LatAmNRG Prospector: Week 8 2019

LATAMNRG PROSPECTOR VOL 8 2019 Shale Support Starts Export Of Frac Sand To Vaca Muerta Spectrum Starts Colorado Basin Multi-Client 2D Seismic Survey

DOF Awarded Three Long Term Contracts With Petrobras In Brazil

CITGO Confirms Board and Names Officers Touchstone Intends £3.8m UK Private Placement ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

THE LATAM PROSPECTOR 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

ARGENTINA Shale Support Starts Export Of Frac Sand To Vaca Muerta

This partnership allows Shale Support the ability to supply the Vaca Muerta Shale in Argentina with the high-quality, frac sand produced by Shale Support under the brand Delta Pearl™. The first shipment left the port of New Orleans on February 18 and is expected to arrive in country on March 10 for further transfer to Shale Support and the Fracht Group’s co-managed distribution warehouse in Vaca Muerta.

“Shale Support is thrilled to partner with Fracht Group, a renowned industry leader in logistics,” said Kevin Bowen, Co-Founder and CEO. “Fracht Group’s current worldwide footprint along with long-standing experience in exporting, makes the organization an ideal partner for Shale Support. With Fracht Group’s current shipping business into South America and Shale Support’s geographic proximity to the Gulf Coast, we are able to provide quality proppant to Argentina without the traditional operational challenges of supply and logistics.”

“The port of Bahia Blanca is a natural fit for us, since we are currently moving heavy oil field equipment for customers through the port and into Vaca Muerta,” says Reiner Wiederkehr, CEO Fracht USA. “Adding consumables like sand and chemicals with Shale Support is a natural extension of that business for us. A long-term key to the development of the Vaca Muerta shale play is to help the operators bring down their consumables cost and that requires a transition to handling these products in bulk, and Shale Support has a successful track record in building and running those types of facilities. Shale Support’s Southton Rail Yard Transload facility is a great example of what can develop in Vaca Muerta.”

Spectrum Starts Colorado Basin Multi-Client 2D Seismic Survey

(Shale Support, 21.Feb.2019) — Shale Support, a provider of frac sand and logistical solutions to the oil and gas proppant market, has announced a strategic partnership with Fracht Group, an international transportation company and industry leader in providing general and specialized logistics solutions. Fracht Group, founded in 1955, operates 107 offices worldwide in 40 countries including Argentina.

(Spectrum, 20.Feb.2019) — Spectrum is commencing a new 20,000 km 2D survey in Colorado and Salado basin offshore Argentina. This new program ties with Spectrum’s existing 38,000 km survey that was acquired in 2017 for the ongoing first offshore licensing round.

The survey is done in cooperation with BGP utilizing the vessel BGP Pioneer.

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Data is being acquired with a 12 km streamer with continuous recording to image deep reflection and high fold data. This will support full interpretation from Moho to water bottom. The data will be processed with PSTM, PSDM and Broadband products with first deliveries in Q2 2019.

BRAZIL S&P Raises Petrobras StandAlone Credit Profile (Petrobras, 21.Feb.2019) — Petrobras informs that the rating agency Standard & Poor’s (S&P) raised its standalone credit profile (SACP) to “bb” from “bb-”, with a stable outlook, affirming its global rating at “BB-”.

The agency noted that the revision of Petrobras’ SACP reflects the company’s sound performance, driven by growing production, solid portfolio management - in terms of investment efficiency and asset sales - and its maintenance of effective and solid governance standards (including an independent price policy aligned to international markets) that allowed it to reduce debt.

Petrobras SACP is one notch higher than its global rating, which follows the Government of Brazil’s rating, the company's controlling shareholder. In addition, the stable outlook incorporates the agency's view that current management will remain committed to its goal of debt reduction, but that Brazil’s sovereign rating caps Petrobras rating.

Petrobras Hires Santander To Revive LPG Unit Sale -Sources “The Colorado 2D survey is adding to Spectrum’s portfolio of projects in Argentina. It is in line with our growth strategy to develop an extensive 2D database for regional evaluation of these high potential offshore basins. The new seismic will be utilized to assist the Ministry in placement and design of sectors for future license rounds offshore Argentina. It is anticipated that the shelf area of these basins will be included in the second offshore license round, expected to open in 2019.

(Reuters, Tatiana Bautzer and Carolina Mandl, 19.Feb.2019) — Brazil oil company Petroleo Brasileiro SA has hired the investment banking unit of Banco Santander Brasil SA to revive efforts to sell its liquefied petroleum gas (LPG) distribution unit, four sources with knowledge of the matter said on Tuesday. Petrobras, as the statecontrolled company is known, had agreed in 2016 to sell Liquigas Distribuidora SA to local rival Ultrapar Participações SA in a process managed by the investment banking unit of Itau Unibanco Holding SA.

