World Looks To Colombia For Oil Supply

As Libya descends into civil war, it is estimated that half of Libya’s 1.6m barrels a day oil output has already been closed down.

Escalating violence in North Africa sent oil prices above $106 per barrel early this week as Western Governments consider economic and military sanctions against Libya, including a no-fly zone over the country.
 
As Moammar Gadhafi continues to unleash air assaults against his own people, the markets are now factoring in the possibility that unrest could spread to other oil producers in North Africa and the Middle East – causing further supply disruption.

In the U.S. a gallon of regular gas climbed to $3.50 – up 15 cents in a week.
Current oil price spikes are coming from an “escalation in the Libyan troubles and the large reduction in U.S. crude-oil stocks,” confirmed Matt Parry, chief economist at KBC Energy Economics.

This means that oil importers and international investors will look to other geographic regions to pick up the slack from the choked Middle Eastern supply.
At the top of that list of alternative regions is Colombia – an oil rich nation with surging production levels and low political risk.

“In the past 10 years, Colombia has gone from being nearly a failed state to becoming a very attractive destination for foreign investment,” stated a Barclays analyst in a recent report.

The Energy Information Administration (EIA) estimates that Colombia oil production will rise from 760,000 b/d in 2010 to 810,000 b/d in 2011.
 
The “Colombian Oil Rush” has already begun with an estimated $3.1 billion invested in the oil industry last year, and Colombian government predicting 1 million barrels a day production by 2012.

Much of that production is going to come from the prolific Llanos Basin. Growth investors should look for a company with staking, drilling and producing pedigree, operating in that basin.

Petroamerica (PTA-TSXV) is one company that appears to hit all the marks. With a market cap of $174 million, they have a 15% interest in a confirmed oil discovery in the Balay-1 exploration well in the Llanos Basin. The well has tested at a stabilized rate of 1,314 bbl/d of 28.3º API.

Earlier this year Nelson Navarrete – a Colombian national – took over the duties of President and CEO of Petroamerica.

Mr. Navarrete has over 24 years of oil and gas exploration and production experience through his extensive career with the State Oil Company of Colombia – Ecopetrol.

The Board also announced the appointment of Ronald Pantin to the Board of Directors.

This is significant because Mr. Pantin is the CEO of Pacific Rubiales (PRE-TSX) – the largest independent oil production company in Colombia – with a market cap of about $9 billion.

Petroamerica already has a farm-in agreement with Pacific Rubiales on the CPO-1 block, which is on trend with the Caracara fields. The Caracara fields were bought by Cepsa for $920 million in June 2008.

So PTA is making friends with heavy hitters in Colombia.

On March 7, 2011 PTA confirmed its intention to focus on the lower to medium risk exploration properties in the Llanos Basin by withdrawing from the Eastern Cordillera blocks, COR-12 and COR-14.
 
On March 9th 2011, Petroamerica announced the completion and casing of the Balay-2 ST1 well for an extensive testing program.

The original objectives of the Balay-2 well were to appraise the Balay-1 Mirador Formation discovery and to assess the hydrocarbon potential of deeper reservoirs.

The Balay-2 ST1 well bore has been logged and a probable net oil pay thickness of 50 feet has been interpreted in the Upper Mirador, compared to the 20 feet of net oil pay encountered in Balay-1.

According to the World Bank “Ease of Doing Business index”, Colombia’s ability to “protect investors” jumped 20 places in 2010 – from 25 to 5. That puts it in the top 3% of the 183 surveyed countries.

The steady removal of the Colombian “political discount” will put companies like PTA high on the radar of investors looking to profit from the mayhem unfolding in the Middle East.

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World Looks To Colombia For Oil Supply is news story from: News and Stories from Energy Editor

Crude oil was higher due to short covering overnight and is consolidates some of this month’s decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term.

If September extends the aforementioned decline, the reaction low crossing at 74.70 is the next downside target. Closes above the 20 day moving average crossing at 78.83 would confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 78.72
Second resistance is the 20 day moving average crossing at 78.83

Crude oil pivot point for Tuesday morning is 75.35

First support is Monday’s low crossing at 74.86
Second support is the reaction low crossing at 74.70

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Crude Oil Market Commentary For Tuesday Morning is news story from: News and Stories from Energy Editor

Crude oil was slightly higher due to short covering overnight and is consolidates some of the decline off last week’s high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term.

If September extends the aforementioned decline, the reaction low crossing at 74.70 is the next downside target. Closes above the 10 day moving average crossing at 80.04 would confirm that a short term low has been posted.

