Editor’s Remarks
2012, Latin America, Members' Socials and the New D&D
‘Time flies’ seems as good a cliché as any to begin the first issue of Drillers of Dealers in 2012 – it was either that or the perennial ‘What
will 2012 hold…?’. I will leave the answer to that to our contributors this month (who most certainly do not speak in clichés) and instead include a sketch of our first activity in 2012.
A few weeks ago, we were in Bogotá, Colombia to host our first ever Assembly there on the business of oil and gas in Latin America. We were excited to do so, there being no shortage of intriguing plays emerging on the continent, each with its own set of risks, rewards and business models. Here are some takeaways from the Assembly.
Colombia: There is something altogether Canadian about Colombia in terms of the makeup of the companies and nature of the market there – over a hundred independent companies drill to find small to medium resource pools in prolific basins. For all the small companies, business is good, but with only six years of proven resources in place in the whole country and with the Government turning away from the smaller independents in favour of courting the supermajors – how much long-term value can be counted on?
Perú: Perú is widely thought to possess superior geology to Colombia, but also a more exhausting permitting process and more challenging social and operational challenges. Company bosses can spend years reassuring their investors about the prospectivity of their giant blocs while they obtain the necessary permits to begin to drill in Perú. When the head of Perúpetro, Dr Ochoa, announced that a task force had been set up by the Government and promised to slash the waiting time, the audience broke into a spontaneous applause.
Argentina: Although no one doubts the theoretical potential of Argentina’s shale play, which has attracted the big boys in 2011 – ExxonMobil for example – and which has been estimated as second only to the United States in terms of shale gas potential, there is the perennial question that refuses to go away: will the Government find a way of (how to put it) destroying value for its investors? Companies have rushed into Argentina, but one wonders how big the gold rush might be if the Government didn’t have a track record of burning the fingers of its foreign direct investors. Nevertheless, the panel of CEOs discussing the issue predicted an improving fiscal regime and a continuation of M&A activity from NOCs and Supermajors.
Equatorial Margin: Tullow’s Zaedyus discovery, whose partners CGX Energy spoke at the Assembly, was not just one of the biggest E&P stories of 2011 in Latin America, but in the world.
Industry observers are familiar with the ‘unzipping’ of Africa and South America and the analogues between the massive pre-salt basins in Brazil and West Africa. But while the hydrocarbons are most certainly in place, opportunities for new entrants offshore Guyana are not currently present and it is expensive to get involved in Brazil’s pre-salt development these days. Companies like Gran Tierra and Panoro (who’s VP and CEO addressed the Assembly) have managed to get a foot in the door in Brazil and CGX Energy are a pure-play company offshore Guyana, surrounded by some very big neighbours. There was general agreement from the panel on ‘New Frontiers’ that it’s only a matter of time before a company-making Jubilee- like field is discovered in the offshore South American Equitorial margin. When that happens, it’ll be one of the most exciting news stories of the year.
Cocktail Receptions: Canadian law firm and Oil Council Partners McCarthy Tétrault and Pacific Rubiales on consecutive nights of the Assembly hosted cocktail receptions – where much of the real business of networking takes place. Around the swimming pool of the outdoor bar at the Hilton, Bogotá, fund managers, private equity investors, and American and European E&P firms scouted out local O&G companies to forge new business contacts. These drinks receptions are always a great success. We’ve added a few more into our calendar of events, which means that there is a cocktail reception coming soon to a city near you in 2012! Starting in Houston in February during NAPE week (fully booked), we will be hosting some high- quality networking receptions we call ‘Members’ Socials’ in April in London, New York in May, and Calgary in June. For more info on this and all our other activities, including a new African-focused Assembly in June in Paris.
Finally… a notice about Drillers and Dealers; You’ll have gathered that this is by far the biggest Drillers and Dealers we’ve ever produced. In 2012 we will publish Drillers and Dealers bi-monthly but triple the content in each issue. And, starting from next month, we will have a brand new look to the magazine and a new website to boot as we continue to transform D&D from little more than a pdf of assorted market commentary one year ago, to a fully-fledged industry-insider magazine for the global O&G industry with a growing circulation that now stands over 55,000 people.
I welcome feedback and comments on either the form or the content of the magazine as well as suggestions for features and articles. It is, after all, for the industry, by the industry. We hope you enjoy the current issue, and we look forward to seeing you this year – in Houston, London, NYC, Calgary, Paris, Bogotá, or any combination of the above.
By Drake Lawhead, Editor
Drillers and Dealers :::
::: February 2012 Edition
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