Underexplored Landbase with Tremendous Potential
Perú is a relatively unexplored country. In 2011, Perú produced an average of 70,000 barrels of crude oil per day, over 401 million cubic feet of gas and another 80,000 barrels of natural gas liquids per day. Perú has six main hydrocarbon basins covering approximately 400,000 km2, including the world famous Camisea gas field in the Central Jungle. This limited production makes Perú a net importer of hydrocarbons, importing on average 95,000 bopd in 2011. As a result, the country has placed a high priority on closing the import gap for oil and gas.
Petrominerales is one of Perú’s largest landholders with a total of 8.2 million gross acres (5.2 million net) primarily in the Ucayali Basin, where we have interests in four exploration blocks. The Ucayali Basin exceeds 100,000 km2 and offers excellent prospectivity with multiple source rocks and reservoirs for a variety of play-types. One large gas condensate field and three smaller oil pools have been discovered in this basin to-date, from which more than 50 million barrels of oil equivalent have been produced.
Our exploration prospects in Peru are targeting large resource potential and, if successful, could significantly increase our reserve base and provide a new production platform.
In 2011, we started to explore the potential of our lands with Block 126, a large 2.6 million acre parcel where we now have a 100% working interest. In 2011, we commenced drilling and up to three-well exploration program. This program included the construction of two logistics bases on the block, one at Nueva Italia and another at Sheshea.
In 2012, we made our Sheshea oil discovery. Our discovery demonstrates: (1) that our Peruvian acreage has attributes for successful oil exploration; (2) that an active petroleum system and oil migration and trapping opportunities exist on the block; (3) the validity of our geological model and interpretations; and (4) that commercialization opportunities exist, as our light-oil discovery provides sales flexibility to maximize pricing and is located in proximity to river barge transportation.
Royalties on this block start at 5 percent.
We also hold a 30% non-operated working interest in blocks 114 and 131, where we are carried through the first phases of exploration. On Block 114, our operating partner is in the process of acquiring 250 km of 2D seismic in the south part of the block, and on Block 131 an Environmental Impact Assessment is underway. Later in 2013, our joint venture partner will drill the first of two exciting exploration prospects on blocks 131 and 141.
Royalties start at five percent on Block 114 and 23 percent on Block 131.
On Block 161, a 1.2 million acre block, we have a 100% working interest and are working on a revised EIA submission for our planned 350 kilometre 2D seismic program. We are also awaiting feedback on our first round of community workshops, and expect to be able to acquire the 2D seismic in 2013.
Royalties on this block start at 23 percent.