LatAmNRG Prospector: Week 6 2019

LATAMNRG PROSPECTOR VOL 6 2019

Technology: Transforming The Industry. The Trinidad And Tobago Experience

EXMAR’S TANGL FLNG REACHES BAHIA BLANCA

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

ARGENTINA EXMAR’s Tango FLNG Reportedly Reaches Bahia Blanca, Argentina

30 June 2018 until 10 business days prior to the maturity date. Facility B will be amortised in equal quarterly repayment instalments from 31 December 2019 until maturity with the right to convert all or part of Facility B into additional new ordinary shares of Phoenix at a price of 28 pence per share at any time from 30 June 2019 until 10 business days prior to the maturity date.

https://bit.ly/2D5ZJoQ (Energy Analytics Institute, Aaron Simonsky, 4.Feb.2019) — EXMAR’s Floating LNG Liquefaction Unit (FLNG), Tango FLNG, has reportedly arrived to the port at Bahia Blanca in Argentina, according to local media reports.

Tango FLNG is expected to commence production of liquefied natural gas or LNG in the second quarter of 2019, EXMAR announced in December 2018 in an official statement.

Phoenix Global Resources Announces Additional Vaca Muerta Funding https://bit.ly/2GeRdIc (Phoenix Global, 4.Feb.2019) — Further to Phoenix Global Resources plc’s announcement on 6 December 2018, the company announced additional funding arrangements.

The existing convertible revolving credit facility with Mercuria Energy Netherlands BV, part of the Mercuria Group, increased to $235 million, providing immediate additional funds of $50 million (the Amended Convertible RCF). Additional funds will be used to support the first phase of the Group’s 2019 business plan.

The Amended Convertible RCF will provide immediate additional funds of $50 million and bears interest at a rate of 4% over 3-month US$ LIBOR with a maturity date of 31 December 2021. The Amended Convertible RCF has two tranches, a facility A commitment of $160 million (Facility A), which was entered into in February 2018 and a facility B commitment of $75 million (Facility B). Facility A will be amortised in equal quarterly repayment instalments from 30 June 2019 until maturity with the right to convert all or part of Facility A into additional new ordinary shares of Phoenix at a price of 45 pence per share at any time from

The right to convert Facility B is subject to appropriate shareholder resolutions, in relation to the authority to allot and disapplication of pre-emption rights in relation to such shares, having been approved. The company intends to propose the relevant resolutions at its annual general meeting to be held this year.

Mercuria Group is a substantial shareholder of the company and a related party under the AIM Rules. The entering into of the Amended Convertible RCF constitutes a related party transaction under the AIM Rules. The directors of the company, except for the two Mercuria directors (being Mercuria's designated directors under the Relationship Agreement between Phoenix and certain Mercuria Group companies), having consulted with the company’s nominated adviser, Stockdale Securities Limited, consider that the terms of the Transaction are fair and reasonable insofar as the company’s shareholders are concerned.

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Anuj Sharma, CEO of Phoenix said: “I am pleased to announce that funding is in place to support the first phase of our 2019 work program, which will allow Phoenix to continue to develop its highly attractive asset base. Management will be providing an update on operational activity towards the end of February.”

Argentina Changes Unconventional Gas Subsidy Program https://bit.ly/2GfKugY (Kallanish Energy, 6.Feb.2019) — Argentina’s government has decided to change the country’s subsidy program for unconventional gas development leaving projects in limbo, Kallanish Energy learns from local producers YPF and Pampa Energia.

BRAZIL Airborne Strengthens Presence In Brazil https://bit.ly/2TCU4xn

Composite Pipeline (TCP) Riser for dynamic application in Deepwater Brazil.

As a global leader in TCP, Airborne Oil & Gas started a qualification programme in 2018 for dynamic TCP Risers intended to be deployed in deep water off the coast in Brazil, including for pre-salt environment.

Oliver Kassam, CEO, comments: “Brazil is a key market for Airborne Oil & Gas, and the TCP Riser has a unique opportunity to deliver the ultimate reward to our clients in terms of lowered total cost and overall installability benefits. With our qualification program well underway, we are glad to have Renato Bastos lead our organisation in Brazil and prepare for our future growth.”

Airborne Oil & Gas’ TCP Riser design delivers the lowest total installed cost solutions for dynamic risers in deepwater applications, whilst offering maximum flexibility to operators in terms of subsea configuration and choice of installation method. The TCP Riser developed by Airborne Oil & Gas optimises cost with minimum bend radius and weight, using only robust and field proven materials.

