Pacific Rubiales (PRE:TSX), one of the largest oil producers in Colombia, announced this morning that they have received environmental licenses from the Colombian authorities to explore and develop in the CPE-6 and Guama blocks. The Guama block is a 184,000 acre block located in the Lower Magdalena Valley Basin approximately 100km east of the Company’s La Creciente gas field. PRE has a 100% working interest on this block. The Guama block booked net 2P reserves of 34.2MMboe of oil at 2012 year-end. The CPE-6 block covers a 593,000 acre prospective area located in the prolific Llanos Basin in Colombia. The CPE-6 block lies along the heavy oil trend approximately 70km to the southwest of the company’s Rubiales/Quifa SW giant oil field complex.
PRE has a 50% working interest and is the operator of the block along with their 50% partner, Talisman Energy (TLM:TSX). (Note, TLM has been a target of activist investor Carl Ichan who recently disclosed a near 6% share position in the company). The Llanos Basin is home to Petroamerica (PTA:TSXV) and Parex (PXT:TSX) who are both quick growing production on the back of highly successful drill campaigns in the Basin.
Ronald Pantin, Chief Executive Officer of the Company, commented: "It is important to understand that the CPE-6 license is a 'global environmental license' which will allow for exploration and future development on the block. For the remainder of 2013 the Company plans to drill one exploration well and obtain production flow tests from existing wells. Following this into 2014, the Company plans to drill up to 19 additional wells, including two exploration wells and 17 appraisal and development wells. The Company and our partner will begin activities as soon as logistical, partner and permit approvals allow.”
Colombian oil and gas producers have been penalized over the past few years relative to their North American peers. Much of this is attributed to a slow regulatory environment. Colombia has seen a recent increase in exploration activity and it seems the government is still struggling to keep pace. As a result some licenses have taken time which has deterred investors. This latest license highlights the fact that the Colombian authorities are working to make the process more timely and efficient. Mr. Pantin commented: “we would like to again recognize the efforts that the ANLA has made to improve and streamline the licensing process for oil producers in Colombia and we look forward to working with them in the future.”
Here's the five year chart on PRE:
Pacific Rubiales is in the late stages of closing its acquisition of Petrominerales (PMG:TSX) and today, PMG announced it will hold a shareholder meeting on November 27th in Calgary to review the Management Information Circular which was mailed recently. PMG received a positive fairness opinion from their financial advisor TD Securities.
Read: Pacific Rubiales Receives Environmental Licenses for the CPE-6 and Guama E&P Blocks
Related: Pacific Rubiales to Buy Petrominerales for $1.6 Billion and 56% Premium