Bloomberg News has a magazine article out today about Pacific Rubiales Energy Corp. The story includes some proper on-the-ground reporting beyond official sources, which we don’t often see when it comes to the company known as PREC. Some of the article’s bullet points in bold, with my commentary in plain text.
Tanker trucks make a 4-km line outside the Rubiales field. That 4-km line shows a crucial weakness in Colombia’s oil infrastructure. Happily for that country, new pipelines are coming on to carry oil, but there’s still no plan for a pipeline to supply the heavy-oil fields with diluent. The road network is overwhelmed with these tanker trucks. In addition, the trucks drive about 200 km on a dirt road from the town of Puerto Gaitan. Thanks to a typical logjam between company, roads department and local authorities, no one has paved this road. The upshot: field workers are isolated. Instead of a 2-hour drive to town, they tolerate a 10-hour drive in the rainy season. PREC executives get to the field in 45 minutes from Bogotá in a plane.
PREC was sued May 30 by the USO union which claims that PREC union-busted and brought in a company union. Those USO claims are backed by a stack of statements from workers saying they were blacklisted or forced to renounce their USO ties in order to work at PREC.
PREC may lose control of the Rubiales field in 2016, and its proposed replacement, CPE-6, is bogged down in environmental permit problems. Wait, PREC may lose access to the Rubiales field? And CPE-6 is bogged down? Isn’t that the most important part of this story? Here’s the buried lede:
With the scheduled loss of Rubiales approaching, Pantin has targeted an adjacent area called CPE-6 as a major source of future production. Environmental regulators, in response to concerns from 37 rancher families, are requiring that Pacific Rubiales limit the number of roads it builds and restrict its use of water in the area. The environmental issues have delayed the granting of the drilling license to the company for more than a year.
Investors are skeptical about PREC’s ability to cash in on its new international efforts, but the company has something called “the Pacific effect.” Quoting Ronald Pantin, “we go to a new area, we enter, and we discover.” And with ties to BPZ, OYL.v and IOC, what could possibly go wrong?
But for all that, the best part is the headline.
Venezuelans Find Oil Bonanza in Colombia as Shares Soar
I love the word “soar.” It always reminds me of this. Here’s what counts for soaring in Bloomberglandia these days:
Hey I know someone with something to say about that.
Disclosure: I have no position in PREC or its competitors and haven’t ever worked for or been paid by anyone with a position in PREC, as far as I know.