petrominerales buyout

[prince_jake_33]

Pacific Rubiales Energy Corp. (PRE) agreed to buy Canada’s Petrominerales Ltd. (PMG) for C$935 million ($909 million) cash as the world’s fastest-growing major crude producer seeks to reduce transport costs.

Petrominerales shareholders will receive C$11 a share and one share in a newly formed exploration and production company, Bogota-based Pacific Rubiales said yesterday in a statement. That’s 42 percent more than the Calgary-based company’s C$7.74 price before trading was halted Sept. 27. Pacific will also take on C$640 million in debt, including convertible bonds.

Pacific Rubiales, listed in Toronto and Bogota, made at least 10 acquisitions of companies and oil block stakes over the past two years. Petrominerales would give Pacific access to low-density crude, which is cheaper to transport than the heavy oil that makes up the bulk of its reserves. Petrominerales (PMGC) jumped 54 percent to C$11.90 at 9:01 a.m. in Toronto today.

“This is a natural fit,” David Neuhauser, a managing director at Livermore Partners Inc., said by e-mail on Sept. 27, before the deal was announced. “Pacific needs the light oil, and Petrominerales needs the capital to develop their vast acreage. Should be very positive for both companies.

[dan_s]

Great news to start the week. I own this one.

[mdwitte]

Dan: are you going to sell now, or hold on and get the $11 plus the Exploreco shares?

[dan_s]

I plan to hold and take the deal.

[cviller]

Dan,
Any way you can extrapolate how this compares to your fair value for GTE? How similar are the assets of GTE and Petrominerales? Thanks.

[dan_s]

My Fair Value Estimate for GTE is $11/share. You can find the calculation at the bottom of the forecast model under the Sweet 16 Tab. Just click on the GTE logo.

Yes, this deal should draw some attention to GTE.

GTE is debt free and has a lot more exploration upside than PMG.