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$Colombia and Latin America
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Re: Reading from tea leaves -- 2019 tea leaf reader winner is.... murdochjak! On my defend, i have reiterated here ad vomited for months, that CPO-5 is interesting asset ( btw. for 6MM acquisition costs), you get 2 discoveries producing on natural flow first 3kbpd 2 years without any decline, the second one year without any decline at 5kbpd on natural flow. Even if you recalculate that you will grab only 20% from 30% WI after taking ORRI and X-factor royalty, it looks promising. GPRK started at LLA-34 with 45% WI, but with ORRI and 20% minority interest, effectively they took somewhere about 35% net rev. before royalties ( sliding scale starting at 8%)... You know Josef, I never think of your posts as vomit. Seriously. <g> Gotta admit that the x-factor royalty on CPO-5 does not exactly excite on first glance. But maybe the 23% x-factor simply reflects the outstanding quality of CPO-5 as you argue. Besides the acquisition cost for Amerisur was inexpensive. However, if GeoPark had faced a similar x-factor royalty on LLA 34, it would have taken longer to buy out the debt partner. CPO-5's x-factor is not as high as the 29% x-factor royalty on PUT-12. I would expect GeoPark to sell off some of the Amerisur acquisition. Focus on the choicest bits. At some point if these high x-factors are deemed excessive given the current pricing environment, the total royalty hit will get factored into the block value. From the release: "ONGC brings significant operating knowledge and expertise to the CPO-5 project." Interesting. Some of the press release reads like it targeted senior ONGC people. Or IR got some interesting telephone inquiries..... I can't judge, other than ONGC's progress in Colombia has been rather slow. The bright side is that ONGC, if properly persuaded, could come up with, healthy amounts of capital to quickly advance exploration and development. Not sure about the Colombia office but would guess that across the entire organization of ONGC, there is some serious talent. The big bonus in this deal are the partnerships with Oxy. Never owned it; have not envied the location of some assets; but overall get the impression that the company is a class operator with lots of experience. Parex, Frontera, Ecopetrol/Hocol, ONGC, Oxy, it is an impressive roster of partners. Onward and upward to 100k boe/d for GeoPark. |
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