Proactive Article18 Jan 2012 17:59
This arrived in my inbox today, good to see getting on more radars here.
http://tinyurl.com/6nswcvg
Global Energy Development excited about potentially transformational change of emphasis in Colombia
Colombia is the rising star of the oil and gas industry, with production set to hit 1.2 million barrels of crude a day by the end of this year.
If it hits this target, then the country will have doubled average daily output in just three years, underlining the strides it has made in a very short space of time.
An open door policy and a well constructed and trusted regulatory framework have encouraged an influx of foreign explorers and producers, including usually risk-averse majors such Shell (LON:RDSA), Chevron (NYSE:CVX) and Exxon (NYSE:XOM).
And of course improved security after decades of armed struggle has also helped.
The success of Colombia as a producer is in stark contrast with Venezuela, where the nationalisation programme under president Hugo Chavez is in the process of destroying the country’s crown jewels.
This does of course have an upside for Colombia, which has seen an influx of technical expertise and investment that has been scared away from Venezuela.
“There is a lot of buzz around Colombia, which is in the midst of an oil boom,” said Stephen Voss, managing director of Global Energy Development (LON:GED), an oil company that has been active in the country since the mid-1990s.
It is active in the Llanos Basin, a magnet for foreign investment.
However, the popularity of the area has put great strain on the local infrastructure and made it difficult and more costly for the smaller independents to ship their oil.
Another headache is disposing of the waste water from the oil production.
All of this has prompted a re-think at Global, which is moving the focus of its development efforts west over the mountain range to Colombia’s Middle Magdalena Region.
There are two reasons for this. The first is costs related. The second becomes apparent when you look at the company’s reserves statement.
Around 88 per cent of its 124.6 million barrels of 2P reserves are in the Middle Magdalena, though it is currently responsible for less than 5 per cent of the company’s production.
Unlocking the potential of the area will provide a huge lift for Global.
This isn’t a high-risk exploration story. It is about oilfield development, and applying technological advances that weren’t around when the group originally assessed the potential of the Bolivar and Torcaz discoveries.
The group has the financial wherewithal to do the groundwork, before deciding how it will accelerate the development of these fields.
It has been profitable for eight out of the last 10 years and has increased revenues in all bar one year in the past decade. 2011 is on target to be another record revenue year, according to analysts.
The current focus of Global’s work programme in the Llanos Basin is the conve
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