News and AnalysIs for

Suroco Energy announced its 3Q12 results. The chart shows production net of Working Interest and Royalties was up 27% sequentially after having been stalled for two quarters. Alastair Hill, Suroco’s President and CEO commented, “During the third quarter we achieved a record average production rate of 1,111 barrels per day net to the Corporation after royalties and in September we experienced our best single monthly average with 1,232 barrels per day net to the Corporation after royalties. The three Cohembi wells drilled during the quarter helped us to delineate the north-western area of the field and extend the proven oil-bearing area.”

Many Colombian news sources picked up a BBC story about Qatar investing its oil wealth in building a knowledge-economy. That so many picked up it meant a number of news editors thought it suggested a different approach to using royalties. That got us thinking as well.

The contract for the Achapo area was signed with the company Canacol Energy Colombia SA on October 31, 2012. The contract authorizes Canacol for hydrocarbons exploration and production in a 5.057 m2 area of the Caguán Putumayo basin. The expected investment is US$7.8M total investment.

The National Environmental Licensing Agency (ANLA) amended the environmental license granted in 1987 to the Chevron Petroleum Company. This amendment allows Chevron to develop gas wells in the Rioacha area (La Guajira).

(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 are 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.)

As we predicted, incidents were way up this week after having fallen for five straight weeks. The vast number of incidents were reported by the Colombian Armed Forces so it was clear the government was responsible for turning up the heat. The Colombian government never agreed to lay down their arms so this is not surprising. This is not to say the Farc were angels or that the self-declared truce was being observed perfectly, but there were fewer of these. ‘Somebody’ blew up two electrical towers in Antioquia and the departmental government thinks it was the Farc.

On November 22 Reyes Reinoso Yánez, a chemical engineer from Venezuela, took over as president (e) of the Cartagena refinery (Reficar). Reinoso took office after Orlando Cabrales Martínez quit for personal reasons.

We reported earlier in the week that the Pacific Rubiales-C&C Energy deal had given a boost to the share prices of other Colombia-focused companies. The question was whether the boost would be sustainable: would the “animal spirits” (as one of our experts put it) continue to hold or will the reality that PRE did the deal with C&C and not with someone else bring prices back to earth? As the chart shows, the answer seems to be that the boost was generally sustained.

Petronova published its 3Q12 results and the press release was mostly a review of its exploration activities since production is minimal at this time. Revenues were US$33,708 for the quarter. The company operates the PUT-2 and Tinigua blocks both of which are pending environmental licensing. Petronova also has non-operated working interests in Llanos blocks CPO-06, CPO-07 and CPO-13 where its partner is Tecpetrol. Petronova President and CEO Antonio summarized the company’s quarter saying, “PetroNova successfully closed a CAD$30 million private placement this quarter, which enables the progression of our active exploration program. We expect to drill eight additional exploration wells through mid-2013”.

Based on numerous reports in the Colombian press Minminas Federico Renjifo believes about 100,000 barrels of oil production is held up due to delays in the granting of environmental licenses. In some cases National Environmental Licensing Agency (ANLA) employees are making requirements beyond those established by law. Renjifo also claimed that the licenses are a bottleneck and there need to be manuals for the procedures to be followed by companies to get crude oil exploration and development licenses.