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Executives

John D. Wright – Chairman of the Board

Andrea Hatzinikolas – General Counsel and Corporate Secretary

Kelly Sledz – Chief Financial Officer

Corey C. Ruttan – President and Chief Executive Officer

Petrominerales Ltd (OTCPK:PMGLF) Annual and Special General Meeting Conference Call May 9, 2013 5:00 PM ET

John D. Wright

Good afternoon ladies and gentlemen, the annual and special meeting of the shareholder of Petrominerales will now come to order. My name is John Wright, I’m the Chairman of the Board of Directors and I will chair this meeting this afternoon.

Today’s meeting will be divided into two parts, we’ll begin with the formal business of the meeting and after completing the formal business requirements, we will be happy to provide you with an overview of our operations and have a question-and-answer period.

Seated beside me today is Mr. Corey Ruttan, our President and Chief Executive Officer; Mr. John Koch, our Chief Operating Officer; Mr. Erik Lyngberg, our Senior Vice President Exploration; Mr. Jaime Valenzuela, our Vice President and Country Manager, Colombia; Mr Kelly Sledz, our Chief Financial Officer and Ms. Andrea Hatzinikolas our General Counsel, who will be acting as Secretary for this meeting.

I’d also like to introduce a few of other members of our team that are here today in person and I ask them to stand as I call their name, Ms. María Mercedes Palacio, who is our Vice President of Corporate Affairs; Mr. Jeff Chant, our Vice President Organizational Performance and Human Resources and Mr Jorge Posada our General Council Colombia. With the exception of Mr. Ernesto Sarpi and Mr Geir Ytreland who unfortunately were unable to join us today, all our Board members are presented in Calgary for this annual general meeting. I’d ask that each additional Board member present stand as I announce their name, Mr. Kenneth Mckinnon, Mr. Enrique Umana-valenzuela, and Mr. Alastair Macdonald. Thank you ladies and gentlemen.

I kindly request that [Carl Gold] Computershare act as scrutinizer for the meeting today. And I’m informed by the secretary of the meeting the proper notice of the meeting was given and I’ve instructed the secretary to retain proof of mailing of the notice with the records of this meeting. The reading of that notice will be dispensed with. Copies of all meeting materials and our corporate profiles are available at this meeting in both English and Spanish. To make the best use of our time, certain proxy holders have been asked to move and second the resolutions which we’ll consider in our set out in the course of the meeting. In order for this meeting to be properly constituted, there must be a quorum under our close of the incorporation, the quorum for the meeting is met if the holder or holders of at least 5% of the shares entitled to vote at the meeting are present in person or represented by proxy.

The scrutiny advises that a quorum is present and I request that a copy of the scrutinizer’s report be kept by the secretary with the records of this meeting. As notice as being duly given and we have a quorum, I declare this meeting is properly called and regularly constituted for the transaction of business.

Voting on the resolutions of the meeting today will be done by a show of hands or a ballot. Unless you’ve already voted, each of you who is a registered shareholder, who has not submitted a proxy should have received and completed your ballots before you entered the room and submitted them to the scrutinizer. If you are a registered shareholder who has not already voted and who did not complete your ballots and you would like to, please raise your hand now and a representative of Computershare will provide you with your ballots. It’s important to note that if you are a shareholder and have previously voted or hold your shares in a brokerage firm, no further action is required.

Okay, the first side of my business is the presentation of the audited consolidated financial statements of Petrominerales and the report of the auditors for the fiscal period ended December 31, 2012.

These audited financial statements together with the report of the auditors and management’s discussion and analysis were mail to shareholders. No action is required to be taken by the shareholders in respect to these financial statements.

I declare that the audited consolidated financial statements of Petrominerales for the fiscal period ended December 31, 2012 and the auditor report have been submitted by the shareholders have been received by the shareholders has submitted to this meeting.

The next item of the business is the election of the Directors of the corporation. In the proxy materials six nominees for election is Directors of Petrominerales have been proposed. Would the Secretary please read the names of those six persons who have been nominated?

Andrea Hatzinikolas

The Petrominerales Director nominees are as follows. John D. Wright, Alastair McDonald, Kenneth R. McKinnon, Ernesto Sarpi, Enrique Umana-Valenzuela and Geir Ytreland.

John D. Wright

Thank you Andrea. May I know how motion to elect those nominated as

Directors of Petrominerales for the upcoming years.

Alison Howard

So moved.

John D. Wright

Thank you, Alison.

Unidentified Company Representative

(Inaudible)

John D. Wright

Thank you [Agrian]. Is there any discussion. There being no discussion, we’ll proceed with the voting on this matter. If you completed a blue ballot form that you already not submitted please raise your hand and a scrutineer will come to collect your ballot.

Okay. I am advised by the scrutineer that the motion to appoint each of the nominees as Directors of Petrominerales have received votes on favor. I therefore declare the motion carried and each of the six nominees will be elected to the Board of Directors of the Petrominerales. The reported voting results will be made publicly available following this meeting.

