Columbus Energy Resources PLC (LON:CERP) this afternoon gave investors a broad update on its operations, including details of an upcoming well in Trinidad and a potential new venture in South America.
In Trinidad, the company is working towards the start of drilling at the South West Peninsular (SWP) in the third quarter, subject to government approvals.
The drill plans will be aided by a detailed technical report by independent geoscience specialists, due in the second quarter.
“Nearly two years since I started with Columbus, we are now almost ready to start unlocking the huge potential that exists in the SWP, an asset located just a few miles from Venezuela and part of the biggest hydrocarbon basin in the world,” said Leo Koot, Columbus executive chairman.
Koot added: “We have successfully re-negotiated the commercial terms of the SWP licences in a manner which makes them far more attractive than the commercial terms we have for the other assets in our portfolio.
“Specialist independent technical consultants have also been working with our team to de-risk the SWP portfolio and identify well locations which will allow us to carry out a suitably risked drilling campaign over the next 6-24 months.”
The SWP well will be funded from the company’s existing available resources.
Koot highlighted that it will “hopefully provide the stepping stone to an exciting and transformational drilling and development campaign.”
A possible new opportunity in South America
Columbus is, meanwhile, in ‘exclusive discussions’ over a potential new venture in a South American country.
The company noted that it follows a successful three-month tender process.
It described the project as a “low-cost entry into a discovered onshore oilfield”. Columbus, as part of its detailed work programme for the 2019-2021 period, and, the award is anticipated late in the second quarter or early in the third.
Additionally, a number of other mergers and acquisition opportunities are being considered, consistent with the company's strategy roadmap.
“This entry into another country will start the process of expanding our footprint and reducing our exposure to just one country of operation,” Koot said.
“We believe our team have the skills to enable us to unlock a number of opportunities in that country and the region.”
The existing Trinidad operation increased net cashflow marginally during the first quarter of 2019, despite lower production and lower average oil prices.
Output measured 602 barrels of oil per day in the quarter, compared to 607 bopd in the preceding three months.
The company noted that production peaked at 1,000 bopd in late January, and, it highlighted that the rate exceeded 860 bopd on three occasions during the period.
It said that rig usage and opex costs being managed carefully to reflect current commercial circumstances, and, the company continues to retain its focus on profit rather than production growth.
Columbus ended the quarter with US$2.06mln in cash.
It generated US$400,000 of cash flow in the three months, whilst gross revenues reduced by 14%.
Koot added: “We have been managing our operations in Trinidad in a different manner, focussing on optimising profit as opposed to simply growing the total production numbers.
“With lower oil prices and the impact of SPT between US$50-US$60/bbl, we have taken action to reduce our rig activity and we have also reduced operating costs in a number of other areas.
“Despite the lower production and resultant lower revenues, we have slightly increased our cash netback from operations and will look to continue to maintain a tight ship until the economic conditions and commercial terms allow us to pursue real production growth again.”