Spectrum will continue to work with oil companies and the Argentina government to provide high quality data ahead of future license rounds,” said Rune Eng, CEO of Spectrum.

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Petrobras Initiates Output At P76 Platform In The Búzios Field (Petrobras, 20.Feb.2019) — Petrobras started the production of oil and natural gas of P-76, the third platform to enter production in the Búzios field.

With a daily capacity to process up to 150,000 barrels of oil and compress up to 6 million cubic meters of natural gas, P-76 will contribute to the growth of the companies’ production. It is the second platform to start-up in 2019, out of a total of four planned for this year, in line with Petrobras Strategic Plan.

The Búzios field, in the pre-salt of the Santos Basin, was discovered in 2010 and is the main field under the Transfer of Rights Agreement. The field started production in April 2018, and another platform is expected to start-up this year, the P-77.

The FPSO (floating, production, storage and offloading unit of oil and gas) is located approximately 180 km off the coast of the state of Rio de Janeiro, at a water depth of 2,030 meters. The project provides for its interconnection to ten producing wells and seven injector wells. The offload of oil production will be made by relief vessels, while gas production will be drained through the pre-salt pipeline routes.

All contracts have a firm duration of three years and can be extended for another two years. The vessels allocated for the contracts are Skandi Commander, Skandi Olympia and Skandi Chieftain, all owned by DOF Rederi AS (100 % owned by DOF ASA). Each vessel will be equipped with two state of the art work class ROVs owned and operated

by DOF Subsea Group.

All three contracts are expected to commence in 2nd quarter 2019. Estimated total firm contract value is NOK 1,3 billion.

Skandi Olympia (built 2009) has been on charter with Fugro since her delivery in 2009. She was redelivered from Fugro by the end of 2018 and been idle in Norway since. Skandi Commander (built 2007) completed a RSV contract with Petrobras in November 2018 and is now working on a 60 days contract with Total in Brazil. Skandi Chieftain (built 2005) worked the 2018 season in Canada and has been idle in St. Johns since November 2018.

Before moving to Canada Skandi Chieftain worked on a long-term RSV contract Brazil.

COLOMBIA Pioneer Energy Services’ CEO Says Rig Demand Firm In Colombia (Energy Analytics Institute, Piero Stewart, 19.Feb.2019) — Pioneer Energy Services’ President and Chief Executive Officer Wm. Stacy Locke commented on the company’s operations in Colombia.

DOF Awarded Three Long-Term Contracts With Petrobras (DOF, 22.Feb.2019) — DOF has been awarded contracts for three ROV Support Vessels (RSV) with Petroleo Brasileiro S.A. (Petrobras).

In Colombia, Pioneer diversified its client base and finished 2018 with seven rigs earning revenue for five customers, the executive said in an official company statement.

“Demand has been firm in Colombia with seven rigs currently contracted, although one of the seven will not be earning revenue for part of the first quarter due to a required mast repair, but is expected to return to work in the second quarter.”

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Colombia Hopes Auction Will Add 1 Bln BBls To Oil Reserves (Reuters, 21.Feb.2019) — Colombia hopes to increase its oil reserves by 1 billion barrels by auctioning 20 possible production areas as part of its push to bolster the oil sector, the government said on Thursday.

Colombia last had an auction in 2014. The government held off recent bidding rounds because of low international crude prices, repeatedly postponing an auction that had been set to take place last year.

GUYANA

Guyana Hopes Oil Will Bring Wealth – Not Corruption And Crisis (The Conversation, 21.Feb.2019) — When ExxonMobil begins oil production in Guyana next year, mining crude from its seven new deepwater wells, life may change dramatically in this small South American country.

The mega deal is expected to increase Guyana’s gross domestic product from US$3.4 billion in 2016 to $13 billion by 2025. That’s because Guyana, one of the poorest in South America, will receive about half of all ExxonMobil’s oil revenue after the company’s exploration costs are repaid.

Eco (Atlantic) Contracts Stena Forth To Drill Offshore Guyana

JAMAICA

(Eco Oil & Gas, 20.Feb.2019) — Eco (Atlantic) Oil & Gas Ltd., along with its partners in the Orinduik Block, offshore Guyana, Total E&P Activités Pétrolières and Tullow Guyana B.V. (operator), announced they have contracted a rig, the Stena Forth, a sixth-generation drillship from Stena Carron Drilling Limited Guyana Branch, to drill the Jethro-Lobe prospect on the Orinduik Block offshore Guyana.

