Perhaps rain is a good omen in Colombia. Those who came to Cartagena on the Caribbean Coast for Ronda 2012 awoke to tropical rainstorm on Wednesday, October 17, the long-anticipated date for bid submissions. It was finally, as ANH president Orlando Cabrales put it, “the moment of truth.” The torrential downpour proved no deterrent as several hundred people made their way through flooded streets to the Internacional de Convenciones Julio Cesar Turbay Ayala.
In addition to the suspense of seeing which companies were willing to bet on a country that has reversed its oil and gas fortunes for the past decade, attendees were treated to quite a show. Companies deposited their bids in crystal-clear boxes where they were retrieved and sorted into equally transparent bins. This served a purpose, as illustrated by one company representative who exclaimed with obvious glee, “We submitted the only bid for the block we wanted!” One by one, bids were opened by the immaculately manicured hands of young women apparently pulled from the ranks of local beauty contests. They were then placed on overhead projectors so the crowd could see the offers for themselves. The whole process, in which 105 offers were made for 49 blocks from 37 companies, took more than three hours.
New Kids on the Mature Block
Much of that three hours involved opening bids for Type 1, mature blocks, many of which received multiple offers. The Llanos Basin is the bread and butter of Colombia, and only two of its Type 1 blocks failed to attract bids. The most active bidder for this acreage was a consortium of Argentine Andes Energia, a newcomer to Colombia, and Integrated Oil & Gas that made 10 offers. Petroleo del Norte placed eight bids, offering percentage participation in the 20-30% range that often blew its competition out of the water as this is the primary biding criteria for these blocks. Under those terms, LLA-33 was the most hotly contested, with Petroleo del Norte offering 31% plus an additional US$ 4 million investment over a three-year period, while B.C. Exploracion & Produccion de Hidrocarburo bid 34% plus US$ 2 million. In all, this block netted four bids. Of the 17 Llanos Basin blocks offered as Type 1, one received six offers, two netted five, four had four, two had three and four received two bids.
As the bid round progressed to the higher-risk, higher-reward acreage that Colombia knows must be explored to secure its future, the number of bids thinned while the dollar amounts soared. Players from ExxonMobil, Statoil and Anadarko clustered in groups watching closely the activity on the screens, as well as the floor. Both Statoil, which made two offers, and Anadarko, which made four, are newcomers to Colombia. They came for Caribbean blocks, giving credence to the notion that the offshore trend which yielded Venezuela’s Perla discovery extends into Colombia’s friendlier waters. One offshore block received bids for US$ 55.1 million and US$ 23.3 million, while two others garnered offers for US$ 31.8 million and US$ 28.5 million. Repsol, which made the Perla discovery, partnered with state-company Ecopetrol to make one of the four bids placed for a deepwater block that adjoins acreage held by Petrobras.
Jumping the Unconventional Gun
After all the hype about Colombia’s 31 blocks with potential for unconventional hydrocarbon potential, at the end of the day only five blocks received bids. Three of those blocks are in the Middle Magdalena Basin, including one that received two bids ‒ one from Ecopetrol for US$ 11.8 million and another from Harvest Natural Resources for US$ 7 million. Harvest just exited Venezuela and will be a newcomer to Colombia if their bid is accepted. Admittedly, even with a handful of burgeoning plays in several basins, it is early for unconventional talk in Colombia.
“Muy excellente,” Cabrales said in an all-Spanish press conference that ‒ thanks to the heavy bidding ‒ was held two and a half hours after its originally scheduled time. One didn’t have to speak Spanish to understand how pleased the ANH is with Ronda 2012 results. All blocks that failed to receive bids will be offered in a second bid round which will kick off on November 28, 2012. It was certainly an exciting process to watch unfold. The upcoming months will be equally intriguing as we see what kind of results both old and new players in the country are able to produce.
Now it’s your turn. Do you think Colombia is ripe for new discoveries? Please leave your comments below.
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