The next item of business is the appointment of the auditors. I now ask for motion to appoint Deloitte as auditors of Petrominerales for the ensuing years and authorize the directors to fix the remuneration to be paid to the auditors. Thank you, Sean.

Unidentified Company Representative

I second the motion.

John D. Wright

Thank you, Megan. Is there any discussion? Although shareholders in favor of the motion, please signify by raising your hand. Contrary if any? I declare the motion carry.

The next item of business is the approval of an amendment to the corporations bylaws to allow for an advanced notice provision as described in the meeting material. Thank you, Joe.

Unidentified Company Representative

I second the motion.

John D. Wright

Thank you, Alison. Is there any discussion? If there is no discussion, we will proceed with the voting on this matter by ballot. If you have a completed yellow ballot form that you’ve not already submitted, please raise your hand and our scrutinizer will come to collect your ballot.

I think advised by the scrutiny of the motion to amend the corporations bylaws to allow for the advanced provision as described in the meeting material did not receive a majority of votes in favor and is therefore not carried. The report of the voting results will be made publicly available following the meeting. As a short note to our shareholders, Petrominerales propose that these advanced notice provisions as we along with governance experts are of their view of the providing reasonable time for our shareholders to consider proposed director nominees is good governance.

However, our provision did not confirm exactly in minor ways with the standard forms recently advocated by proxy advisory firms. We plan to make these minor changes to our advanced provisions and approve an amended bylaw to address this. Thank you.

The next item of business is the approval of the continuation and renewal of the corporation shareholders rights plan as described in the meeting material.

Unidentified Company Representative

So, moved.

John D. Wright

Thank you, Adrian.

Unidentified Company Representative

I second the motion.

John D. Wright

Thank you, Megan. Is there any discussion? For all those shareholders in favor of the motion please signify by raising hand. Oppose if any? I declare the motion carry. The next item of business is the approval of the amendments to the articles of Petrominerales to provide for the implementation of a share dividend program.

Unidentified Company Representative

So moved.

John D. Wright

Thank you, Shaun.

Unidentified Company Representative

I second the motion.

John D. Wright

And thanks again, Alison. Again, is there any discussion? All the shareholder in favor of the motion, please signify by raising a hand, contrary if any? I declare the motion carry. Is there any other business that anyone present wishes to bring to the attention of the meeting? As there is not further business to be brought before the meeting I’ll ask for a motion that this meeting be terminated.

Unidentified Company Representative

So moved.

John D. Wright

Thank you, Joe.

Unidentified Company Representative

I second the motion.

John D. Wright

And thank you, Megan. All those in favor please signify by show off hands. Contrary if any? I hereby declare the motion carried and this meeting terminated. That concludes the formal portion of our meeting.

Prior to the commencement of our presentation today, I would like to take the opportunity to thank a few groups here. First, of course, our shareholders for your continued confidence in our assets, our team and our strategy. I’d also like thank our Board of Directors who provide a strong strategic vision and finally, most importantly, our valuable employees who are key to our success in future growth and consistently demonstrate their commitment to our visions and values.

I’m now going to turn the meeting over to Corey Ruttan to present the informal portion and our presentation. There will be a question-and-answer period immediately following this corporate presentation. During the question-and-answer period, if you have a question, please raise your hand and a Petrominerales representative will bring a microphone to you to ensure your question is heard by all participants including those participating via the webcast. Or if you wish, you can complete the question form placed on each chair and pass it to a Petrominerales representative who will bring you a written question forward. For all of you participating by webcast, you can at anytime during the presentation click on the submit a question button on the right hand side of your screen and send us your question. Time permitting, we will attempt to answer all of the question submitted to us.

So with that, I’d like to bring up Corey Ruttan to bring up-to-date on Petrominerales.

Corey C. Ruttan

All right. Thank you, John, and thank you all for coming this afternoon. First of all, I need my clicker. We will start with the customary message from our lawyers, I certainly encourage you to read this. During the presentation, I will be making some forward-looking statements which by their nature involve uncertainty and obviously actual results certainly may differ.

So first, I wanted to spend a little bit of time reflecting on 2012 and first I wanted to start with some of our accomplishments. I think we are obviously very excited when we discovered our first oil in Peru with our Sheshea discovery on Block 126. We also had seven new oilfield discoveries in Colombia. We were able to generate close to $650 million of cash flow in 2012, mostly thanks to María Mercedes and her team, I’m proud to say that we’ve significantly enhanced our community relationships and certainly grown support for our operations in local communities. And then lastly, late last year, we announced our entry into Brazil. this is a large resource opportunity that I can say we’re excited about certainly drilling our first few wells here starting late this year.

Obviously, 2012 also had a number of challenges, I would say overall, our exploration success rates were below expectations, I would say from a strategic perspective, we focused on some higher cost, higher risk, higher reward opportunities, and frankly, they didn’t work out as well as we would have liked. that’s partly the nature of the oil business. The end net result of that was a decline in production and a decline in reserves. and at the end of the day, I know our shareholders aren’t happy with that. and I certainly known the entire management team in all of our staff are not happy with those results. I think the obvious question is okay, what are you doing about that or how are you addressing this?