Holness Opens Debate On Bill To Acquire Venezuela’s Shares In Petrojam

The Stena Forth is a harsh environment, dynamically positioned Class 3 drillship, capable of operating in up to 10,000 feet of water to a maximum drill depth of 35,000 feet. The Stena Forth, which is currently drilling off West Africa, is fully crewed and is operating.

Eco Atlantic confirms that the contract with Stena secures the rig for transport at the end of May, targeting a June 2019 spud date. Further, the agreement also defines a window for a second well on the Orinduik Block, which would be drilled after the Jethro-Lobe well has been drilled. Long lead items, including the well heads and casings for two wells, have been secured and ordered.

The Orinduik partners are currently reviewing plans for a second well and anticipate formalizing those plans in the coming weeks.

(Jamaica Gleaner, Livern Barrett, 19.Feb.2019) — Prime Minister Andrew Holness has sought to explain that the move to compulsorily acquire Venezuela’s shares in Petrojam is purely economic.

Holness was speaking in the House of Representatives as he opened the debate on a Bill to take over Venezuela’s 49 per cent in the oil refinery.

“We do not take this step lightly,” Holness said, noting that Jamaica is always grateful to the people of Venezuela.

However, he said under the current circumstances, the Jamaican government cannot properly plan for Petrojam's future.

“We have been left at risk,” Holness said. “We cannot wait until Petrojam is run to the ground.”

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

TRINIDAD AND TOBAGO Touchstone Exploration Intends £3.8m UK Private Placement (Touchstone, 19.Feb.2019) — Touchstone Exploration Inc. intends to complete a private placement directed towards United Kingdom institutional investors. The company expects to raise gross proceeds of £3.8 million (approximately C$6.5 million) by way of a placing of 31,666,667 new common shares of no par value at a price of 12 pence (approximately C$0.205) per New Common Share (the Placement Price). The Placement Price represents a 4 percent discount to 12.5 pence, which was the closing price of the company’s common shares on the AIM market of the London Stock Exchange on February 18, 2019.

VENEZUELA Fire Hits Pumping Station, Disrupts Venezuela Crude Transportation (Reuters, 19.Feb.2019) — A fire hit a crude oil pumping station in Venezuela’s Orinoco belt region on Tuesday, state-owned oil company Petroleos de Venezuela (PDVSA) said, disrupting crude transportation as the cashstrapped firm struggles with the impact of U.S. sanctions.

The company intends to use the net proceeds from the Private Placement to finance the drilling of an exploration well in the Corosan west region of its Ortoire exploration property (80% working interest). Touchstone anticipates spudding the well in the second quarter of 2019 targeting a total depth of 9,000 feet.

For details of the nature and quantities of contingent and prospective gas resources targeted, see the estimates prepared by the company’s independent reserve and resource evaluators summarised in the company’s January 17, 2019 announcement.

In response to the crude oil price volatility experienced in the fourth quarter of 2018, Touchstone has held back from recommencing a development drilling program. This remains under active review, and the company expects to use cash flows from operations to finance future development drilling based on the prevailing commodity market. The company delivered average crude oil sales volumes of 1,994 barrels per day in January 2019.

CITGO Petroleum Confirms Board and Names Officers (Citgo, 22.Feb.2019) — CITGO Petroleum Corporation confirmed its newly appointed Board of Directors, which held its first official meeting today, Friday, Feb. 22. The Board includes Luisa Palacios as Chairwoman, Rick Esser, Edgar Rincón, Angel Olmeta, Luis Urdaneta and Andres Eloy Padilla.

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Together with CITGO senior leadership, the Board will work to guarantee the company’s financial and operational stability; enhance its corporate governance; and protect its assets.

“CITGO is a historic brand that provides enormous value to the American economy and the communities in which it operates,” said Luisa Palacios, newly appointed Chairwoman of the CITGO Board.

“With highly complex refineries and, more importantly, best-in-class employees that keep this company running smoothly, CITGO is – and will remain – a major player in the energy industry. This Board will be working hard to provide the stability, leadership and protection that ensures it remains so,” said Palacios.

Friday’s meeting included an intensive review of the company’s business units, which provided ample opportunity for the Board to interact with the internal management team.

The meeting included an in-depth discussion of the company's finances, operations and immediate challenges so the Board can quickly develop and implement its vision going forward.

Additionally, the Board nominated and elected several corporate officers, including unanimous approval of Rick Esser as Executive Vice President.

With the full support of the Board, Rick will immediately assume responsibility for the day-to-day strategic decisions and operations of CITGO while the company conducts an intensive internal and external search for a chief executive officer.

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