Work On Modernization Of Talara Refinery Reaches 71% Mark

(Energy Analytics Institute, Piero Stewart, 12.Nov.2018) — Construction of the Talara refinery in Perú continues.

Modernization work at the refinery — which is comprised of 16 processing units and 5 auxiliary units — is 70.94% complete, PetroPerú reported in an official statement on its website. Work completion will increase the refinery’s production capacity to 95,000 barrels per day from 65,000 barrels per day.

Additionally, work on the refinery will improve technology standards and improve its competitiveness and allow for production of the cleanest fuels in the region, of a quality dubbed ‘Euro VI,’ according to PetroPerú.

The refinery is expected to come online in December 2020.

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Frontera Energy Announces 3Q:18 Ops, Financial Results

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

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

THIRD QUARTER 2018 OPERATIONAL AND FINANCIAL HIGHLIGHTS

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

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

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

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

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

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

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

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

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

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

Richard Herbert, Chief Executive Officer of Frontera, commented:

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

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

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

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

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

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

Board of Directors Update:

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

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

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

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

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

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

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

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

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

Strong Balance Sheet:

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

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

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

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

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

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

Update on Transportation Costs:

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

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

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

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

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

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

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

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

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

Exploration and Development Update:

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

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

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

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

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

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

Annual Guidance Update:

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

Third Quarter 2018 Conference Call Details:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Camisea Consortium Resumes Operations at Malvinas Gas Plant

(Energy Analytics Institute, Ian Silverman, 20.Oct.2018) — The Camisea Consortium confirmed conditions at the Malvinas Gas Plant “are normal and present no risk to the safety of people, operations or the environment,” reported the daily newspaper El Comercio.

Today, starting at 5 p.m., normalization of plant operations will begin, with expectation of reaching total production capacity of natural gas and natural gas liquids to supply the domestic market and exports by 8 am on October 20, the consortium announced after completion of preventive evaluation of the site.

On October 16, at noon, during a routine inspection, a “potential atypical condition” was detected at one of the facilities at the processing plant, reported the daily.

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Ecuador, Peru In Talks To Explore Oil And Gas Blocks: Energy Minister

(Reuters, Alexandra Valencia, 11.Oct.2018) — Ecuador has begun talks with neighboring Peru to jointly explore two oilfields at the border and allow state-run Petroamazonas to operate natural gas areas in Peru, Ecuadorian Energy Minister Carlos Perez said on Thursday.

Ecuador, which earlier this year awarded foreign and domestic energy firms exploration and production rights for four oil blocks in the Andean country, plans to continue offering areas through an onshore auction later this year and another in 2019 for natural gas blocks off its Pacific shore.

“We could form a joint venture between (state-run oil firms) Petroamazonas and Petroperu plus a private company to bring in capital,” Perez told Reuters in an interview.

The crude to be jointly produced along the border would feed Peru’s 65,000-barrel-per-day Talara refinery through an existing pipeline, while natural gas to be produced in Peruvian territory would be exported to Ecuador to ease a shortage there.

Ecuador President Lenin Moreno’s government is moving fast to attract foreign investment in the country’s energy industry to reverse a slow decline in crude output.

Other countries in the region, including Brazil, Mexico, Colombia and Argentina, also are competing for oil capital.

Oil contracts in Ecuador have been changed to allow operators to export independently and over a dozen crude and gas blocks are planned to be offered to foreign companies through production agreements and service contracts.

After completing the Intracampos 2 onshore oil tender in the last quarter of 2018, Ecuador will next year auction exploration and production rights for gas blocks off the Esmeraldas, Manabi and Guayas shores, which have been studied but reserves have not been confirmed.

The country’s largest gas field, Amistad, is also being offered for private investment.

“We want to bring large companies (to the gas auction) because bigger investment is required there,” Perez said.

Ecuador, which plans to boost oil output to 590,000 barrels per day (bpd) in 2019 from 520,000 bpd this year, supports a crude production increase at the December OPEC meeting, he said.

“Due to national interest, Ecuador wants to have the option of being able to increase production. That will be our point of view (in the upcoming OPEC meeting),” Perez said.

The current crude price of between $70 and $80 per barrel is “reasonable”, Perez said, adding that “we must find a balance” in the market.

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Energy Analytics Institute (EAI): #LatAmNRG

Frontera Energy Announces Exploration Discovery in Colombia

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

Richard Herbert, Chief Executive Officer of Frontera, commented:

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

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

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

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

Exploration Discovery in Colombia

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

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

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

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

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

Operational Update

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

Fourth Quarter and 2019 Drilling Update

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

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

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

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

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

***

PetroTal Provides Update On Peruvian Blocks 95 and 107

(PetroTal Corp., 26.Sep.2018) — PetroTal Corp. is increasing production from the Bretaña oil field on Block 95, as well as evaluating the Osheki prospect in Block 107.

Key highlights from the fields follows:

— Bretaña oil field (Block 95):

– One of the largest undeveloped discoveries in Peru

– First oil achieved in June 2018, ahead of schedule

– Installation of initial Long-Term Testing Facilities to handle production of 5,000 barrels of oil per day (b/d) and 5,000 b/d of is expected to be completed on schedule and under budget by late October, 2018

– Average September 2018 production is ~900 b/d naturally flowing, expected to increase to over 2,000 b/d by November 2018

– First development well to be spud in early 2019, allowing for production growth to 5,000 b/d by mid-2019 and to 10,000 b/d in early 2020.

– Significant proved + probable (2P) reserves of 39.8 million barrels of oil, independently verified by Netherland Sewell & Associates, Inc. (NSAI) effective as of December 31, 2017

– Attractive fiscal terms with an initial cash royalty of five percent, not surpassing eight percent at peak production

– Established routes to market with current production being sold at the Iquitos Refinery

“We have achieved operational milestones, ahead of schedule and under budget, including the commencement of production at Bretaña. PetroTal is in a strong financial position with no debt, and our investment case is further de-risked by a relatively simple geological story,” said PetroTal President and Chief Executive Officer Manolo Zuniga.

— Osheki light oil prospect (Block 107):

– Recent confirmation that Osheki prospect is estimated to hold 534 million barrels of mean prospective recoverable resources, estimated by NSAI effective as of June 30, 2018.

– Estimate is based on a recovery factor of 30 percent of the estimated 1.78 billion barrels of mean prospective original oil in place (OOIP)

– Currently in discussions with potential joint venture partners to drill Osheki

– Further potential material upside from additional leads in Block 107

“We are proud to be aligned with the Peruvian government as we play our part in helping the country increase production and reduce oil imports. I am very upbeat about the future as we continue our journey to become a Peruvian focused E&P of scale, creating value from our existing assets, and over time expanding the portfolio in Peru,” concluded Zuniga.

***

PetroTal Corp. Announces Intention for Secondary Quote of Common Shares

(PetroTal Corp., 26.Sep.2018) — PetroTal Corp. announced its intention to seek a secondary quotation of its common shares with their admission to trading on the London Stock Exchange’s AIM market, subject to preparation of the requisite documentation. The company expects that the shares will begin trading by the end of this year.

“We are focused on realizing the value of our material oil assets in Peru. A secondary quotation on London’s AIM would hopefully increase liquidity and allow us to broaden the shareholder register, at a time when we both are rapidly moving ahead in [Peru] with the development of Block 95 and continuing to assess potential partners for Block 107,” said PetroTal President and Chief Executive Officer Manolo Zuniga.

PetroTal Corp. is a junior oil and gas company domiciled in Canada with corporate offices in Houston, Texas. The company is focused on development of oil and gas assets in Peru.

The company is seeking admission to AIM, alongside its current listing on the TSX Venture Exchange, in order to take advantage of AIM’s liquidity, as well as to access a broader range of institutional investors. The Board believes this will help expedite the unlocking the value of PetroTal’s Peruvian assets. PetroTal would be the only exclusively Peru focused independent oil and gas company quoted in London.

