Petrobank, ANH in Talks for Exploration Contract, 3 TEAs

Canadian oil company Petrobank (TSE: PBG) is in talks with Colombia's hydrocarbons regulator ANH for a new exploration contract and three technical evaluation agreements (TEAs) in the Llanos basin, the company said in its Q2 earnings statement Monday.

Discussions began at the end of Q2, Petrobank president and CEO John Wright told BNamericas.

Petrobank has recently signed three exploration contracts with the ANH for the Joropo, Corcel and Casanare Este blocks and one TEA for the Garcero Oeste block. These properties cover a total 272,207ha in the Llanos basin.

The company is also awaiting final approval on a fourth exploration contract for the 13,660ha Las Águilas block - previously referred to as Palmitos B block - adjacent to the Orito block in the Putumayo region. Approval is expected shortly, Wright said.

If all negotiations are successful, Petrobank will end up holding a total of five explorations licenses and four TEAs in Colombia, Wright said.


Petrobank saw its Q2 oil sales from its operations in Colombia fall 24% to 1,024 barrels a day (b/d) compared with 1,354b/d in 2Q04, the company said in its Q2 earning release Monday.

The company attributes this decline to the Orito-90 well, which normally produces approximately 285b/d, having been offline for the last 1.5 months due to maintenance.

Petrobank holds 79% and 69% respective working interests in incremental production on the Orito and Neiva blocks, which are in the Putumayo region and the Upper Magdalena basin about 300km northeast of Orito.

Production costs were up 18% year-on-year for the quarter due to fixed costs despite lower production volumes, the statement said. However, second quarter oil prices in Colombia averaged US$42.06/b, up 12% compared with prices in 2Q04.

Petrobank expects production to increase by year-end as the Orito-116 well, which has shown a "positive hydrocarbon potential" during testing, is scheduled to come online in September, the statement said. Moreover, drilling of the Orito-117 well is set to begin in late-September.

Drilling on the Joropo exploration block is due to commence in 1Q06, while Petrobank plans to shoot seismic on the Corcel and Casanare Este exploration blocks in 1Q06, the statement said.

Capital expenditures in Colombia in Q2 rose 129% to Cdn$5.5mn (US$4.6mn) for a total of Cdn$10.4mn so far this year, according to the statement.

Company-wide, Petrobank posted Q2 net income of Cdn$4.7mn, turning around 2Q04 losses of Cdn$1.8mn.

About Business News Americas: Business News Americas is a multilingual news and business information service that covers the most important original stories in 11 different business sectors throughout Latin America everyday. Visit BNamericas to access our real-time news reports, 7-year archive, Fact File company database, and latest research reports.

Click here for a Free two week trial to our Latin America Oil & Gas information service.