First resistance is the 20 day moving average crossing at 79.02
Second resistance is the 10 day moving average crossing at 80.04

Crude oil’s pivot point for Friday morning is 76.41

First support is Thursday’s low crossing at 75.52
Second support is the reaction low crossing at 74.70

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Gold was lower due to profit taking overnight as it consolidates some of Thursday’s rally. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.

If October extends the rally off July’s low, the reaction high crossing at 1220.80 is the next upside target. Closes below the 20 day moving average crossing at 1190.40 would temper the friendly outlook.

First resistance is the overnight high crossing at 1218.60
Second resistance is the reaction high crossing at 1220.80

Gold pivot point for Friday morning is1211.0

First support is the 10 day moving average crossing at 1199.20
Second support is the 20 day moving average crossing at 1190.40

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Natural gas was slightly higher overnight as it extends this week’s trading range. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

If September renews last week’s decline, May’s low crossing at 4.140 is the next downside target. Closes above the 20 day moving average crossing at 4.557 confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 4.467
Second resistance is the 20 day moving average crossing at 4.557

Natural gas pivot point for Friday morning is 4.308

First support is Wednesday’s low crossing at 4.257
Second support is May’s low crossing at 4.140

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Crude Oil, Natural Gas and Gold Market Commentary For Friday Morning is news story from: News and Stories from Energy Editor

Crude oil closed lower on Tuesday and below the 10 day moving average crossing at 80.51 signaling that a short term top has been posted. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI have turned bearish signaling that sideways to lower are possible near term. Closes below the 20 day moving average crossing at 79.08 are needed to confirm that a short term top has been posted. If September renews the rally off May’s low, the reaction high crossing at 84.50 is the next upside target. First resistance is last Wednesday’s high crossing at 82.97. Second resistance is the reaction high crossing at 84.50. First support is today’s low crossing at 79.20. Second support is the 20 day moving average crossing at 79.08.

Natural gas closed slightly lower on Tuesday but remains above support marked by July’s low crossing at 4.290. The mid range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If September extends the decline off last week’s high, May’s low crossing at 4.140 is the next downside target. Closes above the 10 day moving average crossing at 4.622 would confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 4.583. Second resistance is the 10 day moving average crossing at 4.622. First support is Monday’s low crossing at 4.313. Second support is May’s low crossing at 4.140.

The S&P 500 index closed lower due to profit taking on Tuesday while extending last week’s trading range. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If September extends the rally off July’s low, June’s high crossing at 1129.20 is the next upside target. Closes below the 20 day moving average crossing at 1100.59 would confirm that a short term top has been posted. First resistance is last Thursday’s high crossing at 1127.50. Second resistance is June’s high crossing at 1129.20. First support is the 20 day moving average crossing at 1100.59. Second support is the reaction low crossing at 1083.60.

The U.S. Dollar closed higher due to short covering on Tuesday as it consolidated some of last Friday’s decline. A late day sell off tempered early gains and the low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 81.99 are needed to confirm that a short term low has been posted. If September extends the decline off June’s high, the 75% retracement level of the November-June rally crossing at 78.60 is the next downside target. First resistance is today’s high crossing at 81.65. Second resistance is the 20 day moving average crossing at 81.99. First support is last Friday’s low crossing at 80.17. Second support is the 75% retracement level of the November-June rally crossing at 78.60.

The U.S. Dollar closed higher due to short covering on Tuesday as it consolidated some of last Friday’s decline. A late day sell off tempered early gains and the low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are turning neutral to bullish hinting that a short term low might be in or is near. Closes above the 20 day moving average crossing at 81.99 are needed to confirm that a short term low has been posted. If September extends the decline off June’s high, the 75% retracement level of the November-June rally crossing at 78.60 is the next downside target. First resistance is today’s high crossing at 81.65. Second resistance is the 20 day moving average crossing at 81.99. First support is last Friday’s low crossing at 80.17. Second support is the 75% retracement level of the November-June rally crossing at 78.60.

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Stock Market and Commodities Commentary For Tuesday Evening is news story from: News and Stories from Energy Editor

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November 29, 2010

Petroamerica Oil Corp. is focused on light/medium oil in Colombia. The Company has assembled a large portfolio of prospective oil properties in several prolific basins, and is joint ventured on some of these properties with established producers in the country.

Trading initiated on TSX Venture Exchange under the symbol PTA on October 23, 2009. PTA announced first oil discovery, Balay-1, on March 11, 2010.