Strand Hanson Limited is acting as the company’s Nominated Adviser on the proposed admission.

PetroTal will hold a special meeting of shareholders on October 25, 2018 to amend the Articles of the company in preparation for the secondary quotation. A management information circular and related meeting materials have been mailed to the company’s registered shareholders and filed on SEDAR at www.sedar.com.

***

PetroTal Announces Grant of Performance Share Units, Deferred Share Units

(PetroTal, 14.Sep.2018) — PetroTal Corp. granted performance share units (PSUs) and deferred share units (DSUs) to certain officers and directors of the company.

PetroTal granted an aggregate of 3,901,666 PSUs to certain officers of the company in accordance of the provisions of the company’s PSU plan. The PSUs will vest annually over three years and each PSU will entitle the holder to acquire between zero and two common shares of the company (Common Shares), subject to the achievement of performance conditions relating to the company’s total shareholder return, net asset value and certain production and operational milestones.

PetroTal also issued an aggregate of 650,000 DSUs pursuant to the company’s DSU plan to the independent directors of the company. The DSUs vest immediately and may only be redeemed upon a holder ceasing to be a director of PetroTal. No Common Shares will be issued under the DSU plan; all DSUs granted are settled in cash.

Further details regarding the PSU plan and the DSU plan are set out in the management information circular of the company dated April 30, 2018, which is available on SEDAR at www.sedar.com.

***

PetroTal Seeks Exploration Partner for the Osheki Prospect in Peru

(Energy Analytics Institute, Aaron Simonsky, 13.Sep.2018) — PetroTal Corp. is seeking joint venture partners to drill the first exploration well by the fourth quarter 2019 or early 2020.

“We are currently engaging potential joint venture partners to drill the exploration prospect and expect the full data room to be open as soon as September 15, 2018,” reported PetroTal in an official statement, citing its Vice President of Asset Development Chuck Fetzner.

The announcement from the company comes after it reported an independent evaluation of the prospective resources with respect to the Osheki prospect in Block 107, located in the Ucayali Basin of eastern Peru. Drilling permits for the prospect have already been approved.

Calgary-based PetroTal id focused on developing and exploiting the Bretaña oil field, as well as evaluating the Osheki prospect in Block 107, which could provide significant growth for the company.

Osheki Resource Upgrade

Based on an independent assessment completed by Netherland Sewell & Associates, Inc. (NSAI), with an effective date of June 30, the Osheki prospect is estimated to have 534 million barrels (MMbbls) of mean prospective recoverable resources. This estimate is based on a recovery factor of 30 percent of the estimated 1.78 billion barrels of mean prospective original oil in place (OOIP), using maps generated from seismic acquired in 2007 and 2014. The mean risked prospective resources figure for the Osheki prospect is 85 MMbbls.

“Today’s increase in prospective resources at Osheki is a milestone in the development of our asset portfolio in Peru. It firmly endorses the quality of the Osheki prospect, which also contains further potential material upside from additional leads in Block 107,” said PetroTal President and Chief Executive Officer Manolo Zuniga in the company statement.

 

He continued: “This important development follows the Bretaña oil field successfully coming online ahead of schedule in June, with the remaining long-term testing equipment installation on schedule to allow us to increase production from the current ~1,000 bopd to over 2,000 bopd by the end of October. Bretaña has a clear path to increasing production to above 10,000 barrels of oil per day by 2020.”

The prospect was de-risked with a new 3D geologic model supporting Cretaceous age reservoirs with high quality Permian source rocks. Block 107 has four additional leads that, with Osheki, could contain a total of 4.58 billion barrels of recoverable resource in the high estimate case.

“In a report commissioned prior to PetroTal taking on the assets, it was estimated there was 313 MMbbls of mean recoverable prospective resource for the Osheki prospect. In NSAI’s June 30, 2018 report, the estimate has increased by more than 60 percent. When we combined the two seismic programs we were able to see closure in as many as three different horizons. The Osheki prospect is a sub-thrust play similar to the Cusiana complex in the Llanos Foothills of Colombia,” concluded Fetzner.

***

Peru-Petro President Says Proposed Hydrocarbon Law “Favorable”

(Energy Analytics Institute, Piero Stewart, 10.Sep.2018) — The proposed Law for the Promotion of the Hydrocarbons Industry, which will be debated shortly by Congress, is “favorable” for the country’s oil sector, announced Peru-Petro President Seferino Yesquén.

The official, speaking during an interview with Andina, said the law is “favorable” because it will “modernizes the sector and allow for faster investments.”

***

 

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.

***

Peru Approaching Lithium Discovery Announcement with Caution

(Efe, 6.Sep.2018) — Peru’s government is exercising caution after mining company Macusani Yellowcake announced in July that it had discovered the world’s largest lithium deposit, the energy and mines minister said Thursday.

The company, a unit of Canada’s Plateau Energy Metals, estimated that the deposit in Peru’s Altiplano region holds at least 2.5 million tons of lithium (more than the reserves of Bolivia and Chile) and 124 million pounds of uranium, Francisco Ismodes said.

“We have to treat it with caution,” Ismodes said at a press conference in Lima.

Though acknowledging the importance of the announcement, he said Peru’s lithium is mixed with rock and thus its characteristics are different from the reserves of that light and soft metal that are found in Bolivia.

Ismodes said the Peruvian government had only had preliminary meetings thus far with the mining company that carried out the exploration work in the country’s southeastern Puno region, near the border with Bolivia, and acknowledged that the government needed to gather more information.

Since the so-called Falchani deposit also contains uranium, the Energy and Mines Ministry is working on a bill for the development of that radioactive element and plans to introduce it before year’s end.

Peru currently has no regulations governing uranium development.
Ismodes also guaranteed that no project would be launched to develop the lithium deposit without taking into account protected cultural or landscape heritage sites.

Plateau Energy Metals’ chief operating officer, Laurence Stefan, said initially that annual production of lithium rocks at the Falchani deposit could total between 5-6 million tons, allowing the company to obtain 50,000 to 60,000 tons of lithium carbonate.

Strong demand is expected in the future for lithium-ion batteries, which power a wide range of electrical and electronic devices, including electric vehicles, mobile phones and laptop computers.

***

Peru Approaching Lithium Discovery with Caution

(Efe, 6.Sep.2018) — Peru’s government is exercising caution after mining company Macusani Yellowcake announced in July that it had discovered the world’s largest lithium deposit, the energy and mines minister said Thursday.

The company, a unit of Canada’s Plateau Energy Metals, estimated that the deposit in Peru’s Altiplano region holds at least 2.5 million tons of lithium (more than the reserves of Bolivia and Chile) and 124 million pounds of uranium, Francisco Ismodes said.

“We have to treat it with caution,” Ismodes said at a press conference in Lima.

Though acknowledging the importance of the announcement, he said Peru’s lithium is mixed with rock and thus its characteristics are different from the reserves of that light and soft metal that are found in Bolivia.

Ismodes said the Peruvian government had only had preliminary meetings thus far with the mining company that carried out the exploration work in the country’s southeastern Puno region, near the border with Bolivia, and acknowledged that the government needed to gather more information.

Since the so-called Falchani deposit also contains uranium, the Energy and Mines Ministry is working on a bill for the development of that radioactive element and plans to introduce it before year’s end.

Peru currently has no regulations governing uranium development.

Ismodes also guaranteed that no project would be launched to develop the lithium deposit without taking into account protected cultural or landscape heritage sites.

Plateau Energy Metals’ chief operating officer, Laurence Stefan, said initially that annual production of lithium rocks at the Falchani deposit could total between 5-6 million tons, allowing the company to obtain 50,000 to 60,000 tons of lithium carbonate.

