RE:RE:RE:TOO LATE "IT'S SOLD"waitingstill wrote: I don't necessarily agree. PRE definitely wanted to be involved with this field or they would not have put in a proposal. I think that they put in "mutually agree" so that PRE could try to save face and act as if it is not the end of the world for them. I do believe the PRE came out earlier and stated that they cold make up production from other fields. This will also free up $500mil for them to invest elsewhere. Clearly other investments will be higher risk than an existing field but, from the sounds of the offer, Eco was going to get to keep all existing fields anyhow and PRE would be involved in only new developed fields - so maybe it was not so low risk.
It will be interesting to see how the market reacts on Monday. I hope this disappointment is already baked into this brutal SP. If so, then we will get a chance to see how good PRE management really is and if they are able to find more generating fields fast. I have to admit that I am surprised that the govt has put the screws to PRE despite the rhetoric of how they are going to help the oil industry in Colombia!
I believe they might mean mutually agreed upon considering the terms Eco wanted. Eco will now likely auction out a partner going forward. The other thing to keep in mind is that proposal was made while oil prices were much higher. Could be that pre balked at spending the $500m now. As you say, they were always going to lose all existing production.
The other part of this I have trouble understanding is why analysts and investors keep discussing whether pre can "make up" this production elsewhere as if it essential. It's not. Going forward from mid 2016 as a 90,000 bpd company is not the endof the world. It is already baked into the price. In fact., I did all of my metrics at90k bpd prior to buying.