URUGUAY ROUND 3

BEIJING, 25TH OF SEPTEMBER 2017

M. ENG SANTIAGO FERRO

EXPLORATION & PRODUCTION

ANCAP

Index

• ANCAP: NOC of Uruguay

• Recent E&P activity in Uruguay

• Exploratory Potential of the Offshore Basins

• Uruguay Round 3

• Final Remarks

Index

• ANCAP: NOC of Uruguay

• Recent E&P activity in Uruguay

• Exploratory Potential of the Offshore Basins

• Uruguay Round 3

• Final Remarks

Uruguay: a reliable country

Source: Uruguay XXI

Above ground risks minimized

• Vertically integrated Oil Company

• ANCAP is the agency competent to manage the activities, business and operations of hydrocarbons industry, by itself or by third parties

• ANCAP will sign with the Oil Company the Exploration-Exploitation Contract after approval and on behalf of the República Oriental del Uruguay Executive Branch

PETROLEUM

COMPANIES

ANCAP as facilitator

SERVICE COMPANIES STATE AGENCIES

COMUNITY

PRESS OTHER COMPANIES

ACADEMY

MVOTMA: DINARA, DINAMA MIEM: DNE, DINAMIGE, DNI

MEF MUNICIPAL AUTHORITIES

ANP (PORT) CUSTOMS

NAVY/COASTGUARD URUGUAY XXI

MEC: UDELAR, ANII , PEDECIBA, ANEP. UNIVERSITIES AND INTERNATIONAL INSTITUTIONS

SCHOOLS, NOGs, LOCAL NEIGHBOURHOOD BOARDS, UNIONS

NATIONAL & INTERNATIONAL

PORT LOGISTIC SERVICES LEGAL FIRMS CUSTOM BROKERS

Index

• ANCAP: NOC of Uruguay

• Recent E&P activity in Uruguay

• Exploratory Potential of the Offshore Basins

• Uruguay Round 3

• Final Remarks

E&P activity timetable in Uruguay

Present Day Oil & Gas Map of Uruguay

Multiclient Agreements in force

Spectrum: 10400Km of 2D seismic PGS: 15700Km2 of 3D seismic

ION: 9800Km of 2D seismic Robertson: 2 geological reports

FIT: Fluid Inclusions Study of Lobo and Gaviotin wells

Schlumberger: Advanced Interpretation Data Package

AGI: micro-seeps detection of hydrocarbons into sediment samples

TGS: Well Logs

Several MC agreements under discussion or process of approval

2D and 3D Seismic offshore

12

2D Seismic before 2007: 13.000Km Present 2D Seismic: 41.000Km

3D Seismic before 2012: 0Km2 Present 3D Seismic: 39.500Km2

Exploratory well in ultra-deep waters Challenge: more than 40 years after last offshore wells drilled

http://www.offshore-mag.com/content/dam/offshore/print-articles/volume-77/05/2017-DeepwaterPoster-D6-Ads.pdf

3,404 m Water Depth

Raya Well

• 100 days of operation: on time and budget

• Complex Logistics on Port

• Construction of Mud and Cement plants

• Imports and Exports authorized by ANCAP and DNA in coordination

• Success from operational, HSE, drilling engineering, etc point of views

• 2 people from ANCAP – E&P on board during whole operation

Investment in Exploration of Hydrocarbons 1017MMUS$ since 2007; 14MMUS$ by ANCAP, 736MMUS$ by Oil Companies operating in Uruguay, 66MMUS$ by other IOCs and 200MMUS$ by Service Companies

(*) Values updated to September 2016 based the Consumer Price Index published by the Bureau of Labor Statistics of USA.

Index

• ANCAP: NOC of Uruguay

• Recent E&P activity in Uruguay

• Exploratory Potential of the Offshore Basins

• Uruguay Round 3

• Final Remarks

Tectonic and structural framework of the continental margin of Uruguay

Offshore Uruguay basins

Three offshore basins are recognized in Uruguay: Punta del Este Basin to the west Pelotas Basin to the east and Oriental del Plata Basin at ultra-deep waters. At shallow area, Punta del Este and Pelotas are separated by the Polonio high, and at deeper waters they are individualized by a NW-SE trending structure called the Rio de la Plata Transfer System.

