OVL and GeoPark announce strategic partnership across Latin America

ONGC Videsh, the international arm of Indian oil & gas giant ONGC, and GeoPark have entered into a long-term partnership to acquire and invest in upstream projects across Latin America. Both companies have an existing presence in the region and the partnership will help the two companies work together as a consolidator of assets to build a large scale business.

GeoPark has a sporadic portfolio throughout Latin America and has aspired to build a large portfolio. It has been semi-successful at doing so with recent growth underpinned by its Colombian position in LLA-34 (55% operator, with Parex 45%) and current production of c.30mboepd. In Chile, Argentina and Peru, GeoPark is also operator and one of the few Latin American focused E&Ps that has made an attempt at venturing beyond Colombia.

GeoPark acreage
Source: GeoPark

ONGC has a small presence in Latin America with production of c.34mboepd. It has built its position through a series of compact partnerships and assets dominated by heavy oil. ONGC aspires to build its international business noting that it announced its intention to spend USD10-12 billion in overseas acquisitions and partnerships back in 2015. It now appears to have found its niche in Latin America where it can build up a larger platform having tested the waters.

GeoPark and ONGC acreage
Source: Wood Mackenzie, OGInsights

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Tullow ventures into Peru

Tullow has farmed into Karoon Gas' 35% of Block Z-38 in Peru. This reduces Karoon Gas' interest to 40% with Pitkin Petroleum being a 25% partner.

Tullow has acquired the 35% interest in return for:

• Funding 43.75% of the cost of the first exploration well, capped at US$27.5m (for 100% cost of well) after which Tullow will pay its 35% share; and
• US$2m payable upon completion with US$7million payable upon declaration of commercial discovery and submission of a development plan to Perupetro.

Karoon has identified two prospects, Marina and Bonito, with a net unrisked prospective resources of 1.7bnbbl. Tullow will now drill the Marina prospect. Karoon Gas' 75% interest is still subject to completion of farm-in obligations which includes funding of two exploration wells.

The block has been in force majeure since 2014 and once lifted, Karoon Gas will have 22 months to complete its drilling commitment. Although the timing of drilling remains uncertain, the block is covered by high-quality 3D seismic and Marina is a potential candidate for drilling in 2019.

Separately, Tullow has concluded negotiations with Perupetro to acquire a 100% stake in offshore Blocks Z-64, Z-65, Z-66, Z-67 and Z-68.

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