M&P's Colombian Gas Play: A Strategic Bet on a Tightening Market

The energy sector is increasingly defined by scarcity. Nowhere is this truer than in Colombia, where a looming natural gas supply deficit threatens to reshape the country's energy landscape—and create opportunities for companies like M&P. By securing operatorship of the Sinu-9 gas block with a 61% stake, M&P has positioned itself at the epicenter of a critical resource shortage. With 110.2 bcf net 2P reserves and exploration upside in one of Colombia's most prolific basins, the timing of this move couldn't be better.

Colombia's Gas Crisis: A Perfect Storm
Colombia's gas supply deficit is projected to hit 30% by 2026—a figure that reflects a perfect storm of declining domestic production and surging demand. According to Ecopetrol, proven reserves have dwindled to just 6.1 years of consumption, while imports now account for 60% of supply. The government's energy transition policies, including halted exploration contracts and increased tax burdens, have exacerbated the decline in drilling activity. Meanwhile, industrial consumers face gas prices expected to rise by up to 90% by 2026, driven by reliance on costlier LNG imports.

This crisis isn't abstract. The Gas Market Operator (GMO) warns that current infrastructure can't bridge the gap beyond 2025, leaving industries at risk of shutdowns. With LNG prices three times higher than domestic gas, Colombia's energy security hinges on companies like M&P that can scale production in time.

M&P's Play: Control, Cash Flow, and Upside
M&P's 61% stake in Sinu-9—secured through two transactions—gives it operational control and direct access to 110.2 bcf of 2P reserves. This asset is no backwater: the Sinu San Jacinto basin hosts 3P reserves of 243 bcf net to M&P, with significant exploration upside. The company's plans for a six-well drilling campaign, targeting start in October 2025, aim to unlock this potential.

But the real value lies in the timing. By Q4 2025, M&P's infrastructure upgrades—expanding production capacity to 24 mmcfd net—will align perfectly with Colombia's peak demand. With gas prices already above $8/mmBtu and rising, this timing ensures near-term cash flow visibility. The staggered payment structure for its acquisitions ($20 million upfront, deferred payments over six months) preserves liquidity, leaving M&P's $405 million war chest intact.

Financial Discipline and Optionality
M&P's financial approach is a model of restraint. The company has avoided overextending by structuring payments to match cash flow from operations. The call option to acquire an additional 5% stake within 12 months—priced at $18.75 million—adds low-risk upside. Should gas prices or reserves grow, this option could prove a steal.

The partnership with NG Energy and Pertamina's technical backing further de-risks the project. With environmental approvals for 22 wells already in hand, M&P can accelerate drilling without regulatory hurdles.

Investment Thesis: A Structural Play on Scarcity
This is a value-driven growth story. M&P isn't just capitalizing on a commodity price upswing—it's addressing a structural deficit. By owning operatorship in a block that can scale production to meet Colombia's needs, M&P becomes indispensable. The 2026 deficit creates a price floor for gas, while exploration upside offers asymmetric returns.

Investors should watch for two catalysts:
1. Infrastructure completion by Q4 2025, which will double production capacity and lock in cash flows.
2. Drilling results from the six-well campaign, which could expand reserves beyond 3P estimates.

Risks include regulatory delays or a slower-than-expected LNG import ramp-up, but these are mitigated by M&P's liquidity and Pertamina's influence. At current valuations, the stock reflects only base-case scenarios—exploration success could re-rate it sharply.

Conclusion: Betting on Necessity
In a world of energy shortages, M&P's Sinu-9 stake is a bet on necessity. Colombia's gas deficit isn't a temporary hiccup—it's a multi-year trend driven by policy missteps and geology. For investors seeking exposure to a company that controls a critical resource in a high-demand market, M&P's disciplined strategy and timing offer a rare combination of safety and upside. This is a play for the next three years—and beyond.