TIDMAEN
RNS Number : 2999F
Andes Energia PLC
19 February 2015
19 February 2015
Andes Energia plc
("Andes" or "the Company")
Operational Update
The Board of Andes (AIM: AEN; BCBA: AEN) is pleased to provide
an update on the Company's operating performance. Several
activities have been carried out over recent months in order to
develop the acreage, increase current production to a consolidated
production level of 3,300 boepd, grow proven and probable reserves
to 26 million boe and continue to be cash flow positive.
Highlights
-- Andes acquired 51% of Interoil in January 2015, which has
resulted in consolidated production of 3,300 boepd
-- Expanded, diverse production base of over 120 wells and 8
fields in Argentina and Colombia (1,800 boepd from Argentina and
1,500 boepd from Colombia)
-- Average prices received year to date in Argentina of US$77
per barrel and US$47 per barrel in Colombia
-- Discovery in December 2014 in Vaca Muerta in the Vega Grande
license has led to continuous production from the shale play,
transforming Andes into one of the few shale oil producers in
Argentina where we continue to develop and monetise our shale oil
resource base of more than 500 million boe
-- Andes, in partnership with YPF, has drilled one to two
development wells per month in the Chachahuen field in Argentina
during the last 12 months at a cost of US$1.1 million per well
(US$0.22 million net to Andes). To date, 60 wells have been drilled
and currently produce a total of 3,800 bbls/d of oil (760 bbls/d
net to Andes)
-- The development plan in Chachahuen has delivered outstanding
results, encouraging the partnership to commit to an additional 100
wells, for which Andes is fully funded
-- Other producing fields in Argentina (Chañares, Vega Grande,
El Manzano and La Brea) account for net 800 bbls/d and a workover
campaign is currently underway to maintain production levels
-- In Colombia, a reorganisation process is being carried out to
capture synergies with the recent acquisition and to cut costs. A
restructuring of the Interoil debt and a normalisation of
regulatory requirements have been made. Additionally, the main
Colombian producing field (Puli C) is currently undergoing
technical studies with a view to enhancing production through a
secondary recovery project and a workover program. The acquisition
of Interoil has allowed Andes to establish a strong operational
base in Colombia
-- In the last 3 months the Company has secured US$10 million of
new debt from Macquarie Capital and Mercuria, allowing Andes to
finance its organic and inorganic growth strategy
-- Higher regulated oil price environment in Argentina of US$77
per barrel likely to remain for the foreseeable future
-- In Argentina the regulated oil price environment is
structured to maintain a stable price in the domestic market
allowing local companies to maintain their cash flows and encourage
and maintain the profitable development of all onshore plays,
including shale
Alejandro Jotayan, CEO of Andes commented: "The Company is
growing quickly and sustainably. Consolidated production has
reached 3,300 boepd, with over half of the production being sold in
Argentina at an average price of US$77 per barrel. In addition, we
have 4 discoveries to date in the Vaca Muerta and are producing oil
from one of those discoveries under natural flow. We see the
current low international oil price environment as an opportunity
to grow responsibly and sustainably."
For further information please contact:
Andes Energia Nicolas Mallo Huergo, T: +54 11
plc Chairman 4110 5150
Alejandro Jotayan,
CEO T: +44 20
Billy Clegg, Head 3757 4983
of Communications
Macquarie Capital Jon Fitzpatrick T: +44 20
(Europe) Ltd Fergus Marcroft 3037 2000
Nick Stamp
Westhouse Securities Antonio Bossi T: +44 20
David Coaten 7601 6100
GMP Europe LLP Rob Collins T: +44 20
Emily Morris 7647 2800
Camarco Georgia Mann T: +44 20
3757 4986
Note to Editors:
Andes Energia is an oil and gas company focussed on onshore
South America with a market capitalisation of circa GBP150m. The
Company has its main operations in Argentina and Colombia.
The Company has 26MMbbls of conventional 2P reserves, and it
also has certified prospective resources of 659MMboe, primarily in
the Vaca Muerta unconventional formation in Argentina and 7.5
million acres across South America.
The Company has approximately 2 million net acres in
unconventional plays including 250,000 net acres in the Vaca Muerta
formation, which is the second largest shale oil deposit in the
world and the only producing shale oil deposit outside of the USA.
Over 300 wells have already been drilled and fracked in the Vaca
Muerta formation.
Andes is the only AIM quoted company on the London Stock
Exchange with exposure to Vaca Muerta.
The Company currently produces 3,300 bbls per day in Argentina
and Colombia from 6 conventional fields in Argentina and 2 in
Colombia, with positive cash flows generated. Andes Energia, with
its partner YPF, has 30 wells planned over the next 12 months,
which are fully funded by the field production cash flow.
Considerations on Argentinean oil domestic market and
regulation
Domestic oil prices in the country are not directly linked with
international price movements, and have not been affected by recent
drops in WTI and Brent levels. National and Provincial States,
together with oil producers, refiners and retail vendors formally
agreed to establish a price of US$77 per barrel for crude oil.
Argentina used to be a net oil exporter until 2008 with extensive
infrastructure available to transport oil from inland fields to the
Atlantic Ocean coast. In 2014 the country imported minimal
quantities of crude oil for the first time in 20 years, but in 2015
the supply/demand situation is expected to be balanced. All big
refiners, except one, are crude producers also, and all of them
sell the refined products domestically. Part of the refining
capacity is located inland near oil fields, at more than 1,000 km
from the Atlantic coastline, which implies a substantial transport
cost to process imported crude oil. Additionally, the country is
running with a shortage of foreign currency in the Central Bank
reserves, and companies who want to import must ask for
authorisation from the Central Bank to receive foreign currency to
pay for imports. There is, therefore, an incentive for the State to
promote the consumption of local crude oil instead of authorising
oil imports, even at a higher price than import parity, to avoid a
loss of foreign currency reserves and to incentivise domestic
production, investments, jobs and other activities.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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