Parex Resources (TSX:V.PXT, Stock Forum), a Calgary-based firm engaged in the exploration, development and production of oil and natural gas assets in South America and the Caribbean, announced today that the company had entered into an agreement to purchase all of the issued and outstanding shares in privately held oil entity, Verano Energy.
According to the news release, the company has offered up a total net consideration of $198.0 million or $1.25 per Verano share in an effort to consolidate Parex's core Southern Llanos area through the acquisition of additional working interests in Blocks LLA-32, LLA-34 and in LLA-17.
The aforementioned blocks have shown substantial exploration and appraisal success and as a result of the transaction, the company will assume operatorship of Block LLA-32.
Pursuant to the arrangement, shareholders in Verano will receive $76 million in cash and $153 million in Parex common shares based on the 20-day weighted average trading price of Parex shares ending May 9, 2014 of $10.88 per share.
The company will assume the working capital surplus of Verano which is estimated at $30 million at closing with the remaining cash consideration to be funded by Parex's current working capital and undrawn credit facilities.
The release went on to note, “The Transaction will substantially grow current production and cash flow for Parex while maintaining Parex' significant financial flexibility.”
Parex was in the news recently when the company announced Q1 2014 financial results yesterday.
Shares gained 4.62% on the news to $12.00 per share.
Currently there are 109.8m outstanding shares with a market cap of $1.3 billion.