ConocoPhillips, Canacol to look for shale oil in Colombia
BY DAN MOLINSKI
BOGOTA--Canacol Energy a Calgary, Canada, firm that operates in Colombia, said it will explore for shale oil with ConocoPhillips in Colombia's Middle Magdalena basin.
Under the terms of the deal, ConocoPhillips will pay $13.5 million in cash and carry the cost of the drilling, completing, and testing of up to 13 wells.
In a statement, Canacol said the agreement between the two companies calls for exploration and potential development of the Santa Isabel contract, one of five contracts that Canacol has interest in totaling 334,000 net acres "that expose [Canacol] to a potentially large unconventional shale oil play as supported by recent drilling results."
Texas' ConocoPhillips will get 70% of any shale oil found in the deeper areas while Canacol would retain the other 30% and keep 100% of the rights of shallower reservoirs.
The ConocoPhillips deal adds to partnerships Canacol has with two other major international oil companies, the local units of ExxonMobil and Shell.
Analysts in Colombia quickly praised Canacol's latest partnership.
"We think this is a brilliant move for Canacol," said Celfin analysts in a research note. "It is a large carry that allows the company to de-risk the block at no real cost and still allows it to have full control over anything they find that is small enough to fit in their budget."