International oil and gas companies are drawing a bead on Colombia, seeing a sign of change in the country that says: Open for Business. It's a sign that's long overdue.
Benchmark Energy Corp. has already seen the sign, last week announcing that it entered into a "definitive amalgamation agreement" with Bolivar Energy Inc., a private Alberta corporation focused on exploration and development in Colombia.
Under the agreement, Benchmark will acquire all of the outstanding shares of Bolivar; both firms expect the acquisition to be completed by the end of June. Bolivar is party to a farmin agreement regarding Block LLA-24 in Colombia's Llanos basin, and may earn a 35% working interest in the block which is close to numerous light oil producing fields.
Seismic acquired
To date, Benchmark said, 207 sq km of 3D seismic has been acquired over the block and is being processed. So far, management of Bolivar has identified at least seven leads and prospects on Block LLA-24.
With the acquisition of Bolivar, Benchmark said it will be able to expand its portfolio of oil and gas projects in Colombia, to add to the recent potential discovery on its Sierra E&P contract in the Middle Magdalena basin.
"Moving forward," Benchmark said, "the proposed strategy of the combined company will be to secure low to medium-risk properties where a specific geotechnical tool such as 3D seismic offers a competitive advantage for unlocking value."
Benchmark also said the combined company aims "to balance exploration with production opportunities, and intends to evaluate the possible reactivation of mature fields in the Putumayo and Magdalena basins of Colombia."
Sounds good, doesn't it? And it's not too good to be true, either.
Production up
In the past few years, Colombia has granted rights to explore hundreds of areas across the country to a wide range of firms to increase oil output. The result is an increase of almost 50% in production over the past 4 years.
According to recent reports, Colombia's total proven oil reserves rose to 2.05 billion bbl according to an independent evaluation, up from 1.79 billion a year ago. That's according to Julio Cesar Vera, director of hydrocarbons for Colombia's mines and energy ministry.
Cesar Vera also said the country's probable reserves stand at 586 million bbl and possible reserves reach about 464 million bbl. The country's total reserves—which include proven, probable, and possible—stand at 3.1 billion bbl. Cesar Vera said the increase of reserves came from several fields in the Llanos region operated by companies such as Pacific Rubiales Energy, Petrominerales, and state-owned Ecopetrol SA.
Cesar Vera said Colombia's oil self-sufficiency is now assured until at least 2020 and that companies exploring in the country will doubtlessly find more new reserves by then.
Thumbs up, Colombia.
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