Cepsa buys stake in Colombia oil block
To pay USD 900 million for 70 percent of area with reserves of 40 million barrels25 March 2008
MADRID - Compañia Española de Petroleos, Spain's second largest oil company, said Monday it had agreed to buy exploration and production rights to oilfields in central Colombia containing estimated reserves of 40 million barrels of crude.
Cepsa's Colombian unit is buying Hupecol's 70-percent stake in the so-called Caracara block in the Los Llanos Basin in the centre of the South American country in an investment estimated to be worth some USD 900 million (EUR 595 million).
In a statement to the Spanish National Securities Commission (CNMV), Cepsa said the acquisition forms part of its business plan for the period 2008-2012 in which it has earmarked investments of USD 1.8 billion (EUR 1.190 billion) to increase its current reserves and output. It said the Caracara block would help offset falling output in mature production areas.
Cepsa said the Caracara block covers about 47,200 hectares and has current output of over 20,000 barrels per day. It also has significant growth potential through new investments both in terms of exploration as well as development.
The purchase of Hupecol's stake is pending authorisation by the Colombian National Hydrocarbons Agency and the state-owned oil company Ecopetrol, which will hold the remaining 30-percent stake in the block, which is to be operated by Cepsa.
Cepsa's output in Colombia totalled 253,000 barrels last year, with reserves estimated at over 1 million barrels. It currently has eight exploration and development contracts in the upper and lower reaches of the Río Magdalena Valley and in the Llanos Basin.
Cepsa said the acquisition of the Caracara block would generate significant synergies both in exploration and production with its existing operations in the basin.
The Spanish company also has an exploration and production presence in Algeria and Egypt.
Cepsa's net profit last year fell 8 percent from a year earlier, with earnings affected by the depreciation of the dollar. Its gross operating profit fell by 7 percent to EUR 1.429 billion.
[Copyright El Pais / ADRIAN SOTO 2008]