Trinidad’s South-West Peninsula has huge potential upside for Columbus Energy (LON:CERP) says Leo Koot, executive chairman.
Talking to Proactive, Koot said he was delighted with a renegotiated deal with Bolt for acreage in the peninsula and hinted more deals are around the corner.
READ: Columbus Energy successfully restructures BOLT transaction in South West Peninsula of Trinidad on materially improved terms
The new deal will see Columbus relinquish its interest in Bolt and set up a new company, Columbus Bonasse, that owns the lease rights to the fields in the SW Peninsula.
In essence, Columbus now has a contractual relationship directly with the landowners rather than a company in-between such as Bolt, Koot said.
“This gives us way more security and control of what we are going to do.
"Until now we've been focused on production from the onshore field at Goudron in Trinidad, but now we can use its cash to focus on the SW Peninsula."
What particularly excites Koot is that the area is relatively unexplored.
Columbus has two small fields there already - Icacos, a 50% venture with Touchstone (LON:TXP), and Bonasse, which it now owns 100%.
Crucial, though, is that Venezuela is just 4Km away and the acreage is right in the middle of the East Venezuelan basin, which Koot says is the richest hydrocarbon basin in the world.
“We’ve already got good data. 3-D seismic with geochemistry and tons of gravity data that has already been interpreted.
"As a result, we have identified more than a dozen prospects, each of which has the potential to hold between 20mln and 400mln barrels individually.
"For us, that is really huge, really big, and materially different from where we were playing before," he adds
First objective will be to get Goudron producing steady cashflow.
"Next will be the reactivation of Bonasse, where a couple of more wells will be reinstated and by the end of this year, maybe early next year, we will deepen a few wells"
A couple of shallow targets within the prospects list will also be looked at followed by 'more adventurous' targets in 2019.
These are private production licences so it's a different regime from Goudron, which is an important detail, said Koot.
“At Goudron, we get paid in Trinidad dollars and we have to supply to a refinery
“Any crude we produce from the South-West Peninsula we are free to trade ourselves and get paid in US$.”
Goudron will provide enough cash for the annual work programmes, but if a deal in the tens of millions comes along Columbus would go to market.
Koot admits it is looking at deals on that scale, though a smaller deal in the SW Peninsula is likely to close first.
On track with plan
Koot joined Columbus in May last year and says the three-year plan is on track.
"We’ve restructured the debt (with the Lind deal), brought on Schroders as a cornerstone investor, nearly doubled production and the share price, while our cash flow is positive."
This new Bolt deal, though, takes the company to a new level.
“First tick was to be cash positive end of 2017. Second was growth through production additions. Third is exploration growth and now it's over to the last element of our strategy, which is transformation.”
“That means either finding a material field within the SW Peninsula portfolio or spreading our wings elsewhere.”
At 5.65p, Columbus is valued at £30mln.