Building an E&P in Colombia Outlook on Sector Funding Nathan - - PowerPoint PPT Presentation

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Jan 08, 2024 356 likes •497 views

Building an E&P in Colombia Outlook on Sector Funding Nathan Piper Head of Oil & Gas Research Preconceptions Exporting the Three Cs Confidential | Investec Corporate & Investment Banking 2 Solutions. Capital. Empowered

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Nathan Piper Head of Oil & Gas Research

Outlook on Sector Funding

Building an E&P in Colombia

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2 Confidential | Investec Corporate & Investment Banking

Solutions. Capital. Empowered people.

Preconceptions

Exporting the Three ‘C’s

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3 Confidential | Investec Corporate & Investment Banking

Solutions. Capital. Empowered people.

Reality

Stable Democracy and Economy

Became OECD member in May 2018 Established Democracy Peaceful Transitions of Power Centre Right Leadership 2016 Peace Accord signed with FARC Uribe Santos Duque

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4 Confidential | Investec Corporate & Investment Banking

Solutions. Capital. Empowered people.

The Basics

Industry started in Magdalena Basin but Llanos Basin is the key producer

2018 AVERAGE PRODUCTION PER BASIN – 0.9MB/D Bogota MAJOR SEDIMENTARY BASINS

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5 Confidential | Investec Corporate & Investment Banking

Solutions. Capital. Empowered people.

Low Cost Onshore Oil

Major Factors Attracting E&P Investment

Low Cost Onshore Oil
Low well costs (<$10m/well), quick to cash flow
Brent linked pricing
Proven Basins with Infrastructure
Over 5,000km of pipelines with spare capacity
Short Cycle
Discovery to production in months not years
Established Oil Sector
Producing since 1918
Business Friendly with Competitive Fiscal Terms
No retrospective changes to fiscal terms

Bogota

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6 Confidential | Investec Corporate & Investment Banking

Solutions. Capital. Empowered people.

Colombia’s Oil Sector within Latin America

A country with oil, not an ‘oil country’, persistently low reserve life index

Brazil and Colombia delivered greatest % growth over the past decade, following regulatory reform
Latin America accounts for ~7% global oil production

Source: BP Statistical Review, Investec

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7 Confidential | Investec Corporate & Investment Banking

Solutions. Capital. Empowered people.

Oil (and coal) remain key exports

Oil accounts for 34% of National Exports, 13-15% of tax revenue and 7% of National GDP

Source: Comtrade, Ministry of Mines and Energy

Colombia exports around 500,000b/d

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8 Confidential | Investec Corporate & Investment Banking

Solutions. Capital. Empowered people.

Oil Production Declined Dramatically

Reforms drove greater activity levels and investment

Source: BP Statistical Review, ANH, Investec

IPO Multiple licensing rounds

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9 Confidential | Investec Corporate & Investment Banking

Solutions. Capital. Empowered people.

Outlook for E&P Funding

Declining investor interest but funding still available

Equity Raised by E&Ps on London Stock Market Life Cycle of an E&P

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10 Confidential | Investec Corporate & Investment Banking

Solutions. Capital. Empowered people.

Lack of Delivery

Sector lacks scale, liquidity and share price performance

EQUITY RAISED BY UK E&PS (£M) E&P OUTPERFORMED BY FTSE250, OIL AND S&P500

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11 Confidential | Investec Corporate & Investment Banking

Solutions. Capital. Empowered people.

Conclusions

Colombia remains attractive and needs to increase activity E&P sector has to focus on shareholder returns to remain relevant Must deliver on ESG metrics Countries and companies competing for declining investment levels

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