Hupecol to divest La Cuerva interest

Scotia Waterous (USA) Inc has been retained as exclusive financial advisor by Hupecol to explore alternatives to optimize the company’s portfolio, including the divestment of Hupecol’s interest in the La Cuerva block in Colombia’s Llanos Basin.  

Highlights of the Offering:

1) La Cuerva block in the Eastern portion of the Llanos Basin consisting of ~47,950 gross acres

• 100% WI, and operated by Hupecol
• Contract consists of an 8% royalty
• Contract does not contain over-rides or preferential rights; all obligations have been met

2) Opportunity to acquire current production with significant exploration and development upside

• Production of approximately 2,900 bbl/day (June 2011)
• Targeted reservoirs, typically in the Carbonera C3/C5/C7 reservoirs found between 3,500 and 4,500 ft TVD, have excellent production characteristics

3) Net 2P reserves of more than 16.3 MMboe certified by third-party reserve engineers Petrotech with a PV-10% of  approximately US$435 million based on a 3/31/2011 effective date 

• Proved: 6.1 MMbbl oil (47% proved developed); probable and possible: 13.8 MMbbl; 3.7 MMbbl of prospective resources identified
• Widespread 3-D seismic coverage over reservoirs of excellent quality

PROPOSALS DUE: August 11, 2011

Recent deals in Colombia and valuation of La Cuerva block

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The value of the La Cuerva block is estimated to be $200-$430 million, based on

• $18-$22/2P BOE, a close comparable to the Hupecol-Sinopec deal where the 2P metric was $25/BOE. The Hupecol-Sinopec metric is discounted to account for the difference in RLI of  La Cuerva block (15 years) and Hupecol-Sinopec assets (6 years). With $18-$22/2P BOE, the value of the asset is $290-$360 million.
• $70,000/Daily BOE for the current production of 2,900 bbl/day and thereby the value of the asset to be $200 million.
• 2P-NPV10 of $435 million, as reported in Scotia's marketing flyer.

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Other opportunities available in Colombia

There are currently three other asset packages in Colombia that are available for sale. The packages are offered by InterOil and Alange Energy. The snapshots of the packages are as follows- 

Source: Derrick Petroleum E&P Transactions Database

Source Documents:

La cuerva map

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Scotia waterous marketing flyer

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