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.

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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.

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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.

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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.

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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

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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

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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.

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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.

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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.

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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.

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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)

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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.

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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

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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

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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/

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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

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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).

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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.

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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.

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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.

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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

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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.

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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

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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.

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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)

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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.

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Cano Limon Pipeline Restarts After 180 Days

(Reuters, 17.Jul.2018) – Pumping through the Colombia’sCano 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

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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.

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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.”

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.
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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.
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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.

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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.
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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.

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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.
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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.

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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.
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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.
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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).

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