Petrominerales Colombia shares surge on takeover by Pacific Rubiales
BOGOTA (Reuters) - Shares in Canadian oil company Petrominerales PMGC.CN surged as much as 44 percent on Colombia's stock exchange on Monday after the company agreed to be taken over by Pacific Rubiales (PRE.TO), Colombia's largest private oil producer.
Pacific Rubiales, which says it produces around 210,000 barrels of oil per day (bpd) in Colombia or about a fifth of national output, said the deal would deliver logistical savings, as well as adding to its production and exploration assets.
The C$1.6 billion ($1.55 billion) takeover, financed mainly through cash and bank loans, will bring synergies for Pacific Rubiales' Colombia operations, including a source of lighter oil to use as a diluent for its own heavier crudes, the company said in a presentation to analysts on Monday.
Petrominerales' PMG.TO Toronto-listed shares also rose, but by just 4 percent to C$11.70. Petrominerales produced an average 23,975 bpd in Colombia in August, it said.
Pacific Rubiales' Toronto shares fell 1.2 percent, while its Bogota-listed shares PRU.CN dropped 3.4 percent to 37,460 pesos.
Greater access to pipelines would also reduce its spending on more expensive road haulage to transport some of its crude, the company said, as well significantly increase its exploration and production acreage.
Colombia's oil sector has witnessed a boom in the last few years after a U.S.-backed military crackdown that vastly improved security and roughly halved the numbers of the main leftist rebel group, the FARC, to around 8,000.
Crude output has risen about 60 percent since 2008 to 944,000 bpd on average in 2012, according to the National Hydrocarbons agency. The Andean nation is aiming to average 1.1 million bpd in 2013.
Guerrilla attacks on oil pipelines and infrastructure are still a regular occurrence, however, with an attack every two to three days in 2012 adding to the cost of doing business.
The government has been engaged in peace talks in Cuba with the FARC since last year. Progress has been slow but the talks continue.
A separate challenge the sector is facing is to ramp up exploration to boost dwindling reserves. The country's biggest oil producer is state-run Ecopetrol ECO.CN.
Through the purchase, Pacific Rubiales will get 18 blocks comprising 1.6 million acres (0.65 million hectares) gross and net in Colombia, and four blocks comprising 8.2 million acres gross, or 5.2 million net, in Peru. The company estimated the total value of synergies from the purchase at US$160 million a year.
Pacific Rubiales said its spending on exploration next year will be focused solely on Colombia although it still has exploration ongoing in Peru.
Pacific Rubiales will also gain 5 percent of oil pipeline Oleoducto Central S.A. and 9.65 percent of pipeline Oleoducto Bicentenario, both of which are in Colombia.
(Editing by Marguerita Choy and Peter Galloway)