Colombia experienced a dramatic rise in energy production since the implementation of regulatory reforms in 2003.
An influx of international companies and investment capital has recently come into the country. Once company that joined the rush is PentaNova.
The Istanbul exploration well is 80% (Working Interest) owned by PentaNova, they have a Government Royalties of 8.0% on any Oil 6.4% on any Gas.
The well should finish drilling tomorrow, March 23, 2018. If it hits the company will build a pipeline to a major pipeline and sell the gas to a utility and cash flow will begin mid 2019. The lowest price it may ever be might have been today, March 22, 2018. We will know in a few days. USA symbol is PENYF and in Canada PNO on the tmxmoney.com site
Natural gas consumption in Colombia has grown, rising by more than 60% in the past decade. However the existing fields production is declining, so exploration is badly needed and time for replacing gas reserves is now.
The Chuchupa gas field currently producing 30% of the country’s natural gas.
Increase in natural gas demand is further supported by the mandate to use gas power in towns with a population of over 5,000.
As demand increases, supply continues to fall with Chuchupa, Colombia’s largest gas field, in decline at a rate that required more than 65 MMscfpd to come on stream every year to replace produced molecules.
Significant natural gas investment will be required in Colombia to offset the growing demand shortfall.
This means DRILLING NEW WELLS.
Favorable investment terms led to Colombia’s crude oil production doubling within the past 10 years, reaching one million bopd in 2013.
Share Prices - around $0.30 the next 4 years will see huge changes in the PRICES of COMMODITIES like NAT GAS. By 2022 the price and demand of NAT GAS will rise in COLUMBIA.
HOW TO PLAY
One strategy you can buy both SHARES AND WARRANTS, as the SHARES RISE and cover the price of WARRANTS sell the shares and wait until the Share Price hits $1.05 by 2022 and you get a free ride if you time it right.
18 Months from the Drilling of a gas well, it will be flowing gas and they will tie it to a pipeline and earn $ cash flow from the well. This increases both Shares and Warrants. When you have earned $0.10 on the Shares from .30 to .40 you can sell your shares and maintain a hold on the value upto $1.05/ share and earn the right to buy back in once the progress de-risks the projects. You have approx 4 years to the expiry on the warrants, which allow you to convert $1.05 in cash and the warrant into one share.
Warrants around $0.10 allow you to buy into the future at $1.05 with only 10% down todaty and wait until July 2022 before transacting. https://www.investopedia .com/terms/w/warrant.asp
The drop in global crude oil prices since mid-2014 has led to a slowdown in drilling activity and in new investments. You can take advantage of the lack of drilling activity by buying into the low end of the cycle nature of resource stocks and sell in later years when the cycle swings as it will.
As a result, Colombia’s oil production has been stagnant at one million bopd in recent years, and its production is expected to remain flat in upcoming years.
Natural gas investments will be supported by attractive prices that are affected by the gas supply shortfall and the LNG regasification plan pricing at Cartagena. Gas prices are expected to rise from the current level of US$5.00 MMbtu.
The Gas Price in North America
The gas price in Colombia 8,257.45 pesos. Colombian Peso per Million Metric British Thermal Unit).
If the USD falls the Peso may change, but prices of rigs and day rates may increase making costs shift over next 4 years. We can't know currency pegs for certain in next year, but the gas demand will be there for decades so if the find gas its a long term bet and a fair one.
Additionally, the lack of regional pipeline integration results in localized markets that experience upside potential during surges of high demand. For instance, gas prices reached up to US$15 – US$18/MMbtu during the last La Niña.
On May 2017 the country announced the country's largest natural gas discovery in 28 years, but stopped short of quantifying the Caribbean deepwater find or declaring it to be a commercially viable.
That discovery comes as Colombia is experiencing an ongoing decline in domestic gas reserves and output.
Earlier 2017 , the country lost its self sufficiency in gas production and was forced for the first time to import an LNG cargo from Trinidad and Tobago to a new regasification facility in Cartagena in order to meet domestic gas demand. Keep that in mind that new supply within country could be very lucrative in next few years.
At a press conference in Bogota, Santos said the deepwater well Gorgon-1, drilled by Ecopeterol and its 50-50 operator partner Anadarko, had found natural gas at a depth of 2,316 meters. The gas-bearing sand layer was measured at between 260 and 360 feet of natural gas pay. This success is what everyone is after.
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They have nat gas refill stations already as well, although small volume its a future trend to consider.
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The country has Nat gas buses for tourism and industry! [13413640_1338476189500367_1824431537440289973_n.jpg]
Gas can be exported if they find enough to export the infractructure is there now , so lets hope they find some ()