for July 6 and 25, 2018. Total principal plus accrued interest owed is $155,979,564, the company announced in an official statement.

Ecopetrol said it is able to make this prepayment due to its cash position of COP 16.6 billion as of the first quarter of 2018. The Colombian company expects this cash position will remain strong and thus allow it to better confront crude price volatility scenarios and be prepared to seize opportunities that might arise for inorganic growth.

***

Colombia Produced 865,987 B/D in May 2018

(Finance Colombia, Jared Wade, 14.Jun.2018) –Colombia produced an average of 865,987 barrels of oil per day in May, an uptick of 1.6% over May 2017 according to government figures.
This level also represents a 0.1% increase from April, and the slight increase marks the third straight month of rising production, according to the Ministry of Mines and Energy.

After five months, the annual average for the country now stands at 854,190 barrels of oil per day. This is almost exactly in line with the 2017 average of 854,121 barrels of oil per day yet still below the 885,000-barrel daily average of 2016.

The annual figure, however, still exceeds the Ministry of Mines’ previously released “medium-term” estimate of 840,000 barrels of oil per day.

The vast majority of the oil in Colombia is produced by state-controlled oil company Ecopetrol. The Bogotá-based company has set a goal of 725,000 barrels of petroleum-equivalent per day for 2018 and expects to drill at least 620 development wells and 12 exploration wells during the year to help replace falling reserves.

Frontera Energy, formerly known as Pacific Rubiales, produced an average of 52,195 barrels of oil per day in Colombia the first quarter of 2018. This was a slight decrease from the 56,593 it produced in the country compared to the first quarter of 2017.
***

Colombia’s ANH Approves New Contract Model

(Energy Analytics Institute, Jared Yamin, 15.Jun.2018) – Colombia’s National Hydrocarbon Agency (ANH by its Spanish acronym) approved the new oil and gas exploration and exploitation contract model for offshore areas.

The contract aims to entice large petroleum companies to make favorable investments in Colombia — especially those made in the most vulnerable regions — through investments and work programs that benefit communities, royalties, economic rights and via a percentage participation in production that favors the state.

“This is great news for the country, given that a good contractual scheme is a fundamental element when it comes to a petroleum company defining its investments. Today, we are more competitive in the proposal to attract large investments,” announced the agency, citing ANH President Orlando Velandia Sepúlveda.“We look for companies with experience, the best technology and a robust financial structure,” he added.

This contractual model, when compared to the previous, represents a great advance in all aspects, and creates a positive environment for companies and investments to remain in Colombia, said Sepúlveda.

The new contractual model applies to operators executing technical evaluation contracts, and companies that have rights to convert contracts into exploration and production contracts, as well as the companies selected in future competitive processes in offshore areas.
***

Frontera Plows Forward in Colombia

(Energy Analytics Institute, Ian Silverman, 12.Jun.2018) – Canada’s Frontera Energy Corporation continues its active drilling program in Colombia.

The company had six (6) drilling rigs operating continuously in the first two months of the second quarter of 2018, of which three (3) were active in the Quifa heavy oil area, two (2) on the light oil-focused Guatiquia block, and one (1) drilling the high impact Acorazado-1 well in the Llanos 25 block, the company announced in an official statement.

Guatiquia block

Frontera commenced drilling the Alligator-3 development well on the Guatiquia block on May 10, 2018. On April 27, 2018, the well reached a total depth of 12,416 feet (12,189 feet TVD), encountering 31.5 feet of net pay in the Lower Sand-1A formation. The well was completed in the Lower Sand-1A formation with an electrical submersible pump.

The Lower Sand-1A formation has been flow tested for approximately 13 days at an average rate of 1,800 barrels per day (b/d) of 18.2 degree API oil with an average water cut of 40% at stabilized bottomhole flowing pressure with an approximate 34% drawdown. The well has produced a total of 27,500 barrels of oil since start of production.

At the Guatiquia block, Frontera continues to have exploration success. During the quarter, the company completed testing the Coralillo-1 well in two zones. On May 10, 2018, the company reported the Lower Sand-1A formation was flow tested for approximately 11 days at an average rate of 1,050 b/d of 15.3 degree API oil with an average water cut of 1% at stabilized bottomhole flowing pressure with a 60% drawdown. Subsequently, the well was shut-in for a 5-day pressure buildup test. Results confirmed positive reservoir properties, low formation damage and no depletion during the testing period.

Additionally, on May 18, 2018, the company began testing the well in the Guadalupe formation. In this formation, the well was initially flow tested for 10 days at an average rate of 800 b/d of 17.1 degree API oil with an average water cut of 1.1% at stabilized bottomhole flowing pressure with an approximate 38% drawdown. Since discovery, the Guadalupe formation has produced a total of 8,140 barrels of oil. Following the initial production test in the Guadalupe formation, the well was shut-in for a pressure buildup test. Given the positive results, on May 22, 2018, the company requested permission from the Agencia Nacional de Hidrocarburos (ANH by its Spanish acronym) to conduct long term testing for the well.

Quifa block

Frontera has drilled nine (9) horizontal oil development wells to date at the Quifa block during the second quarter of 2018. In addition, the company commenced construction of facilities to expand its water handling capabilities on the block, which is expected to be operational during the fourth quarter of 2018. The company plans to boost the number of active drilling rigs in the Quifa area from three (3) to five (5) in mid-June. As the company adds water handling capacity during the third quarter it expects the number of active drilling rigs to increase to six (6).

