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Example of opportunity in Oil and Gas Company

The opportunity includes exploration, development, production and transportation in South area of Argentina. There are 8 exploration blocks in our files, 7 in Santa Cruz Province and 1 in Mendoza.

Once the concession was made, there has been done geological and geophysical studies in order to understand and define different plays, led and prospects in each block to estimates it oil and gas content. The blocks are:

 

 Block

Characteristics

Area (km2)

Capacity (Mm3PE)

Investment (MMUSD)

NPV (MMUSD)

A

Near Petrobras Glenn Close gas and condensated basin.

4878

4000

6.93

238.4

B

Near Fell from Geopark, who produces the 50% of petroleum and 25% of gas of Chile.

3230

12971

10.84

658.2

C

Studies to be done in the area to confirm hydrocarbon deposits.

1217

6180

13.30

323.1

D

Visible petroleum in Petrobras zone near it.

4700

9871

15.95

325.4

E

Proven oil drillings.

6600

1616

10.45

13.6

F

Gas and liquid hydrocarbons between 1100 and 2200, depth.

3450

43

6.94

0.4

G

Gas detected, visible petroleum

5147

5290

16.79

317.0

H

Close to important gas and petroleum productors.

173

2470

5.58

62.4

 

 

 

Due to the location and the proximity to companies already exploiting blocks there, the exploration risk is low.

 

Assumptions for the economic plan:

 

 

Area 1[1]

Area 2[2]

Area 3[3]

Petroleum Price (USD/bbl)[4]

70

70

70

Gas Price (USD/MMBTU)

5

5

5

Operative Costs (USD/bbl)

12

15

12

Transportation cost (USD/bbl)

2

2

2

Income Tax (%)

2

2

2

Royalties (%)

19

19

12

Infrastructure Lifetime (years)

5

5

5

 

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[1] Includes A, B, D and G

[2] Includes: C, E and F

[3] Includes H

[4] If the drilling are to be productive, the Price will be 80 USD/bbl

 

 

 

Estimated production:

 

The investment is to be done in three periods, and the participation alternatives of concessions owners are open:

 

1.    Non initial payment Agreement between parts

The investor assumes the investment on the invoice delivery on his own risk, with an assurance in the licensee name. If the drilling are find to be successful, the investment is recovered as a part of the net results. If there is no success, the investor goes out of business.

2.    Non initial payment Agreement between parts

Idem alternative 1 but the investor finances part of the development process.

3.    Others

 

 

 

An important fact of the project is the fact that the blocks are located near existing formations with shale oil and gas with a high potential to be gas and oil producers. According to the U.S. Energy Information Administration, Argentina has 13.4 trillion cubic feet of possible natural gas resources and 774 trillion cubic feet of technically recoverable shale gas resources, being the  11th and 3rd respectively in the world. As can be seen in the image below, the basins are located in the same area mentioned for the 8 blocks.