News and AnalysIs for

Of this amount, CoP$8,668 (US$4.8M) will be invested in the Meta and CoP$3,447 (US$1.9M) will be allocated to many projects in Casanare.

Interoil published its 3Q12 results and they were not encouraging. There was a net loss in the quarter of US$7.1M and year to date Net Income is down by about 2/3 from 2011. Earlier we documented the continuing decline of Interoil’s Colombian production. Near the bottom of Interoil’s 3Q12 results was the statement “The production decline is a direct result of reduced investment activity due to liquidity constraints. To address this issue, the board has initiated a sales process in Colombia”.

National business newspaper La Republica reported that Ecopetrol says that despite the attacks of 17 November to Transandino pipeline, management expects to meet its goal of producing around 780,000 bpd on average by the end of this year. Note that this figure is likely production before royalties (see our November Monthly Report). We estimate it is the equivalent of about 655,200 bpd as usually measured (Net of Working Interest and Royalties).

The Farc surprised everyone last Friday by announcing a unilateral truce to last for two months. They said they were suspending all attacks against civilian, government and private targets. Of course, they had just blown up the TransAndino pipeline the day before so they went out with a bang so to speak. The government immediately said they would not reciprocate, consistent with their line since the beginning of the peace process. What is worrisome are rumors that Farc commanders in the south may not comply with their leaders’ orders.

The Ministry of Commerce, Industry and Tourism reported that Foreign Direct Investment (FDI) destined to sectors not related to mining and energy increased from US$1.299,1M in November 2010 to US$2.634,1M in November 2012. During the course of 2012 the FDI indicator has grown by 12.9%.

The Colombian press and congress is stirred up about the lost hydrocarbons potential of the territory that disappeared in the redrawing of the Colombia-Nicaraguan maritime border (see map by Hydrocarbons Colombia). Nicaragua adds fuel to the fire by publicly rubbing its hands with glee over the prospect of auctioning the zones to deep pocketed oil companies. That may indeed happen – although we think PDVSA will end up with them – but we do not believe this represents lost reserves, production or money to Colombia.

RCN Radio reports what appears to be a Transgas Occidente press release.

In November 2011 and May 2012 there were breaks in the line of the PK78 PK77 sector of the Mariquita-Cali pipeline. In order to repair these breaks, the Transgas de Occidente company has invested CoP$9,000M in a realignment of 550 meters. PK77-PK78 sector is located in the city of Manizales.

Shona Energy Corporation reported its 3Q12 results. Production was up 22% sequentially to just over 16MMcf/d. EBITDA was up 43%. Year-over-year comparisons are dramatic but not really meaningful as the company was just getting production going last year. The company reported Net Earnings Per Share of 1 cent vs a 2 cent (US$) per share loss last year in the same period.

Sintana Energy recently announced a deal with ExxonMobil for the VMM-37 block (in the Middle Magdalena basin) where by the company would keep any conventional resources found on the property but farm-out the unconventional resources to ExxonMobil Exploration Colombia. ExxonMobil would have a 70% share in return for shouldering the exploration costs. Now Sintana has published estimated reserves and the unconventional play is likely 4 times the conventional play just looking at Sintana’s share. In the block as a whole there are estimated to be 14 times as much unconventional play resources as conventional play. The chart shows the range from the “Low” Case (P90) Case to the “Best” Case (P50).

(The USO is the Colombian petroleum workers union. Unrepentantly radically left, it often seems trapped in some Marxist-Leninist twilight zone from before the fall of the Berlin Wall or perhaps before the Second World War. Still its capacity for mischief is unmistakable and so we believe it is important for oil and gas industry stakeholders to keep track of what they up to. We will summarize major news items from their webpage or other sources and publish the summary every Monday. We will reproduce the tone of their items while not agreeing with their messages. )