Strong demand is expected in the future for lithium-ion batteries, which power a wide range of electrical and electronic devices, including electric vehicles, mobile phones and laptop computers.

***

PetroTal Conducting Test at Bretaña Oil Field in Peru

(PetroTal Corp., 25.Aug.2018) — The company placed the Bretaña oil field online at approximately 1,000 b/d during the initial testing and commissioning phase. To date, the well has accumulated approximately 40,000 barrels with no sign of water produced from the aquifer. The oil is being sold at the local Iquitos refinery owned by PetroPeru.

As part of the testing phase, the well is currently undergoing a pressure build up test to gather reservoir data. During this initial phase, the company continues to produce the well under a choke that will reduce the risk of aquifer water production until water handling facilities are installed in the field.

During the testing phase, prior to Declaration of Commerciality, the company will record all production costs, royalties, and sales as part of capital expenditures. For this reason, any oil in the storage tanks will not be considered “revenues” until after the declaration of commerciality.

Since testing started, PetroTal has realized an average oil price of $58.16, net of transportation.

“Our team continues to deliver ahead of schedule and we are pleased with the initial well test and early production thus far. Strong realized oil prices of over $58.00 plus our ability to barge directly to the refinery, which saves on pipeline tariffs, provides key cash to the company at this stage,” said PetroTal President and Chief Executive Officer Manolo Zuniga. “With Perupetro providing the certificates of qualification, this sets the stage for PetroTal to grow for the foreseeable future.”

Water injection pumps have arrived at the field and are being installed. Remaining water-handling facilities, such as the desalter, originally scheduled to be ready by November, are now scheduled to arrive in September and be ready for operation in late October. Once the facilities are installed and commissioned, the well will be opened to produce at an expected rate of 2,000 and 2,500 b/d.

PetroTal plans to spud the first development well in the first quarter of 2019. As previously reported, this well will be drilled down to the Chonta formation to evaluate its oil potential, and then horizontally sidetracked into the main Vivian formation as an oil producer. The rig used to begin drilling in Bretaña is currently drilling for another operator and will be mobilized to the Bretaña field in December to begin the drilling campaign.

Earlier this month, Perupetro presented to the company the certificates of qualification as the 100 percent working interest operator of Blocks 95, 107 and 133. The Supreme Decree authorizing Perupetro to execute the amended license contracts in respect of these blocks is expected by year-end 2018.

About Bretaña Field

Oil in the Bretaña field was first discovered in the 1970’s and was subsequently re-discovered. Several wells have been drilled to delineate the field and recent seismic has de-risked the structure. The rediscovery well drilled in 2014 tested 18.5 degrees API oil from the Vivian formation. The Northern oil fields in Peru have produced over one billion barrels of oil, mostly from the Vivian formation. The company acquired the assets in Peru on December 18, 2017. The company is working to put the field on long-term test and begin production as early as Q4 2018.

***

PetroTal Reports 2Q:18 Financial Results

(PetroTal Corp., 23.Aug.2018) — PetroTal Corp. provided a summary of its financial and operating results as of June 30, 2018.

Selected financial and operational information is outlined below and should be read in conjunction with the company’s unaudited consolidated financial statements, and management’s discussion and analysis (MD&A) for the quarter ended June 30, 2018, which are available on SEDAR at www.sedar.com and the company’s website at www.petrotal-corp.com. All figures referred to in this press release are denominated in U.S. dollars.

2018 SECOND QUARTER HIGHLIGHTS

— Initiated oil production at the Bretaña field on June 1 to begin commissioning facilities

— Produced approximately 6,300 barrels of oil during commissioning phase in June

— Produced approximately 24,700 bbls in July as expected under restricted choke

— Installation of full water handling facilities is ahead of schedule

— PetroTal has been qualified by Perupetro as a 100 percent working interest operator

FINANCIAL HIGHLIGHTS

The following table summarizes key financial highlights associated with the company’s financial performance for the second quarter ended June 30, 2018.

***

Frontera to Plug, Abandon Delfin Sur-1 Exploration Well

(Energy Analytics Institute, Jared Yamin, 18.Aug.2018) – Frontera Energy Corporation declared the Delfin Sur-1 exploration well offshore Peru non-commmercial.

On August 12, 2018, the company completed drilling the well, located on the Z-1 block offshore. The well was drilled to a total measured depth of 7,228 feet in the Heath Formation, on time and on budget and evaluated the Zorritos Formation where hydrocarbon shows were encountered but not in sufficient quantities to justify further evaluation. The well is being plugged and abandoned, the company announced in an official statement. Future activity on the block is under evaluation.

Frontera has a 49% working interest in the well and is the technical operator. The company’s net capital cost of the well was approximately $14 million.

***

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.

***

 

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

***

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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Plateau Energy Peru Unit Finds Lithium Resources

(Reuters, 16.Jul.2018) – Canadian miner Plateau Energy Metals Inc’s Peru unit Macusani Yellowcake S.A.C. said on Monday it has found 2.5 million tonnes of high-grade lithium resources and 124 million pounds of uranium resources in its Falchani hard rock deposit in the region Puno.

Ulises Solis, general manager of the unit, told a news conference that it was unclear how much of the lithium resources would eventually end up being classified as economically viable reserves.

Solis said a feasibility study would reveal that next year, and that a proposed $800 million, underground lithium-uranium mine could be built within a year to start production in 2020.

The announcement is the latest in a flurry of plans to expand or build new lithium mines amid forecasts for massive demand from the electric vehicle industry, which uses lithium in car batteries.

Plateau has drilled 3,000 meters or about 15 percent of the surface of its exploratory concessions in Puno, which are located at an altitude of about 4,500 meters in the Andes, Macusani said in a statement.

It plans to drill another 10,000 meters by early next year, Laurence Stefan, Plateau’s chief operating officer, said at the press conference.

Plateau headquarters did not immediately respond to a request for comment.

The company is working with the government to develop clear rules for mining radioactive materials that are still lacking in Peru, Solis said. (Reporting By Marco Aquino)

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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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Role of Peru’s Hydrocarbon Industry on Development

(Energy Analytics Institute, Ian Silverman, 9.Jul.2018) – PeruPetro will host a conference titled “Role of the Petroleum and Gas Industry for Peru’s Economic Development.”

Details follow:

When: 7 July 2018

Where: Talara, Peru

Venue: Javier Pérez de Cuellar Auditorium (2nd floor of Municipal Library)

Contact: PeruPetro

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PetroTal Reports First Oil from Bretana

(PetroTal Corp., 3.Jul.2018) – PetroTal Corp. achieved first oil production from the Bretana Norte discovery well at the Bretana field in Block 95 in Peru.

The company also provided further operations updates for both Bretana and Block 107. All figures referred to in this press release are denominated in U.S. dollars.

Operations Highlights

— First oil production achieved in five months, significantly ahead of schedule

— Discovery well flowed oil without stimulation

— Well produced 100 percent oil with minimal natural gas and no formation water to date

— Commissioning of facilities is progressing as expected and on schedule

— Water handling facilities on schedule for commissioning in October, 2018

— 7,000 barrels of oil produced to date through the ongoing long-term testing phase

— Signed oil sales contract allows for strong operating netbacks to PetroTal

— First oil sales and shipment expected in early July, 2018

— Osheki prospect in Block 107 remapped, independent resource audit being prepared

Operations Update

The company initially provided guidance that the Discovery Well, which had been tested but not produced, could commence production in 10 to 12 months from PetroTal taking over operational control of the field in late December 2017. The Company is pleased to announce that on June 1, 2018 the well was placed on production through long-term testing, allowing for the start of the commissioning of the newly installed oil production facilities, five months earlier than anticipated. Field personnel have controlled the choke sizes of the well over the initial four weeks to carefully manage the commissioning of the facilities and to properly commission the facilities. The Discovery Well is testing oil from the Vivian formation, producing 100 percent oil with minimal natural gas and no formation water. As previously announced, the company is restricting the well flow rates to avoid water production until the required water injection facilities are installed and commissioned in October of this year.

