Pacific Rubiales agrees to buy Petrominerales for $1.55 billion
BY DARCY CROWE
BOGOTA -- Pacific Rubiales Energy, is moving to expand its operations with the purchase of a smaller Latin America focused oil company for $1.55 billion.
Pacific Rubiales will consolidate its No. 2 ranking after Ecopetrol with the purchase of Petrominerales, an oil company with operations in Colombian and Peru. The Colombian firm posted the acquisition in a statement.
The purchase represents the largest recent acquisition in Colombia' s oil industry, a sector that has seen a flurry of foreign investment and a surge in output in recent years.
Pertrominerales shareholders will receive $10 per share, which represents a disbursement of $906 million in cash.
Petrominerales shares surged on the back of speculation that the acquisition was imminent. The shares of the two companies were halted by exchanges in Bogota and Toronto, where they trade. Petrominerales shares rose 7.65% to $7 and 18% to $8.33 on the two bourses.
Pacific Rubiales is taking on Petrominerales' debt, which stands at $620 million, and will invest $96 million towards a Petrominerales project in Brazil. It said it plans to pay for the acquisition, which is slated to conclude in the fourth quarter of this year, with cash and through bank loans. It also said it expects to pay down a significant portion of Petrominerales' bank loans by selling some of the pipeline assets controlled by Calgary-based company.
Petrominerales produced about 24,000 bopd at the end of July. This will add to Pacific Rubiales' gross production, which at the end of the second quarter was 156,099 boed.
The two companies have participated in an oil-production boom in Colombia in recent years, as foreign investors have moved to explore and pump oil in areas that were once controlled by Marxist guerrillas.
Colombia' s oil output has reached 1 MMbpd earlier this year, up from around 600,000 bpd in 2008, according to the United States Energy Information Administration.
Pacific Rubiales was one of the first companies to take advantage of the improved security. It operates one of the largest oil fields in the country.
The company, led by Venezuelan oil executives, secured control of the Rubiales field in 2007 and brought in technical expertise that was missing in Colombia for extracting its goopy, sulfur laden crude.
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