LatAmNRG Prospector: Week 28 2019

LATAMNRG PROSPECTOR VOL 28 2019

DomRep Launches First Oil Licensing Round

Argentina Opens Tender For $2bn Vaca Muerta Pipeline

Ecopetrol Finds Oil At Boranda 2 ST Well

ANH Signs PPAA Deals Worth $158mn With Geopark, Hocol

Siemens Turbine Generator To Power Eni Mexico Area 1

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

Energy Analytics Institute’s weekly LatAmNRG prospector and select highlights from the week. Read the full stories online 24/7 at www.energy-analytics-institute.org

ABOUT US

ARGENTINA YPF Launches YPF Ventures, Invests In Bird (YPF, 8.Jul.2019) — YPF announced the launch of YPF Ventures, a corporate venture capital fund that will expand YPF’s influence into emerging energy businesses.

YPF is one of Latin America’s largest energy companies with $15B in revenue and 21 thousand employees.

YPF Ventures is distinct from other corporate energy venture funds in that it combines a typical early stage venture capital fund with a growth equity vehicle. This second vehicle helps innovative energy companies in the US expand into Latin America by leveraging YPF’s role as an energy leader with a significant retail footprint and inmarket presence in Latin America. The two funds operate as follows:

Energy Analytics Institute (EAI) is a Houston-based private organization focused on provided integrated services related to the Latin American and Caribbean upstream, downstream, midstream and renewable energy sectors.

I. EAI’s primary focus related to the Latin American and Caribbean petroleum sectors is to assist businesses establish and nurture relationships with other businesses or consumers by facilitating integrated business-to-business (B2B) and business-to-consumer (B2C) solutions.

II. EAI also organizes timely forums, seminars or executive speaking engagements related to the Latin American and Caribbean petroleum sector covering topics relevant to the upstream, midstream, downstream and renewable enegy sectors.

III. EAI also provides unbiased breaking news, among project updates, related to the Latin American and Caribbean petroleum sectors covering countries small and big from Jamaica and Trinidad and Tobago in the Caribbean to Guyana, Bolivia and Peru in South America and bigger regional players including Mexico, Colombia, Venezuela, Brazil and Argentina.

CONTACT / FOLLOW US: E. news@energy-analytics-institute.org E. webmaster@energy-analytics-institute.org W. www.energy-analytics-institute.org

— The bridge fund links the hubs where energy innovation takes place (starting with the San Francisco Bay Area) and Latin America. Through this model, YPF is able to put its full weight as a Latin American leader behind its portfolio companies, which in turn helps attract the world’s top innovation to YPF. — The seed fund, on the other hand, seeks to build and promote an ecosystem of innovation in Latin America.

This fund will double the available capital for cleantech entrepreneurs in Latin America (currently only $2M a year). The Seed Fund leverages local top engineering talent and the hundreds of millions in energy R&D by local governments to unshackle Latin America’s entrepreneurial talent.

“To lead an energy business in the current environment, we need to stay ahead of the curve and combine vision and innovation, two key assets that will enable us to deepen our purpose and change the lives of Argentines through energy,” stated Miguel Gutiérrez, President of YPF. “With the launch of YPF Ventures, we will be able to attract innovation to Latin America while also playing a relevant role in promoting the ecosystem of Argentine entrepreneurial talent.”

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YPF Ventures has already invested in two companies: — Sustentator, Argentina’s distributed solar generation leader. Sustentator is YPF’s first step in a market that brings the energy company to the homes of its customers.

— Bird Technologies, a leading company in urban micromobility. Bird provides short distance personal mobility services by distributing electric scooters in big cities. YPF Ventures’ investment in Bird aims to speed up the platform’s expansion in Latin America while placing YPF at the forefront of trends in mobility.

YPF Ventures is led by Managing Director Tomas Ocampo, a former entrepreneur who earned an MBA from Stanford University in 2015 and an MS in Energy from Stanford in 2016. Sergio Giorgi, YPF’s head of Business Development, Strategy and Investor Relations, serves as President for the fund.

