HABITAR ENERGIA (H.E.) is an investment fund dedicated primarily to structuring energy projects in Latin America. Registered in Dubai with License Number 11273.
H.E. is currently focused on Argentina and Venezuela projects which required funds to accelerate its growths. Two countries with high levels of return on investment.
The Fund’s general partner is the Argentine company HABITAR PARTNERS sa with extensive experience.
The main project is MORICHAL project in Venezuela to finance the exploitation of an oil field with a potential of 20,000 barrels per day. and in the range of 6 years at 30 thousand barrels.
Habitar Energia will lend funds to Aldyl (infrastructure development Argentina company) in order to extract oil from MORICHAL field owned by PDVSA company (Venezuela).
Financing Model
The financing model is based on an advance of working capital for the operating firm (Aldyl) based on the SERVICE ORDERS approved by Venezuela (PDVSA Company).
The model would be a 50% financing on the individual service orders approved up to the amount of US$5 MM.
The recovery of the investment is made through the sale of the crude oil generated from the operation, which is collected through the designation of an OFFTAKER who receives the crude oil from Venezuela and pays the price directly to the fund on a profit + loan + interest basis. The remainder is paid to the operating company.
Expected Benefits Model
General Considerations
The contract is based on the exploitation of the MORICHAL PESADO AREA, on the basis of a business plan developed in coordination with PDVSA. This plan foresees an OPEX and CAPEX investment. The BASE profit of this project is 17% as established in the ASH contract.
In its capacity as structurer, HABITAR ENERGIA will receive 10% of the ALDYL contract that is the object of this agreement.
Specific Considerations
The Project consists of the exploitation of the heavy oil field in the Morichal district, which has an extraction potential of 20,000 barrels per day.
•The fields are owned by the Venezuelan oil company PDVSA, which has contracted Aldyl to work jointly in the exploitation of the field.
•Habitar Energía is in charge of the issuance, although the credit risk is held by both Aldyl and PDVSA (who pays Aldyl). •In order to develop this project, Aldyl needs to raise funds of $2M, and the rest will be financed by equity.
•Aldyl is expected to make an estimated profit of 17% on the total cost, while Habitar Energía (who pays the investors) will make a 10% return on the total costs.
General Considerations
Company Presentation // Aldyl Argentina
LEADER IN ITS INDUSTRY
Aldyl is an Argentine company founded in 1979 that specializes in water and gas piping products.
Thanks to its constant innovation of its products, it has become one of the market leaders in the oil, mineral and industrial sectors.
MAJOR BENEFICIARIES SINCE FRACKING
Since the emergence of fracking, Aldyl’s importance has grown enormously, since Argentina’s Vaca Muerta field has a large amount of Shale Oil reserves. For the extraction of these hydrocarbons, the treatment of water and sand is very important.
Vaca Muerta is a field that allowed Argentina to become the 4th country in the world in Shale Oil reserves, and the 2nd country in the world in Shale Gas reserves. In addition, since its discovery, it has increased its oil reserves tenfold.
A KEY PARTNER OF THE INDUSTRY
It has provided services to two of the main oil companies in South America: YPF and PDVSA.
INDUSTRY ANALYSIS // QUICK OVERVIEW
IOCS
(INTERNATIONAL OIL COMPANIES)
- Normally private and listed companies
- High technological component
- No innate resources available
- Access to new fields that are key to their survival
- Able to exploit the most complex deposits
NOCS
(NATIONAL OIL COMPANIES)
- State-owned companies with abundant reserves
- Usually operate locally
- Technological capabilities inferior to IOCS
- Only allows IOCS to enter their reserves when exploitation is complex
OPEC:
- OPEC (Organization of Petroleum Exporting Countries) was founded in 1960.
- The idea was to collaborate to fix prices and volumes produced, taking volatility out of the market.
- The organization did not achieve its objective, as several countries have almost always produced at full capacity due to their financial needs.
- They control more than 80% of the world’s oil reserves.
Ranking by revenue of the oil and gas sector
- A few years ago, NOCS companies topped the ranking, due to their large reserves.
- As time went by, new exploitation techniques (e.g. fracking) were discovered, which
allowed IOCS to exploit more complex reservoirs, thus reducing the gap with NOCS.
INDUSTRY ANALYSIS // DIFFERENT PHASES
VV
Definition
UPSTREAM
- Covers the entire crude oil exploration and production chain.
- Once a company decides that an area has potential, it must negotiate legal exploration rights with the government of the country.
MIDSTREAM
- Handle the transportation and storage of oil and gas.
- This segment is made up of many independent transportation operators.
DOWNSTREAM
- Refining and distribution of finished products, divided in refining and marketing.
- Refining is the technique by which crude oil is processed and refined end-use products, such as gasoline, diesel or kerosene, are extracted
Capital-intensive
- It is the most capital-intensive phase due to the high fixed and variable costs.
- Less capital-intensive
- Capital depends on the complexity of the refinery, although it is less intensive than downstream.
Risk
- It depends mainly on the price of a barrel of crude oil.
- The marginal cost is key, since if oil prices are below this marginal cost, extraction will not be of interest.
- It is indirectly affected by the price of the barrel.
- This is since if the barrel is trading below the marginal price, upstream companies will not undertake new exploitations and will not contract their transportation services.
- Is affected by the price of the barrel, but to a lesser extent than in previous phases.
- The refining margin is key for refining companies, as it measures the difference between the cost of the crude oil used and the value of the refined products.
Players
INDUSTRY ANALYSIS // NEW TECHNIQUES
New exploitation techniques
In recent years, new ways of extracting and exploiting resources have been explored that were unfeasible until recently due to their high cost or technological difficulty:
Shale Oil
- Shale oil is a key factor in the downward spiral of crude oil prices experienced between 2014 and 2020, as it meant an injection of millions of new barrels into a market that already had idle capacity
- The new fracking technology has made it possible to extract these reserves, generating an economic return of 40-50 USD/barrel.
- The only country that has been able to take massive advantage of this new technique has been the USA, thanks to the infrastructures built in the 20th century.
- Argentina and China have great potential, but as they are remote areas with no infrastructure built, the risk is greater.
INDUSTRY ANALYSIS // OIL PRICE RISK
Enviromental Strategy
Project Advantages
• Only environmentally conscious operator that disposes of industrial waste material in a sustainable manner.
• Low production costs give Habitar a favorable cushion to continue operating even with a drop in oil prices.
• Entry barriers in the industrial-waste treatment industry yield limited competition to the business.
Environmentally Sustainable Process
• Oil and Gas producers generate waste through exploration and exploitation wells
• Waste management companies remedy the polluted solid and recover marginal amounts of oil
• Habitar processes & grants sustainable treatment certificates for O&G producers
Industrial level O&G
Production
Growing quantities of untreated waste accumulation in the local stockpile
Sustainable Waste Remediation Process
Environmentally conscious waste-disposal
Growth Opportunities
• Habitar´s flexible and mobile processes can be leveraged to expand into other attractive jurisdictions such as the Mendoza region in Argentina initially as well as Chile, Ecuador, Colombia, Bolivia and other LatAm geographies in the future.
