Pacific Rubiales Tags Accelerated Quifa Devt at $162MM
Pacific Rubiales has announced an expanded capital plan for 2010 that includes a US $853 million capital expenditure program. With this investment program the companies will double its net production, after royalties, from the current estimate for year end 2009 of 46,000 boe per day to 92,000 boe at the end of next year. At Quifa, the company will spend $162 million for the accelerated development of the block, which includes drilling 20 exploration/appraisal wells and 36 development wells during 2010.
Ronald Pantin, the company's Chief Executive Officer, stated, "Given the stellar performance we have had ramping up production at the Rubiales/Piriri fields to date, the exploration success at the Quifa block, and the successful opening of the ODL pipeline, we believe there is a compelling rationale to accelerate the development of both these fields, with a particular focus on the Quifa block. This will allow us to significantly increase our production, expected to reach 225,000 boe per day of gross production by the end of next year, equivalent to 92,000 boe per day net to the company after royalties. The expanded production targets reinforce our company's strategy to remain as the fastest growing and most dynamic low-cost producer in the region."
Capital Expenditure Program
The $853 million capital program for 2010 includes $165.5 million for development drilling, $190.8 million for exploration, $471.8 million for production facilities and $25 million to advance the STAR pilot project. This is an increase of $471 million over the 2009 capital expenditures and $394 million over the previously projected 2010 budget.
The company is financing its 2010 capital plan from current operating cash flow and from the early exercise of its warrants which, if exercised in full, would result in net proceeds to the company of approximately $275 million, after payment of incentive fees.
Highlights of the capital budget:
Development Drilling: $97 million is allocated to drill 113 producing wells at the Rubiales/Piriri Field (41 vertical, 62 horizontal and 10 injector wells); $53.2 million is designated to drill 36 producing wells at Quifa (1 vertical and 35 horizontal); and $15.3 million will go to increase production in the medium-light oil fields to 11,000 bopd by year end.
Exploration: $94.7 million will go to acquire 6,000 kilometers of seismic work and $96.1 million to drill 36 exploration/appraisal wells, of which $43.4 million will be dedicated to drill 20 new wells at Quifa. The 2010 exploration campaign is targeting 405 million boe of mean un-risked resources.
Production Facilities: $342.3 million will be spent to increase the Rubiales field capacity up to 170,000 bopd; and most importantly, US$65.5 million will go to begin building a new production facility at Quifa that will allow for an initial 30,000 bopd capacity; $21.5 million is dedicated to upgrade facilities in the medium-light oil and natural gas fields; and $42.5 million is assigned to the Llanomulsion project, transportation optimization and Information Technology Projects.
STAR: $25 million has been allocated to develop the secondary recovery pilot project at the Rubiales/Piriri Field as part of the phase III of the STAR project, namely on-site testing at Rubiales.
Year-end production rates: The capital expansion program projects a target operated production rate of 225,000 boepd gross for year-end 2010 (92,000 boepd net), a significant increase from previous projections. Within this target, the company is targeting an increase in production at La Creciente to 80 MMscfd.
With this expanded capital plan the company estimates operating costs to increase to $185 million, a $99 million increase over the 2009 budget.
The announced capital plan of the company and the corresponding new production targets will take the company to a new level of asset development, particularly in the Quifa block. To date the company has announced exploration success on 6 wells in the Quifa block, located in the Llanos Basin of Colombia, namely Prospects "D", "E", "H" and "I". The company is now preparing the necessary documentation to request the declaration of commerciality for the whole south-western Quifa area. The Quifa block is an Association Contract with Ecopetrol, S.A. in which Meta Petroleum (a wholly-owned subsidiary of Pacific Rubiales) holds a 60% working interest and Ecopetrol S.A. holds a 40% working interest.
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