Flash Note PREC: The Company will acquire Petrominerales
Ideas get bigger when you share them...
October 1, 2013 (www.investorideas.com newswire) Pacific Rubiales announced that it reached an agreement with Petrominerales to acquire all the outstanding common shares of that company.
Current Px (PREC): COP 39,000 /share
T.P. 2014YE (PREC): Under Review - Rating: Under Review
The acquisition is strategic for several reasons: i) The acquired assets are aligned with PRECís capacities, experience and objectives; ii) Most of Petromineralesí current production is close to PRECís infrastructure and consists primarily of light oil (whose availability has become increasingly limited), which also has higher netbacks, and is a reliable diluent of lower cost to mix with PRECís heavy crude production; iii) Access to additional transport infrastructure through Ocensa (5%) and OBC (9.65%) will be crucial to increase production and to reduce transportation costs; and iv) Greater diversification and expansion of the production, reserves and exploration portfolio, will be achieved.
Although transaction multiples are slightly higher than those of the last comparable transaction - C&Cís acquisition (approx. USD 20/bbl of 2P reserves), and the value of the reserves estimated by DeGolyer & MacNaughton in the 2012 reserves report (USD 19/bbl of 2P reserves), we believe that the premium paid is well supported on the abovementioned considerations.
Rumors on the acquisition caused significant movements in the prices of both stocks on Friday September 27, 2013; Pacificís announcement of an imminent corporate issue, led to the suspension of the two stocks trading both in Canada and in Colombia (40 minutes after the suspension in Toronto). PMG has appreciated 63% in the last two days, reaching CAD 11.7 per share, a price that appears to be already incorporating a greater value from the new company ExlploreCo. Meanwhile, until yesterday PRE had depreciated 6%, probably due to the perception of the higher value paid, but today it has recovered 4.5%.
Given the magnitude of this transaction, we put Pacific Rubialesí target price Under Review, while the new scenario set by the acquisition of Petrominerales is incorporated in our projections.
This report has been prepared by Inversiones IMT S.A. and/or Correval S.A. Sociedad Comisionista de Bolsa and/or BCP Capital S.A.A. and/or their subsidiaries for informative purposes only. This report is based on publicly available information that it should be considered to come from reliable sources. However we do not guarantee it as accurate or complete and it should not be relied on as such.
Unless otherwise stated, this report does not include privileged information that could violate either copyrights or market regulations.
This material belongs to Inversiones IMT S.A. and/or Correval S.A. Sociedad Comisionista de Bolsa and/or BCP Capital S.A.A. and/or their subsidiaries and cannot be copied, distributed or redistributed in any form by any means or without the prior written consent of Inversiones IMT S.A. and/or Correval S.A. Sociedad Comisionista de Bolsa and/or BCP Capital S.A.A. and/or their subsidiaries.
The purpose of this report is not to predict the future, nor guarantee specific financial results. It is also important to consider that the information contained in this research may be oriented to a specific segment of clients or investors, with a certain risk profile that may not be yours. Unless otherwise stated, the report does not contain investment recommendations or other suggestions that can be understood to be given under the capital market intermediariesí special duty to clients classified as investors. When recommendations are made, the report will specify a risk profile. Inversiones IMT S.A. and/or Correval S.A. Sociedad Comisionista de Bolsa and/or BCP Capital S.A.A. and/or their subsidiaries can seek and/or conduct business with companies that are mentioned in the report, and they can also execute buying and selling transactions of shares that are mentioned.
It is important to state that fluctuations in Exchange rates can have adverse effects on investment value. Inversiones IMT S.A. and/or Correval S.A. Sociedad Comisionista de Bolsa and/or BCP Capital S.A.A. and/or their subsidiaries recommend their clients to seek assistance from professionals accredited by the appropriate regulatory agency. It is up to the client to determine if the information in this report is sufficient to make an investment decision or any other market operation.
Under no circumstances can the information published here be considered as provided legal, accounting or taxation concept. When it is required, Inversiones IMT S.A. and/or Correval S.A. Sociedad Comisionista de Bolsa and/or BCP Capital S.A.A. and/or their subsidiaries recommend their clients to seek advice from accredited professionals.
Inversiones IMT S.A. and/or Correval S.A. Sociedad Comisionista de Bolsa and/or BCP Capital S.A.A. do not assume any responsibility, obligation nor any loss related to the information contained in this report, neither do these same firms assume civil responsibility for any legal recourse caused by action or omission derived from this document.
This news is published on the Investorideas.com Newswire and its syndicated partner network
Published at the Investorideas.com Newswire - Big ideas for Global Investors
Disclaimer/ Disclosure:The Investorideas.com newswire is a third party publisher of news and research as well as creates original content as a news source. Original content created by investorideas is protected by copyright laws other than syndication rights. Investorideas is a news source on Google news and Linkedintoday plus hundreds of syndication partners. Our site does not make recommendations for purchases or sale of stocks or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investment involves risk and possible loss of investment. This site is currently compensated by featured companies, news submissions, content marketing and online advertising. Contact each company directly for press release questions. Disclosure is posted on each release if required but otherwise the news was not compensated for and is published for the sole interest of our readers. More disclaimer info: http://www.investorideas.com/About/Disclaimer.asp
BC Residents and Investor Disclaimer : Effective September 15 2008 - all BC investors should review all OTC and Pink sheet listed companies for adherence in new disclosure filings and filing appropriate documents with Sedar. Read for more info: http://www.bcsc.bc.ca/release.aspx?id=6894. Global investors must adhere to regulations of each country.