Pacific Rubiales Energy Corp. (TSX: PRE) (BVC: PREC) (BOVESPA: PREB) is pleased to announce that today it closed the acquisition of Petrominerales Ltd. (TSX: PMG) (BVC: PMGC) ("Petrominerales") by way of a plan of arrangement (the "Arrangement").
With the completion of the Arrangement, Pacific Rubiales has acquired all of the issued and outstanding shares of Petrominerales. Petrominerales shareholders will receive Cdn.$11.00 cash for each Petrominerales common share held, plus one common share of a newly formed exploration and production company ("ResourceCo" as referred to in our news release of October 15, 2013, and from now on referred to as "Alvopetro").
Ronald Pantin, Chief Executive Officer of the Company, commented:
"We are pleased to announce the closing of the acquisition of Petrominerales. This acquisition is an excellent fit with our strategy of integrating light oil with our heavy oil business to secure additional components of the value chain, provide immediate capture of additional value through asset synergies, grow production, reserves and cash flow at attractive metrics, and provide significant exploration upside. The Petrominerales light oil and pipeline assets in Colombia provide a strategic hedge for our future supply, cost and security of diluent volumes and pipeline transportation, based on our expectation of the Company's growing heavy oil production.
"As previously disclosed, the Company expects to close the sale of its 5% equity ownership and transportation rights in the OCENSA pipeline for significant cash value, while retaining a long term agreement for transportation of the Company's oil production in this strategic pipeline.
"The acquisition of Petrominerales also includes the Rio Ariari exploration
block, which covers an area of 760 thousand acres in the southern Llanos Basin.This large block is part of the same heavy oil belt that includes the Rubiales, Quifa and CPE-6 blocks and is located approximately 80 and 200 kilometers southwest of CPE-6 and Rubiales/Quifa fields respectively. To date, Petrominerales has drilled 30 wells on this block, resulting in multiple discoveries testing oil with 9 - 10° API gravity. The Rio Ariari block is strategic to the Company's core expertise in heavy oil development in Colombia.
The Company expects to include the newly acquired Petrominerales blocks in its year-end reserve and resource reports.
"Overall, the Petrominerales acquisition adds production and reserves at
attractive and accretive metrics, assets whose value can be increased through accelerated activity, transportation and marketing synergies, and exploration upside. This not only strengthens our focus in Colombia and Peru, but also builds on our proven track record of extracting value by growing production and generating cash flow as we build for the long term benefit of our shareholders and employees, the leading E&P company focused in Latin America."
The closing of the Arrangement triggers a change of control event under the loan agreements with respect to Petrominerales' 2010 and 2012 convertible debentures.
As such, the Company is expected to send out a change of control offer to all bondholders enabling them to elect to cash out the convertible debentures. The Company intends to send the change of control offers on or about November 29, 2013.
Pacific Rubiales' address is 333 Bay Street, Suite 1100, Toronto, Ontario, M5H 2R2. To obtain a copy of the report filed with the Canadian securities regulatory authorities relating to the Arrangement, please contact the Company's Deputy General Counsel, Special Projects, Melissa Krishna at (416) 362-7735 x 222. Prior to the Arrangement, Pacific Rubiales did not hold any shares in the capital of Petrominerales.
Pacific Rubiales, a Canadian company and producer of natural gas and crude oil, owns 100% of Meta Petroleum Corp., which operates the Rubiales, Piriri and Quifa heavy oil fields in the Llanos Basin, and 100% of Pacific Stratus Energy Colombia Corp., which operates the La Creciente natural gas field in the northwestern area of Colombia. Pacific Rubiales has also acquired 100% of Petrominerales Ltd, which owns light and heavy oil assets in Colombia and oil and gas assets in Peru, 100% of PetroMagdalena Energy Corp., which owns light oil assets in Colombia, and 100% of C&C Energia Ltd., which owns light oil assets in the Llanos Basin. In addition, the Company has a diversified portfolio of assets beyond Colombia, which includes producing and exploration assets in Peru, Guatemala, Brazil, Guyana and Papua New Guinea.