John D. Wright

So introduce a little bit about our 2013 plan. first of all, I’d like to say, we’ve certainly made some organizational changes, and the target of these changes is to significantly reduce our cost structure and improve our operational performance. I think this is also allowed us to have a refocused and rejuvenated exploration effort. From a strategic perspective, we’re allocating, were creating a more balanced capital program in 2013. we’re allocating capital between exploration and development opportunities whereas in the last couple of years, it’s almost been exclusively exploration dollars. The next part of our capital program is actually to dedicate some capital to prove up two large recourse opportunities: one, in Colombia with heavy oil and the second, in Brazil with the unconventional resource that we’re pursuing there. So both of those opportunities have the opportunity to significantly increase our reserve base and it significantly expand our development drilling inventory.

From a financial perspective, we’ve completed a new reserve base lending facility a $250 million facility and we’ve initiated a process to unlock the value associated with our strategic infrastructure in Colombia. So just a little bit more on the organizational changes, John introduced the entire team earlier, just take a moment to reintroduce John Koch, our Chief Operating Officer who is appointed in February of 2013. John is a petroleum engineer with over 30 years of experience. I had the good fortune or John and I both had the good fortune of working with John at Pacalta in Ecuador in the late 90s. And we’re certainly excited to have him on board.

Secondly, another important senior change that we’ve made is we appointed Jaime Valenzuela to the position of Vice President and Country Manager Colombia, since joining Petrominerales in June of 2010, I can certainly assure you that Jaime has made an incredible contribution and I know John and I both are very happy to acknowledge Jaime in this new capacity and just as an aside Jaime also worked with us at Pacalta in Ecuador and in subsequent incarnations has worked very closely with John Koch as well.

So with John I think here is the immediate areas that we’re focused on, and this is very simple. Our goal is to drill better wells with better jobs at lower costs and the end result I think will be a better understanding of our geological results and at the end of the day we’ll have more capital to drill more wells which will give Eric and his team a much better chance of finding more oil. So that fundamentally is what we’re driving towards. I would say we’re certainly complementing our best-in-class Colombian execution team with the Western Canadian Sedimentary Basin and North American developed basin experience technology and best practices. And I think that will certainly allow us to be much better positioned as we re-enter places like Peru, and as we get started in Brazil later this year as well.

So just wanted to talk a little about the Petrominerales value proposition. I think it’s a simple yet compelling value proposition when you look at it on some of the parked spaces. The first layer, I would say we have a very high value base of production and reserves. In the first quarter, we produced a little over 22,000 barrels a day. Once again, we generated some of the world’s best operating net packs from this production over $61 per barrel. Our reserve base at the end of the year stood at over 40 million barrels and we’ve got over 110 development locations that we can be drilling on this asset base. The second part is an exploration asset that I certainly fell can’t be replicated today. We’ve got a highly perspective land base now in three countries, Colombia, Peru and now Brazil. And I think we’ve got a broad inventory of light oil and heavy oil opportunities that can drive the company for certainly a long period ahead of us.

The third layer and this is unique I think for a company our size, is we own some very highly value strategic infrastructure in Colombia. And I think this not only provides us a strategic advantage, it’s a cost advantage and with some of the recent restructuring it provides a tremendous amount of financial flexibility for us.

And then the fourth layer is especially at current share prices, we provide a very compelling dividend yield for our shareholders. So just to put this into numbers a little bit, if you look at our current evaluation based on yesterday’s closing share price. Our enterprise value sits at about $1.2 billion and certainly on any of these evaluation metrics, I would say it represents a tremendous investment opportunity right now.

So first enterprise value to annualized first quarter cash flow at three times, enterprise value per flowing barrel at just over $55,000 per flowing barrel and when you consider these are some of the most profitable barrels produced, that’s a pretty compelling metric. The dividend yield I talked about at current prices is over 8%, and certainly our enterprise value relative to our net asset value, we are trading at less than one times. So, again I think this is a really attractive time to be looking at an investment in Petrominerales.

So, talk about our 2013 capital program in a little bit more detail, I talked about the balance between exploration and development. You can see the first category. There are nine wells on the exploration side of things, eight of them in Columbia, targeting about 44 million barrels of original oil in place, and one very exciting well that’s going to be drilled in Peru by our partner, starting sometime later this year.

To complement that exploration program, we’ve got 14 additional development locations planned for this year, three of them on our Central Llanos assets at Yenac and Mantis and an additional 11 locations spread between our two incremental production contracts at Orito and Neiva and then the third layer of the capital program like I mentioned is to prove up these large resource opportunities. First of all in Brazil with tight oil opportunity where our first two wells will be drilled later this year and then in Columbia on the heavy oil asset that we’ve got, we’ve two additional horizontal wells planned for later this year.

So I think the target with the third layer is to really again help position ourselves for 2014, 2015, 2016 and really create a repeatable development leg to our capital program.