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Interview with Paul Kroshko, CEO of Petroamerica (PTA-TSX) a Canadian-based junior explorer focused on light/medium oil in Colombia. PTA has assembled a large portfolio of prospective oil properties in several prolific basins, and is joint ventured with established producers in Colombia.

Mr. Kroshko was VP Exploration at Petrominerales in Colombia from May 2006 to May 2008. Prior to this he had been Latin America Exploration Manager for Petrobank. During his tenure leading the exploration initiative, Petrominerales discovered several new fields including Corcel and Mapache.

Q: Let’s start at the beginning. How does a boy from the University of Western Ontario become a legendary Latin American Oilman?

Kroshko: Let me tell you, it was a long and winding road. I got a degree in Zoology from the University of Western Ontario and went on to get further degree in geology and geophysics. During the summers I worked in the bush doing the exploration grunt work in the mining industry. Blasting trenches, living in tents, fighting off bears – all that stuff. After university I was hired by Shell Canada who had a robust training program. Later I worked in Asia, North Africa, Indonesia and South America. And I learned a lot about the process of how to find oil.

Q: Sounds like you had itchy feet. What made you continue working in South America?

Kroshko: After working several years in Nexen, I met John Wright who was the CEO of Petrobank/Petrominerales. He offered me a job as a senior geophysicist and I eventually became VP of Exploration. Colombia was relatively quiet at that time. A challenging place to operate. But I could see the potential. I learned to speak Spanish and I got hooked.

Q: At Petrominerales you had a big discovery.

Kroshko: Corcel was a significant discovery which extended the limits of the conventional Llanos play.

Q: Colombia has surged 20 places on the World Bank “Ease of Doing Business” Index. How has the Colombian business environment changed in the last 10 years?

Kroshko: In recent years a lot of positive changes have been made including improvements in security and changes in regulations. These changes have made Colombia very competitive in the international arena. Let me put it to you this way: when you sign a contract in Colombia it never has to be renegotiated.

Q: Currently about 660,000 barrels of oil flow out of Colombia every day. Do you have a prediction what this figure might be in 2 years?

Kroshko: I don’t have a crystal ball – but I’ll say this: the ANH is doing a fantastic job of encouraging foreign investment through their competitive bid rounds, and we expect to see a number of discoveries feeding back into the production output.

Q: Pacific Rubiales is a Colombian oil producer that has seen its stock rise from $2 to $29 in 2 years. You have a farm-in agreement with them on the CPO-1 block. Why aren’t they doing this work themselves?

Kroshko: Pacific Rubiales picked up CPO-1 in the 2008 bid round. For them, it’s a risk-mitigating business deal, having us pay the first $8.6 million on the seismic and first well.

Q: What’s in it for Petroamerica?

Kroshko: We get 50% of the proceeds, and access to their experience and infrastructure. Historically, these farm in agreements work well for both parties. CPO-1 is directly on a trend with the prolific Caracara fields, which were bought by Cepsa for $920 million in June 2008.

Q: And this is part of the famous Llanos Basin?

Kroshko: Yes, it’s underexplored land with great potential.

Q: Balay-1 produced 1,300 barrels a day from natural flow, and the watercut is less than 1%.

Kroshko: That is correct. On July 14 we began a six month production test under natural flow though a restricted choke which is now producing about 1,000 barrels a day.

Q: Petrobras is the operator on this well.

Kroshko: Yes.

Q: Why don’t they put a pump on it?

Kroshko: Actually there is a pump down the hole, but it isn’t turned on.

Q: Why not?

Kroshko: Because we are following a program testing sequence which includes assessing the reservoir quality, size and performance.

Q: An article in “Upstream Magazine” cited a Petrobras management source as saying Balay-1 will be capped at 15,000 barrels per day.

Kroshko: That article is speculative in nature and therefore I prefer not to comment on it.

Q: 15,000 barrels a day would be a company maker.

Kroshko: Right now Balay-1 is flowing about 1,000 barrels a day with no pump. As I said, anything else is speculation.

Q: On October 20, when your stock price was $.29, David Ricciardi of Jennings Capital initiated coverage on PetroAmerica. They’ve rated it a “Speculative Buy” with a 12-month target of $.80 – a gain of about 170%. The stock price is now $.48. Obviously Jennings Capital is bullish on PTA. What do you see as your short term catalyst?

Kroshko: The Llanos basin has a lot of oil in it. We have key properties there. We are drilling. The results of those tests will drive our stock price.

Q: What about the long term catalysts?

