Page 13 - LatAmOil Week 08 2020

LatAmOil
NEWS IN BRIEF
LatAmOil
SERVICES
Pemex will not award
additional work to
EMGS under previously
announced contract
Electromagnetic Geoservices (EMGS) has been advised by Pemex that the company will not, in the near to medium future, receive additional acquisition work under the two-year acquisition contract announced to the market on 4 June 2019.
It is the company’s understanding that the customer’s decision is related to its own strate- gic priorities, and not related to EMGS’ perfor- mance under the contract.
The company has previously assumed that substantial new acquisition work under the two- year contract would be forthcoming within the near future. The decision by the customer not to order additional acquisition work, at least for the near to medium future, will have a material detrimental effect on the company’s revenue and profitability going forward.
The board of directors of the company is evaluating all strategic options available to the company. The company will immediately initi- ate a comprehensive cost reduction programme to adjust the company’s operational cost base to the new confirmed backlog level.
At the time of the award of the original two- year contract, EMGS said the work programme was located in the Gulf of Mexico and would consist of both shallow and deepwater sur- veys. EMGS said it would mobilise the Atlantic Guardian for the project
EMGS, February 20 2020
PETROCHEMICAL
Petrobras starts
non-binding phase
for sale of UFN-III
fertiIiser plant
Petrobras, following up on the release disclosed on February 10, 2020, informs the beginning of the non-binding phase related to the sale of 100% of its shares in Nitrogen Fertiliser Unit III (UFN-III).
Potential buyers qualified for this phase will receive a descriptive memorandum with more detailed information about the aforementioned asset, as well as instructions on the divestment
process, including guidelines for preparing and submitting non-binding proposals.
This disclosure is in accordance with Petro- bras’ divestment guidelines and with the special regime for the divestiture of assets by federal mixed-capital companies, provided for in Decree 9,188/2017.
This transaction is in line with the portfolio optimisation and the improvement of the com- pany’s capital allocation, aiming at maximising value for its shareholders.
UFN-III is a nitrogen fertiliser industrial unit located in Três Lagoas, in the state of Mato Grosso do Sul. Construction of UFN-III began in September 2011, but it was interrupted in December 2014, with a physical advance of about 81%. After completion, the unit will have a projected urea and ammonia production capac- ity of 3,600 tonnes per day and 2,200 tonnes per day, respectively. The completion of UFN-III will be the responsibility of the potential buyer. Petrobras, February 21 2020
Canacol Energy achieves 224% 2P gas reserve replacement ratio at Colombian blocks
Canacol Energy is pleased to report its conven- tional natural gas reserves for the fiscal year end December 31, 2019.
The Corporation’s conventional natural gas reserves are located in the Lower Magdalena Valley basin, Colombia.
Conventional natural gas proved and prob- able reserves (2P): increased by 12% since December 31, 2018, totaling 624 bcf at Decem- ber 31, 2019, with a before tax value discounted at 10% of $2.1bn, representing both CAD15.47 per share of reserve value, and CAD13.41 per share of 2P net asset value (net of US$285.6mn of net debt)
Ravi Sharma, Chief Operating Officer of Canacol, commented, “The corporation has historically achieved significant conventional natural gas exploration and development drill- ing success from our assets located in the Lower Magdalena Valley, and this success continued into 2019. Since 2013, we have added 696 bcf of 2P conventional natural gas reserves from commercial success in 27 out of 31 drilled wells, representing a 37% CAGR at an industry leading three year 2P F&D cost of $0.67/mcf.
“With a portfolio of 140 identified prospects and leads containing mean unrisked prospective gas resource of 2.6 tcf according to our 2018 third party resource report, we anticipate many more years of successful exploration drilling resulting in the movement of gas resources into proven
and probable reserves.”
Canacol Energy, February 19 2020
FINANCE
Petrobras receives investment grade from Fitch under stand-alone credit profile
Petrobras informs that the rating agency Fitch Ratings upgraded the company stand-alone credit profile (SCP) by two notches from ‘bb+’ to ‘bbb’, the second level in the investment grade scale. The agency maintained the ratings of Petrobras at ‘BB-’, with stable outlook.
“We are very happy with the change in Petro- bras’ rating, mainly because this confirms that all of the company’s transformation effort, focused on reducing debt and the cost of capital is being recognised by the market. We know that we have a long way to go, but we are very honored by this recognition”, said Andrea Almeida, Chief Finan- cial and Investor Relations Officer.
Fitch highlighted that the stand-alone upgrade reflects the company’s improving cap- ital structure, strong cash flow generation and financial flexibility, with robust liquidity, solid ability to access capital markets to refinance debt and the expectation of further improvements going forward.
According to Fitch, Petrobras’ debt ratings are capped by the sovereign rating of the Brazilian republic, Petrobras’ controller shareholder. Petrobras, February 21 2020
Guyana outlines plan for
report on petroleum
production and revenues
On December 20, 2019, Guyana became an oil producing nation. In anticipation of first oil, the Government of the Co-operative Republic of Guyana (GCRG) established, in January 2019, a sovereign wealth fund (SWF), known as the Nat- ural Resource Fund (NRF), for the management of petroleum revenues.
Following the rules set out in the NRF Act 2019 can help to safeguard against the resource curse, as well as ensure that petroleum revenues benefit both current and future generations. In establishing the NRF, GCRG committed to managing the Fund according to the principles of good governance including transparency, and accountability, and international best practices including the Santiago Principles.
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