In addition to putting the Discovery Well on production, the company is installing initial water handling facilities at Bretana. The project is on schedule to begin commissioning water treatment and reinjection facilities by late October 2018. At that time, oil production rates from the Discovery Well are anticipated to increase to between 2,000 and 2,300 barrels per day (b/d). The company has also completed refurbishment and construction on the existing drilling pad and is now able to drill additional wells without causing material interruptions to production.

Manolo Zuniga, President and Chief Executive Officer of PetroTal, stated: “We are extremely pleased for having been able to achieve first production in just five months. The well and the newly installed equipment have met expectations of field personnel and there have been no issues with achieving oil flow at sufficient rates to commission equipment. As mentioned above, the well is being produced under a restricted choke to avoid producing water until the full facilities are installed to handle produced water in October of this year. In the meantime, the well is expected to produce without stimulation at rates of up to 1,000 b/d, depending on the planned activities and objectives of field personnel, gather well and reservoir data, and meet the requirements of the initial oil sales contract which calls for PetroTal to sell up to 1,000 b/d to the Iquitos refinery.”

Oil Sales Contract

The Company is pleased to announce the execution of an initial oil sales contract with PetroPeru, Peru’s state oil company and owner of the Iquitos refinery, pursuant to which the company is entitled to sell up to 1,000 Bbls/d to the refinery during the initial long-term testing phase. The company successfully negotiated a discount equivalent to 14 percent from Brent; however, the company does not pay pipeline tariffs during the contract term as all oil is barged to the refinery. Additionally, the crude oil will be picked up at the Bretana field and transported to the refinery by PetroPeru at a cost equivalent to our internal cost projections. As a result, the company expects to achieve strong operating netbacks. The company expects to deliver most of the initial oil recovered to date to the refinery in early July. The chart below outlines the company’s anticipated operating netbacks at certain benchmark reference prices:

             
Benchmark Brent Prices $60.00 $65.00 $70.00 $75.00 $80.00 $85.00
             
Realized Price $51.44 $55.73 $60.02 $64.31 $68.59 $72.88
               
  Royalty $2.57 $2.79 $3.00 $3.22 $3.43 $3.64
  Barging $5.50 $5.50 $5.50 $5.50 $5.50 $5.50
  Pipeline 0 0 0 0 0 0
  Lifting $21.95 $21.95 $21.95 $21.95 $21.95 $21.95
             
Operating Netback $21.42 $25.49 $29.57 $33.64 $37.71 $41.79

The higher per unit lifting costs included above are driven by the initial lower production rates during the initial commissioning and testing phase.  The Company expects future lifting costs to approximate $11 per barrel once production reaches 5,000 b/d.

Mr. Zuniga continued “As demonstrated, the avoidance of paying the pipeline tariff effectively reduces our cost structure, thus the negotiated 14 percent discount is beneficial for both PetroTal and PetroPeru, the owner of the Iquitos refinery. We use a lifting cost of $21.95 per barrel on this initial production as the early restriction on production rates affect the unit costs. Additionally, we have yet to finalize the commissioning process, so this initial estimate could vary.  In any event, you can see that this is a robust project.”

Block 107 Osheki Prospect

The company has completed the remapping of the Osheki prospect based on all available data. The revised maps suggest there is closure on the structure and up to three producing horizons may hold hydrocarbons. Updated maps are available in the investor presentation on the Company’s website at www.petrotal-corp.com.

In addition, the company has retained Netherland, Sewell & Associates, Inc., qualified independent reserves evaluators, to prepare an initial hydrocarbons volumes assessment of the Osheki prospect. Once this assessment is complete, the company expects to open the Block 107 data room for prospective partners to review.

***

Frontera to Spud Delfin Sur-1 Offshore Peru

(Energy Analytics Institute, Ian Silverman, 30.Jun.2018) – Canada’s Frontera Energy Corporation announced commencement of mobilization of the Petrex-10 drilling offshore Peru.

Drilling of the Delfin Sur-1 exploration well is expected to begin in July 2018, the company announced in an official statement.

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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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Frontera Announces Details Of Share Split

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

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

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

DIRECT REGISTRATION SYSTEM

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

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Force Majeure Affects NorPeruano Pipeline

(Energy Analytics Institute, Ian Silverman, 3.Jun.2018) – Canada’s Frontera Energy Corporation announced it was notified by Petroperu S.A. of a force majeure event affecting a portion of the NorPeruano pipeline following the identification of oil traces in the Pastaza River, an area outside Block 192.

Force majeure will begin on June 4, 2018 and Frontera is uncertain of when full operation of the pipeline will resume. The company announced that should a portion of the pipeline be inoperative, it will result in Block 192 being declared in force majeure, the company announced in an official statement.

Frontera is working diligently with Petroperu S.A. and the local communities in providing resources in the identification and remediation processes and is hopeful that the period of force majeure will be of limited duration. Should Block 192 be declared in force majeure, the period of time this declaration would be in effect will be added to the end of the contract term for Block 192, currently anticipated to be June 10, 2019.

PRODUCTION IMPACT

If Block 192 is declared in force majeure, the anticipated impact would be approximately 8,600 barrels per day (b/d) of net production.

“We will take advantage of any downtime to undertake necessary maintenance and work-overs on Block 192. Despite the impact on net production, we do not believe that this force majeure event will have an effect on Peru sales volumes for Q2 due to the current build up of inventory in Peru. We also anticipate that our aggregate sales volumes for Q2 will be higher than the previous quarter, as the increase in oil inventory previously disclosed in the first quarter due to the timing of the loading of one cargo of crude oil will be reversed in the second quarter of 2018,” announced Frontera in its official statement.

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China Looks to Invest $10 Billion in Peru Over 3 Years

(Energy Analytics Institute, Piero Stewart, 1.Jun.2018) — China plans investments of $10 billion across various sectors in Peru over the next three years.

The Asian giant is planning to focus investments on sectors including energy, mines, telecommunications, construction and finance, reported the daily newspaper El Comercio, citing China’s Ambassador to Peru Jia Guide.

Work at Peru’s largest copper mine is at the forefront of China’s planned investments.

Expansion of the Toromocho copper mine located in Junín, which is controlled by Chinalco, will require an estimated investment of $1.355 billion. Plans for the mine include boosting production to 170,000 metric tons per day from 117,000, with an additional personal of some 3,500, announced Guide.
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Energy, Education, and Learning Through NRG ED

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

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

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

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

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

(Reuters, Marco Aquino & Mitra Taj, 23.May.2018) — The government of Peruvian President Martin Vizcarra canceled his predecessor’s decision to award five offshore oil contracts to London-based Tullow Oil PLC shortly before resigning, citing insufficient consultations with coastal residents.

The reversal, which was published in the official gazette on Wednesday, was a victory for fishermen and environmentalists who said that exploration and drilling would have put important fisheries and whale breeding grounds at risk.

It was another setback for efforts to shore up slumping energy investments in Peru, a relatively small oil producer where past bidding rounds have failed to draw offers.

Tullow, whose shares fell 5.2 percent in London on Wednesday, said it would consider “next steps.”

The contracts came under fire after Peruvians learned the disgraced former president, Pedro Pablo Kuczynski, had signed five decrees authorizing them just before stepping down in March over graft allegations.

Despite Kuczynski’s approval, the contracts themselves were never signed, state energy promoter Perupetro said.

Vizcarra’s government said Perupetro had negotiated the contracts directly with Tullow without giving communities along Peru’s northern coast enough time to weigh in.

“We want a country that develops investments with peace and tranquility, and that’s done with a good start to a project,” Prime Minister Cesar Villanueva told a press conference.