***

Frontera Loan to Puerto Bahia

(Energy Analytics Institute, Ian Silverman, 12.Jun.2018) – Frontera Energy Corporation entered into an unsecured loan agreement with Puerto Bahia.

The agreement is pursuant to which Frontera has agreed to loan an aggregate amount of $30.46 million to Puerto Bahia, subject to certain terms and conditions. The loan bears an annual interest rate of 14% and will mature on May 31, 2019.

Puerto Bahia is a private company organized and existing under the laws of Colombia that is responsible for the design, construction, ownership, operation and maintenance of a large-scale multi-purpose port facility located in the Cartagena Bay in Colombia.

On October 4, 2013, Pacinfra Holding Ltd., a wholly-owned subsidiary of the Company, Pacific Infrastructure Inc., an entity in which Frontera indirectly owns a 39.22% interest, Puerto Bahia, a wholly-owned subsidiary of Pacific Infrastructure, and Wilmington Trust, National Association (as administrative agent) entered into an equity contribution agreement pursuant to which Pacinfra Holding and Pacific Infrastructure agreed to both jointly and severally cause equity or debt contributions to be made to Puerto Bahia up to an aggregate amount of $130 million in circumstances where it is determined that there were certain deficiencies related to operation and maintenance of the a multi-purpose port facility developed by Puerto Bahia and Puerto Bahia’s ability to make payments towards its bank debt obligations.

In accordance with the equity contribution agreement, a deficiency notice to Pacinfra Holding was issued requesting the company fund, or cause to be funded, a total amount of $30.46 million to Puerto Bahia, due May 31, 2018. The loan agreement was entered into to satisfy this funding commitment.

***

Frontera Announces Details Of Share Split

(Energy Analytics Institute, Ian Silverman, 12.Jun.2018) – The offer will consist of a two-for-one share split of the company’s issued and outstanding common shares.

The record date of the Share Split will be June 21, 2018 at the close of business, announced Frontera Energy Corporation in an official statement. The company’s transfer agent, Computershare Investor Services Inc., will send shareholders of record one additional common share for every share held on June 26, 2018. No action is required to be taken by the shareholders.

The Toronto Stock Exchange has determined to implement due bill trading in connection with the Share Split. Anyone purchasing common shares during the period commencing June 20, 2018 and ending on June 26, 2018 inclusively shall receive a due bill. Frontera’s common shares will commence trading on an ex-distribution basis on June 27, 2018 and the due bill redemption date will be June 28, 2018.

DIRECT REGISTRATION SYSTEM

Frontera announced use of the direct registration system or DRS to electronically register common shares issued pursuant to the Share Split. Computershare will send out DRS advice statements to registered shareholders, indicating the number of additional common shares that they are receiving as a result of the Share Split. In addition, Computershare will electronically issue the appropriate number of common shares to CDS Clearing and Depositary Services Inc. and The Depository Trust Company for distribution to the non-registered shareholders of the Company. Beneficial shareholders who hold their common shares in an account with their investment dealer or other intermediary will have their accounts automatically updated to reflect the Share Split in accordance with the applicable brokerage account providers’ usual procedures.

***

Colombia’s ANH Denies Fracking Plans in Boyacá

(Energy Analytics Institute, Jared Yamin, 8.Jun.2018) – Colombia’s National Hydrocarbon Agency (ANH by its Spanish acronym) says it has no plans to carry out fracking activities in Boyacá department.

The ANH, which is studying the subsoil in the area, plans to utilize very low impact geophysical acquisition tools, such as seismic vibros and magnetotelluric, the agency announced in an official statement on its website.

In the statement, the agency emphasized that it maintains dialogue and communication with neighboring communities in order to overcome any perceived obstacles or inconveniences, and continues to hold meetings with local and departmental authorities to evaluate the potential impact of any of its projects.
***

Q&A: Greening Colombia’s Energy Mix

Juhern Kim, acting representative of the Global Green Growth Institute (GGGI) in Colombia, gives a presentation on the intergovernmental organisation’s strategies. Credit: GGGI Colombia

(Inter Press Service, Constanza Vieira, 6.Jun.2018) – Colombia is a global power in biodiversity and water resources, but at the same time it depends on exports of fossil fuels, coal and oil, to the world. But don’t panic: in the green economy there are also incomes and jobs – says a world expert on the subject, Juhern Kim.

“If Colombia makes intelligent use of its abundant natural resources, its natural capital, it can create new business opportunities linked to bio-economics, sustainable agriculture and forestry, which have the potential to generate income and create green jobs,” Kim, an environmental economist and ecosystem management specialist, told IPS in an interview.

Kim is acting representative in Colombia of the Global Green Growth Institute (GGGI), an intergovernmental organisation created in 2012, which promotes sustainable development that is both economically viable and socially inclusive. It works directly in 26 countries, including Colombia.

In June last year, Colombia ratified the Paris Agreement on Climate Change, by which it pledged to reduce greenhouse gas emissions by 20 percent by 2030, to help fight global warming.

Among other issues, Kim analysed in his interview with IPS how this South American country is moving towards climate change mitigation and adaptation and a low-carbon economy, as committed to in the climate agreement signed in December 2015 in the French capital, at the 21st Session of the Conference of the Parties (COP 21) to the United Nations Framework Convention on Climate Change.