Kroshko: From 1999 to 2005 Colombian oil production decreased 35% due to lack of investment. There’s a backlog of exploration work waiting to be done. 50% of the explored blocks in 2009 yielded positive results. We’ve done our homework. Right place at the right time. The growth of the Colombian economy depends on increased oil production, so the regulatory environment is extremely favourable.

Q: On November 17th, PTA closed a $25 million bought deal equity financing underwritten by Raymond James, GMP, Haywood, Cannacord and Jennings. How much money has PTA raised in total?

Kroshko: A little over $90 million.

Q: You also have the backing of Endeavour, who have been instrumental in the financing of Bankers Petroleum and Pacific Rubiales.

Kroshko: Yes, Endeavour is an important relationship.

Q: You’re doing business with established operators, like Pacific Rubiales, Dyas and Petrobras. How did a new company like PTA close these deals?

Kroshko: Our key relationships flow from the pedigree of the technical team and our innovative business strategies.

Q: You’ve just appointed a new VP of Exploration, Ralph Gillcrist.

Kroshko: That is a very big win for PTA. Ralph has a long and successful history with Colombian oil exploration.

Q: How long have you known Ralph?

Kroshko: About 10 years. I’ve worked acreage in the past that Ralph has picked up. He has a PHD in structural geology; he has worked internationally and has a lot of experience in the Llanos basin. If you are developing an oil asset in Colombia, you know Ralph or know of his work.

Q: Why attracted Ralph to Petroamerica?

Kroshko: The experienced management team, strong financial backers, and the anticipation of early cash flow from the Balay discovery.

Q: According to disclosures on “Canadian Insider” recently you and Pat Klassen have been buying large blocks of PTA.

Kroshko: The geology of the land package, and the business model of the company give us enormous confidence in the stock price. Colombia is a very exciting place to be. Simply put, I’m buying stock in PTA because I have confidence in our exploration program and people implementing it.

Q: Thank you for time.

Kroshko: My pleasure.

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Interview with Paul Kroshko, CEO of Petroamerica (PTA-TSX) is news story from: News and Stories from Energy Editor

Crude oil closed up $0.01 at $78.99 a barrel today. Prices closed nearer the session high today. Bulls have the slight near term technical advantage. The next near term upside price objective for the bulls is producing a close above major psychological resistance at $80.00 a barrel.

Natural gas closed up 2.7 cents at $4.59 today. Prices closed near the session high today and saw tepid short covering in a bear market. The bears have the overall near term technical advantage. Prices are still in a six week old downtrend on the daily bar chart.

The U.S. stock indexes closed higher and near the session high today in the wake of upbeat economic data in the form of a stronger than expected new home sales report today. The stock index bulls have gained some fresh upside near term technical momentum recently and the indexes today hit fresh multi week highs.

The U.S. dollar index closed down 44 points at 82.18 today. Prices closed near the session low today and hit a fresh three month low. Bears have the near term technical advantage. Prices are in a seven week old downtrend on the daily bar chart.

Gold closed down $4.50 at $1,187.10 today. Prices closed near mid-range today in quieter trading. A weaker U.S. dollar index today did not help the gold bulls. The gold market bulls still have the slight overall near term technical advantage as trading has turned choppy recently. Prices just last month hit a fresh all time record high. However, prices are also in a six week old downtrend on the daily bar chart.

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Stock Market and Commodities Commentary For Monday Evening is news story from: News and Stories from Energy Editor

Crude oil closed lower on Wednesday as it extends last week’s trading range. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. If September extends the rally off this month’s low, the reaction high crossing at 79.97 is the next upside target. Closes below last Tuesday’s low crossing at 74.70 would temper the near term friendly outlook. First resistance is today’s high crossing at 78.57. Second resistance is the reaction high crossing at 79.97. First support is last Tuesday’s low crossing at 74.40. Second support is the reaction low crossing at 71.47.

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Natural gas closed lower on Wednesday as it continues to consolidate above the 10 day moving average crossing at 4.456. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term. Closes above today’s high crossing at 4.662 are needed to confirm that a short term low has been posted. If August resumes the decline off June’s high, the reaction low crossing at 4.108 is the next downside target. First resistance is today’s high crossing at 4.662. Second resistance is the reaction high crossing at 4.923. First support is last Thursday’s low crossing at 4.288. Second support is the reaction low crossing at 4.108.