Renato Bastos brings with him over 20 years experience with a strong background in the SURF market for installation of flexible pipe, having worked in number of position including Ship Operations Manager and Technical Director. Most recently, he held the role of Projects Director of Subsea for Ocyan. With his experience, he is well positioned to lead the development and qualification work of the TCP Riser, and develop the Brazilian market, which is a strategic market for Airborne Oil & Gas.

US Asks Brazil To Consider Lifting Tariffs On Ethanol Exports https://bit.ly/2Gz1gHq

Shown: Renato Bastos (Airborne, 6.Feb.2019) — Airborne Oil & Gas announces that Renato Bastos has joined Airborne Oil & Gas, as Vice President Brazil, strengthening its presence in Brazil. In this role, Renato will be responsible for delivering the company’s roadmap to qualify the Thermoplastic

(Reuters, 6.Feb.2019) — The United States has asked Brazil to consider lifting tariffs imposed on its ethanol exports and is hopeful of a positive outcome, a senior official at the U.S. Department of Agriculture said.

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

Petrobras Reports Reduction In Relevant Shareholding Interest https://bit.ly/2Dr1NYM (Petrobras, 4.Feb.2019) — Petrobras, in compliance with article 12 of CVM Instruction 358 of January 3, 2002 and Circular Letter CVM/SEP/No001/2017, informs that it was notified by the National Bank for Economic and Social Development (BNDES) and BNDES Participações SA (BNDESPAR), a wholly-owned subsidiary of BNDES, that BNDESPAR sold preferred shares issued by Petrobras, so the two institutions began to manage less than 20% of the preferred shares issued by the company, according to the information below.

voting rights or the purchase and sale of securities issued

by Petrobras; IV. BNDES is enrolled with CNPJ/MF under No. 33.657.248/0004-21 and it is headquartered in Brasília, Federal District, at Centro Empresarial Parque Cidade, Setor Comercial Sul - SCS, Block 9, Tower C, 12 floor, and services office, in the city of Rio de Janeiro, State of Rio de Janeiro, at Avenida República de Chile no. 100. BNDESPAR is enrolled with the CNPJ/MF under No. 00.383.281/000109 and it is headquartered in Brasília, Federal District, at Centro Empresarial Parque Cidade, Setor Comercial Sul SCS, Block 9, Tower C, 12 floor and services office, in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida República de Chile no. 100.

Petrobras Offers Clarification Related to Financial News https://bit.ly/2GiDsbB (Petrobras, 6.Feb.2019) — Petrobras, in relation to the news published in the media about possible collective arbitration by an association of investors, clarifies that it has not been notified by the Arbitration Chamber of São Paulo Stock Exchange (B3). If notified, Petrobras shall take all measures to guarantee its interests and the interests of its shareholders.

It should be noted that the Brazilian authorities, including the Federal Supreme Court, recognize that Petrobras was a victim of the acts revealed by Car Wash Operation. As a victim, the company has already recovered more than R$ 3.2 billion as compensation in Brazil and will continue to take appropriate action against all those who have caused damages.

I. BNDESPAR sold, between 11/07/2018 and 01/30/2019, 121,404,100 preferred shares, therefore BNDES and BNDESPAR jointly started securitizing the total of 1,120,246,354 preferred shares, falling below the level of 20% the total preferred shares issued by Petrobras; II. The purpose of the shareholding is strictly for investment purposes, and does not aim to alter the shareholding control or the administrative structure of Petrobras;

The company also clarifies, as already informed to the market, that by the agreement to close investigations of the U.S. Department of Justice (DOJ) and the Securities & Exchange Commission (SEC) of the United States, DOJ also recognizes the situation of victim of Petrobras and the SEC recognizes the company’s performance as an assistant prosecutor in more than 50 criminal proceedings in Brazil.

III. BNDES and BNDESPAR have not entered into any contracts or agreements that govern the exercise of

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

COLOMBIA ONGC And Amerisur Spud Calao-1X Exploration Well In Colombia

“Following the positive result from Indico-1, we are delighted to report the spudding of Calao-1X from the Indico pad to determine the size of the play,” said Amerisur Resources CEO John Wardle in the company statement. “CEO We look forward to sharing the results with our shareholders throughout this busy, and potentially transformational, period for Amerisur, which has already delivered material reserves and production growth on the basis of the Indico discovery.”

https://bit.ly/2HVKu7z (Energy Analytics Institute, Piero Stewart, 4.Feb.2019) — Amerisur Resources Plc spud the Calao-1X exploration well on the CPO-5 block using rig E-2029 on February 1, 2019, the company announced in an official statement.