Unidentified Company Representative

So, now we’ll get into a little bit more detail on some of our assets. I wanted to start by chatting briefly about an acquisition that we completed this week. We announced it earlier this week it’s an 87.5% interest in the Canaguaro block. This sits just south of Block-25, it’s on the same false trend or fair way as our Guatiquia, Corcel and the Balay Discovery is just to the South of it, it comes with production of just over 400 barrels a day, $2.3 million barrels of 2Preserves and we see at least five locations that we can drill on this land base including two of them we have scheduled in for the second half of 2013.

On a metric basis the acquisition metrics were about were about $51,000 per flowing barreling and if you include all the future development costs the 2Preserves were acquired just over $24 a barrel and certainly you can see the little blue symbol there that’s the monetary offloading facility where we ship a good proportion of our oil and exported to the cost, we’re only about 35 or 38 kilometers away from that stations so we’re certainly able to bring a lot of marketing synergies bare with this acquisition as well. So how does that fit into our Deep Llanos portfolio, you can see a tucked in there, but we’ve got over 600,000 acres of land in the Deep Llanos fairway. Obviously, our Corcel discovery was the key to unlocking a big portion of this fairway.

Since the original discovery, we’ve made 16 different oil pool discoveries and that references a 50% success rate on an exploration basis. So I think some of the keys to that success has been we were very early adopter of using high quality 3D seismic as an exploration tool. And then you combine that with a group of very talented geoscientists and I think that’s helped us really have much better than average success rates.

From an inventory perspective the inventory was still over 50 prospects and leads in inventory and that’s a mix of Corcel type prospects and deeper higher impact of prospects in the Foothills trend here. So for 2013 we’ve got an additional 6 wells planned here as well as in the way cross hatching near on Block 25, you can see 300 square kilometers of new high quality 3D seismic and that’s targeting both the deeper Foothills trend as well as at least two prospects write on trend with our recent Canaguaro prospect or acquisition.

So resuming a little bit on Corcel in the first quarter, we produced a little over 14,000 barrels a day from this fairway here. Very happy to announce our discovery, I think certainly the exploration teams off to a good start so far in 2013.

We’re currently producing that well at rate just about 800 barrels a day from the secondary target, which was the Guadalupe formation and we have over 40 feet of net pay identified in the primary zone, which is the Mirador horizon. We very quickly moved over to drill our Taya-2 location and that’s drilling ahead now and we’ve got four additional exploration wells planned for this area for the rest of 2013, including the Guatiquia northeast and the [Cebu] prospect.

If we move on to the Central Llanos, we’ve got over 200,000 acres of land here, this is over 20% of our land base similar to Corcel. We’ve had about a 50% success rate since inception through this fairway with eight different discoveries, still have over or about 34 prospects and leads in inventory, certainly one of the most exciting things we’ve discovered to date has been our Yenac and Mantis pool which I’ll talk about on the next slide, but in our press release last night we also announced our (inaudible) discovery, so we’ve got pay or indicated pay on logs of about 54 feet through four different horizons and it certainly looks like another exciting discovery for us.

For the rest of 2013, we do have two additional wells planned and next I will focus on the development potential that we’ve got at Yenac and Mantis. So, this is just a map of what that looks like. At the end of the year, we had 4.8 million barrels of reserves booked on this. That included three development locations and we see up to eight additional development locations that we can drill here.

So, right now we’re on the Mantis 4 location. Our plans for 2013 include three additional appraisal wells and again in the white cross hatching to the south, you’ll see we’ve got 45 square kilometers of additional 3D seismic plan to try and prove up the extension of the Yenac pool to the south. So, also on the development side of things, we do have our legacy incremental production contracts, the first of which is a redo. This is 1.2 billion barrel original oil in place pool is the biggest field in Southern Columbia in the Putumayo Basin. Our production in the first quarter was just over 12 barrels a day. These are some of our higher operating netbacks, so you can see it close to $77 per barrel. 2P reserves of over $15 million barrels, and that includes 39 developmental locations and we see an additional 25 locations that we can add to the inventory.

Right now, we are in the process of completing a redo 197 and we are evaluating the redo in Orito location, which can certainly prove up a new fairway. And maybe more importantly for the long-term is, there is a tremendous amount of enhanced oil recovery opportunity here particularly through water flooding. And if you think about it a 1.2 billion barrel oil pool, we don’t need to move the recovery factors very much and we can have a significant and meaningful impact on our 2P reserves. So for the rest of 2013, we’ve got five more locations to be drilled and up to two re-completions that we’ll be doing.

Moving onto our second incremental production contract at Nueva. Our production here is little over 2700 barrels a day and this is our highest netback property. Its pipeline connected, very low operating costs and you can see over $90 a barrel of netbacks, which is quite remarkable.

The 2P reserves here is 7.5 million barrels and that includes 26 development locations and we see at least six additional locations we can drill here. Similar to redo, we feel there is a lot of enhanced oil recovery upside again through water flooding. For the rest of 2013, we‘ve got six locations planned, I think we are going to started drilling again here in June and six re-compilations identified just to start things off.

So now moving on to our heavy oil acreage, we’ve got over 760,000 acres of land here, three blocks, the fiscal regime here, our blocks have a base 6% royalty rate, and this demonstrates the importance of getting here early.

