Well a picture speaks a thousand words with regard to the shifting production and the picture is telling me 2013 will be more difficult than outstanding, but the year is still young.  The friday share price drop suggests to me that those day traders and market manipulators are not willing to risk holding over a weekend. Speaks volumes to me anyway.

 

The shift to non-tariff as described as ESSENTIAL in the report is not out of choice rather out of necessity as the Mirador formation at Rancho Hermosa is TAPPED OUT, which we knew would happen.  Therefore their only option is to shift production to the other lesser formations such as the C7, Une, Gatchet etc.  only time will tell how sustainable production will be these lesser formations in the next year or two.

 

Bottom line doesn't look good in the near term as one should begin to discount the RH field entirely, Ecuador production will increase but they also need to recoup their 100 M investment over the next 5 years before one can determine the ultimate wisdom of this investment.  Their heavy oil exploration program has some potential if it weren't for the molasses like pace of exploration and should they find large enough reserves to develop they aren't likely to have the money or the expertise to develop these fields on a timely basis but on the bright side we know Pacific Rubiales is the leader in heavy oil production in Colombia and will end up taking over this potential development leaving CNE with only a minimum percentage. Still a better deal that the Sinochem Capella disappointment.

 

The VMM2, VMM3, Santa Isabela blocks may yet have good news to offer up late in the year and it is unfortunate Exxon missed on the Mono Arana 1 well and it should be concerning to all investors Exxons lack of clarity on testing or further evaluation on the Mono Arana 1 well.  The news release never indicated a date of touchdown for the Mono Arana 1 well which is normally provided on initial well result.  Perhaps Exxon and CNE don't want us to know how long they have been sitting on this disappointing first exploration well?  Yes they did at least win a small concession with a conventional oil find that we really don't know the economics of without several months of testing.  Lastly I'm not yet convinced, primarily due to lack of drilling AGAIN, that the LLA23 block has the potential to pick up the slack from the declining RH field.

 

2013 looks to me to be more about sustaining production than dramatically inceasing production, for me another year of watching for a potential CNE turn aound.

 

The picture good or bad for CNE will be much cleared toward the end of 2013.

 

All IMHO