Page 9 - LatAmOil Week 42 2019

LatAmOil
NEWS IN BRIEF
LatAmOil
UPSTREAM
Ecopetrol acquires 30% of
the Gato do Mato discovery
in Brazil’s Pre-Salt
Ecopetrol reports that its subsidiary Ecopetrol Óleo e Gás do Brasil has entered into an agree- ment with Shell Brasil Petróleo to acquire 30% of the interests, rights and obligations in two areas corresponding to the BM-S-54 Concession Agreement and the Sul de Gato do Mato Shared Production Agreement, located o shore in Bra- zil’s Santos basin, in the so-called Pre-Salt, where a hydrocarbon deposit known as Gato do Mato was discovered.
Under this agreement, Shell will reduce its stake from 80% to 50% and continue as operator, while the French company Total will retain the remaining 20%. In addition to these oil compa- nies, the Brazilian government also participates in the Shared Production Agreement, through Pré-Sal Petróleo (PPSA). A er discounting this share, the consortium will proportionally main- tain the above percentages.
ree wells that have discovered light hydro- carbons have been drilled in these two blocks. e consortium will continue executing activi- ties and operations in order to initiate produc- tion in coming years.
“Joining this discovery in the Brazilian Pre-Salt with world-class companies is part of our growth and internationalisation strategy, focused on high potential basins such as Santos in Brazil. is acquisition balances our produc- tion portfolio by adding light hydrocarbons. In 2018 we announced the entrance into the Pre- Salt, an area with one of the greatest potential in the continent. Today we strengthen our presence by being part of a discovery that will give us pro- duction in a few years” said Felipe Bayon, presi- dent of Ecopetrol.
According to Ecopetrol’s estimates, the com- pany could incorporate some 90mn barrels of crude in contingent resources as of 2020, which will be gradually added to its balance of reserves. Ecopetrol also estimates that its share of produc- tion could total around 20,000 barrels per day of crude in 2025. is agreement is in line with the company’s strategy of capital discipline and sustainable growth in reserves and production and strengthens Ecopetrol’s position in the San- tos basin in Brazil. e Gato do Mato stake will add to our current position at Pau-Brasil and Saturno blocks.
e agreement signed by Ecopetrol Óleo e Gás do Brasil Ltda. and Shell Brasil Petróleo Ltda. is subject to the respective approvals of assign- ment to Ecopetrol by Brazil’s Ministry of Mines and Energy, the country’s National Agency of
Petroleum, Natural Gas and Biofuels (ANP) and other customary transaction conditions.
Ecopetrol is Colombia’s largest rm and is an integrated oil company that is among the 50 largest in the world and the four largest in Latin America. In addition to Colombia, where it gen- erates over 60% of the country’s production, it is active in exploration and production in Bra- zil, Mexico, Peru and the United States (Gulf of Mexico). Ecopetrol operates the largest re nery in Colombia, most of the country’s oil-pipe- line and polyduct network, and is signi cantly increasing its share of bio-fuels.
Ecopetrol, October 21 2019
PetroTal completes first horizontal well at Bretaña
PetroTal is pleased to provide an update in respect of its operations and production at the Bretaña oil eld in Block 95 in Peru (100% working interest). All monetary amounts in this release are in United States dollars.
PetroTal has successfully completed the 4H well, the company’s rst horizontal well in the Bretaña oil eld. e well had an approximately 500‐metre lateral completion utilising auton- omous in ow control device (AICD) valves to maximise oil production. Initial production from the well during the rst four days of pro- duction was 6,200 bpd. e 4H well was drilled updip towards the crest of the structure and provided data to con rm management’s analy- sis of the reservoir. e well was drilled under budget by approximately $3.0mn (representing 20% savings), which will expedite payout of the well. e company will announce additional well data, including sustained rates, with its quar- terly nancial lings and operations update in November 2019.
During the third quarter, the company upgraded the production facilities, expanding PetroTal’s production capacity to over 7,500 bpd. e Company plans to commission phase one of its central production facilities for Bretaña
(CPF‐1) in December 2019, which will increase full field production capacity to over 10,000 bpd. Incremental implementation of phase two of the company’s production facilities (CPF‐2) is planned for July 2020. When CPF‐2 is fully integrated by year‐end 2020, PetroTal will have the capacity to produce up to 20,000 bpd. Facility expansion is being implemented on a modular basis to time facilities with well completions to most e ciently deploy capital.
As a result of the company’s successful drill- ing campaign in Block 95 to date, the board of directors has approved an additional $19.0mn of capital expenditures for 2019. Approximately $14.0mn will be deployed to drill and complete the 5H well, which will target updip oil to the northern portion of the structure; and $5.0mn will be directed to bring additional production facilities to the eld by mid‐2020, as an interim step to installing CPF‐2 by year‐end 2020. e company expects the interim capital spent will yield an additional 5,000 bpd of capacity in mid‐2020. As mentioned above, the CPF‐2 should bring total eld oil production capacity to 20,000 bpd by year end 2020.
Once completed, the 5H well will be the com- pany’s second horizontal well. Production from the well is expected to help the company achieve a targeted exit rate of 10,000 bpd at yearend 2019. e 5H well will also be completed with AICD valves in the lateral section. e well is expected to come online simultaneously with the facili- ties commissioning at year‐end. e company plans to drill a second water disposal well in Jan- uary 2020 as part of a new capital budget once approved by the board of directors.
Management expects to fund the 2019 addi- tional capital spending with existing working capital and cash flow from operations. As of September 30, 2019, the company has cash and cash equivalents of approximately $40.0mn. e company produced approximately 4,800 bpd in the scal third‐quarter. Management expects average above 6,500 fourth quarter production above 6,500 bpd, a projected increase of over 35% over the third quarter average.
Week 42 24•October•2019
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