Amerisur Resources is an experienced Colombian Operator with an extensive, strategic acreage position in the underexplored Putumayo in partnership with Occidental Petroleum (Oxy) and a strategic acreage position in Llanos in CPO-5 with partner ONGC. Calao-1X is the second well to be drilled from the Indico pad to determine the prospectivity of the Lower Sands (LS3) formation around the Indico discovery. As previously announced, initial analysis by the company indicated that a 283 feet gross, 209 feet net, oil column is present in the LS3 formation at Indico-1, the company announced.

Amerisur said the Calao-1X will be a directional well, with a planned total measured depth of approximately 11,940 feet, targeting a structure alongside Indico to the southwest, towards the Aguila structure. On a simple structural basis, the company estimates potential resources at Calao-1X of between 2 and 9.8 MMBO gross.

However, given the results at Indico-1, which indicate the potential for combination trapping, the company believes potential resources may be significantly higher.

The drilling of Pavo Real-1, which targets a similar structure to Calao adjoining Indico to the northeast, will follow Calao-1X, the company announced.

Amerisur holds a 30% non-operated stake in the CPO-5 block which is 70% owned and operated by India’s ONGC Videsh Ltd. The company will make a further announcement in due course once the well has been drilled and logged.

Colombia To Change Oil Contract Bidding In Effort To Boost Output https://bit.ly/2D9DXQX (Reuters, 5.Feb.2019) — Colombia has modified how it will give out offshore oil and gas exploration contracts and relaunched bidding for more than 20 possible production areas, as the Andean nation seeks to award oil contracts for the first time in more than four years.

GeoPark Announces 2018 Certified Oil And Gas Reserves https://bit.ly/2t5dUFU

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

GeoPark Updates on South American Operations https://bit.ly/2t5dUFU (GeoPark, 5.Feb.2019) — GeoPark Limited announced a business segment update related to its operations Colombia, Peru, Chile, Argentina and Brazil.

Colombia After record production of 10.8 mmbbl in 2018 (an increase of 30% over 2017), GeoPark’s 2P D&M certified reserves increased by 26% to 111.2 mmbbl compared to 2017. Net additions of 33.4 mmbbl of 2P reserves resulted from strong reservoir performance and continued successful exploration, development and appraisal drilling in the Llanos 34 block (GeoPark operated, 45% WI).

For each barrel of oil extracted in Colombia, GeoPark added 2.3 barrels of 1P reserves, the equivalent of a 1P RRR of 229%. Similarly, for each barrel of oil extracted, GeoPark added 3.2 barrels of 2P reserves, resulting in a 2P RRR of 321%.

The 1P RLI was 7.6 years, while the 2P RLI was 10.7 years.

As of December 31, 2018, the Llanos 34 block included approximately 80-90 future development drilling locations (2P, gross, including the Mirador and Guadalupe formations). The Llanos 34 block represented 95% of GeoPark Colombia 2P D&M certified reserves as of December 31, 2018.

In November 2018, GeoPark signed an agreement with Perenco Oil and Gas to divest the La Cuerva and Yamu blocks for $18 million plus a contingent payment of $2 million based on future oil prices. GeoPark will continue operating the La Cuerva and Yamu blocks until the closing of this transaction, expected in the first months of 2019.

Reserves corresponding to the La Cuerva and Yamu blocks include 2.3 mmboe of 1P (1.1 mmboe PD and 1.2 mmboe PUD), 5.3 mmboe of 2P and 7.9 mmboe of 3P reserves as of December 31, 2018.

Peru GeoPark completed the preparation of the Environmental Impact Assessment (EIA) to initiate operations in the Situche Central oil field in the Morona block (GeoPark operated, 75% WI). The EIA was submitted to the Servicio

Nacional de Certificacion Ambiental (SENACE) on July 2, 2018. The Company is currently waiting for additional comments from SENACE, which is the final step of the EIA approval process.

During 2018, D&M updated its review of the Situche Central field, including a reinterpretation of the 3D seismic, structural geology, trapping and oil migration model. Following this evaluation, D&M has certified 3P gross reserves of 198.3 mmbbl in the Situche Central field (131.2 mmbbl net to GeoPark), which represents a 111% increase with respect to the 2017 reserve certification, and provides more information with respect to the field size and significant upside potential.

The Situche Central oil field in the Morona block represented 100% of GeoPark’s Peruvian D&M certified reserves.

