Ecopetrol S.A. (NYSE: EC) reports that it has submitted the best offers for 12 exploratory blocks in the Round Colombia 2012, following the opening of bidding held yesterday by the National Hydrocarbons Agency (Agencia Nacional de Hidrocarburos, ANH) in Cartagena, Colombia.
Of the 12 blocks, Ecopetrol holds a 100% stake in six of them, and the remaining six in partnerships with Anadarko, ExxonMobil, Repsol, and Hocol. The total area of the blocks is approximately 3.1 million hectares and are located in the following basins: Llanos, Mid Magdalena Valley, Caguan-Putumayo, Catatumbo, Cordillera, and the Colombian Caribbean offshore.
In this round, the ANH auctioned blocks for exploration and production of unconventional hydrocarbons. Ecopetrol has carried out activities in this type of hydrocarbons, and yesterday's bidding should allow it to increase its strategic position in five new blocks. Ecopetrol holds a 100% stake in three blocks, and two of the blocks are held in partnership with ExxonMobil.
In conventional hydrocarbons, Ecopetrol submitted the top bid for seven blocks. In two of them, it holds a 100% interest, and in the other five, it holds jointly with Anadarko (two blocks), ExxonMobil (one block), Repsol (one block), and Hocol (one block), the latter a company of the Ecopetrol Corporate Group.
One of the two blocks in the Caribbean Offshore is held in partnership with Anadarko Colombia Company while the other is held in partnership with Repsol Exploracion Colombia S.A. These alliances with oil companies that have a broad experience in offshore exploration and production, are part of Ecopetrol S.A.'s strategy of strengthening its presence in this basin.
Ecopetrol's investment in these 12 blocks is estimated at US$370 million during the initial phase of exploration over the next three years, which includes the minimum mandatory commitments and the additional investment offered in the round.
Following the verification of documents and analysis of the information submitted by the companies, the ANH expects to award the blocks on November 26, followed by the signing of contracts between November 27 and December 21 of 2012.
We expect the results obtained in Round Colombia 2012 to strengthen Ecopetrol's strategic position, and to signal that major oil companies have confidence in Ecopetrol, which should contribute to our strategy that aims at increasing reserves and achieving production of 1.3 million by 2020.