RE:RE:Petroamerica for saleIngiboy,
With all due respect, but it seems that you do not pay attention to the company's and the CEO's public statements although you have been here for long.
Let me quote the CEO's recent statements in BLOOMBERG. He is clearly saying that the company is OPEN to a buyout if the price is right. I quote:
2) Takeover Target: According to Bloomberg (as linked above), Petroamerica's CEO said in an interview in June 2014, that while seeking more acquisitions to increase production, the company is also open to takeover offers from potential suitors. I quote his statement:
"Our plan is to continue diversifying assets, to operate fields and continue growing. If someone is able to make an attractive offer that shareholders feel represents the correct value, one would have to do it."
The thing is that the consolidation in the Colombian energy sector started roughly in 2011, and the M&A activity has been on the rise since then, given that the business security has been improving dramatically. On that front, let's see some facts:
A) Pacific Rubiales (OTCPK:PEGFF) is the primary suitor in Colombia, and has to replace 60,000 bopd from the Rubiales field. Its agreement with Ecopetrol in the Rubiales field expires in 2016. Even though the company is negotiating a followup deal with Ecopetrol, most analysts treat the loss of production from that field as a certainty.
According to an article (as of August 2014), Macquarie Securities says there is little incentive for Ecopetrol not to take those barrels from Pacific Rubiales. "With almost 100% certainty, Ecopetrol will take the 60,000 barrels that is now owned by Pacific Rubiales," they say.
B) Pacific Rubiales is not alone. According to Bloomberg, Parex Resources is focusing its growth efforts on Colombia and aims to double production in the next five years. Parex's CEO is planning more land and asset acquisitions to boost the company's output to as much as 50,000 bopd, according to a recent interview at Parex's headquarters in Calgary.
Parex's CEO believes that Colombia's stable government and well-understood oil resources make it a better investment than other countries in the region such as Argentina. As linked above, he also said: "To be relevant in the market, you really have to be in the range of 25,000 to 50,000 bopd. Parex's production will grow as much as 20% annually from 17,500 to 18,500 bopd this year".
How do you think is Parex going to achieve this? This is why, I do not expect the M&A activity in Colombia's energy sector to abate any time soon. In fact, I believe the consolidation will intensify over the next couple of years. And I think it shouldn't be long before the predator comes in and takes out its next prey.
And Petroamerica has a strategic advantage as a potential takeover target. Most of Petroamerica's oil production (pro forma the deal with Suroco) is light oil, which is an effective diluent. And diluents have become increasingly important to heavy oil producers in Colombia. For instance, let's recall why Pacific Rubiales acquired Petrominerales in late 2013. Petrominerales' light oil was strategic for Pacific Rubiales to monetize its heavy oil, because Pacific Rubiales expected to save $35 million by using the light oil as diluent to transport its heavy oil.