Chile GeoPark’s 2P D&M certified reserves in Chile decreased by 27% to 24.7 mmboe compared to 2017. Oil and gas production, adjusted development plans and other technical revisions caused the declines, which were partially offset by drilling successes.

The 1P RLI was 7.2 years (no change from 2017). The 2P RLI decreased to 24.7 years, compared to 30.7 years in 2017.

The Fell block represented 99% of GeoPark Chile 2P D&M certified reserves and consisted of 40% oil and 60% gas, similar to 2017.

Argentina After production of 0.7 mmboe in 2018, GeoPark’s 2P D&M certified reserves in Argentina increased significantly to 14.2 mmboe compared to 1.1 mmboe in 2017. The net increase in 2018 includes the acquisition of 100% WI and operatorship of the Aguada Baguales, El Porvenir and Puesto Touquet blocks.

The 1P RLI and 2P RLI increased to 6.1 years and 15.2 years, respectively.

The Aguada Baguales, El Porvenir and Puesto Touquet blocks represented 91% of GeoPark Argentina 2P D&M certified reserves and consisted of 42% oil and 58% gas.

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

Brazil GeoPark’s 2P D&M certified reserves in Brazil decreased by 27% to 3.2 mmboe compared to 2017, resulting from production of 1.1 mmboe during 2018.

The 2P RLI decreased to 2.9 years compared to 4.0 years in 2017.

The Manati field (GeoPark non-operated, 10% WI) represented 100% of GeoPark’s Brazilian D&M certified reserves and is 98% gas.

GeoPark Announces Date For 4Q:18 Conference Call https://bit.ly/2GA21QC (GeoPark, 5.Feb.2019) — GeoPark Limited will report its 4Q:18 and year-end 2018 financial results on Wednesday, March 6, 2019 after market close.

Frontera Announces Investor Day, Corporate Update

GUYANA ExxonMobil Announces Two New Discoveries Offshore Guyana https://bit.ly/2Dijo4P (ExxonMobil, 6.Feb.2019) — The discoveries build on the previously announced estimated recoverable resource of more than 5 billion oil-equivalent barrels on the Stabroek block.

Tilapia-1 is the fourth discovery in the Turbot area that includes the Turbot, Longtail and Pluma discoveries.

Tilapia-1 encountered approximately 305 feet (93 meters) of high-quality oil-bearing sandstone reservoir and was drilled to a depth of 18,786 feet (5,726 meters) in 5,850 feet (1,783 meters) of water. The well is located approximately 3.4 miles (5.5 kilometers) west of the Longtail-1 well.

https://bit.ly/2US0g4P (Frontera, 7.Feb.2019) — Frontera signed a farm-in agreement with Parex Resources Inc., which is subject to Agencia Nacional de Hidrocarburos (ANH) approval.

Under the agreement, Frontera has received a 50% working interest in the VIM-1 Block in the Lower Magdalena Valley basin in Colombia in exchange for funding 100% of the first $10 million of the drilling, testing and completion costs of the La Belleza-1 exploration well, after which costs on the block will be split 50/50 with Parex.

The farm-in presents an exciting growth opportunity for Frontera and it is currently expected that the well will commence drilling during the second quarter of 2019.

Capital expenditures associated with the farm-in agreement were included as part of the exploration capital budget for 2019.

The Noble Tom Madden drillship began drilling the well on Jan. 7 and will next drill the Yellowtail-1 well, approximately six miles (10 kilometers) west of Tilapia-1 in the Turbot area. Baseline 4-D seismic data acquisition is underway.

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

“We see a lot of development potential in the Turbot area and continue to prioritize exploration of high-potential prospects here,” said Steve Greenlee, president of ExxonMobil Exploration Company. “We expect this area to progress to a major development hub providing substantial value to Guyana, our partners and ExxonMobil.” he other discovery was at the Haimara-1 well, which encountered approximately 207 feet (63 meters) of highquality, gas-condensate bearing sandstone reservoir. The well was drilled to a depth of 18,289 feet (5,575 meters) in 4,590 feet (1,399 meters) of water. It is located approximately 19 miles (31 kilometers) east of the Pluma1 discovery and is a potential new area for development.

The Stena Carron drillship began drilling the well on Jan. 3 and will next return to the Longtail discovery to complete a well test.