The expert, who previously represented the GGGI in Vietnam and worked on issues related to the green economy at the UN Environment, also analysed how Colombia can make its energy mix and its economy greener in general.

IPS: Colombia is the world’s fifth largest producer of coal. How does the GGGI suggest bringing about an end to mining, an activity that runs counter to the climate accords?

JUHERN KIM: Coal production plays an important role in the Colombian economy: it contributes around 1.5 percent of GDP and 18 percent of total exports. Since about 95 percent of the coal produced in Colombia is exported, national coal production is affected by international market trends.

The recent volatile price fluctuation for commodities, and the associated impact on the Colombian economy, clearly shows that the country’s economy needs to be diversified in order to grow more and better.

Furthermore, future global demand for coal will tend to fall, although it will happen progressively and not for all types of coal.

Many countries have started to shut down their coal plants, and have been working on reducing the consumption of other fossil fuels, reinforced by international commitments such as the Paris Agreement, where Colombia made its own commitment as well.

GGGI promotes a sustainable and inclusive economic growth path, which implies the reduction of coal and other fossil fuel use, due to the negative environmental impacts.

That’s why GGGI has been supporting the government of Colombia for the last year and a half through the National Planning Department (DNP) to formulate a long-term green growth policy, that proposes actions related to the economic activity of coal in three ways:

  1. Incorporation of renewable energy in the energy mix. GGGI advocates for countries to achieve energy transitions towards cleaner technologies. In Colombia, the production of electricity from coal amounts to 8 percent of the total.
  2. Exploring new economic growth drivers to diversify the economy currently depending on the mining-energy sector (oil and coal exports). For instance, Colombia has abundant resources associated with natural capital, such as biodiversity – if Colombia utilizes these resources wisely, they can create new business opportunities related to bio-economy, sustainable agriculture, forest economy, which have the potential to generate income and create jobs (green jobs).
  3. Curbing the environmental impacts of coal mining, especially by informal miners. Coal mining has informality rates close to 40 percent, while many productive units do not have an environmental license and have exploitation techniques that are harmful to the environment. It is intended to strengthen the mining formalization and provide technical assistance to reduce pollution.

IPS: How can the coastal population be protected from the intensification of tropical storms and the advance of coastal erosion?

JK: Colombia is being highly threatened by tropical storms and coastal erosion in two coastal areas that represent nearly 1,700 km in the Caribbean and 1,300 km in the Pacific.

Colombia has coasts on two oceans, and the frequency and intensity of such extreme events have been increasing, which, added to the deficient planning of urban development, increases the vulnerability and risk of people, infrastructure, and ecosystems.

The National Adaptation Plan recognises the country’s vulnerability to this type of events.

The country is now moving in the right direction led by the Ministry of Environment and Sustainable Development (MADS) by including climate change variables within the planning and zoning of the territories, which will be articulated with adequate financing and technology transfer to implement mitigation measures for this type of risks.

Of particular importance is the ecosystems-based adaptation measure.

In this case, protecting and increasing the mangroves on the coastal lines will reduce coastal erosion, and at the same time allow the sustainable use of this type of ecosystem for the benefit of local people’s livelihood.

In other cases, it will be necessary to implement traditional infrastructure measures that avoid short-term calamities. Increasing local capacities, public awareness, adequate planning and the implementation of risk mitigation measures are key to achieving this objective.

IPS: A key question is the energy transition. How can clean energy be promoted in Colombia? Is community self-management better, or are large regional concessions, criticised as monopolies, preferable?

JK: Colombia has a high proportion of clean energy from hydroelectric generation (70 percent). However, this energy depends on the hydrological cycle which makes it vulnerable to the effects of climate change.

In that sense, it will be beneficial for Colombia to diversify its energy mix with other sources of clean energy, with some policy changes and regulations in the wholesale energy market.

Colombia currently lags behind in terms of the production of non-conventional renewable energy resources, compared to neighboring Latin American countries like Chile. However, Colombia has a strong potential for generation of solar, wind and biomass energy, and those can also serve as alternative off-grid solutions.

We believe that renewable energy projects should be carried out by entities that have the right technical and financial strengths required to develop, operate and maintain this type of projects.

IPS: What does the GGGI think of fracking?

JK: Fracking, like any other exploitation technique, has associated risks in its implementation and management, as it is known for generating many environmental impacts, such as potential contamination of ground and surface aquifers, methane emissions, air pollution, etc. In addition, it also has a potential for increasing oil spills, which can harm soil and surrounding vegetation.

In general, as an institute dedicated to green growth, we promote the development of alternative renewable energy sources to reduce dependence on fossil fuels. As mentioned above, it would be expected that the government make some efforts to diversify their economy to generate new sources of economic development while taking care of the environment and social impact.

IPS: According to environmental analysts, when the FARC (Revolutionary Armed Forces of Colombia) withdrew from the territories it controlled, it became evident that the guerrillas had played a role as forest rangers in those areas, because thousands of hectares have been razed since then. What is your take on the situation and what do you think can be done?

JK: Although the presence of guerrillas in many forested zones of the country prevented the entry of agricultural expansion and exploration for natural resources in some sense, it is probably not that simple to say that they played a role as forest rangers, because they also supported the production of illicit crops that generated deforestation.

In brief, understanding the reasons for the increase in deforestation in the country is not simple math at all. And finding solutions is not simple as well.