Most of our competitors who acquired land in subsequent bid rounds had to bid incremental government take or X Factor, when they were awarded those blocks. So certainly we have a distinct advantage from a fiscal perspective on the blocks where we operate.

You can see most of our activity has been focused on the western half of the Rio Ariari block. We’ve drilled I think close to 30 wells there, virtually every well has encountered heavy oil. So we certainly feel like we’ve discovered a very significant heavy oil resource. But the key for 2013 was to make sure we demonstrate the commerciality of this resource, and that’s what we’re absolutely focused on with our capital program this year.

I think we’ve had a great result with our Tatama horizontal well. This is a 300 meter long well where we’ve been producing on the latest test over the 630 barrels a day. And will talk about on the slide what our plans are for that Mochelo area.

In addition to that, we’re going to go back to our original Rio Ariari discovery well and look at drilling in a second horizontal well there. And in addition we’ve got one exploration well planned for our Chiguiro Oeste block.

So this just assumes on one small area of our Rio Ariari of representing Mochelo, you can see the small shorter thick black line there, that’s the 300 meter long Tatama horizontal well that we drilled, again over 630 barrels a day. Our plan next is to drill the Mochelo sewer well which is going to be 1000 meters long. I would say it’s certainly going to be more optimally drilled, certainly more optimally completed and we feel like that will provide the foundation for our first phase cold flow heavy oil production platform on our Rio Ariari Block.

The next well will be located; it's actually just almost immediately south and a little bit west of this around our Rio Ariari discovery. That is a vertical well that we put on long-term production test. It produced for about three months and averaged around over 150 barrels a day. So from a vertical well, that's actually a pretty good result. So I think later this year, you’ll see as follow-up on that success as well.

In this immediate Mochelo area, one thing I didn’t talk about is just this is just one small area. But we see about 86 million barrels of original oil and plays in this immediate area. So we certainly feel we’re already well on our way to unlocking what we feel is a tremendous heavy oil resource in Colombia.

So I talked about strategic infrastructure and this asset, the key to this is really about 5% ownership interest in the Ocensa pipeline. This is arguably the most valuable or strategic piece of infrastructure in Colombia. I think it will always be the lowest cost solution for getting the llanos basin crude to high-price international crude markets. One of the other significant things that happened in the first quarter was Ocensa went through a significant restructuring where they moved from a cost model to a profit model. And what that means is the tariffs on Ocensa increased and they split the ownership of Ocensa into an equity ownership piece and then the transportation rates into a separate vehicle. So, the equity ownership because of the higher tariffs is now going to receive an annual dividend and we estimate that to be up to above $30 million a year net for our share.

In addition to that, through transporting oil on the Ocensa pipeline as supposed to having the truck barrel, we can still realize about $10 per barrel savings. So, that translates into about $80 million a year. So I think just that asset alone you can see there is significant value there.

The one thing I would like to point out is that dividend stream, so, the higher tariff I just talked about, that’s been reflected through a reduction in our net present values in our reserve report. We reflected the new high tariffs and our financial results for the first quarter are operating net backs reflected those higher tariffs. But what’s not in our reserve report and wasn’t in our financial statements is this dividend stream, because we’ll record that as we receive it in the first payment scheduled for the third quarter of this year.

The second part of this asset base is close to 10% interest in the OBC pipeline; this will give us a capacity of a little over 11,500 barrels a day, similar to Ocensa, it provides a rate of return for us, it’s 10.5% rate of return and again it gives us significant savings relative to having the truck barrel, so about $5 per barrel.

So, hopefully, I’ve demonstrated that this is a pretty high value piece of business. In the first quarter, we’ve actually created a separate marketing business as a result of these assets and we generated profit of $3.3 million in the first quarter. One thing I’d say is we also announced – I talked about the financial flexibility that’s associated with these assets. We’ve launched a value maximization process here to try and really realize value from these assets while retaining the strategic benefits.

So next, let’s move on to Peru. similar to Colombia, the reason we like Peru is, it’s a great combination of geological prospectivity, and fiscal regime. We’re one of the largest acreage holders in Peru over 5 million net acres of land. We focused in on the Ucayali basin, which is in Central Peru. the reason we like this is that it’s excellent prospectivity, and the reason for that is, we’ve got a massive sedimentary column here, multiple source rocks, multiple reservoir rocks, lots of opportunities to trap hydrocarbons.

Unidentified Company Representative

Assuming a little bit on our four blocks there, so I won’t talk too much about it here. if you look at Block 126 that’s what we had our Sheshea discovery. and to put this in perspective that’s a 2.6 million acre block of land. So it’s bigger than our entire land basin in Colombia. You can see our Sheshea-1X discovery well there. I think it’s on a Peruvian standard. This is in a pretty ideal location. we’re about 8 kilometers away from a road, which is about 60 kilometers away from our barging point, and from a regulatory, for 2013, most of our activity on Block 126 will be focused on getting regulatory approvals for our next phase of activity.

