TBY talks to Marcela Vaca Torres, Colombia General Director of GeoPark, on GeoPark's assertive moves in exploration investments, regulatory opportunities to encourage exploration, and new opportunities in shale gas and offshore resources.

Marcela Vaca Torres
As a lawyer with a degree from Georgetown University (Washington, DC) and 20 years of experience, Marcela Vaca Torres has worked for prestigious companies in the energy and mining sector, including ECOCARBON, Morgan Meguire, GHK Company Colombia, and Hupecol, prior to her move to GeoPark, where she is currently the General Director. Her extensive experience as a general and legal manager at various companies in Colombia has allowed her to lead the management of business groups such as Hupecol Group, as well as projects that develop high-impact relationships with private and public partners (Ecopetrol S.A.). In her academic career, she has served as a visiting and adjunct professor at a number of accredited universities.

What were the strategies behind GeoPark's aggressive drilling at a time when exploration investments overall have been down in Colombia?

We had a challenging 1Q2016; several activities were conducted in order to mitigate the effects of lower oil prices. In this sense and although we delayed our drilling campaign several months, it was re-started considerably earlier than many companies in oil industry. We were successful at drilling in the Jacana field, with consecutive success in three wells. We also had a workover campaign that increased our production. Consequently, the results we got were moving the boundaries of Jacana fields, extending them into the northwest and helping us achieve the target of increasing our reserves. Of course, we are happy with the results: 100% success rate in the 2016 drilling campaign, which is on the top for benchmarks in the industry. Altogether, these wells are producing approximately 2,000 barrels out of a total 34,000-35,000 bpd that we are currently operating. Therefore, Jacana field is bringing us positive results. Several tests and activities will be developed in this area in order to boost our production for 2017 and coming years.

Colombia needs an estimated USD7 billion annually over 10 years to maintain exploration operations and production levels. With a 2016 budget of USD3.5 billion, how can this gap be closed?

It will not be closed, at least not in the near future. Exploration levels have certainly fallen and, of course, reserves are getting closer and closer to their limits. Unless there are more incentives for a company to invest in this environment—including social and financial encouragement—then companies will not invest what the country requires to catch up with its needs; however, better late than never. Looking at the results of the seismic studies and the number of wells being drilled, it is unlikely there will be aggressive exploration or that there are enough economic signs from either regulators or the general financial environment for people to risk it and explore. But every company has its moment, and so despite what the rest of the industry is doing, we will continue to move forward.

What are some specific regulatory changes that would encourage investment in this field?

There are two opportunities right now, the first of which is the tax reform. This could be a game changer for the industry, considering that Colombia's stake is approximately 70%, probably the highest rate in the region. We are aware of the government's income needs, but we trust that equitable solutions are found to encourage the oil industry to continue risking in Colombia. The second opportunity is the new bidding rounds, but the new regulations and the rounds themselves have been announced for months now without much result. Once the final regulatory draft is issued, we will be able to determine our participation. We believe there are still enough opportunities in Colombia for companies of our size to move ahead.

What is your outlook for Colombia in regard to its shale and offshore resources?

Colombia needs to open new areas to exploration. Exploring the Pacific was an option, but previous rounds were not that successful. Colombia needs more offshore exploration, for which regulations has been successfully enacted. Then there is shale, which only a few companies have committed to explore. There are still regulatory, environmental, and social concerns, but if we want to continue extending the bounds of our self-sufficiency, we need to find an alternative. Shale gas seems a quicker solution than offshore although it is more expensive and much more controversial. In any case, it will not be economical until the price picks up.