Petroamerica Expects Colombia Oil License in a Few Months

Petroamerica Oil Corp. expects to receive in “a few months” a license to operate its first Colombian oil block and is seeking funding for further expansions, Chief Executive Officer Nelson Navarrete said.

The Calgary-based company has applied to Colombia’s hydrocarbons agency to operate the PUT-7 block in the southern province of Putumayo, where it holds a 50 percent stake after acquiring Suroco Energy Inc. in July.

“Becoming an operator will give us control over certain projects,” Navarrete said in an interview today. “And it will give us access to better opportunities in future oil rounds.”

PUT-7 is adjacent to Petroamerica’s Suroriente block where a September agreement between the government and residents ended a two-month blockade that hindered oil production in the third quarter. Colombia is striving to avert the first oil production decline since 2005 amid damage to pipelines caused by the Marxist guerrillas as well as community protests.

Inhabitants in the area started the blockade July 13 to demand basic services and protest an oil spill caused by rebels, said Navarrete, a former vice-president of exploration and production with state-run Ecopetrol SA.

“The government played an important role in the agreement and has followed it up,” he said. “I think it will last.”

Petroamerica expects to produce 6,600 barrels of oil equivalent a day this year, according to a September presentation.

The company is seeking $70 million to $80 million to pay a C$35 million ($31 million) bond maturing in April and to fund production growth, Navarrete said. A share sale is not being considered. The existing notes have an 11.5 percent coupon.

“The company’s situation is very different now,” he said. “We’d want a single-digit rate for the new funding.”

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