In 2014, Newpek continued its activities in the U.S. hydrocarbon industry, while accelerating the process of preparing itself to participate in Mexico's opening of the hydrocarbon industry to private investment.
Newpek's activities in the U.S. are concentrated at the Eagle Ford Shale (EFS) play, Edwards Trend and Wilcox in southern Texas. It also has mineral rights in other areas in the north of that state, as well as in Oklahoma, Kansas and Colorado. In 2014, 122 wells were connected to sales at the EFS play, bringing the total at that formation to 497. There are another 40 wells producing in Edwards Trend. All together, production from these plays averaged 8.2 thousand barrels of oil equivalent (BOE) per day, 21% more than in 2013.
In northern Texas, Kansas and Oklahoma, Newpek collected data on more than 150 square miles in the first phase of seismic testing. Its interpretation will enable the company to decide on the location of future drilling sites.
Drilling site in southern Texas, U.S.A.
In Mexico, in conjunction with its partner Monclova Pirineos Gas, it manages two mature fields service contracts at San Andrés and Tierra Blanca, Veracruz. Also, together with Petrofac, it provides integrated services to the oil and gas industry.
In 2014, the mature oilfields in San Andrés and Tierra Blanca produced 4.7 thousand BOE per day, 33% more than in 2013. Likewise, Newpek and Petrofac continued their strategy of strengthening their position as providers of integrated services for oil companies. They continued the drilling work and rework of wells in southeast Mexico.
Revenues in the U.S. totaled U.S. $170 million during the year, and EBITDA came to U.S. $116 million, 28% and 27% more, respectively, than in 2013. Production of liquids, including condensates and oil, accounted for 62% of total volume, compared to 52% in 2013. The better production mix contributed to an improvement in the company's financial results.
During the second half of the year, particularly toward the end of it, there was a sudden and sharp decline in oil prices. Today, there is considerable uncertainty regarding what the new, long-term sustainable price for oil will be. The new price environment is forcing oil companies to reduce capital expenditure programs for 2015 and beyond. Insofar as Newpek is concerned, the 2015 drilling program at EFS involves only 80 wells, compared to more than a 100 per year on average in the recent past. In other areas it is planned to continue with the analysis of geological information to select the most promising prospects, while extraction is going to be deferred until oil prices improve.
With the secondary legislation on Mexico's energy reform approved in 2014, Newpek is looking ahead to new opportunities in the opening of the energy industry to private investment. The first is the possible migration of existing mature fields service contracts into production sharing agreements in partnership with Pemex. Furthermore, the Mexican government plans to auction off blocks of hydrocarbon resources in 2015, with varying characteristics, including oil in shallow waters, mature fields, onshore and extra-heavy oil fields.
Newpek will evaluate the opportunities as they arise, benefiting from the technical and human capital it has been developing for several years. The combination of highly trained technical personnel, experienced partners, and a healthy financial condition give Newpek strong reasons to be optimistic about the success of this new activity.