It seems that the post-conflict process has been generating a change in the territorial dynamics, in some cases through an absence of control arguably provided by guerrillas in the past, in other cases through a high-level of speculation associated with unproductive land use, with false hope embedded for some people wanting to be awarded land titles if they put any type of activities in the land, and sell their land at a better price in the future.

The playing field must be levelled. The abovementioned situation prevents rural producers and entrepreneurs from accessing land with adequate support for productive activities and conservation incentives, such as credits (i.e. financial instruments), access to markets, financial incentives for conservation (e.g. payment for ecosystem services), and so on.

In fact, the whole landscape should be properly planned in an integrated way – i.e. sustainable landscapes approach, which promotes economic gains but minimising environmental impact and increasing social returns.

For instance, productive zones for local economic development should be set up, but it is not wise to set them in the biological corridor. Also, financial instruments designed to promote sustainable agriculture methods, such as agroforestry, can be a driver for making a sustainable transition.

Also, Colombia has defined an Integrated Strategy for the Control of Deforestation and Forest Management, which sets clear guidelines on how to address this issue. However, having this strategy is not enough if there is no tight alliance among Colombian society as a whole.

In addition, the public authorities have an important role to play to implement the vision for conservation of forests (i.e. command and control) – e.g. functions of the prosecutor offices, judges and many other actors, committed to reduce illegality.

***

Brookfield Buys Remaining Interest in Gas Natural Fenosa

(Energy Analytics Institute, Jared Yamin, 29.May.2018) ‐- Spain’s Gas Natural Fenosa is finally exiting Colombia.

The company sold 15.46 million shares, representing the remaining 41.89% interest in gas distributor Gas Natural ESP, to Canada’s Brookfield Asset Management, which had officially launched a takeover bid, announced the daily La Republica, citing a report from the Colombian Stock Exchange (BVC by is Spanish acronym).

The total value of the transaction is valued at COL$1.124 billion, according to the daily. With the closing of this deal, Brookfield, which already held a 59.1% interest in Gas Natural Fenosa, will be the outright owner of the company.

***

Ecopetrol to Invest COL$94.5 Bln on Infrastructure

(Energy Analytics Institute, Jared Yamin, 28.May.2018) ‐- Ecopetrol plans to invest a total of COL$94.5 billion Colombian pesos on infrastructure and education.

The funds for the seven projects will come from taxes, and will be destined for six Colombian departments, announced the state oil company in a Twitter post.

Department —- Type ————- Amount $COL Bln —– Area

Putumayo —— 1 Infrastructure —- $13.0 ——————- Puerto Caicedo
Caquetá ——– 1 Infrastructure —- $35.7 ——————- El Paujil, Cartagena del Chairá
Arauca ——— 1 Infrastructure —- $27.9 ——————- Arauca, Arauquita, Tame
Cesar ———– 1Infrastucture —– $4.7 ——————— La Gloria
Meta ———– 1 Infrastucture —– $2.6 ——————— San Martín
Nariño ——— 2 Education ——– $10.6 ——————- Barbacoas, Tumaco

Source: Ecopetrol
***

Ecopetrol Says Tibú Field Affected by Continued Sabotage

(Energy Analytics Institute, Jared Yamin, 27.May.2018) ‐- Thefts of elements from producing wells coupled with infrastructure sabotage at the Tibú field in the municipality by the same name in Northern Santander continue to harm the environment and neighboring communities.

To date in 2018, Colombia’s state oil company Ecopetrol has registered 428 offenses, of which 246 include illegal valve connections that have led to the loss of an estimated 30,447 barrels of petroleum, announced the company in a post on its website. This compares to 202 illegal connections detected in the same period in 2017.

In terms of the environment, an estimated 98 incidents have been reported in 2018, which affected more than 11,700 square meters of ground cover and 5,700 square meters of different bodies of water.

Ecopetrol announced that some 127 offenses related to the operation of 59 producing and injector wells have been detected, including thefts of equipment such as solar panels, pipes, transformers, cables, and electric systems, among other materials.

Besides the cost aspect, these actions continue to produce negative environmental impacts and/or increase the possibility of incidents that could result in injuries or loss of life to people in/and around the area, Ecopetrol concluded.

***

Canacol Announces Timing of 2018 Shareholders Meeting

(Energy Analytics Institute, Ian Silverman, 26.May.2018) – Canacol Energy Ltd., the exploration and production company with operations focused in Colombia, announced its Annual General Meeting of Shareholders will be held on July 3, 2018, in Calgary, Canada.

Canacol’s common stock trades on the Toronto Stock Exchange, the OTCQX in the United States of America, and the Colombia Stock Exchange under ticker symbol CNE, CNNEF, and CNE.C, respectively.

***

IMF Approves New $11.5 Bln Colombia Credit

(Energy Analytics Institute, Jared Yamin, 25.May.2018)  – The International Monetary Fund (IMF) approved a new two-year flexible credit line with Colombia for nearly $11.4 billion. The new credit replaces the former one, which was approved in 2016, reported the daily newspaper El Espectador.
***

Ecopetrol to Initiate Drilling of 19 Wells in Akacías

(Energy Analytics Institute, Ian Silverman, 24.May.2018) – Ecopetrol and Talisman Colombia Oil & Gas (TCOG), a company of Repsol group, plan to initiate drilling of new production wells in late May 2018 at the Akacías field, located in the Acacías municipality in Meta.