And it’s really a three-pronged regulatory approval. First, to get approval for 3D seismic, next to get approval to do long-term production testing, and then also to drill appraisal wells. and that will help refine the resource estimates you see here of between 25 million and 165 million barrels in place. Secondly, you can see Block 114 and Block 131, those are two blocks where we’re partnered were 30% working interest, and our partners start growing in the first of two locations there at their cost starting in the later part of 2013.

So just to look a little closer at Sheshea. You can see the location of the well there. We tested oil from two different formations the Agua Caliente formation, just about 80 barrels a day at a fairly high water cut and what that tells you is we’re raid out the oil water contact. The next formation the Chonta formation, we’ve produced that at over 1,400 barrels a day and the most exciting thing is no water and its 53 degree API light crude.

So, I can tell you our country manager improve when we announced that there were a lot of heavy oil producers that we’re very excited about having a source of light oil this close. So again to reiterate, you can see the resource in place obviously we’ll have to refine that through delineation drilling between 25 million and 165 million barrels in place.

So next I just want to talk about Brazil. We mentioned, we enter Brazil late last year with an acquisition and yesterday we announced that we acquired an additional two blocks here, what that’s allowed us to do is pretty much tie up the entire play fairway that I’m going to talk about here and it’s called the Gomo fairway or it’s a tight oil play that we’re targeting.

Before I get into details on that, again Brazil similar to prove in Columbia the reason we like it is again it’s a great combination of geological prospectivity in fiscal regime. The base royalties in Brazil are 11% and certainly this basin is actually the oldest and largest on-shore basin in Brazil. So, I think there has been over 1.5 billion barrels of oil produced.

The other thing is in addition to this Tight Oil or a zone that we’re targeting we get to drill through all the shallow horizons that are productive through the areas. So that certainly helps mitigate our risk.

In 2013 we’ve got two wells planned and we’ve got a recompletion plant on our Bom Lugar field as well. So our goal here is to provide a proof of concept on this large resource opportunity. I think we’ve conservatively estimated about 1.2 billion barrels in place on our blocks and with success we feel like we’ve got an inventory of over 200 lower risk development locations.

If we just look real quickly at the geological perimeters here or we compare the Gomo, which in green to some of the other large resource plays that are being exploited, certainly from a reservoir quality permeability, porosity, certainly the net pays are extremely compelling and as a result the oil in place per section is pretty compelling. So when we look at even a 10% recovery factor and we’re talking about 1.2 billion barrels in place that’s 120 million barrels and that’s certainly a lot bigger than what we’ve got in Colombia right now. So we feel like our Brazilian asset has the opportunity to be the next Colombia for Petrominerales.

I touched on this earlier. I wanted to talk a little bit about our social responsibility programs. Gaining social license to operate in Colombia is of ever importance. We’ve always recognized this. We feel the key is to maintain a strong presence in the communities. We’ve established local offices in all the areas where we operate and that creates a very strong engagement both with the communities and the locally elected officials.

From the voluntary social investment perspective, I would say there is four pillars here. And the first is income generation and what that’s focused on this promoting new business and trying to create more local suppliers and frankly growing other businesses other than those that are supporting the oil business, in particular in agricultural.

The next pillar would be strengthening institutions and really simply what this is, is trying to help local governments access funds that are already there for projects they think we’re important, so we’re building capacity for those smaller municipalities to access money that’s there at the national level for their projects that they are interested in perusing.

The next is a leadership and community development and what this is really focused on is strengthening family, strengthening values and providing access to education. The fourth pillar, the environment I can assure you we’re using investing class practices and we’re involving the community in all paces of our environmental management plans and the monitoring of those plans afterwards. And to conclude this slide just real quickly our goal here is to leave a lasting influence, a lasting positive influence, long in the areas we operate long after our operations are complete and that’s really the goal of this department and I think they are doing a fantastic job.

We did announce our first quarter financial results last night as well, just real quickly the – our production was little over 22,000 barrels a day. We generated operating net bags of over $61 per barrel, the result was cash flow of a $102 million and just to reiterate that does not include any of the dividends that are effectively will be coming to as I think in the month of October later this year. So, it doesn’t include any accruals for that. With the capital expenditure level of just under $82 million that allowed us to generate over $20 million of free cash flow in the quarter. I touched on the marketing business, that’s kind of a new segment for us and that generated $3.3 million of profit for us in the quarter. I did talk about our expanded reserve base credit facility that stands $250 million. And like I said, we have launched a pipeline monetization process that together with our expanded reserve base credit facility will provide sufficient financial resources certainly for the convertible bonds that come due in August and also to create excess financial resources on top of that would be our plan.

So, just wanted to touch back on the net asset value equation in the value proposition, if you only consider the value of our 2P reserves and the cost base of the infrastructure that I talked about earlier, you get to a net asset value of about $1.2 million which translate into $14 a share, so obviously a significant premium to where we are trading today. But I think the most important thing is what’s not included in that asset value calculation? Certainly our high value exploration land base that includes 85 prospects and leads is not reflected in there.

