Colombia, Peru, Brazil, Argentina
The Rubiales field is a model for GTE/Conoco Phillips COP Iquitos Arch oil prospects. Rubiales 4.2 billion OIIP with a 12% recovery factor is a great operational model for new heavy oil projects in South America. If you missed PRE there is always the next large South American oil resource prospect. The next major heavy oil prospect in South America has the opportunity to start operations with enhanced oil recovery (EOR) technology, such as STAR in-situ, or THAI in-situ.
Rubiales' high porosity reservoris and cold flow from vertical and horizontal wells provides a model that allows early cash flow. Sinopec's (Emerald Energy) Capella bitumen field in the Putumayo basin is very heavy bitumen and doen't flow cold on vertical wells.
Maurel and Prom recently announced a new heavy oil discovery near the Rubiales oil field that flows 500 bopd cold flow from a vertical well in the Carbonera reservoir. The Carbonera is high quality sandstone reservoir.
If GTE / COP doesn't prove up a major new oil trend, then GTE's valuation reamins in the eight Costayaco sized propsects along the Putumayo Foothills Trend. Miraflor 1990's to Moqueta 2010, more of the same. GTE's Putumayo Trend 5 MM acres has enough exploration prospects to keep GTE exploring for light oil for many years in proven reservoirs (Caballos and Villeta) in a proven light oil trend with a proven source kitchen. Oil is trapped as it flows from the Cordilla/Andes Foothills into the foreplains.
PRE notes 12% recovery factor on 12 API bitumen in very porous reservoirs that flow cold which has allowed 20 years of heavy oil production without EOR (STAR). STAR in-situ was developed by PRE's principals who were exposed to EOR methods used in Venezuela's bitumen fields. STAR is in-situ - (fire in the hole), gas + air + fire equals heats allowing the bitumen to flow up the pipe.
GTE is risking $12 MM ($.05/share) to drill 4 exploration stratigraphic test wells into a multi-billion barrel regional play with a 5% - 10% chance of success. The $.05/share risked for GTE is a minimal investment, for such high potential return.
FMR (institutional investor) bought 24 MM shares of GTE over the past five quarters basically 5 MM shares per quarter. Institutional ownership moves the share price of these South American mid-cap oil producers. GTE has 25 - 30 analyst / brokerage houses providing coverage, so GTE is well positioned to benefit.
Since June 2010, $10 billion a month has flowed into Ecopetrol (EC) stock, increasing EC, valuation from $50 billion in June to $90 billion today, while EC's fundamentals were relatively unchanged. Since March 2009 Argentina's stock market has increased in value from 930 to over 2900. International investment dollars are flowing into Argentina's stock market, probably the same for Colombia, Peru, and Chile stock markets. I think Brazil is next to attract large inflows of international investment capital. In the near future, the stock markets of Peru Chile, and Argentina will interconnect making it easier to invest in South American emerging companies.
To summarize, outside of Brazil listed companies, and HRT Oil and Gas, Ecopetrol, Petrobras, and other major oil companies:
1) GTE has IMO one of the best light oil portfolios in South America.
2) GTE has 12 MM acres Iquitos Arch and is starting exploration of a major regional trend with the potential of 0 barrels to a couple of billion barrels. Similar potential to the Rubiales oil field 4.2 billion OIIP.
3) GTE has diversified operations and land portfolio in Colombia, Peru, Brazil, and Argentina.
4) GTE's $280 MM cash balance allows GTE to minimize financial risk.
5) GTE is positioned as a South American company that will benefits from the continued inflow of international investment capital flowing into Colombia, Peru, Brazil, and Argentina.
Considering GTE's asset diversification and pristine balance sheet,~ GTE risking $.05/share to explore a multi-billion barrel virgin regional trend (Iquitos Arch) that extends from the ITT 1 billion bbl oil field directly into GTE's 12 MM acres. Iquitos Peru is IMO about as good as it gets for ~ high impact wildcat exploration. |