Activities slated for the Akacías field development stage in 2018 consist of drilling a total of 19 wells, Ecopetrol announced in an official statement.

Currently, 9 active wells at the Akacías field produce an average 6,300 barrels per day of petroleum.
***

Canacol Mobilizes Rig to Drill Borojo 1 Well in Colombia

(Energy Analytics Institute, Aaron Simonsky, 24.May.2018) – Canacol Energy Ltd. announced it has mobilized a rig to drill the Borojo 1 exploration well.

Located on the 100% operated Esperanza E&E contract, the Borojo 1 well will target gas-bearing reservoirs located in the Cienaga de Oro sandstones, announced Canacol in a company press release. The well will spud in the first week of June 2018 and take approximately 4 weeks to drill and complete. And similar to Breva 1, the Borojo well will be perforated and tested with a workover rig approximately 1 week after the drilling rig moves off to drill the Canahuate Este exploration well.

***

Ecopetrol Plans Social Investments of 1.3 Bln Pesos in Meta

(Energy Analytics Institute, Ian Silverman, 24.May.2018) – Colombia’s state oil company Ecopetrol announced plans to make social investments of 1.3 billion Colombian pesos in Meta department, where the company and its partner Talisman Colombia Oil & Gas (TCOG) operate in the Acacías municipality.

Investments will be directed to the immediate area of influence and include activities at La Esmeralda, Loma de Tigre, Montelíbano, in Acacías and Santa Ana in Guamal, the state entity reported in an official statement.

Other related projects to receive assistance include: programs related to musical education and sports; improving education centers; boosting productive projects; finding solutions for potable water in villages; improving sports and health programs; among others.
***

Energy, Education, and Learning Through NRG ED

(Energy Analytics Institute, Aaron Simonsky, 24.May.2018) – Energy Analytics Institute, formerly LatinPetroleum Inc., continues to promote its “Energy Education Initiative” in the Americas, also known as “NRG ED.”

NRG ED is structured to work with K-12 schools, community colleges, four-year colleges and universities, workforce training programs, communities and businesses, and aims to promote reduction of non-renewable energy usage in favor of renewable energies. However, the core of the initiative is education, without which the NRG ED initiative would not be.

“At its core the initiative is really focused on education,” said Chad Archey, Editor-in-Chief at Energy Analytics Institute from Atlanta, Georgia.

EAI views basic education as most important in the overall learning process and also promotes educational initiatives and research from grade school to the professional level related to the energy sector. EAI aims to foment constructive dialogue regarding energy usage as well as ways to reduce the carbon footprint left by non-renewable energy resources through the following: 1) educational consultancy, 2) development and distribution of educational and training materials, and 3) promotion of debate and discussion regarding renewable energy alternatives.

Energy Analytics Institute (EAI), formerly LatinPetroleum Inc. (dba LatinPetroleum.com), is a Houston-based independent company focused on producing non-biased news, updates and special reports for investors interested in the Latin America and Caribbean petroleum sectors.
***

Canacol Reports 3rd Colombian Gas Discovery at Breva 1

(Energy Analytics Institute, Jared Yamin, 24.May.2018) – Canacol Energy Ltd. announced results of the Breva 1 natural gas exploration well located on its 100% operated VIM 21 block in the Lower Magdalena Valley Basin of Colombia.

The Breva 1 exploration well is located approximately 1.5 kilometers north of the Toronja 1 Porquero gas discovery announced by Canacol on June 27, 2017. Toronja 1 encountered approximately 14 feet true vertical depth (TVD) of net gas pay within the Middle Porquero sandstone reservoir, and tested at a rate of 24.4 million standard cubic feet per day (MMscf/d) of dry gas with no water. Nelson 6, Canacol’s first discovery in the shallow Porquero sandstone play, encountered 39 ft TVD of net gas pay and tested 23 MMscf/d of gas.

Using the Pioneer 302 drilling rig, Breva 1 spud on April 29, 2018, and reached a total depth of 7,560 feet measured depth in 13 days. The well encountered 29 ft TVD of net gas pay with average porosity of 27% within the primary Porquero sandstone reservoir target. The well has been completed and cased, and Canacol is currently mobilizing a work over rig to perforate and production test the well. The work over rig is anticipated to arrive in 2 weeks, and the testing program is anticipated to take approximately 1 week to complete.

After Nelson 6 and Toronja 1, Breva 1 represents the third consecutive discovery in the emerging and important new Porquero play type in Canacol’s exploration portfolio. By means of the application of the AVO methodology proven to be so successful locating gas‐charged reservoir sandstones in the Cienaga de Oro play type, the company has demonstrated the same relationship between gas and reservoir sandstones in the Porquero Formation. Going forward, the successful outcome of the three exploration wells in the Porquero sets up at least five exploration and appraisal locations on the VIM 21 concession. It also provides critical technical information regarding the AVO methodology enabling Canacol’s exploration team to investigate the potential for the Porquero play type across the company’s expansive acreage position (1.1 mm net acres) in the Lower Magdalena Valley Basin.
***

Building Momentum – Oil and Gas in Latin America

(By Rodolfo Guzman, Paola Perez, Paola Carvajal, Roberto Imperatore, Arthur D. Little, 22.May 2018) – Unconventional oil production has grown these past few years despite low oil prices since 2014. Although production in the US decreased in 2015, stabilization of prices and improvements in several operational areas allowed unconventionals to maintain a relevant role in the global supply. Last year, Arthur D. Little published a viewpoint analyzing the perspectives for unconventional resources in selected Latin American countries. While our outlook for Latin American opportunities remains positive, there are new factors to consider. The key shale players have stayed strongly focused on the US, the moderate oil price recovery expectations persist, and concerns about fracking operations are increasing. Therefore, host countries, especially in Latin America, are now under greater pressure to create conditions that favor the development of these resources.