Argentina Opens Tender For $2bn Vaca Muerta Pipeline (Reuters, 10.Jul.2019) — Argentina has opened the tender for a new $2 billion gas pipeline from the huge Vaca Muerta shale field, which according to the country’s Energy Secretariat, should be completed the middle of 2021. The pipeline, which a government source previously estimated would cost $2 billion, will run from the southern province of Neuquén to Salliqueló, a town in the province of Buenos Aires.

BOLIVIA

“Like oil exploration, a venture capital fund enables us to perform high-risk testing with low capital investment and the potential to unlock high value in a short time period.

YPF Ventures captures and keeps the entrepreneurial spirit of our company, imprinting it on the current trends of innovation and technological disruption,” stated Daniel González, CEO of YPF.

Vaca Muerta Output Growth Leads To LNG Exports (EIA, 12.Jul.2019) — Argentina’s domestic natural gas production has been rising steadily in the past three years, largely because of increasing production from the Neuquén Basin’s Vaca Muerta shale and tight gas play.

Production from Vaca Muerta surpassed 1.0 billion cubic feet per day (Bcf/d) in December 2018.

As production has grown, Argentina has resumed exporting natural gas by pipeline to neighboring Chile and Brazil and has started exporting liquefied natural gas (LNG). Argentina’s first LNG export cargo was shipped on June 6 from the offshore Tango floating liquefaction unit (FLNG).

Bolivia To Buy Petrobras’ Stake In Gas Pipeline (Reuters, 9.Jul.2019) — Bolivia’s state-owned oil company YPFB plans to bid on a stake in a natural gas pipeline linking the country to Brazil to secure better terms for its gas sales there, the company said on Tuesday. YPFB intends to bid on an unidentified portion of the 51% stake that Brazil’s state-owned energy company Petroleo Brasileiro SA owns in the Transportadora Brasileira Gasoduto Bolivia-Brasil (TBG), which pipes Bolivian natural gas from the Bolivian-Brazilian border to Sao Paulo, the company said in a statement.

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BRAZIL Petrobras And CADE Ink Natgas Market Deal (Petrobras, 8.Jul.2019) — Petrobras reports that it signed an Agreement with the Administrative Council for Economic Defense (CADE), which consolidates understandings between the parties on the promotion of competition in the natural gas industry in Brazil, including the sale of shareholdings in companies operating thereof.

The purpose of the Agreement is to preserve and protect the competitive conditions, aiming to open the Brazilian natural gas market, encouraging new agents to enter this market, as well as suspending administrative procedures established by CADE to investigate Petrobras’ natural gas business.

With the signature of this Agreement, among other commitments, Petrobras undertakes to sell the following shareholdings: (i) Nova Transportadora do Sudeste S.A. (NTS) -10%; (ii) Transportadora Associada de Gás S.A. (TAG) -10%; (iii) Transportadora Brasileira Gasoduto Bolívia-Brasil S.A. (TBG) -51%; and

fulfilled by potential buyers. Petrobras also undertakes to indicate in the transportation systems the maximum injection and withdrawal volumes at each receiving point and delivery area, for further adjustments to the current transportation service contracts, so that transportation companies, under the supervision of ANP, can offer the remaining capacity to the market, thus enabling other companies to use the transportation network not used by Petrobras. Furthermore, the company is committed to other actions to allow greater competitiveness in the natural gas market, such as: (i) negotiation of access to outflow and processing assets, (ii) refrain from purchasing new gas volumes from partners/third parties, except in certain situations provided for in the Agreement, and (iii) lease of the Regasification Terminal in the state of Bahia.

In addition, the schedule and the fulfillment of the commitments assumed with CADE will be followed up by an external agent, to be hired by Petrobras, according to specifications to be established by mutual agreement.

Petrobras considers that the signature of the Agreement is in line with the company’s strategy of improving its capital allocation, reducing leverage and regulatory risk, and consolidating its cooperation efforts with CADE in building a favorable environment for new investors to enter the natural gas industry, contributing to the country’s growth.

(iv) indirect participation in gas distribution companies, either by selling its 51% interest in Gaspetro, or by selling its indirect participation in distribution companies.

Petrobras Announces Tender Offers Expiration Date

While divestments are not carried out, Petrobras shall appoint, within a period of up to six months from the date of signature of the Agreement, independent members of the Board of Directors in these transportation companies and in Gaspetro, according to the “Novo Mercado” listing industry rules, aiming at ensuring the functional unbundling of companies.