There is potential for at least five floating, production storage and offloading vessels (FPSO) on the Stabroek Block producing more than 750,000 barrels of oil per day by 2025. The Liza Phase 1 development is progressing on schedule and is expected to begin producing up to 120,000 barrels of oil per day in early 2020, utilizing the Liza Destiny FPSO. Liza Phase 2 is expected to startup by mid-2022. Pending government and regulatory approvals, sanctioning is expected in the first quarter of 2019 for the project, which will use a second FPSO designed to produce up to 220,000 barrels per day. Sanctioning of a third development, Payara, is also expected in 2019, and startup is expected as early as 2023.

The Stabroek Block is 6.6 million acres (26,800 square kilometers). ExxonMobil affiliate Esso Exploration and Production Guyana Limited is operator and holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds 25 percent interest.

TRINIDAD Technology: Transforming The Industry. The Trinidad And Tobago Experience https://bit.ly/2HWQpcH (Trinidad PM Keith Rowley, 4.Feb.2019) — Once again, it is my distinct honour and pleasure to deliver the feature address at this the opening of 2019 Energy Conference and Trade Show hosted by the Energy Chamber of Trinidad and Tobago. I want to thank the organizers for the sterling effort dedicated towards organizing this very important event and for being so kind to invite me to address you. It is an opportune moment, coming soon after my nationwide broadcasts and public conversations with the nation, on the state of affairs of the economy of Trinidad and Tobago (T&T) and particularly, the contribution of the energy sector.

The energy sector of T&T, notwithstanding its performance in the recent past, represents the industry best placed to achieve significant economic growth, not only within the sector but for the nation as a whole.

However, as a small producer, Trinidad and Tobago’s energy sector is inextricably tied to the oscillating fortunes of the global oil and gas industry.

In its 2019 projections, the World Bank Group Global projected the slowdown in global economic growth to slow to 2.9 percent. This is set to have a negative impact on the global economy, including the oil and gas industry and by extension T&T’s energy sector. There appears to be no respite in the volatility of energy prices. With a projected oversupply in oil production, prices are likely to be subdued unless there is a significant cutback in production by the major producers. In the meantime, however, Henry Hub natural gas prices have remained at the 2018 levels.

Notwithstanding, the volatility of energy prices, by and large, the oil and gas industry has remained resilient. The major companies practicing in the industry, in the face of lower prices, increased cost pressures, and tighter environmental standards, have been adopting powerful new technologies to ensure future relevance.

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

It has been well established that the petroleum industry has been in the forefront of changes in state-of-the-art exploration and development and production technology.

Technological advances such as three-dimensional seismic techniques, polycrystalline diamond compact drill bits, horizontal drilling, and offshore platforms capable of operating in hostile, deep-water environments are widely acknowledged to have had significant impact on productivity in exploration and development.

However, there were other challenges and the early operators realized as many do today, that T&T geological formations are exceedingly complex. This necessitated lengthy and costly coring operations to acquire the information required to delineate the lenticular reservoirs. It required a new technology-Electrical Logging-which helped to resolve formation complexity and eliminate the need to take expensive cores.

EDITOR’S NOTE: Excerpt is from a feature address at the Trinidad Hyatt Regency by Dr. The Honourable Keith Rowley, the Prime Minister of the Republic of Trinidad and Tobago at the 2019 Energy Conference & Trade Show of the Energy Chamber of Trinidad and Tobago.

VENEZUELA Sanctions Put Squeeze On Venezuela’s Output: Wood Mackenzie https://bit.ly/2t3vXfI

In the context of the local oil and gas industry, the introduction of technology has been instrumental in its quantum leap as an industrial force in T&T. In an earlier time this country had the distinction of being the first producing country in which gas re-cycling and rereinjection was applied in order to recover more oil. This was in the year 1916 in the Tabaquite Field. However, all was not plain sailing as in the early years drilling was dangerous business and blow-outs were the order of the day. A solution was required. It took the form of a new development - drilling fluids- imported from the US in the 1930s to resolve the problem. Its introduction revolutionized the industry and allowed for much deeper wells to be drilled.

(Wood Mackenzie, 2.Feb.2019) — The sanctions the US government has imposed against Venezuela aim to curb the Maduro government’s access to revenue from crude export. But impact could they have on state-run oil producer PDVSA and the country’s energy sector?

Ann-Louise Hittle, vice president Macro Oils, at global natural resources consultancy Wood Mackenzie said: “We estimate Venezuela’s production currently stands at 1.1 million barrels of oil per day (b/d).

“We believe production will likely fall to around 900,000 b/d under pressure from sanctions and a lack of materials for workovers, but we expect waivers will ease the full impact of the sanctions until they expire.” _____________________________________ ENERGY ANALYTICS INSTITUTE Visit www.energy-analytics-institute.org to read the complete articles, among others.

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