In recent years, countries such as Mexico, Colombia and Chile with potential in unconventional hydrocarbons have been evaluating their prospective resources. However, these activities have not been enough to build momentum and attract resources to speed up the de-risking process for unconventional hydrocarbons. Building momentum requires a strategy for aligning technical, regulatory, and economic conditions to boost the de-risking process of the greenfield plays prior to the take-off of massive developments. Two major forces can, in our opinion, help build momentum: national oil company leadership and/or government promotion & incentives. Besides these levers, a deeper understanding of the local conditions of the oil & gas industry is fundamental for defining the strategy and tactics for building momentum.

In our view, the development of unconventional hydrocarbons in different geographies will continue shaping the global oil and natural gas markets. Countries with high potential and interest in expanding their production, such as Mexico, Colombia, and Chile, still need to build momentum to ensure the inflow of capital investments to speed up the exploration/evaluation phases. Although there is still uncertainty regarding the feasibility of large developments, the growing demand for hydrocarbons presents an opportunity for oil companies.

As the energy industry continues evolving, trends in supply and demand could change the incentives to develop the unconventional plays (growing share of renewable, peak of oil demand, etc.). Therefore, there is a closing window of opportunity for adopting a strategy to provide the required support to oil & gas players and take advantage of unconventional developments.

Download the full report here: http://www.adlittle.com/en/BuildingMomentum
***

Fire at Barrancabermeja HDT Plant Controlled

(Energy Analytics Institute, Aaron Simonsky, 21.May.2018) – Colombia’s state oil company Ecopetrol announced that it has controlled a fire at the HDT plant of the Barrancabermeja refinery.
No injuries were reported and the refinery is operating normally, according to Ecopetrol.

Ecopetrol workers brought the fire — which occurred at the fuel hydrotreating unit that is out of service for programmed maintenance — under control, according to an Ecopetrol information sheet about the incident.

No injuries were reported and the refinery is operating normally, according to Ecopetrol.
***

Canacol Looks to Divest Non-Core Assets in Colombia

(Canacol Energy Ltd., 16.May.2018) – Canacol Energy Ltd. announced plans to divest of non-core Colombian conventional oil assets, among other management objectives for 2018.

These objectives include: 1) sell an average of 114 to 129 MMscfpd of gas and 1,700 bopd (“barrels of oil per day”), 2) execute the necessary investments in drilling, facilities, and flowlines to ensure that the productive capacity of the Corporation is greater than 230 MMscfpd by December 1, 2018, 3) execute a four well exploration and appraisal drilling program to build reserves and 4) divest the Corporation’s non‐core Colombian conventional oil assets to focus on the exploration and commercialization of our significant Colombian gas reserves and resource base.

Highlights of the capital spending program aimed at ensuring that the Corporation achieves 230 MMscfpd of gas production capability by December 2018 include: 1) the drilling of four exploration and appraisal wells and three development wells, 2) expansion of the Corporation’s gas gathering and processing facilities at Jobo, and 3) various workovers of its existing gas wells. The Corporation also expects to acquire new 3D seismic data on its VIM‐5 contract to continue building its gas exploration drilling portfolio. Approximately 97% of the originally announced $80 million budget for 2018 is dedicated to spending on the Corporation’s gas assets, with the remainder on its oil assets, and will be fully funded from existing cash and cash flows.

Subsequent to March 31, 2018, the Corporation completed a private offering of senior unsecured notes in the aggregate principal amount of $320 million and has used the net proceeds to fully repay the outstanding amounts borrowed under its existing credit facility in the amount of $305 million plus accrued interest.

By replacing the credit facility of $305 million, the Corporation benefits from: (i) replacing the current term loan that bears an interest rate of fluctuating three month Libor +5.5% (which currently totals approximately 8%, as the three month Libor has been increasing materially during the last 14 months), to a fixed coupon of 7.25%, which provides both a reduction and certainty of debt expenses in an extremely volatile interest rate environment; (ii) deferring the quarterly $23.5 million amortization of the existing credit facility beginning in March 2019, for a bullet maturity in May  2025; (iii) an administratively less burdensome note indenture that will not require collateral or quarterly certification of  maintenance covenants (only incurrence‐based covenants); (iv) no cash required to be held in a debt service reserve account as is required under the current credit facility (these amounts are scheduled to total approximately $25 million later in 2018 under the existing credit facility); and (v) achieving certain other operational and financial flexibilities, including the ability for the Corporation to pay a dividend.

With respect to the drilling program, the Corporation successfully drilled and completed the Pandereta‐3 and Chirimia‐1 appraisal wells as gas producers, with the Gaiteros‐1 exploration well resulting in a dry hole.  The remainder of the drilling program includes three exploration wells and one development well. The first of the three remaining exploration wells, Breva‐1, was spud in late April 2018 and is currently being cased and completed as a Porquero gas discovery. The remaining exploration wells include the Borojo‐1 well, which will spud in early June 2018, followed immediately by the Canahuate‐East well.  The final development well in the 2018 drilling program is Canahuate‐West, which will be drilled following the Canahuate‐East well.

