Page 20 - LatAmOil Week 42

LatAmOil NEWS IN BRIEF LatAmOil

of December 2019, the Blocks had accumulated
primary production of 362mn barrels.
Existing infrastructure includes two oil- and
water-processing centers with a capacity of
75,000 bpd and 900,000 barrels of water per day
(bwpd), with all the water production being rein-
jected into 30 wells. Additional area infrastruc-
ture includes electricity generation plants and
a topping plant which produces diesel used to
power operations. The oil produced in the fields
is moved by a 16-inch pipeline to Lago Agrio,
where it is loaded into the OCP pipeline and
transported to a port on the Pacific Ocean.
Tariffs are governed by the Service Contracts
and a portion of such tariffs are indexed to US
CPI/PPI. While the existing Service Contracts
expire on December 2022, significant produc-
With the postponement, Petrobras cancelled the production and exploratory potential. Featur- tion potential remains in the event the term of
platform charter bidding to meet the project and ing no upfront capital costs and stable dividend the Service Contracts are extended. The exten-
authorised the start of a new bidding process. income from the pipeline assets, the unique sion of the Service Contracts would benefit the
Petrobras, October 16 2020 structure of this acquisition has the potential to interests of the stakeholders and is in line with
generate substantial value for our shareholders. precedents set by the Ecuadorian authorities
After the completion of this acquisition, New with respect to the Service Contracts (in 2013,
INVESTMENT Stratus will have access to and operate assets with the term of the Service Contracts were extended
production of approximately 18,000 barrels per from 2018 to 2022).
New Stratus Energy day (bpd) of oil (2019 Production). This transac- The Blocks include commitments to mini-
tion would provide New Stratus increased scale mise the environmental impact of operations, to
announces potential and complement its capabilities while improv- maintain high standards of safety, and to under-
ing its positioning and access to additional take long-term investments for the benefit of
acquisition in Ecuador opportunities, such as selective bids rounds local communities.
Midstream Business: Oleoducto de Crudos
and secondary flow of material size and quality.
New Stratus Energy is pleased to announce that Cashflow from this transaction would provide a Pesados Ecuador (OCP). Transporting approx-
it has entered into a letter of intent (LoI) with robust platform for the Corporation to sustain imately 30% of the country’s oil and possess-
certain affiliates of Repsol to potentially acquire and grow as per its strategy in the Sub-Andean ing capacity of 450,000 bpd, the pipeline that
certain upstream and midstream assets in Ecua- basins.” is owned and operated by OCP is Ecuador’s
dor for the aggregate consideration defined in Upon completion of the Potential Transac- second major pipeline and is the only private-
the LoI and described below. tion, the Corporation will hold an indirect 35% ly-owned pipeline in the country. Built at a total
The consummation of the Potential Transac- operated working interest in service contracts for cost of $1.5bn, the Pipeline is 485 km in length
tion is subject to, and contingent on, the receipt Blocks 16 and 67 in Ecuador as well as an indi- and runs from the Oriente Basin to the port of
by the Purchaser and the Sellers of certain cus- rect 29.66% participation in Oleoducto de Cru- Ballao. In 2019 the Pipeline transported approx-
tomary regulatory approvals, including (A) the dos Pesados Ecuador (OCP). The closing of the imately 190,000 bpd, of which 14,000 bpd was
prior authorisation of the Potential Transac- Potential Transaction, is dependent on receipt by from Colombia.
tion by (i) the Ecuadorian Ministry of Energy the parties of the Regulatory Approvals and the Possessing a 24”/36” inch diameter, the
and Non-Renewable Resources (Ministerio de satisfaction of customary conditions to closing. Pipeline moves heavy crude with an average
Energia y Recursos Naturales No Renovables) The Potential Transaction will become effective API of 19 degrees. OCP has oil transportation
and (ii) the Ecuadorian Antitrust Authority and will be published after the Closing. contracts with Ecuadorian state entities, inter-
(Superintendencia de Control del Poder de Description of the Assets: Upstream Busi- national traders, and Colombian oil producing
Mercado), in each case, as required under appli- ness: Blocks 16 and 67. The Blocks are located companies. The Pipeline has four pump stations
cable laws of Ecuador; and (B) customary TSX in the Orellana Province in the prolific Oriente plus two pressure reduction stations to transport
Venture Exchange approvals (collectively, the Basin in Ecuador. The Blocks have a long history crude over the Andes. It also features a maritime
“Regulatory Approvals”). As of the date hereof, of production, with a total of 256 wells drilled, terminal with both onshore and offshore deliv-
the parties have submitted their request for prior and excellent seismic coverage. This has contrib- ery systems and possesses a storage capacity of
authorisation of the Potential Transaction to the uted to substantial knowledge of the area’s char- 3.75mn barrels.
Ecuadorian Ministry of Energy and Non-Re- acteristics, properties, distribution of reservoirs, After the consummation of the Potential
newable Resources and New Stratus will submit production mechanisms, and additional explo- Transaction, New Stratus will hold a 29.7%
the request to the Ecuadorian Antitrust Author- ration opportunities. ownership interest in OCP’s parent company,
ity within the following seven (7) days. The Blocks are comprised of 13 fields, with Oleoducto de Crudos Pesados (OCP). A BOOT
Jose Francisco Arata, Chairman and Chief production of 17,800 bpd (6,200 bpd net to (Build-Own-Operate-Transfer) concession
Executive Officer, commented: “This trans- New Stratus) at an average gravity of 14.2 API. granted by the government to OCP expires
action is part of the Corporation’s strategy of Production in Block 16 peaked in July 2006 at on November 11, 2023, at which time owner-
consolidating its presence in the Sub-Andean 63,000 bpd while Block 67 production reached ship of the Pipeline will be transferred to the
geological basins targeting projects with existing a maximum of 12,000 bpd in October 2007. As government.

P20 www. NEWSBASE .com Week 42 22•October•2020