“With this repeal we are not even remotely opposed to private investment,” Villanueva added.

Since taking office, Vizcarra, Kuzynski’s former vice president, has distanced himself from his predecessor as he aims to strengthen ties with the opposition-controlled Congress and build grassroots support following Peru’s worst political crisis in nearly two decades.

The revocation of Kuczynski’s decrees “is deeply disappointing,” said George Cazenove, Tullow’s head of communications. “Tullow has complied with the process and procedures required under Peruvian law.”

Earlier this month, the comptroller’s office said it had found nothing illegal about the contracts, but that the process of granting oil concessions through direct talks should be more transparent and give other stakeholders more say.

Critics said a public auction should have been held and a higher royalty rate should have been set.

Tullow had planned an initial investment of $200 million in the five blocks, according to Perupetro.

The National Society of Mining, Petroleum and Energy business association said the government had only created more uncertainty for investors in Peru, where oil imports cost the country billions of dollars per year.
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Vizcarra Says Peru to Review Contracts, Including Tullow’s

(Energy Analytics Institute, Jared Yamin, 4.May.2018) – Peru’s President Martin Vizcarra announced his government plans to review all petroleum exploration contracts awarded in the country.

His comments come as artisan fishermen in northern Peru continue to protest decrees that authorized Perupetro to award five petroleum lots, also known as ‘lotes’ in Spanish, to Ireland’s Tullow Oil, reported the daily El Comercio.

“If we find things that don’t have justification, we will not sign the contracts,” said Vizcarra. “This includes lots awarded to Tullow Oil.”
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ECLAC Ssays Venezuela’s Economic Activity to Fall 8.5% in 2018

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

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

TABLE 1: ECLAC GDP ESTIMATES FOR 2018

Country/Region —————————- GDP (Est.)

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

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

Source: ECLAC, April 2018
***

Frontera Energy to Double Investment in Colombia, Peru

(Reuters, 2.Apr.2018) – Canada’s Frontera Energy Corp named a new chief executive on Monday, and said it plans to more than double its investment in operations in Colombia and Peru during 2018, to up to $500 million.

Frontera will direct between $225 million and $240 million of investment to new wells and maintenance in the two countries, the company said in a statement.

The investment will fund between 125 and 135 development wells, 11 to 15 exploratory wells and 15 to 25 work-over wells, the company said. Work-over wells require major maintenance or remedial treatment.

Richard Herbert, formerly of BP Plc, will replace Barry Larson as chief executive. At BP, Herbert was responsible for exploration and development projects worldwide, Frontera said.

Frontera had an average daily production of 70,082 barrels of crude per day (bpd) in 2017, the statement said, down 32 percent from 2016 because of the end of its contract to operate Rubiales field, its top producer. The company aims to produce between 65,000 and 70,000 bpd this year, it said.

Based on a Brent oil price of $63 per barrel, the company anticipates 2018 earnings before interest, taxes, depreciation and amortization (EBITDA) of between $375 million and $425 million, it said.

Frontera had a net loss of $217 million in 2017, compared with net profit of $2.4 billion in 2016, the company said by telephone.

(Reporting by Luis Jaime Acosta; writing by Julia Symmes Cobb; editing by Jonathan Oatis)
***

Repsol Starts Gas Production at the Sagari Field in Peru

(Repsol, 27.Dec.2017) – Repsol has begun gas production from the Sagari field, located in block 57 in the Cusco region of Peru, reinforcing the company´s gas output drive in its reserves development strategy.

The start of production at Sagari will lead to a 25% increase in the block’s total output. Starting in January 2018, it will produce 5.6 million cubic meters per day: approximately one fourth of Peru’s total gas demand.

The Sagari field was discovered in 2012. Repsol holds a 53.84% share and operates the field, partnered by CPNC of China with the remaining 46.16% stake.

Block 57 is located to the east of the Andes mountain range, in one of the most prolific gas production areas of Peru. The Repsol-operated Kinteroni field is also located nearby, and has been in production since 2014.

Repsol has been present in the Peruvian market for two decades, and has become a leader in the local energy sector with involvement throughout the entire value chain.

Repsol is one of the largest energy operators in Peru, holding mineral rights to four mineral blocks, of which three are in production. It also operates the Pampilla (the country’s primary petroleum refinery), has a network of more than 480 service stations and participates in the lubricant, aviation fuel and asphalt markets, among others.
***

GeoPark’s Morona Block Approval in Peru

(GeoPark Limited, 1.Dec.2016) – GeoPark Limited obtained final regulatory approval for its acquisition of the Morona Block in Peru.

In its first project returning to the upstream business, the Peruvian state-owned company Petróleos del Perú S.A. (Petroperu) awarded a 75% working interest (“WI”) in and operatorship of the Morona Block to GeoPark by a Joint Investment and Operating Agreement dated October 1, 2014, and its amendments. The agreement was subject to Peru regulatory approval, which was completed on December 1, 2016 following the issuance of Supreme Decree 031-2016-MEM.

The Morona Block covers an area of 1.9 million acres in the Marañón Basin, a priority target basin for GeoPark and one of the most prolific hydrocarbon basins in Latin America, with over 1 billion barrels of oil produced. The Morona Block contains the Situche Central oil field, which has been delineated by two wells (with short term tests of approximately 2,400 and 5,200 bopd of 35-36° API oil) and by 3D seismic. The block also includes extensive geophysical surveys, an operating field camp and logistics infrastructure. The area has undergone oil and gas exploration activities for the past 40 years, with ongoing association agreements and cooperation projects with the local communities.

DeGolyer & MacNaughton, the independent reserve engineering firm, has certified 2P reserves of 40.2 million barrels of oil (mmbo) and 3P reserves of 82.9 mmbo for the Situche Central oil field (at 100% WI) with no oil-water contact yet encountered in the field. Gaffney, Cline & Associates has audited a maximum unrisked upside potential in the Situche Central oil field to be approximately 200 mmbo (at 100% WI). The total Morona Block also includes a large exploration potential with high impact prospects and plays – including gross unrisked exploration resources ranging from 300 to 500 mmbo, as audited by Gaffney, Cline & Associates.

In accordance with the terms of the Agreement, GeoPark has committed to carry Petroperu on a work program that provides for testing and start-up production of one of the existing wells in the field, subject to certain technical and economic conditions being met. Expected capital expenditures in 2017 for the Morona Block are mainly related to facility maintenance and environmental and engineering studies.

“We appreciate the support of the Peruvian government to advance the Morona Block and we very much look forward to partnering with Petroperu and the local communities in developing and exploring this exciting project,” said GeoPark Chief Executive Officer James F. Park. “ The Morona Block is the type of high-value project we look for in Latin America – with an already-discoered big oil field and the opportunity to convert existing reserves into production and cash flows, combined with high impact exploration potential in a proven and prolific hydrocarbon system. The timing and size of this project also fits very well within GeoPark’s existing high quality portfolio of production and exploration assets across the region and represents an important piece of GeoPark’s ambitious medium to long term growth plans.”

***

Peru’s Large Oil Block Woes

(Maria Luisa Puig, Eurasia, 14.Sept.2015) – Indigenous groups occupied the installations of block 192, the largest oil field in the Amazon jungle, to force the government to listen to their economic and environmental demands. The Humala administration announced in Aug.2015 a 2-year contract with Canadian Pacific Exploration and Production (previously Pacific Rubiales) after an auction for a 30-year concession drew zero bids. Amid protests, Congress later passed a law that allows state-owned Petroperu to operate the block, a setback for the government.

Block 192 has faced several protests in the past, some of them also with disruptive effects on production. An inconclusive consultation process with some groups suggests these will persist.

More widely, recent protests highlight structural challenges facing investments in extractive sectors. Peruvians’ trust in institutions remains low, which makes protests the most viable alternative to channel discontent. The government has little capacity to prevent these or mediate between companies and social groups once they have started. At about 12,000 b/d, block 192 represents about 20% of Peru’s oil output.