(Petrobras, 8.Jul.2019) — Petrobras announced the expiration and expiration date results of the previously announced offers to purchase by its wholly-owned subsidiary Petrobras Global Finance B.V. (PGF), of any and all of its outstanding notes set forth in the table below (the “Notes”).

Divestments will be carried out following a schedule agreed upon by the parties, in accordance with the Company’s Divestment Methodology, pursuant to the provisions of Decree 9,188/17, subject to economic and financial valuations related to each of the assets, as well as technical, legal, financial and compliance requirements

The Offers were made pursuant to the terms and conditions set forth in the offer to purchase dated July 1, 2019 (the “Offer to Purchase”and, together with the accompanying notice of guaranteed delivery, the “Offer Documents”).

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The Offers expired at 5:00 p.m., New York City time, on July 8, 2019 (the “Expiration Date”). The settlement date with respect to the Offers will occur promptly following the Expiration Date and are expected to occur on July 11, 2019(the “Settlement Date”).

The table below sets forth the aggregate principal amount of Notes validly tendered in the Offers and not validly withdrawn, and the aggregate principal amount of Notes reflected in notices of guaranteed delivery delivered,at or prior to the Expiration Date and the consideration payable for Notes accepted for purchase in the Offers.

5803, BofA Securities, Inc. at +1 (888) 292-0070, Credit Suisse Securities (USA) LLC at +1 (800) 820-1653, J.P. Morgan Securities LLC at +1 (866) 834-4666 and Scotia Capital (USA) Inc. at +1 (800) 372-3930 (toll free) or +1 (212) 225-5559 (collect). Requests for additional copies of the Offer Documents may be directed to Global Bondholder Services Corporation at +1 (866) 470-3800 (toll-free) or +1 (212) 430-3774. The Offer Documents can be accessed at the following link: http://www.gbscusa.com/Petrobras/.

Documents related to the Offers have not been filed with, and have not been approved or reviewed by any federal or state securities commission or regulatory authority of any country. No authority has passed upon the accuracy or adequacy of the Offer to Purchase or any documents related to the Offers, and it is unlawful and may be a criminal offense to make any representation to the contrary.

Petrobras Chief Governance, Compliance Officer Resigns In order to be eligible to participate in the Offers, holders of Notes reflected in notices of guaranteed delivery received by PGF prior to the Expiration Date must deliver such Notes to PGF by 5:00 p.m., New York City time, on July 10, 2019 (the “Guaranteed Delivery Date”).

(Petrobras, 5.Jul.2019) — Petrobras informs that its Chief Governance and Compliance Executive Officer, Rafael Mendes Gomes, presented his resignation from the position, for personal reasons.

On the terms and subject to the conditions set forth in the Offer to Purchase, PGF expects that it will accept for purchase all of the Notes tendered on or prior to the Expiration Date, and all of the Notes delivered on or prior to the Guaranteed Delivery Date. The principal amount of Notes that will be purchased by PGF on the Settlement Date is subject to change based on deliveries of Notes pursuant to the guaranteed delivery procedures described in the Offer to Purchase. A press release announcing the final results of the Offers is expected to be issued on or promptly after the Settlement Date

Petrobras will initiate a selection process to choose the new Officer who, according to the company’s governance rules, must be elected by the Board of Directors, based on a triple list of Brazilian professionals, pre-selected through a process to be conducted by a specialized Human Resources company, who will seek professionals with acknowledged competence in the area.

PGF engaged Banco Bradesco BBI S.A.,BB Securities Limited, BofA Securities, Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and Scotia Capital (USA) Inc. to act dealer managers with respect to the Offers. Global Bondholder Services Corporation acted as the depositary and information agent for the Offers.

The company is grateful for the work of Rafael Mendes Gomes who has been in charge of this office since May 2018.

The Chief Corporate Affairs Executive Officer, Eberaldo de Almeida Neto, shall temporarily accumulate the position until the election of the new Officer.

Any questions or requests for assistance regarding the Offers may be directed to Banco Bradesco BBI S.A. at +1 (646) 432-6643, BB Securities Limited at +44 (20) 7367-

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COLOMBIA

87 blocks, over a joint area of approximately 217,000 hectares.