I’ve talked about an extensive heavy oil resource that we’ve discovered in Colombia. There is no heavy oil reserves booked in our year end reserve report. Talked about the strategic value of our infrastructure and I think certainly the dividend is not reflected anywhere in our net present values or in our financial statement. And I hope I’ve demonstrated that we feel that those assets are worth significantly more than what we paid for them. Next our light oil discovery in Peru, not reflected in our reserve report and then lastly the rest of our land base in Peru with 20 identify prospects and leads is also obviously not recognizing our reserved report.

And then the last piece is obviously our extensive resource opportunity in Brazil that we’re very excited about and hopefully we can prove to our shareholders are show that as the year goes on, I can assure you we’re all very focused on unlocking the value associated with each of these items that’s currently not reflected in our share price.

So, comes close to wrapping it up. I just want to reiterate that I certainly feel like we’ve got an enviable land base in Columbia, Peru and now Brazil. I think it’s some excellent prospectivity under the best available fiscal terms and when you combine that with some very high value, strategic infrastructure, it’s an asset base that in my mind, you can’t replicate.

And just before I conclude, I just wanted to little bit about what our shareholders can expect for 2013 and try and summarize what I talked about before. So, first of all, we’re going to execute a capital program that’s more balanced between exploration and development and our target with that program is to modestly grow production and reserves, but at the same time, we’ll be investing in proving the commerciality of some large resource opportunities in Brazil and in heavy oil in Columbia that will position us for the future along the way, we’re very focused on the pipeline monetization process and I think that will significantly strengthen our balance sheet and expand our financial resources and along the way, we’re going to pay our shareholders an 8% dividend. So, I think it looks like a pretty exciting year and certainly at this valuation point, it’s very attractive entry point for our shareholders.

And lastly, I know John already did this, but I wanted to reiterate certainly a sincere thank you to our employee group for their dedication, hard work and continued commitment in driving the company forward.

I wanted to also thank our Board of Directors for their strategic direction and vision, and again to our shareholders for their support and continued confidence in our asset base, and our newly expanded team.

And I think, with that I’d love to turn it over for a question-and-answer period.

Question-and-Answer Session

Unidentified Analyst

Hi, [Bill Manalak] a shareholder. Could you remind me what you said there about your drilling practices, and there was something with them, and you are going to improve them?

Corey C. Ruttan

No. I just said that what we were – let John finish the answer to this question, what I was saying is that, we’re focused through some of the changes we've made, I can tell you John’s very focused on basically bringing our entire cost structure down, and how are we going to do that, is we're going to drill better wells smelt jobs and better completions. And if we can do that, that means a cheaper well, not cheaper necessarily, a better drilled well at a lower cost and that will give us more capital to drill more wells, that was my point was that comment. And John I don't know if you'd like to add to that?

John Koch

Sure. Yeah, in the (inaudible) Colombia most of the operators have experienced challenges in drilling wells with zone isolation in these multiple zones, and we’re very focused on that we’re changing our well designs and our fluid programs to resulted better isolation between the reservoirs which gives us reduced testing costs and better production results.

Unidentified Company Representative

Well, we’ve been drilling wells there long-time now. So we can always feel better.

Unidentified Analyst

Why weren’t they better before?

Unidentified Company Representative

Yeah. No I think this is I think one of our core values centers around continuous improvement, learning from our past practices and I will never stop trying to drill cheaper wells I can assure you and that’s the natural evolution of every basin. And I think if we can drill wells for less than our competitors we have a significant competitive advantage and we can target different prospects as a result so that will always be our focus.

Unidentified Company Representative

Well, I’m not nearly so much concerned about them being cheaper as them being adequate to do the job do you drill them for.

Unidentified Company Representative

Yeah, better less expensive and that’s the combination of those two things.

Unidentified Analyst

And you spoke about your net asset value being $1.2 million or $4 million.

Unidentified Company Representative

$1.2 billion, yes.

Unidentified Analyst

$2 billion pardon me. Is that before the debt?

Unidentified Company Representative

So what that basically reflects the adjustments for working capital so it’s meant to represent market cap the comparison to market capitalization in the market so market capitalization it comes out to share price of about $14 relative to the roughly $6 share price that we have in the market right now.

Unidentified Analyst

While the net asset value that you spoke out is that the engineering reserves evaluation before tax 10% discount?

Unidentified Company Representative

Yes, so what this is – it’s our engineered NPVs plus the cost base of our infrastructure assets and then adjusted for working capital and debt to get to a net asset value.

Unidentified Analyst

Okay, thank you

Unidentified Analyst

Good afternoon. This is [Mattias] I am a shareholder. Corey, a great presentation and could you expand a little bit on some of the thoughts or conversations you had with the Board regarding evaluation and what does that disconnect right now with capital markets. I believe there’s been a lot of selling in the U.S. I didn’t know if that was the case for instance with this ownership was 30% U.S. though it is 10% now, that’s the latest I have, but just please let me know what – one of the possible explanations behind that. Thanks.