***

PetroPerú to Skip Contracts for Lotes III and IV

(Energy Analytics Institute, Layla Benitez-James, 1.Apr.2015) – Petroperú will not participate in the licenses contracts for the exploitation of hydrocarbons in Lotes III and IV.

The company decided not to participate in the contracts since the minimum investment demanded by the partner Graña y Montero was 30%, reported the daily newspaper La Republica.

Additionally, a letter from Graña y Montero stipulated that Petroperú pay $5 million upon signing of a decree and 25% of another $15 million during May-December of this year.

***

BPZ Repayment of Convertible Bond Principal

(BPZ Resources, Inc., 2.Mar.2015) – BPZ Resources, Inc. announced it will exercise a provision under the bond indenture for the 6.5% Convertible Notes due March 1, 2015.

The bond has an outstanding principal amount of $60 million, whereby the company will avail itself of the 10-day grace period provided for in the Indenture on principal and a 30-day grace period on interest due for a total amount due of approximately $62 million. Once exercised, the grace periods will expire on March 10, 2015 for principal and March 30, 2015 for interest.

The company is engaged in discussions with representatives of certain holders of the Notes of the company’s Convertible Bonds issued with combined outstanding principal amounts of $229 million, maturing March 1, 2015 and October 1, 2017. These discussions include among other items, the potential terms under which one or both bond issues could be restructured to provide a capital structure which would allow the company to continue developing its oil and gas assets. Discussions are also underway with other potential investors regarding alternative financing solutions.

While the company is reviewing several options, an appropriate solution may not be found during the grace period. If the company does not make the payment due on the 2015 Notes and a resolution cannot be reached by the end of the grace period, the company would be in default under the terms of the 2015 Indenture. This action would result in cross defaults to the 2017 Convertible Bond issue, and could force the company to seek Chapter 11 Bankruptcy protection, which is designed to provide protection from creditors while a company seeks restructuring and financing solutions to enable it to remain an economically viable business.

***

Gran Tierra Announces YE:14 Reserves

(Gran Tierra Energy Inc., 2 Feb.2015) – Gran Tierra Energy Inc. announced the results of an independent reserve evaluation of the company’s reserves by Gran Tierra Energy’s qualified reserve evaluator GLJ Petroleum Consultants Ltd. (GLJ) effective December 31, 2014.

Through continued strong reservoir management and appraisal drilling in Colombia and Brazil in 2014, Gran Tierra Energy was able to replace production and add reserves. However in Peru, negative well results after year-end will result in reserves being revised downward. The results of the company’s development program in the Moqueta field in Colombia have been encouraging, adding approximately 14% to it’s existing Proved (1P) company interest reserves in that country. Reservoir performance and additional development drilling contributed to positive 1P reserves technical adjustments at Costayaco.

In Brazil, due to new production from the Agua Grande formation, results of seismic reprocessing and additional reservoir volume in the Sergi formation, Gran Tierra Energy successfully increased 1P reserves in that country by 68%. Although 2014 Proved plus Probable (2P) and Proved plus Probable plus Possible (3P) reserves also appear to have increased at year-end, new drilling data from the Bretaña field in Peru subsequent to year-end indicate that the 2P reserves and 3P reserves associated with that field will be reduced after year-end. A new reserve report for the Bretaña field is expected before the end of the first quarter, once new maps, reservoir rock volumes and related data are integrated and evaluated.

Year-end 2014 highlights

Year-end 2014 highlights, calculated in accordance with United States Securities and Exchange Commission (SEC) rules (comparisons are to 2013 year-end amounts) follow:

In Peru, as announced on January 20, 2015, Gran Tierra Energy expects the Bretaña Sur well results will remove all Possible reserves associated with the southern L4 lobe of the Bretaña field booked at yearend 2014.

A reduction in Probable reserves in the field is also expected, the magnitude of which is unknown at the moment.

A new reserve report for the Bretaña field will be provided after analyzing new vertical seismic profile data from the new well, to reconcile the unexpected time-depth conversion encountered by the well against the time-depth conversion from the previous four wells in the Bretaña field that was used for the pre-drill seismic mapping. The new reserve report incorporating the new mapping and reservoir characterization is expected before the end of the first quarter;

Total 1P oil and gas reserves net after royalty (NAR) were 37. million barrels of oil equivalent (MMBOE) at December 31, 2014, compared with 42.1 MMBOE in 2013 (100% light and medium oil and liquids compared with 95% at year-end 2013), and after producing 9.2 MMBOE of company interest oil and gas before royalties, inventory adjustments and losses or 7 MMBOE NAR before inventory adjustments and losses, excluding Argentina production. The decrease was primarily due to the sale of Gran Tierra Energy’s Argentina business unit during 2014 which contributed 4.4 MMBOE NAR of 1P oil and gas reserves at December 31, 2013;

After producing 1.7 million barrels of oil (MMbbl) NAR before inventory adjustments from the Moqueta field in Colombia in 2014, appraisal drilling resulted in increased 1P reserves of 14% to 15.5 MMbbl, 2P reserves increased by 20% to 23.2 MMbbl and 3P reserves increased by 17% to 33.6 MMbbl on a company interest basis, and 1P reserves increased to 11.1 MMbbl, 2P reserves increased to 16.6 MMbbl and 3P reserves increased to 23.9 MMbbl, each on a NAR basis;

The Costayaco field in Colombia continued its strong performance. Costayaco 1P reserves decreased to 19.1 MMbbl NAR at year-end 2014 from 20.2 MMbbl NAR at year-end 2013, after production of 4.2 MMbbl NAR before inventory adjustments in 2014;

In Brazil, due to new production from the Agua Grande formation, results of seismic reprocessing, and additional reservoir volume in the Sergi formation, Gran Tierra Energy successfully increased 1P reserves by 68%;

Total 2P reserves NAR were 108.5 MMBOE at December 31, 2014, compared with 111.9 MMBOE in 2013 (99% oil and liquids compared with 97% at yearend 2013), prior to adjusting for the sale of the Argentina business unit, which had contributed 6.4 MMBOE NAR of 2P oil and gas reserves at December 31, 2013. Total 2P reserves are expected to be adjusted downward with release of the new Bretaña reserve report before the end of the first quarter;

Total 3P reserves NAR were 170.3 MMBOE at December 31, 2014, compared with 183.9 MMBOE in 2013 (99% oil and liquids compared with 94% at yearend 2013). The Argentina business unit contributed 16.7 MMBOE NAR of 3P oil and gas reserves at December 31, 2013. Total 3P reserves are expected to be adjusted downward with release of revised Bretaña reserves within a month;

In Peru, the Bretaña field contributed 2P reserves of 57.9 MMbbl NAR and 3P reserves of 104.4 MMbbl NAR. These are expected to be adjusted downward with release of a new Bretaña reserve report before the end of the first quarter;

Based on Gran Tierra Energy’s 2014 year-end SEC NAR reserves and Gran Tierra Energy’s 2014 total NAR production, Gran Tierra Energy’s 1P, 2P, and 3P reserves life indices are 5.3 years, 15.4 years, and 24.2 years respectively; The 2P and 3P reserve life indices are expected to be adjusted downward with release of the new Bretaña reserve report before the end of the first quarter;

Annual production for 2014, excluding Argentina production, averaged 25,182 company interest barrels of oil equivalent per day (BOEPD) before royalties, or 19,283 BOEPD NAR, both before inventory adjustments, or 18,523 BOEPD NAR adjusted for inventory changes and losses, including 17,619 BOEPD NAR from Colombia, and 904 BOPD NAR from Brazil. Production in the fourth quarter of 2014 was 18,953 BOEPD NAR before inventory adjustments or 17,169 BOEPD NAR adjusted for inventory changes and losses.

