PetroFalcon Looks to Expand Venezuelan Ops, Finance New E&P JV
Canadian oil company PetroFalcon (TSX: PFC) has been in talks to buy the assets of companies that want to close their Venezuelan operations, Clancy Cottman, CFO of PetroFalcon's wholly owned Venezuelan unit Vinncler, told BNamericas.
"We see possible opportunities in fields where companies want to exit Venezuela," he said.
"If we have the chance to find other assets, other properties in Venezuela, we are prepared to do that. We are actively involved in looking at a number of oil and gas properties in Venezuela," he added.
Italy's ENI (NYSE: E) and France's Total (NYSE: TOT) both refused to become partners in joint ventures dominated by state oil firm PDVSA, which took over the operation of their respective fields as a result.
PetroFalcon's Vinccler, on the other hand, has 40% in a partnership in which PDVSA has the remaining 60% for the operation of several oil and gas fields in two western Venezuela blocks.
PetroFalcon plans to use some US$24mn available from a debt facility with the International Finance Corporation (IFC), the private sector arm of the World Bank Group, and borrow some 10bn bolivares (US$4mn) from Venezuelan banks to finance its share of the US$39mn E&P budget for its JV with PDVSA, Cottman said.
"We have a tentative agreement on the budget, we both want to increase gas production," the official said, adding that definite PDVSA approval for the budget should come in about one month.
IFC awarded PetroFalcon a US$36mn loan last year of which it has used only US$12mn, leaving US$24mn for the JV, Cottman said.
"We have a 10bn-bolivar credit line we can use and could consider doubling that. I would like to make some of the loans longer term, three years, because right now it's all in one year maturities," he said.
The money will be spent in "development drilling and infrastructure," he added.
Vinccler will drill 8-10 wells in the La Vela and Cumarebo fields in the East Falcon block and two more on the West Falcon block.
PetroFalcon is currently producing some 1,600 barrels a day (b/d) of crude but expects to exceed the 20,000b/d mark in late 2008.
"It's a very aggressive budget to increase production," Cottman said.
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