Punta del Este basin

Pelotas basin RAYA-1

Play types

A

B C

D

D

D

E

A) pre-Rift Plays (pre-Cretaceous) B) Synrift Plays C) Transition Carbonate Plays

D) Post-Rift Cretaceous Siliciclastic Plays E) Post-Rift Cenozoic Siliciclastic Plays

Index

• ANCAP: NOC of Uruguay

• Recent E&P activity in Uruguay

• Exploratory Potential of the Offshore Basins

• Uruguay Round 3

• Final Remarks

Purpose

ANCAP is calling Oil Companies interested in carrying out exploration and exploitation of Hydrocarbon activities in the República Oriental del Uruguay Economic Exclusive Zone, under Production Sharing Agreements

Offered Areas AREAS TYPE I

AREAS TYPE II

AREAS TYPE III

Schedule

ACTIVITY DATE

Official Announcement 18 September 2017

Submission of Intention Letter and

documents for the Qualification of Oil

Companies.

From 18 September 2017 to 6 April

2018

Notification of Qualification of Oil

Companies Until 13 April 2018

Inquiries and clarifications Until 13 April 2018

Answers to Inquiries and

clarifications. Until 20 April 2018

Submission of proposals. From 22 April 2018 to 26 April 2018

at 14:00, Local time.

Opening of proposals. 26 April 2018 at 15:00, Local time.

Promotion Activities

HOUSTON Official Announcemnt 18/9 Data Rooms: 18/9 – 23/9

SEG ANNUAL MEETING HOUSTON

24/9 – 29/9

AAPG ICE LONDON

15/10 – 18/10

LONDON Road Show: 20/10 Data Rooms: 18/10 – 24/10

HOUSTON Presentation at IAPGH Meetings and Data Rooms

November 2017

NAPE WINTER SUMMIT HOUSTON

5/2/18 – 9 /2/18

APPEX GLOBAL 2018 LONDON

27/2/18 – 1/3/18

MONTEVIDEO Meetings and Data Rooms to be arranged at any time

with ANCAP. 18/9/17 – 20/4/2018

Qualification of Oil Companies

Documentation to be submitted

• Legal aspects

• Financial aspects – Equity

• Technical aspects – Offshore operations

– Production

– International Experience

• Top 100: Ranking The World’s Oil Companies only legal documentation

Result

• Operator / Non Operator

• Areas Type I / Type I and II / Type I, II and III

• For the Exploration Period / Exploration and Exploitation Periods

• Number of areas for which company can submit offers related to the equity.

Only qualified companies can submit offers and can do it only under the conditions they have been qualified.

Comparison of offers

Exploratory Program (40%)

• Wells, 2D and 3D seismic, EM, geochemistry over seabed samples, re-processing of ANCAP’s seismic

• Licensing existing data

• Minimum exploratory program tailored for each block (very low).

• No mandatory drilling in the first exploration period

Economic Terms

• % of profit oil split (40%) – Ranges based on an R factor

– R = total income / total expenditures

• ANCAP’s Association (20%) – Maximum ANCAP’s

association will be biddable, offered by the Oil Company (20% - 40%)

Available database

Data that can be licensed directly from ANCAP

• Vintage Datapackage

• UR07 2D Seismic

• UR08 2D Seismic

• UR2011 2D Seismic

• UR3D Seismic

Data that can be licensed from Service Companies • AGI

– Micro seeps detection program

• CGG / ROBERTSON – 2 Geological Reports

• ION – UruguaySPAN 2D Seismic – Uruguay Repro 2D Seismic

• PGS – UR12 3D seismic

• Schlumberger / FIT – Fluid Inclusions in Lobo and Gaviotin

• Schlumberger – Advanced processing ofUR2011 2D Seismic

• Spectrum – UR02 2D Seismic – UR13 2D Seismic – UR14 2D Seismic

• TGS – Well logs

Main features of Contract Model

• PSA: Production Sharing Agreements for which Contractor assumes all risks, costs and responsibilities of the activity. – No royalties are applied – No signature or production bonuses. – No surface rentals – No taxes paid to provinces or municipalities – No Ring fencing inside the contract area

• PARTIES’ OBLIGATIONS – Contractor: Perform on behalf of ANCAP all Oil operations

(exploration, devolpment, exploitation, supplementary and ancillary operations) in the area allocated.