***

BPZ Reports New Output from Albacora Well

(BPZ Resources, Inc., 22.Jan.2015) – BPZ Energy provided initial production rates from the Albacora A-27D development well at offshore Block Z-1. The company holds a 51% participation in Block Z-1 and all referenced well production in this release.

The A-27D well was drilled to a total measured depth of approximately 14,500 feet. For the last 10 days, the well has averaged approximately 1,135 barrels of oil per day (bopd) gross. For the last 24 hours, the well has averaged production of approximately 905 bopd, 3,700 thousand cubic feet of gas per day and 2 barrels of water per day. Gas is mostly reinjected due to the lack of a local commercial market at this time. The well is producing better than previous recent wells due to additional pay opened in the Lower Zorritos sands.

Given the positive results of the A-27D, the new Albacora A-22D development well was spud on January 10, 2015. Targeted measured depth of the A22D well is 14,445 feet, which will also test the Mid and Lower Zorritos sands. Results are expected in April.

The Corvina CX15-8D development well is currently being completed with results expected in February 2015. The 8D well location helps extend the Corvina field to the southwest.

Block Z-1 Production from the Corvina and Albacora fields for full year 2014 averaged 5,055 gross, or 2,578 bopd net to BPZ, which represents an 83% increase compared to full year 2013 production of 2,761 bopd gross, or 1,408 bopd net.

For the fourth quarter 2014, production averaged approximately 5,276 bopd gross, or 2,691 bopd net, which was 10% above third quarter 2014 production, and 94% higher than fourth quarter 2013 production. The 2014 exit rate for production was approximately 5,200 bopd, or 2,652 bopd net.January 2015 production to date has averaged approximately 5,443 bopd gross, or 2,776 bopd net.

Manolo Zuniga, President and CEO commented, “Given the positive results on the A-27D, we approved drilling of the A-22D well also targeting the Mid and Lower Zorritos formation, particularly the new deeper oil tested in the last three wells. We have also decided to perforate deeper sands in the Albacora A-21D and A-26D in the first quarter of 2015. These interventions should enable us to increase production with minimal capital, and we continue to look for other similar opportunities. While this work has been approved, the full 2015 capital plan is still under review as we work with our Block Z-1 partner to reduce costs, and with our advisors on financing alternatives.”

***

Gran Tierra Completes Drilling in Peru

(Gran Tierra Energy Inc., 20.Jan.2015) – The Bretaña Sur appraisal well completed drilling operations on the L4 lobe on the Bretaña field and encountered approximately six feet of oil pay above the oil-water contact in the Vivian Sandstone Reservoir.

This oil column is less than what was estimated by Gran Tierra Energy prior to drilling and Gran Tierra Energy expects the Bretaña Sur results will remove the Possible reserves that have been booked for the Bretaña field. A reduction in Probable reserves in the field is also expected, the magnitude of which is unknown at the moment. Gran Tierra Energy will prepare a revised reserve report and information respecting the exact amount of the reduction in Gran Tierra Energy’s reserves will be provided after new mapping and the reservoir characterization is updated. This is expected to follow the company’s year-end 2014 reserve report, which will not include this new data as it has only become available after year-end.

Gran Tierra Energy is continuing with a design for a revised development scenario based upon new resource estimates that contemplates a field development from the existing northern (L2) platform and associated oil processing facilities, consistent with the first stage of the original draft development plan.

Equipment for the first long term test (LTT) production from the Bretaña discovery well has been delivered to the L2 platform and testing of facility components has begun, with first production expected to begin in the second quarter of 2015. The startup time, duration and level of production for the LTT may be adjusted further within the context of the operating and oil price environment at that time.

Gran Tierra Energy is operator and holds a 100% working interest in Block 95, Bretaña Field.

***

LatAmNRG: Heard on the Street 3Q:13

(Energy Analytics Institute, 30.Sep.2013) – Information in this section, provided by Energy Analytics Institute editors and reporters, is hearsay and thus should be treated as such.

The names of our many sources have been withheld to protect their identities and family members in Venezuela.

COMBUSTIBLES
  • A number of gasoline stations along VenezuelaColombia border remain closed due to a lack of supply. [El Universal]
CORPORATE SUITE
  • Venezuelan Oil Minister and PDVSA President Rafael Ramirez was named as Venezuela’s Economic Vice President by President Nicolas Maduro. [EAI]
CROSS BORDER DEALS
  • T&T and Venezuela signed a cross border natural gas deal. Deal signed by Venezuelan Oil Minister Rafael Ramirez and Trinidad Energy Minister Kevin Ramnarine. [EAI]
  • Trinidad Energy Minister Kevin Ramnarine was been under pressure in Trinidad for recent agreements reached with Venezuela regarding cross-border commercialization deals for the Loran-Manatee gas fields. [EAI]
  • Central American energy connection could reduce prices from Guatemala to Panama. [El Espectador]
DISCOVERIES
  • Colombia’s state oil company Ecopetrol announces new oil discovery at Guainiez-1 well in Guaroa. [EAI]
DIVESTMENTS
  • Chile’s ENAP sells 49% interest in Primax Peru and Primax Ecuador for $312 mln. [El Universo]
ELECTRIC SECTOR
  • YPFB Corp. completed 23,141 domestic gas connections in May.2013. [La Razon]
  • Interconexión Eléctrica S.A (ISA) wins bid for design, financing, construction, operation and maintenance of Encuentro-Lagunas project in Chile. [Portafolio.co]
  • Peru’s Energy and Mining Ministry has identified hydrocarbon and electric sector projects worth $26,530 mln thru YE:20. [El Comercio.pe]
  • Electric consumption in Uruguay reaches 1,808 MW on Jun.20.2013 up from record of 1,745 MW achieved on Jul.4.2011. [El Pais]
EXPLORATION & PRODUCTION
  • Bolivian officials search for hydrocarbon investments and technology at Russian Gas Forum [La Razon]
  • Gas output in Bolivia reached 57.08 MMcm/d in the 1Q:13, up 24.2% compared with 45.94 MMcm/d in the 1Q:12. [La Razon]
  • Bolivia’s average production was 56.2 MMcm/d in the first five months of 2013. [El Espectador]
  • YPFB plans investments of $8,406 mln during 2013-2016. [La Razon]
  • YPFB Petroandina SAM President Jaime Arancibia announced the Lliquimuni block could contain 1 Tcf. [La Razon]
  • France’s Total announced plans to develop the 3 Tcf Incahuasi field in Bolivia, after drilling the ICS-2 exploration well. [La Razon]
  • Russia’s Rosneft is interested in investing in exploration and development activities in Bolivia. [La Razon]
  • Repsol’s oil production in Bolivia rose to 3,400 b/d from 2,600 b/d. [La Razon]
  • Ecuador’s Hydrocarbon Secretariat expects oil production to average 518,503 b/d in 2013, up from 503,610 b/d in 2012. [EAI]
  • Ecuador’s Hydrocarbon Secretariat expects the country’s petroleum sector will realize investments of $3.6 bln in 2013, up from $2 bln in 2012. [EAI]
  • Extraction of oil in the Yasuni National Park will utilize new technologies, Wilson Pastor said on state television. [EAI]
  • Ecuador gov’t cancels $34.5 mln committed by Germany for the protection of the Yasuni National Park. [EAI]
  • Mexico’s state oil company Pemex creates company to search for oil deep offshore and shale gas in the USA.
  • Venezuela’s Oil Minister Rafael Ramirez said during an interview on Venezuelan state television or VTV that the decision to stop sending oil to the US had to be taken by Venezuelan President Nicolas Maduro. [EAI]
ENERGY REFORMS
  • Mexico’s left is betting on more autonomy for Pemex without changing the constitution.
EXPORT-IMPORT
  • Venezuela is looking for additional partner(s) for the Mariscal Sucre gas project offshore, Venezuelan Oil Minister Rafael Ramirez says. [EAI]
  • Spanish gov’t requests legal security and respect for the rules of the game in Argentina. [La Nacion]
  • Venezuelan imports of electricity from Colombia continue to increase. [El Universal]
  • Gas imported by Argentina and Brazil up 56.95% and 20.26%, respectively, in the 1Q:13 compared with the 1Q:12 [La Razon]
  • Argentina imported 14.63 MMcm/d from Bolivia in the 1Q:13 compared with 9.32 MMcm/d in the 1Q:12 [La Razon]
  • Brazil imported 32.01 MMcm/d from Bolivia in the 1Q:13 compared with 26.62 MMcm/d in the 1Q:12 [La Razon]
  • Bolivia exported an average 14.1 MMcm/d of gas to Argentina in the first five months of 2013. [El Espectador]
  • Bolivia exported an average 31.3 MMcm/d of gas to Brazil in the first five months of 2013. [El Espectador]
  • Enarsa owes YPFB $180 mln for gas deliveries made in Mar.2013 [La Razon]
  • PDVSA currently exports 330,000 b/d to India but plans to increase this figure to 400,000 b/d, PDVSA President Rafael Ramirez said. The official said PDVSA is also exporting 630,000 b/d to China. [EAI]
  • PDVSA owed $270 mln by Paraguay’s Petropar according to Paraguayan News Portal. [EAI]
FINANCE / EQUITY AND DEBT OFFERINGS

