Parex expects to produce over 17,000bopd in the month of December and exit 2013 at 16,800bopd (Photo: David Jones/Getty)

Parex and Petroamerica have started up production at the La Casona well (Photo: David Jones/Getty)

Parex Resources (PXT:TSX) and Petroamerica Oil (PTA:TSXV) have provided an update on the exploration and development work going on in some of Colombia's most prolific light oil fields.  Parex is excited about the developments on the El Eden block (60% operated working interest, Petroamerica 40% working interest) as they have begun long-term production from the test facility which includes gas compression and sales.  The companies will be producing from the Une formation and is currently producing at restricted rates of 350 bopd and 1.5 million standard cubic feet per day.  The La Casona-2 well which was drilled 600m from La Casona-1 will begin testing the Mirador formation by year-end.  La Casona diversifies Petroamerica's production profile which should be viewed as positive as La Casona also offers further development potential.

Parex also announced that the Tigana-1 and Tigana Sur-1 exploration wells have both been cased and both encountered potential oil pay in the Mirador and Guadalupe formations in the southern LLA-34 block (45% non-operated working interest).  On December 6th, an electric submersible pump (ESP) was installed in the Tigana-1 well to allow for continuous production testing which, after 55 hours, was producing 1,600bopd with a 0.8% water cut.  This well will continue short-term production testing in the Guadalupe reservoir.  The service rig has now been moved 1,200m south to the Tigana Sur-1 well to perform production testing in the Guadalupe formation.

Parex expects production from the Tigana and La Casona wells to maintain north of 17,000bopd of production through year-end.  The company averaged 17,000bopd in the month of November and maintains its 2013 exit rate guidance of 16,800bopd.

Petroamerica is expecting average production in 2013 to be 5,000bopd which could be exceeded with the success the company has had over the last quarter.  They will be announcing their 2014 capital budget and production guidance in the next few weeks.  In January they were producing roughly 4,000 bopd and in 2013 they spent $80 million to discover multiple new fields and to achieve current production of over 6,000bopd.

The Rumi-1 well reached its target depth of 14,620 feet and is being cased.  The wireline logs indicate a gross hydrocarbon column of 60 feet in the Une formation of which 27 feet is interpreted as net oil pay which is very encouraging for this formation.  This represents a potential new oil discovery and one that could be material to Petroamerica.  Rumi is located on the El Eden block which Parex holds a 60% operated working interest with Petroamerica holding the remaining 40%.

On the highly productive Los Ocarros block (50% operated working interest, Petroamerica 50% working interest) which hosts the Las Maracas wells, the company has decided to suspend the La Guira-1 well due to a high water cut encountered in the well even after an ESP was installed.

Pacific Rubiales is an active acquirer in the light oil space in Colombia (Credit: Reuters/Jose Miguel Gomez)

Pacific Rubiales is an active acquirer in the light oil space in Colombia (Credit: Reuters/Jose Miguel Gomez)

In late November, Parex announced they would be targeting 17,500-18,500bopd average production over 2014.  They would be spending approximately $250 million next year in order to achieve that.  Parex remains a strong takeover candidate in the light oil space in Colombia.  With many productive wells across some of the most attractive light oil fields in Colombia, the company would be a favorite among heavy oil producers such as Pacific Rubiales, looking for cheaper diluent for their heavy crude production.  If Parex goes, then you are likely to see their Los Ocarros and El Eden block partners, Petroamerica get bought as well as they currently trade very cheaply relative to their peers in Colombia.

Petroamerica should continue to have lots of news flow going into 2014.  With these latest developments, the company is further derisked and clearly firing on all cylinders.  The Rumi-1 discovery could prove to be a material development for the company.  Watch for 2014 guidance and the testing of the La Casona-2 well as well as further developments at Rumi.  Management also expects to spud La Guira-2 and Crypto-1 early in 2014.

Read: Parex Resources Provides Operational Update Highlighted by the Tigana Discovery and Record Production (Wall Street Journal)

Read: Petroamerica Announces La Casona-1 Production Start-Up and Cases the Rumi-1 Exploration Well For Testing (Wall Street Journal)