As previously announced, forecast realized contractual gas and oil sales, which include contractual gas downtime for 2018, are anticipated to average between 21,700 and 24,300 boepd, which include 114 and 129 MMscfpd of gas, respectively, and approximately 1,700 bopd of annualized oil production. Upon a successful sale of the Colombian oil assets, this annualized oil production forecast would be revised accordingly. The base range for gas production assumes that the Promigas S.A. expansion, which will add 100 MMscfpd of transportation capacity between the Corporation’s gas processing facilities located at Jobo and the markets of Cartagena and Barranquilla, is delayed and does not materialize as of December 1, 2018. The upper range for gas production assumes that the Promigas S.A. expansion is completed on December 1, 2018, as currently planned, and that the Corporation sells additional natural gas in the interruptible market throughout 2018.

Based on the Corporation’s current portfolio of 2018 gas contracts, the average sales price, net of transportation costs where applicable, is approximately $4.75/Mcf. The Corporation has awarded a contract to build and install a new gas processing module at its Jobo gas facility to process an additional 100 MMscfpd of gas, which will raise the gas treating capability of the Jobo facility to 300 MMscfpd by December 2018.

The Corporation will purchase and operate the new gas processing module with funds sourced from existing cash and cash flows including the release of funds from the prior credit facility’s debt service reserve account, which is no longer required under the new senior unsecured notes.

***

Canacol Energy Ltd. Reports 24% Increase in 1Q:18 Revenues

(Canacol Energy Ltd., 15.May.2018) – Canacol Energy Ltd. reported its financial and operating results for the three months ended March 31, 2018.

“The first quarter of 2018 was an important milestone for Canacol, as it represents the first full quarter where the Corporation had access to the newly completed Sabanas flowline, and hence yet another step change in our natural gas production levels,” said Canacol President and CEO Charle Gamba. “We continue to diligently work towards our next goal of 230 MMscfpd by December 1, 2018, for which the Corporation is fully funded to achieve.”

Highlights for the three months ended March 31, 2018. Dollar amounts are expressed in United States dollars, except as otherwise noted. (Production is stated as working‐interest before royalties)

Financial and operational highlights of the Corporation include:

— Average production volumes increased 23% to 20,955 boepd for the three months ended March 31, 2018 compared to 16,992 boepd for the same period in 2017. The increase is primarily due to increase in gas production as a result of the additional sales related to the completion of the Sabanas pipeline, offset by production declines at LLA‐23 and the sale of the Ecuador Incremental Production Contract (the “Ecuador IPC”) (see full discussion in MD&A) in February 2018.

— Realized contractual sales volumes increased 17% to 21,115 boepd for the three months ended March 31, 2018 compared to 18,043 boepd for the same period in 2017. The increase is primarily due to increase in gas production as a result of the additional sales related to the completion of the Sabanas pipeline, offset by production declines at LLA‐23 and the sale of the Ecuador IPC in February 2018.

— Total petroleum and natural gas revenues for the three months ended March 31, 2018 increased 24% to $51.8 million compared to $41.6 million for same period in 2017. Adjusted petroleum and natural gas revenues, inclusive of revenues related to the Ecuador IPC, for the three months ended March 31, 2018 increased 14% to $53.7 million compared to $47 million for the same period in 2017.

— Adjusted funds from operations increased 12% to $23.5 million for the three months ended March 31, 2018 compared to $20.9 million for the same period in 2017. Adjusted funds from operations are inclusive of results from the Ecuador IPC, which totalled $2 million during the three months ended March 31, 2018 and $5 million during the three months ended March 31, 2017.

— The Corporation recorded a net income of $8.3 million for the three months ended March 31, 2018 compared to a net loss of $7.9 million for the same period in 2017.

— Net capital expenditures including acquisitions for the three months ended March 31, 2018 was $40.2 million, while adjusted capital expenditures including acquisitions, inclusive of amounts related to the Ecuador IPC, was $42.6 million. Net capital expenditures and adjusted capital expenditures included non‐cash costs of $14.1 million.

— At March 31, 2018, the Corporation had $61 million in cash and $13.3 million in restricted cash.
***

Colombia’s Gas Reserve Life up to 11.7 Years in 2017

(Energy Analytics Institute, Aaron Simonsky, 14.May.2018) – Colombia’s natural gas reserve life ratio rose 13.6% year-over-year.

Colombia’s Mines Ministry said the South American country had boosted its natural gas reserve life ratio to 11.7 times or 11.7 years in 2017 due to rising reserves and reduced consumption. The details, provided in an official Twitter post, show the increase was up 13.6% compared to 10.3 years in 2016 and 10.5 years in 2015.

A company’s reserve life ratio is a factor of its reserves at year-end divided by that year’s production. It’s normally measured as a ratio or more commonly in years (i.e. 11.7x or 11.7 years), and is often expressed just as R/P.
***

Ecopetrol Profit Rises Nearly 200% in First Quarter

(Reuters, 4.May.2018) – Ecopetrol, Colombia’s state-run oil company, said on Thursday that its first quarter net profit rose to 2.6 trillion pesos ($923.3 million), up 195 percent from the same period in 2017, thanks to improved efficiencies and higher crude prices.

The results were the best first quarter showing in four years, the company said in a regulatory filing.