Corey C. Ruttan

Thank you [Mattias] certainly from a capital perspective I would say you are the – one of the experts on the capital market side of it, so but all attempted, I’d say from a capital market perspective overall the environment is very risk averse right now. So, when you are an exploration weighted company in Latin American country, that’s one factor I would say for sure. I think the other factor frankly, we didn’t have a great 2012 and we need to show a track record of operational success, exploration success I think with our Orito result and our (inaudible) result we’re showing great strides there. I think certainly proving up heavy oil in Brazil will be very important for our shareholders, so that from an operational perspective, I think we need to show some positive operational momentum and I think again we’re well on our way there. From a balance sheet perspective in that risk adverse mind set, I would say people get very fixated on things like we have a bond maturity in August while we also have an expanded reserve based lending facility and we have some very high value infrastructure assets.

So we’re very focused on that, I think once that is doubt with once in for all our concentrate, I think that again creates a revaluation moment, not only because of the perceived issue on the balance sheet, but also a better recognition for what the true value of those assets are. I think those are probably the biggest things that are contributing to it right now. Thank you. Do we want to take one from the webcast well everyone on the floor thanks.

Operator

Sure. Our first question on the webcast comes from Matthew Patel and this is a question for Eric, who asks [Onaradido], what sort of upside potential do you see from water flooding on the field and how should we think about incremental F&D cost for the secondary recovery?

Unidentified Company Representative

Currently, the recovery efficiency of the reservoirs at the (inaudible) is around less than 25%, 1 billion barrels plus of oil in place. So every 1% incremental increases in recovery from that a significant amount of volume to our reserves base. In order to achieve that we’re currently working on a detailed reservoir model and engineering to refine the drill cost and the secondary recovery techniques. Do you want to add anything?

Erik Lyngberg

That’s it.

Unidentified Analyst

Thank you.

Unidentified Analyst

Thanks, Erik We can address a couple of more questions from the website, a group of few together on heavy oil, can you talk about the potential recoverable resource you see across your Rio Ariari heavy oil block, assuming your new completion allows to successfully develop other structures?

Unidentified Company Representative

Yeah, so with 10% recoveries, we’re looking at over 100 million barrels recoverable across this area of the block.

Erik Lyngberg

Yeah, we’ve identified significant resource that’s outside of the Mochelo area, and the Mochelo’s results are proving the commerciality aspect through the production at the horizontal. And then we are expanding that to other areas in the field starting this year with the other two horizontal wells that we’ll be drilling.

Operator

Thanks, Erik. A follow-up question from the webcast on our heavy oil assets is on Rio Ariari, what is the API and viscosity of the crude being produced at Tatama? What do you think the EUR will be on this well?

John Koch

Yeah, so the crude that we’re producing at Tatama is 10 degree API. The viscosity of the crude is about 700 centipoise at reservoir temperature, which is 165 degrees Fahrenheit. The well has produced about 50,000 barrels to date and given the configuration of this well bore, which is a short horizontal with some mechanical damage in it, we estimate this well to come about 80,000 barrels.

Operator

Thanks, John. Do we have any more questions from the audience or should we proceed with some more from the webcast?

Unidentified Analyst

Hi, what price are you receiving for that Tatama crude?

Unidentified Company Representative

So in the first quarter, we recognized about $1.3 million call it net sales of the Tatama test volumes, so when you look at the Brent marker price of brand was about a $112 million taking off discounts trucking daily rent and royalty we netted close to $60 a barrel before operating costs in the first quarter.

Unidentified Analyst

For operating?

Unidentified Company Representative

They are for operating cost, yes.

Unidentified Analyst

That’s all I got.

Unidentified Company Representative

Yeah. Back to the webcast, please.

Operator

Great, this is a question from David (inaudible) and it’s for Kelly he asks how do announcements from Total and Talisman that they wish to sell their stakes in Ocensa affect your attempts to monetize this asset?

Kelly Sledz

Yeah I think it’s important the understand the Ocensa assets, there is two assets within that. There is the equity ownership the 5% ownership in the equity which entitles the owner to dividend stream and there is transportation rights which allow the AMP producer of the owner to move the barrels of oil. So as far as I know those shareholders of Ocensa are expressing interest in selling only the equity piece. We are considering monetization of both some of the transportation rights and equity, so on the transportation piece there will be no impact. On the equity side, I think when you look at the types of buyers for this asset I think that, they would be interest in a large positions, so I don’t see that as impacting our process.

Operator

Thanks Kelly, we have one final question from the webcast today and it comes from Mike Smith, who asks please discuss Petrominerales outlook for your dividend.

Corey C. Ruttan

Yeah, we have not had any discussions about changing our dividend policy, I think compared to a lot of the Western Canadian producers who are paying out large portions of their cash flow and dividends. Our dividend represents just over 10% of our cash flow, so it's in our view pretty sustainable as approved at today's shareholder meeting we have introduced the share dividend plan as well. So that allows shareholders the flexibility to receive dividends in cash or to receive them in shares.

Andrea Hatzinikolas

Thanks Corey. We have no further questions from webcast.

Corey C. Ruttan

We have anything else from the floor? The executive team will be around afterward if anyone has questions they come to them afterwards, and once again I’d like to reiterate thank you to our employees, thank you to our directors, and thank you to our shareholders, and thanks again for attending today. We look forward to updating you through the year on our progress. Thank you.

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