Colombia:

  • Ecopetrol $900 mln bond issue was oversubscribed by 3.1 times. [El Espectador]
  • Ecopetrol road show was led by Bank of America and visited fixed income investors in Singapore, London, Hong Kong, Chile and Peru. [El Espectador]
  • Ecopetrol road show led by Bank of America visited the following US cities: New York, Chicago, Los Angeles and Boston. [El Espectador]

Venezuela:

  • Venezuela’s Central Bank (BCV) holds auction for $330mm with PDVSA bonds.

Venezuelan Debt to China:

  • China has loaned Venezuela nearly $40 bln to date, excluding new agreements signed recently between the countries, of which $20 bln has been paid back. [EAI]
  • Venezuela currently owes $20 bln to China, which represents almost 2.4 months of PDVSA’s revenues assuming oil prices above $100/bbl. [EAI]
  • Assuming China were to lend Venezuela another $44 bln, the country would owe the Chinese nearly $64 bln, which is about 6 months of PDVSA revenue with oil prices above $100/bbl. [EAI]
  • Venezuelan debt of $64 bln to China would represent almost 7.7 months of PDVSA’s revenues assuming oil prices above $100/bbl. [EAI]

Peru:

  • Investments in energy projects in Peru to fall 50% by YE:20. [El Comercio.pe]

Ecuador:

  • China’s Industrial and Commercial Bank (ICBC) could finance 70% of Pacific Coast refinery project. [El Comercio]
GENERAL
  • Colombia’s National Hydrocarbon Agency (ANH) said the country’s oil reserves were 2,377 MMbbls at YE:12. [Portafolio.co]
  • S&P and Fitch raise rating on Emgesa ISA to BBB from BBB-. [Portafolio.co]
  • Chinese executives with LinYi Cake Trade Co. visited Bolivia to inspect the construction process and advances at a pilot lithium battery plant in La Palca in Potosi. [La Razon]
HEAVY OIL
  • Peru to prioritize $1,500 mln in investments for the integration of heavy oil lots in the northern amazon region [El Comercio.pe]
  • PDVSA has 15,000 workers in the Orinoco Heavy Oil Belt of Faja but plans to increase this figure to 40,000, PDVSA President Rafael Ramirez says. [EAI]
  • PDVSA, Cupet (Cuba) and Sonangol (Angola) agree to create JV to produce 20,000 b/d in the Faja. [El Nacional]
  • PDVSA reports in 10.Oct.2013 press release that it has a 71% interest in PetroCarabobo 1 Faja project, meaning the company assumed Petronas’ 11% interest. Partners in the PetroCarabobo 1 project now include PDVSA (WI 71%), OVL (WI 11%), OIL (WI 3.5%), OIC (WI 3.5%) and Repsol (WI 11%). [EAI]
  • Rising drilling costs in the Faja are just one of many issues companies are confronting today. [EAI]
  • Russia’s Lukoil announced plans to exit the Junin Block 6 project in the Faja.

EDITOR’S NOTE: Smaller Russian companies are starting to exit the Faja, ceding more control to Rosneft or other Russian entities; a signal that something could definitely be wrong in Venezuela and the Faja. [EAI]

  • PDVSA announced during the HOLA 2013 conference that it was looking to utilize its heavy oil techniques in Mexico. [EAI]
LAWSUITS
  • Repsol turns down $5,000 mln offer from Argentine gov’t regarding 51% interest expropriated in 2012. [La Nacion]
  • Ecuador’s President Rafael Correa says on Ecuadorian state television that US-based Chevron Corp. is an enemy of Ecuador. [EAI]
LNG
  • By 2015 Uruguay’s ANCAP expects to be exporting 5 MMcm/d of gas from the Puntos de Sayago regasification plant in Uruguay to Argentina’s YPF. [LaRed21]
PETROCHEMICALS
  • Peru to prioritize $3,500 mln in investments for the petrochemical industry. [El Comercio.pe]
PIPELINES
  • Peru to prioritize $3,500 mln in investments for the southern gas pipeline. [El Comercio.pe]
PROTESTS / STRIKES
  • About 50 workers with Petrocedeno JV in Venezuela demand that PDVSA respect their benefits [El Universal]
REFINERIES
  • Peru to prioritize $3,514 mln in investments for the modernization of the Talara refinery. [El Comercio.pe]

Venezuela:

PDVSA’s participation in Abreu e Lima Refinery in Brazil:

  • PDVSA President Rafael Ramirez says co. and Petrobras officials continue to discuss JV prospects regarding the Abreu e Lima refinery. [EAI]
  • From an operational and strategic business plan point of view, PDVSA’s participation in the Abreu e Lima refinery does not make sense. [EAI]
  • Abreu e Lima refinery in Pernambuco could easily source sufficient oil from the Brazil’s offshore pre-salt region w/o having to look to Venezuela for heavy oil. [EAI]
  • Any decision PDVSA President Rafael Ramirez takes regarding the company’s participation in Abreu e Lima refinery w/Petrobras will be politically based. [EAI]

Comments regarding Amuay Refinery explosion on 25.Aug.2012:

  • PDVSA President Rafael Ramirez says explosion at Amuay refinery was sabotage. Amuay refinery explosion was caused by gas leak at Block B23. As a result of the explosion, 42 persons were killed, 5 are still missing, 150+ were seriously injured. published by the Energy Orientation Center (COENER). [EAI]
  • Amuay refinery explosion to cost PDVSA an estimated $1.8 bln, according to COENER. The refinery is processing 645,000 b/d nearly 10 months after major explosion. [Ultimas Noticias]
  • PDVSA to spend an estimated $585 mln on maintenance activities at the Amuay and Cardon refineries, PDVSA President Rafael Ramirez says. [EAI]
SOCIAL
  • CITGO Corp. donates 625,000 energy saving light bulbs to families in 21 cities in the USA [PDVSA

***

Camisea Gas Compression Plant Online by YE:15

(Energy Analytics Institute, Ian Silverman, 29.Aug.2013) – The Camisea gas compression plant will be ready in December 2015.

The plant will require an investment of $318 mln and will allow the gas pipeline to increase its capacity by 50%, reported the daily newspaper El Comercio.

Upon completion, the gas compression plant will allow the gas pipeline to increase its capacity to 850 MMcf/d of gas for the domestic market.

***