UPDATE 2-Ecopetrol, Talisman announce large oil find in Colombia

Mon Dec 9, 2013 10:50am EST

* Proven reserves in onshore find of 35 million barrels

* Second discovery announced in a week for Ecopetrol

* Find is significant boost to Colombia's low reserves

By Luis Jaime Acosta and Peter Murphy

BOGOTA, Dec 9 (Reuters) - Colombian state-owned oil company Ecopetrol and Canada's Talisman Energy Inc said on Monday they had discovered an estimated 1.3 billion barrels of oil in southeastern Colombia and that about a tenth of it was likely to be recoverable.

The announcement was the second in a week for Ecopetrol and an important addition to the diminishing reserves the country has been urgently trying to boost. The Andean nation also expects to eventually exploit shale oil and gas.

Proven reserves of the Castilla blend heavy crude with API gravity of 8 to 9 degrees are currently 35 million barrels, Ecopetrol said. That is roughly five weeks worth of production in Colombia, which produces about 1 million barrels per day.

Ecopetrol owns a 55 percent stake in the Akacias area, which covers about 5 percent of the total area of the CPO-09 block in Meta province, while Toronto-listed Talisman owns 45 percent. The companies hope to reach output of 25,000 barrels per day by 2015, up from around 5,500 barrels now, and 50,000 barrels by 2020.

"This is a significant discovery ... that I think will be beneficial to both our companies," said Talisman Chief Executive Officer Hal Kvisle. "There are significant reserves that can be booked at the proven level but also at the resource level."

He said the oil reserves were a welcome addition to the company's portfolio, which in North America was focused on gas.

Ecopetrol's Bogota-traded shares rose 0.6 percent to 4,125 pesos ($2.13) in midmorning trading, while Toronto-listed Talisman dipped 0.7 percent to C$12.45.

Kvisle said the companies had applied for environmental licensing for Akacias, a process he expected to take nine to 12 months.

Nine wells have been drilled in Akacias so far, Ecopetrol said.

SYNERGIES FOR ECOPETROL

Boosting diminishing reserves of crude oil, which stood at around 2.38 billion barrels in 2012, has been a priority for Colombia.

On Thursday, Ecopetrol said it had discovered crude in the Cano Sur Este block, which it owns in full, with proven reserves of 22.4 million barrels.

The location of the Akacias oil find would offer synergies because it is near the company's most important producing areas, which yield about a quarter of its oil, Ecopetrol said in a filing to the securities regulator.

"Akacias is one of the biggest exploration successes in recent years in Colombia, and clearly shows the potential of heavy crudes in the Llanos Orientales area, the focus of Ecopetrol's exploration campaign," CEO Javier Gutierrez Pemberthy said in the filing.

The company plans to spend $75 billion by 2020 to increase oil and gas production to 1.3 million barrels of oil equivalent per day from output of nearly 1 million boed in recent months.

Foreign investment in Colombia's oil and mining sector has risen sharply in the last few years after a decade-long U.S.-backed offensive against the country's two biggest guerrilla movements boosted security. However, FARC rebels have intensified attacks against crucial oil pipelines this year, leading to frequent interruptions to crude output.

The FARC and the government have been in peace talks initiated a year ago by President Juan Manuel Santos. Progress has been slow, but a deal would make it easier and less expensive to explore more territory for oil.

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