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The U.S. Dollar closed higher on Wednesday and above the 10 day moving average crossing at 83.46 signaling that a short term low has likely been posted. The high range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are oversold but are turning bullish signaling that sideways to higher prices are possible near term. Closes above the 20 day moving average crossing at 84.38 are needed to confirm that a short term low has been posted. If September extends the aforementioned decline, the 50% retracement level of the November-June rally crossing at 82.15 is the next downside target. First resistance is today’s high crossing at 83.64. Second resistance is the 20 day moving average crossing at 84.38. First support is last Friday’s low crossing at 82.25. Second support is the 50% retracement level of the November-June rally crossing at 82.15.

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Gold closed lower on Wednesday and remains poised to extend the decline off June’s high. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term. If August extends the decline off June’s high, the reaction low crossing at 1168.00 is the next downside target. Closes above the 20 day moving average crossing at 1212.90 are needed to confirm that a low has been posted. First resistance is the 10 day moving average crossing at 1198.10. Second resistance is the 20 day moving average crossing at 1212.90. First support is Tuesday’s low crossing at 1175.10. Second support is the reaction low crossing at 1168.00.

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Crude Oil, Natural Gas, Gold and Dollar Commentary For Wednesday Evening is news story from: News and Stories from Energy Editor

Crude oil was lower due to profit taking overnight as it consolidates above the 10 day moving average crossing at 76.02. Stochastics and the RSI remain neutral to bullish signaling that sideways to higher prices are possible near term.

If August extends this month’s rally, the reaction high crossing at 79.38 is the next upside target. Closes below last Tuesday’s low crossing at 74.25 would temper the near term friendly outlook.

First resistance is last Wednesday’s high crossing at 78.15
Second resistance is the reaction high crossing at 79.38

Crude oil’s pivot point for Tuesday morning is 76.83

First support is last Tuesday’s low crossing at 74.25
Second support is the reaction low crossing at 71.09

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Natural gas was lower overnight as it consolidates above the 10 day moving average crossing at 4.451. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near term.

Closes above the 20 day moving average crossing at 4.599 would confirm that a short term low has been posted. If August renews the decline off June’s high, the reaction low crossing at 4.285 is the next downside target.

First resistance is the 20 day moving average crossing at 4.599
Second resistance is the reaction high crossing at 4.923

Natural gas pivot point for Tuesday morning is 4.506

First support is last Tuesday’s low crossing at 4.334
Second support is the reaction low crossing at 4.285

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Crude Oil and Natural Gas Market Commentary For Tuesday Morning is news story from: News and Stories from Energy Editor

Crude oil was higher overnight as it consolidates above the 20 day moving average crossing at 76.07. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

If August extends this month’s rally, the reaction high crossing at 79.38 is the next upside target. Closes below Tuesday’s low crossing at 74.25 would temper the near term friendly outlook.

First resistance is Wednesday’s high crossing at 78.15
Second resistance is the reaction high crossing at 79.38

Crude oil pivot point for Friday morning is 76.54

First support is Tuesday’s low crossing at 74.25
Second support is the reaction low crossing at 71.09

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Natural gas was slightly higher overnight as it extends Thursday’s rally above the 10 day moving average. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term.

Closes above the 20 day moving average crossing at 4.650 would confirm that a short term low has been posted. If August extends the decline off June’s high, the reaction low crossing at 4.285 is the next downside target.

First resistance is Thursday’s high crossing at 4.623
Second resistance is the 20 day moving average crossing at 4.650

Natural gas pivot point for Friday morning 4.499

First support is Thursday’s low crossing at 4.288
Second support is the reaction low crossing at 4.285

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Crude Oil and Natural Gas Commentary For Friday Morning is news story from: News and Stories from Energy Editor

Crude oil was lower due to profit taking overnight as it consolidates some of last week’s rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term.

Closes above the 20 day moving average crossing at 76.27 are needed to confirm that a short term low has been posted. If August resumes the decline off June’s high, the reaction low crossing at 70.93 is the next downside target.

First resistance is the 20 day moving average crossing at 76.27
Second resistance is the reaction high crossing at 79.38

Crude oil’s pivot point for Monday is 75.86

First support is last Tuesday’s low crossing at 71.09
Second support is the reaction low crossing at 70.93

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Natural gas was lower overnight and is poised to extend last week’s decline. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near term.

If August extends the decline off June’s high, the reaction low crossing at 4.285 is the next downside target. Closes above the 20 day moving average crossing at 4.786 would confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 4.588
Second resistance is the 20 day moving average crossing at 4.786

Natural gas pivot point for Monday is 4.399

First support is last Friday’s low crossing at 4.339
Second support is the reaction low crossing at 4.285

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Crude Oil and Natural Gas Market Commentary For Monday Morning is news story from: News and Stories from Energy Editor