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Global E&P Summit 2020
LatAm exploration investments: Why Latin America?
- Exploration investments and activity are coming to a worldwide historical low
- Investors should consider a counter cyclical positioning to harvest the benefits in the next high price cycle
- Latin America has distinctive benefits when considering building a position for the next cycle, compared to other regions
- Positives : Large resources, undeveloped markets and low breakeven prices
- Negatives: Political instability and high Government Takes
- Latin America could be transformed into a dominant player in the next cycle
LatAm exploration investments: Cyclical nature of E&P
LatAm exploration investments: World picture 2019
LatAm exploration investments: Why LatAm ? Oil story
LatAm exploration investments: Why LatAm ? Oil story
LatAm exploration investments: Why LatAm ? Gas story
LatAm exploration: World class E&P plays in LatAm
LatAm exploration investments: Conclusions (I)
- Largest R/P ratio (144 years) showing large undeveloped reserves volumes (Oil reserves proven 324 Bbo vs 1734 Bbo world)
- Large untapped resources opportunity (Venezuela, Brazil, Argentina, Guyana and Colombia)
- Gas consumption share much lower than world. Opportunity to develop gas markets
- LatAm offers potentially large gas resources in new gas plays (Offshore Colombia, Venezuela ..)
- Unique resource and market conditions to develop a significant position if region places right terms and use them intelligently in the next cycle
LatAm exploration investments: Exploration activity (I)
LatAm exploration investments: Exploration activity (II)
LatAm exploration investments: Capex cuts 2010 – 2020
LatAm exploration investments: Capex 2020 by company
LatAm exploration activity: High impact wells 2019
LatAm exploration investments: Price and breakevens
LatAm exploration investments: Offshore projects breakevens
LatAm exploration investments: Regional Government take
LatAm exploration investment: Conclusions (II)
- Industry perception that existing resources are enough to satisfy future demand. Possibly not a correct assumption
- Investments in exploration dropped from 45% to 5% as % of EP in 20 years. NFW wells from 1400 to less that 200 in 10 years
- Resources discovered volumes dropped from 30 to 5 BBO/year
- World average Breakeven prices for Exploration Portfolios are near $50/ bbl
- LatAm has large offshore projects (43 Bboe ) with B/E below $50
- LatAm needs to restructure Government Takes to below 50% to attract the next wave of investments
With large untapped resources and undeveloped markets, LatAm could become a major player in next cycle New favorable Gov Takes and political stability are key to the success of the region.