– ANCAP: Pay Contractor its compensation and assist it in the fulfillment of its obligations.

Contract Term

• 30 years which can be extended to 40 years • EXPLORATION: maximum 9 years (3 + 3 + 2 + 1) for Areas

Type I and II, and 11 years (4 + 4 + 2 + 1) for Areas Type III – Basic Subperiod: Comply with the Committed Exploration

Program (PEC). Guarantee: 10% of PEC. PEC is biddable – Supplementary Subperiod: Comply with the Agreed Exploration

Program (PEA) (at least one exploratory well). Guarantee 5% of PEA.

– Extension Subperiod: Comply with the Agreed Exploration Program (PEA) (at least one exploratory well). Guarantee 5% of PEA. Relinquish 30% of the area.

• EXPLOITATION: 25 years subject to maximum contract term. Guarantee: 5% of investments.

Contractor’s Economy

• Contractor’s compensation in kind – Cost oil

• Recovery limit 60% in case of oil production and 80% in case of natural gas production for Areas Type I and II, 70% in case of oil production and 90% in case of natural gas production for Areas Type III

• Costs recovered quarterly and investments recovered in 20 quarterly installments.

– Profit oil • Variable according R factor. Profit oil split is biddable.

• Contractor has the right to freely dispose hydrocarbons warranted from its compensations.

• ANCAP has the preferential right to purchase such hydrocarbons for domestic demand only.

• Hydrocarbons valued at international market prices.

ANCAP’s Association Option

• ANCAP’s right

• Limit of ANCAP’s association is biddable

• Exercised within 120 days as from the demarcation of the Exploitation Lot

• Payment within 180 days as of the execution agreement, % of: – Productive exploratory wells

– Evaluation wells (up to 25% non productive wells)

– 15% for indirect costs

Taxation

• Income Tax – Corporate Income Tax (IRAE)

– Income Tax on Non Residents (IRNR)

• Tax on Net Worth (IPAT) – Consumption Taxes

– Value Added Tax (IVA)

• Specific Consumption Tax (IMESI)

• Custom Taxes

• Social Security Contributions (CESS)

EXEM

PTE

D

(Hyd

roca

rbo

ns

Law

)

IRNR in Exploration phase was exempted

for subcontractors by a special Decree

Index

• ANCAP: NOC of Uruguay

• Recent E&P activity in Uruguay

• Exploratory Potential of the Offshore Basins

• Uruguay Round 3

• Final Remarks

WEB PAGE: exploracionyproduccion.ancap.com.uy

www.rondauruguay.gub.uy

• Geological information about Uruguayan offshore and onshore basins

• Available E&P database • Bidding round terms • Map of offered areas • Posters • Contract Model • Contact information • Presentations

All relevant information regarding Uruguay Round 3 is being uploaded and posted at this web page

Final Remarks (1/2)

• Uruguay is a reliable country; above ground risks minimized

• Success in previous bidding rounds and MC agreements allowed a huge increase in the available database, reducing exploratory risks

• ANCAP and Uruguay were able to deliver in complex projects such as 3D seismic or Raya well

• Many play types yet to be tested

Final Remarks (2/2)

• 17 Areas offered in Uruguay Round 3

• Deadlines:

– Qualification of oil companies: 2018/04/06

– Submission of proposals: 2018/04/26

• Book Data Rooms

• Excellent opportunity to acquire an asset with:

– Low exploratory program requirements

– Very good bidding round and contract terms

非常感謝你的關注

Contact Info: sferro@ancap.com.uy