News and AnalysIs for

The Interbolsa drama deepened yesterday with news that it was virtually certain to be liquidated. Existing shareholders in the brokerage firm are likewise virtually certain to have their investments wiped out. The surprising news was that oil company Mansarovar is listed in various press reports as the brokerage’s largest single shareholder.

GranTierra reports high quarter-over-quarter and year-over-year growth in Colombian production for 3Q12 despite problems with the TransAndino pipeline. These pipeline interruptions raised operating expense and so unfortunately higher revenue did not translate into higher profits. The company’s press release also gave an extensive update on its exploration activities in Colombia including plans for the blocks it has been (provisionally) awarded in the 2012 Round of auctions.

In the context of the Colombian Association of Petroleum Services Companies, Campetrol’s Expo Oil and Gas, various association officials spoke to the Colombian press. Campetrol has worked with economic think tank, Fedesarrollo to characterize the sector and provide a view into its potential.

Last week the news broke that well-known brokerage house Interbolsa was running short of cash and had been intervened by finance industry supervisor (SuperFinanciera). The news has scared retail investors of all scales. Both the company and the SuperFinanciera insist that stocks purchased by retail investors are safe because they are held in escrow accounts although direct investors in Grupo Interbolsa itself will probably have to take some kind of “hit” to bail out the brokerage firm. What is not at all clear is what happens to certain Interbolsa investments including Tribeca Fund I, the 67.8% owner of PetroLatina, a UK firm which operates in Colombia as PetroNorte – one of the big winners at the 2012 Round with four exploration blocks.

Petrominerales announced the company’s 3Q12 results and investors certainly liked what they heard. At one point the stock was up nearly 11% just before noon Eastern. The company told a good story for potential exploration opportunities but the 3Q12 results themselves were not inspiring. Quarterly production was down 29% year-over-year and 15% quarter-over-quarter. The excitement seemed to come from the company changing the profile of its debt (saving cash) and buying back common shares.

Ecopetrol announced that it transferred a package of assets to its subsidiary Cenit, a hydrocarbons transport company, in exchange for 45,582,982 shares. This contribution is part of a corporate reorganization in the hydrocarbons transport and logistics business line of Colombia’s national oil company, Ecopetrol.

Fitch Ratings has given a huge endorsement to Pacific Rubiales by quality of their debt with a stable outlook. In their report, the rating agency analyses the company’s strengths and weaknesses to come to its positive outlook. The company’s biggest challenge is the potential for what is currently its biggest asset – Pirri/Rubiales field – to be returned to Ecopetrol in 2016. This fact, misinterpreted by congressman Simon Gaviria, caused a temporary flutter in the stock price last week. Fitch’s upgrade assumes the field will be returned, saying the company has enough strength to overcome even this.

In a press release, Canacol updated its activities in the VMM 2, Cedrela and LLA 23 blocks. The latter two are still at initial stages so the news was mostly about VMM 2. Canacol is not the operator – it has a 20% working interest – but given the block’s adjacency to the 100% Canacol Santa Isabela block, the company hopes to get relevant information as well as oil.

Ecopetrol’s surprise results yesterday got us thinking about what the trend were for Colombian companies. We thought it unfair to include Ecopetrol’s 3Q12 results since we do not yet have numbers for its colleagues. But still there is a worrying trend.

National business paper Portafolio reports that the Sinopec/ONGC Videsh joint venture has US$300 to US$500M to spend on acquisitions and is looking to purchase at least 5 blocks. Their objective is to get to 55,000 bpd by 2015 which we estimate would be more than double what they produce today.