Ecopetrol Finds Oil At Boranda2 ST Well (Ecopetrol, 11.Jul.2019) — Ecopetrol S.A. reports that the Boranda-2 ST well, located in Rionegro (Santander), has discovered the presence of crude in the Eoceno basal sands.

The well was drilled from the same platform as the Boranda-1 discovery well (finding reported in 2017 in the Playón block, now known as Boranda), some 1,200 meters to the southeast.

In initial tests the well produced a total of 2,397 barrels of oil accumulated and posted average daily production of 960 barrels, with a water cut of less than 2%. The final depth achieved was 13,932 feet, and it confirmed the finding of medium crude with API of 23º.

The production unit at Boranda-2 ST is considered independent from the one found in the Boranda-1 production well, and is approximately 1,000 feet deeper.

Ecopetrol owns a 50% stake in the block, with the other 50% owned by Parex, who is the operator.

The proximity to Payoa and Provincia crude oil receiving stations and the Barrancabermeja refinery generate a competitive and operational advantage for this block, whose findings confirm its prospectivity.

ANH Signs PPAA Deals Worth $158mn With Geopark, Hocol (ANH, 11.Jul.2019) — After more than five years without offers or rounds of new blocks for Exploration and Production of hydrocarbons in Colombia, the new Permanent Process of Area Allocation (PPAA) launched by the National Hydrocarbons Agency – ANH at the beginning of 2019 starts to bear its first fruits with the signing of four contracts, one with Hocol S.A. and three with the Temporal Union Hocol – Geopark, in order to advance activities in the COR-9, LLA104, LLA-86 and LLA-

Luis Miguel Morelli, President of the ANH, pointed out: “This news confirms that President Duque’s commitment to reactivating the hydrocarbons sector is progressing steadily and is part of the results of his first year in office.

With the signing of these four contracts, which are part of the 11 that were assigned in the first window of 2019, we estimate investment commitments for more than 158 million dollars, if they are fully developed. Those favored where the Temporal Union Hocol – Geopark, for blocks LLA-104, LLA-86 and LLA-87, and Hocol for the COR-9 block. These are large companies that have shown operational excellence and good exploratory results in the country. For example, Geopark is the second private operator in Colombia with a production of more than 70,000 barrels of oil equivalent per day. We appreciate the commitment of these companies to invest in the country and we wish them success in the development of their commitments”.

Rafael Guzmán Ayala, President of Hocol S.A., said: “This Permanent Process of Area Allocation has been a success.

The reactivation of the oil and gas industry is evident; and for Hocol, this represents a great milestone. Acquiring these four blocks strengthens our growth strategy, consolidates our portfolio, and also leverages the strategy of the Ecopetrol Group. Likewise, we celebrate our

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partnership with Geopark, one of the leading E&P companies in Latin America”.

For its part, Marcela Vaca Torres, Legal Representative of the Temporary Union Hocol – Geopark and President of Geopark Colombia, said: “We thank the ANH for the reactivation of the Process of Area Allocation, the first step to guarantee national energy self-sufficiency. We are excited to lead an ambitious exploration program with Hocol, which will result in the expected increase in reserves for the country.”

EPM Announces Expiration Of Tender Offer (EPM, 11.Jul.2019) — Empresas Públicas de Medellín E.S.P. (EPM) announced expiration and results of its previously announced offer to purchase for cash any and all of its outstanding 8.375% Notes due 2021 (CUSIP No.: 29246B AB4 (144A) / P9379R AB3 (Reg S) / ISIN No.: US29246BAB45 (144A) / USP9379RAB35 (Reg S)) (the “Notes”), from beneficial owners thereof (each, a “Holder” and collectively, the “Holders”), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated July 2, 2019. Capitalized terms not defined herein shall have the meaning ascribed to them in the Offer to Purchase.

EPM hereby announces that as of July 11, 2019, at 8:00 a.m., New York City time (the “Expiration Date”), a total of Ps.1,119,178 million aggregate principal amount of Notes had been validly tendered and not validly withdrawn in the Offer, representing 89.53% of the aggregate principal amount of the Notes outstanding.