Ecopetrol plans to invest between $3.5 billion and $4 billion during 2018, as it reboots production and exploration after being battered by the global fall in crude prices.

Consolidated oil and gas production in the first quarter fell to 701,000 barrels per day (bpd) because of February protests that led to blocked roads and the temporary closure of some fields, the company said.

Despite the output fall, Ecopetrol said it would not change its production goal for the year.

“We’re keeping our yearly production goal at between 715,000 and 725,000 barrels per day,” chief executive Felipe Bayon said in the statement.

Ecopetrol produced an average of 715,000 bpd in 2017.

Earnings before interest, taxes, depreciation and amortization in January to March increased by 23 percent compared with the same quarter in 2017, to 7.15 trillion pesos, the company said.

Total sales in the first quarter were up 9.5 percent compared with the same period last year, to 14.6 trillion pesos.

The company will hold a call with investors about the results on Friday.
***

Ecopetrol Provides Update on Emergency in Tumaco

In Tumaco. Source: Ecopetrol

(Energy Analytics Institute, Jared Yamin, 2.May.2018) – Colombia’s Ecopetrol published a brief update on emergency operations in Tumaco. In the area there are more than 100 workers, 9 control points (La Espriella, La Cortina, La Chorrera, El Muerto, La Brava, Pueblo Nuevo, Tangarial 1, Dos Quebrados, and Boca de Caunapí), 17 contention points and more than 1,000 meters of barrier to contain and then gather crude oil, according to an Ecopetrol graphic visual with information or info graphic published via Twitter.

Additionally, there are 6 tankers assigned to transport the gathered crude oil. In terms of attention to affected citizens in the area, Ecopetrol is providing some assistance and has distributed 45,000 liters of portable water to communities in La Espriella and Pueblo Nuevo.
***

ECLAC Ssays Venezuela’s Economic Activity to Fall 8.5% in 2018

(Energy Analytics Institute, Aaron Simonsky, 1.May.2018) – The United Nations Economic Commission for Latin America and the Caribbean, also known as ECLAC or CEPAL by its Spanish acronym, projects economic activity in troubled Venezuela will contract 8.5% in 2018.

Gross domestic product or (GDP) estimates for other important countries and regions follows:

TABLE 1: ECLAC GDP ESTIMATES FOR 2018

Country/Region —————————- GDP (Est.)

Argentina ———————————— 2.5%
Bolivia ————————————— 4.0%
Brazil —————————————- 2.2%
Chile —————————————– 3.3%
Colombia ———————————— 2.6%
Ecuador ————————————– 2.0%
Paraguay ————————————- 4.0%
Uruguay ————————————– 3.0%
Venezuela ———————————– (8.5%)

Latin America and Caribbean (LAC) —- 2.2%
South America —————————— 2.0%
Central America and Mexico ————- 2.6%
Central America —————————- 3.6%
Latin America ——————————- 2.2%
Caribbean ———————————— 1.4%

Source: ECLAC, April 2018
***

ConocoPhillips’s Interest in Colombia

(Energy Analytics Institute, Aaron Simonsky, 25.Apr.2018) — ConocoPhillips is active in Colombia in the Middle Magdalena Basin at VMM-3 and VMM-2, where it serves as operator at both blocks, the company reported in a Fact Sheet updated on its website in March 2018. A short summary of its Colombian interests follows:

— VMM-3: Partners in the block include ConocoPhillips (WI 80.0%, Operator) and CNE Oil & Gas S.A. (WI 20.0%)

In 2015, ConocoPhillips assumed operatorship of the VMM-3 Block, which extends over approximately 67,000 net acres. The block contains the Picoplata 1 Well, which was drilled in 2014 and 2015. In 2016 and 2017, ConocoPhillips conducted production testing operations at the Picoplata 1 Well and is continuing its evaluation of the block.

— VMM-2: Partners in the block include: ConocoPhillips (WI 80.0%, Operator) and Canacol Energy Colombia S.A. (WI 20.0%)

In 2017, ConocoPhillips acquired interest and operatorship of the VMM-2 Block, which extends over approximately 58,000 net acres and is contiguous to the VMM-3 Block. ConocoPhillips is currently undergoing an environmental impact study of the block.
***

EPM Installs Colombia’s ‘First’ Floating PV Project

(PV-Tech, Tom Kenning, 18.Apr.2018) – Colombian utility EPM has installed what it claims to be the country’s first floating solar plant, standing at 100kW at the El Peñol reservoir.

The pilot project will test the technology and its fundamentals in comparison to ground-mount and rooftop systems. For this purpose, traditional solar panels will be installed on a roof at the Guatapé Central camp, under the same irradiation conditions.

EPM general manager Jorge Londoño De la Cuesta said: “With this pilot project we seek to verify if the floating systems of solar panels have an energy performance of more than 10% or 15% compared to traditional systems on land or in the roof, thanks to its proximity to water, which allows them to be more refrigerated and take advantage of the greater radiation from reflection in the water.”

The pilot solar park has 368 panels and is located near the collection tower, so as not to interfere with the dam in its role as a tourist attraction. The plant has been set up across two 50kW modules and is expected to generate approximately 145MWh of electricity per year.

Last September, Innova Capital Partners and French floating PV specialist Ciel & Terre (C&T) also agreed to jointly develop floating solar plants in Colombia. C&T has already completed Brazil’s first floating solar project.
***