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Ecopetrol continues its publicity campaign about local employment and procurement. This time it is the turn of employment, highlighting how many jobs the company creates and how many are filled with local people. With local hiring being a developing community issue, this Ecopetrol press release is timely. Translated and with commentary by Hydrocarbons Colombia.

Petrominerales announced its 2012 results this morning and had its conference call at 10:00 am Eastern. At the close, the share price in Toronto was down 8.4%. The company declared a Net Loss of US$54M in 4Q12 versus a profit of US$77M in 2011. For the year the company turned a profit of US$102M but that was 69% less than in 2011. The problem was production which was down 29%. This was offset by higher oil prices and better netbacks so funds from operations were only down 18%. As the graph shows, additions to reserves were minimal meaning 1P (proven) reserves are down 15%.

Talisman published its annual guidance for 2013 as a consequence of its annual investor open house. Although the company is looking to divest assets with longer-term payoffs, it seems to like its Colombian properties, giving them prominence in the presentation and directing significant CAPEX to 2013 activities in the country. The company also highlighted its investment in Ocensa, which has recently changed its business model from a cost center to a profit center, but this is one of the assets which Talisman would consider selling.

As business newspaper La Republica reported, the Panamanian company Petro Rubiales Corp., a subsidiary of Pacific Rubiales, acquired the majority of shares (50,19%) of the also Panamanian company, Pacific Infrastructure Inc. Petro Rubiales Corp. invested a total of US$2,207,802.85 for 2,324,003 shares at a value of US$ 0,95 each. Thus, Pacific Rubiales gained control over Pacific Infrastructure Inc.

This Ecopetrol press release details the company’s local procurement activities by region. Local procurement has become an issue because the communities in which oil and gas companies operate have lost line of sight to the benefits having hydrocarbons activity in the vicinity. The costs – like roads clogged with tanker trucks – are readily apparent but since the reform of the royalties distribution system, only local procurement is a sure route to jobs. Translated and with commentary by Hydrocarbons Colombia.

Firstly, Pacific Rubiales shareholders should not be concerned. Management did its job and proved (1P) and probable (2P) reserves both increased over 2011 thanks to the Z-1 Block in Peru and the acquisitions of PetroMagdalena and C&C Energy in Colombia. The company has made strategic plays in Papua New Guinea, Guatemala and Guyana that are not yet reflected in either proved or probable reserves. But stepping back and looking at the Colombian results to understand what is happening with the industry as a whole, the picture is far less rosy, as seen in the above graph.

As reported by National business newspaper Portafolio, Fitch Ratings Colombia, a rating agency, estimated that the company Terpel will invest US$895 in the next five years, due to expected increases in sales.

Gran Tierra published its 4Q12 and full year 2012 results. As can be seen from the graph, 4Q12 was not a great quarter for Colombian production. The company reported lower production and higher transport costs due to the disruption of the TransAndino pipeline. Although much of the country enjoyed the Farc’s unilateral truce in 4Q12, the guerrilla’s parting gesture was to blow up the pipeline just before announcing the ceasefire. This was a major disruption that was still unrepaired in mid-December and the result can be seen in production.

Since September 27th 2011, Ecopetrol and Pacific Rubiales have disputed the interpretation of a clause in the Quifa Association Contract. According to this clause, which refers to high prices, Ecopetrol should have greater participation in the profits when oil prices rise and the cumulative production reaches 5M barrels; a figure which was reached in April 2011.

As reported by La Republica, Bank of America and JP Morgan made new recommendations to shareholders about the Ecopetrol’s share. Bank of America described the Ecopetrol’s share as “low performance” and reduced its price objective from US$3 to US$2,75, because they expect the company’s performance will continue to decline by 8% per year through 2014. Meanwhile, JP Morgan said: “The combination of a reduction in production, rising security concerns and ongoing delays in environmental permits will impact the company’s ability to deliver a significant increase in production and operations results in the medium term “.