EPM will accept for purchase on July 18, 2019 (the “Settlement Date”), all Notes validly tendered (and not validly withdrawn or rejected) subject to the terms and conditions described in the Offer to Purchase. Holders whose tenders have been accepted will receive Ps.1,040 for each Ps.1,000 principal amount of Notes validly tendered (and not validly withdrawn or rejected) (the “Consideration”). The Consideration will be payable in U.S. dollars and converted at Ps.3,212.91 per U.S.$1.00, the representative market rate for the purchase of U.S. dollars with Colombian pesos as calculated and published by the Superintendence of Finance of Colombia (Superintendencia Financiera de Colombia) at the end of July 10, 2019, the Business Day prior to the Expiration Date. In addition, Holders who validly tendered and did not validly withdraw their Notes in the Offer will also be

paid accrued and unpaid interest from, and including, the last interest payment date up to, but not including, the Settlement Date (“Accrued Interest”).

Following consummation of the Offer, Ps.130,822 million aggregate principal amount of the Notes are expected to remain outstanding.

Global Bondholder Services Corporation is acting as the tender agent and as the information agent for the Offer.

HSBC Securities (USA) Inc., J.P. Morgan Securities LLC and Scotia Capital (USA) Inc. are acting as Dealer Managers for the Offer (the “Dealer Managers”).

Colombia Reschedules Aborted Tender (Windpower Monthly, David Wes, 12.Jul.2019) — Developers with renewable energy projects of over 5MW that can be online by 1 January 2022 are invited to bid.

The ministry of mines and energy has increased the contract length from the originally proposed 12 years in February’s tender, up to 15 years.

DOMINICAN REPUBLIC DR Launches First Oil Licensing Round (WoodMac, 10.Jul.2019) — The Dominican Republic today launched its first licensing round, putting 14 blocks across its on- and offshore basins up for bid.

The Dominican Republic’s Ministry of Energy and Mines said the blocks on offer lie in the Cibao, Enriquillo, Azua, and San Pedro basins. Wood Mackenzie, a global natural resources consultancy, is assisting the ministry with the evaluation, planning and execution of the licensing round.

Juan Agudelo, director of upstream consulting at Wood Mackenzie, said: “The Dominican Republic government is offering 14 blocks in on- and offshore frontier basins. The exploration performed in the country since the early 20th

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century indicates the presence of a working petroleum system.”

He added: “Blocks will be awarded based on work commitments for the first exploration phase.

The Dominican Republic is incentivising the acquisition of geological and geophysical data, while providing flexibility to explorers on how to conduct activities during the contract exploration phase. Operators will have between eight to 10 years to explore and must drill one well.

“This round aims to boost exploration of oil and gas in the Dominican Republic. The country currently doesn’t have any operators searching for new fields. If the rounds attracts explorers, it will bring investment and help to derisk the oil and gas potential in the country.”

ECUADOR Court Ruling Deemed A Win For Waorani (Reuters, 12.Jul.2019) — A court in Ecuador has upheld a ruling that prevents the government from selling land in the Amazon rainforest to oil companies, a move activists called a historic win for the Waorani indigenous tribe living there. The government had appealed an earlier court ruling in April that the 2,000-strong tribe had not been properly consulted over plans to auction their ancestral lands to oil companies.

MEXICO Mexico Auctions Moratorium Give Rival Brazil An Edge (Bloomberg, Peter Millard and Amy Stillman, 9.Jul.2019) — Mexico’s moratorium on auctioning off its oil riches to foreign producers is giving a leg up to nearby rivals Brazil and Guyana. ‘Mexico President Andres Manuel Lopez Obrador has halted new bid rounds, and state-owned Petroleos Mexicanos has disappointed potential partners by eschewing deep-water blocks in favor of cheaper-to-

produce oil closer to shore. This means latecomers to Mexico’s opening will have to buy into existing licenses, or move on to other countries.

Siemens Turbine Generator To Power Eni Mexico Area 1 (Siemens, 9.Jul.2019) — Siemens will provide MODEC with three 34-megawatt (MW) SGT-A35 gas turbine power generation packages that will power MODEC’s floating production, storage, and offloading (FPSO) vessel.

