When Ronald Pantin was CEO of Pacific Rubiales he would complain that investors applied a ‘Colombia discount’ to Colombia-committed stocks. For a long time that appeared to be true, but it has been getting smaller and, this quarter, it disappeared. However, there are some important caveats.
The ANH’s Permanent Competitive Procedure is the most significant change in procedure in years. It opens the opportunity for continuous block assignments. Ten days ago, the ANH announced an important modification, finally allowing what Agreement 2 was supposed to have from the beginning: the ability to nominate blocks for assignment (which we have called browse-the-rack-and-pick-up-something-you-like). Leopoldo Olavarria and his team at Norton RoseFulbright have kindly prepared the following summary of the changes.
This graffiti adorns a 20-meter wall on Bogotá’s busy Septima (Carrera 7 / 7Th Avenue) in the heart of the capital’s elite neighborhood. It is virtually impossible that politicians, media types and other opinion leaders have not seen it or will not see it over the coming weeks. The inauguration of President Iván Duque has certainly reignited the debate over unconventional technologies.
There was considerable debate among industry watchers about whether companies spent the Capex they expected to in the first half of 2018 or held the money back. As usual every case is different – and we had to make some assumptions — but it looks like they spent as expected or more, except ECP.
There is no hotter political topic in the industry at this time than unconventionals with both the Ministers of Environment and Mines and Energy making declarations recently indicating a more open approach than that of the previous government. As might be expected, this has ‘unleashed the hounds of war’ from the anti-fracking side. Here well-known geophysicist and frequent contributor Jaime Checa gives his view, rational and balanced as always, scarce attributes in today’s world.
The bottom-line for a company are its profits and/or stock market performance. But we try to take a policy perspective so our bottom-line is production and reserves. Both were rather naturally affected by the oil-price crisis and so, maybe, “nobody’s fault”. The current industry question is how fast things have reacted to upward price signals and whether policy plays a role in that. Call it the U-curve.
I promised this three weeks ago now but, fortunately, we received a couple of important expert contributions on Ecuador and the new ‘permanent’ assignment process. Now that we are officially out of the Santos era and into the Duque era, it seems less important to do this. But a promise is a promise…
This week we skip our ‘Last 8 years’ qualitative feature in favor of a guest contribution but we continue the series in our quantitative analysis column. Last week we looked at turnover in key policy positions. If policy instability put off investors, we would expect it to show up in investment and exploration statistics, which is what we look at here.
As they were going out the door, the ANH staff obviously got worried about those nasty ‘incompletes’ on the agency’s ToDo list. As we have complained many times, one of the most significant open items is – or was – the continuous assignment process, now officially dubbed the “Permanent Competitive Procedure”. Leopoldo Olavarria and his team at Norton Rose Fulbright have brought us this overview and commentary on the new procedures.
President Álvaro Uribe (2002 to 2010) had only two Minminas: Luis Ernesto Mejía and Hernando Martínez. President Juan Manuel Santos (2010 to 2018) had seven. He also had six Ministers of Environment and five ANH Presidents. Would the industry be in a different place today if President Santos had shown the same consistency as President Uribe?