Success & Opportunities Will Come with EcoPetrol in ColombiaAs the CEO stated, Parex has no intention of going outside Colombia due to the capital efficiencies (low cost of exploration/production) and future potential M&A opportunites that their partnership with EcoPetrol has opened up.in the FootHills.
Again, from their last webcast transcript Q&A:
Chris Jones Haywood Securities
Hey. Thanks for taking my question. Just on potential M&A and farming opportunities, can you provide a detailed thought on M&A? Obviously, you guys executed the deal with EcoPetrol in the Foothills, but are you looking at other opportunities out there? And I know this question hasn’t been asked in a while, but I’m going to ask it here. Is there an appetite to potentially look outside of Colombia? And then just sort of high-level, what is the rationale behind a potential M&A strategy if there is one?
Imad Mohsen CEO
I was going to start by your second question. We’re not going outside Colombia. We believe in the capital efficiency and the potential of the asset in Colombia and have huge run in Colombia. On the first question, we’ve seen in the last six months more assets on offer in Colombia, specifically from EcoPetrol, than what we’ve seen in the last 12 years. These are assets that EcoPetrol has been proposing for farmers, where you pay as you go, you carry, you don’t pay up front and will deliver potentially good returns if you go in at the right levels.
Parex has looked carefully at the assets. We are focusing in particular on two types of assets, either ones that would fit our strategy in the Foothills, where you have the lower-risk, high-return exploration opportunities, but the biggest focus will be also the assets that will have low volatility, high predictability inventory of inflows, waterfloods, exploitation, that could potentially give us long running room and have a visibility on how we maintain more production growth for years to come onto the biggest Foothill upside cap. So the answer is yes, we are looking. It’s something we’ve been working with EcoPetrol on and we hope something good comes out of it.