The vessel, referred to as the “Eni Mexico Area 1 FPSO,” will be deployed in the Offshore Area 1 approximately 6 miles (10 kilometers) off the coast of Mexico at a water depth of approximately 105 feet (32 meters). The field is owned by a consortium of two companies including Eni Mexico S. de R.L. de C.V. as operator and Qatar Petroleum.

MODEC is responsible for the engineering, procurement, construction, mobilization, installation, and operation of the FPSO. Once operating in 2021, the FPSO is expected to process 90,000 barrels per day (bpd) of crude oil and have a storage capacity of 900,000 barrels of crude oil.

The SGT-A35 aeroderivative gas turbine (formerly the Industrial RB211), with a 3,600 rpm power turbine from the Rolls Royce marine MT30 gas turbine and directly coupled to a synchronous 2-pole generator, offers leading-class reliability and availability that is critical to this type of remote installation. The gas turbine packages feature lightweight, torque-tube-style baseplates, and modularized design with easy maintainability.

Furthermore, the SGT-A35 gas turbine generation packages are dry low emissions (DLE)-ready, allowing for conversion to DLE-type engines if required for future upgrades. SIL 3 compliance was incorporated into the package design, as requested by MODEC for this specific project.

Last year, MODEC purchased four SGT-A35 gas turbine power generation packages for its FPSO Carioca MV30 for the Sépia field operated by Petrobras, located in the giant “pre-salt” region of the Santos Basin.

“MODEC selecting us again for such a large-scale project confirms our strong position in the power generation business,” said Patrice Laporte, Vice President of Oil and Gas for Siemens America. “Due to the fast-paced delivery schedule of the overall FPSO, we will supply the gas

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turbine generation packages within a very short lead time.”

Talos Increases Credit Facility Commitments And Provides Hedging Update (Talos, 10.Jul.2019) — Talos Energy Inc. provided an update on the results of its semi-annual borrowing base redetermination and recent hedging activities.

Effective July 3, 2019, the Company’s borrowing base of $850 million was unanimously reaffirmed by participants of its syndicated credit facility. In conjunction with the regularly scheduled redetermination, Talos elected to increase the banks’ commitments under the facility from $600 million to $850 million and added three additional lenders to the syndicate. The next borrowing base redetermination is expected in the fall.

During the second quarter of 2019, Talos also entered into a series of derivative contracts, comprised of swaps and costless collars, to hedge additional fiscal year 2020 oil production of 3,423,500 Bbls.

The weighted average price the Company will receive under the swap contracts was $56.59/bbl and the weighted average floor and ceiling prices for the costless collars were $55.00 and $66.63, respectively. The table below reflects the contracted volumes and weighted average prices the Company will receive under its derivative contracts as of June 30, 2019.

We expect that our recent hedging additions, when coupled with our attractive basis differentials, will continue to generate robust price realizations into 2020.”

TRINIDAD AND TOBAGO Trinidad Downgraded By Standards And Poor’s (Guardian, Curtis Williams, 9.Jul.2019) — Trinidad and Tobago has suffered a downgrade in its sovereign ratings from credit rating agency Standard and Poor’s.

In its update on this country, S&P said the decision to downgrade T&T was based on lower-than-expected energy production and economic growth which it expects to weaken the government’s revenue base and delay its plans to balance the budget by fiscal year 2020-2021.

VENEZUELA PdV To Tap Fractionator To Replace Imported Naphtha (Argus, 9.Jul.2019) — Venezuela’s national oil company PdV is seeking to adapt its infrastructure to cope with a shortage of imported naphtha that is hindering heavy crude production and exports.

Talos President and Chief Executive Officer Timothy S. Duncan commented, “The reaffirmed borrowing base and increased commitments, both in terms of dollars and number of participants, is a strong endorsement of the Company’s asset base and strategic direction.

The company said it plans to build two small pipelines at its Jose industrial complex to supply its 210,000 b/d PetroPiar heavy crude upgrader with up to 5,000 b/d of residual naphtha stripped from gas liquids at the nearby 200,000 b/d Jose fractionator.

With the additional commitments, we have further enhanced our already solid liquidity position and improved our optionality and flexibility moving forward.

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