Thursday evening, Gran Tierra Energy (GTE) announced a friendly deal to acquire Petroamerica Oil (PTA) for cash and shares worth about US$84 million based on a C$3.32 GTE price.
PTA shareholders can elect to receive .40 of a GTE share or C $1.33 in cash for each PTA share, up to 70% payable in cash. That’s about a 40% premium to Petroamerica’s recent 92-cent share price.
Both of the Calgary-based international oil companies are focused on the oil and gas business in Colombia. GTE considered Petroamerica’s land position in the Putumayo Basin “highly strategic” and “complementary” to its own portfolio. The combined company is expected to produce 28,000-30,000 boe/d in 2016.
GTE says the deal is accretive, and the pro-forma company will have about $135 million to $210 million cash on hand following the transaction, depending on how much cash consideration is elected by PTA shareholders.
Well-known natural resources investor Frank Giustra is a sizable Petroamerica Oil shareholder. In a brief exchange Friday morning, Giustra called Gran Tierra “great paper” and said the combined company had big potential.
Ralph Gillcrist, Petroamerica’s President and CEO commented, “This transaction ensures that the high quality assets of Petroamerica will be fully developed and the combination with Gran Tierra will create one of the best-positioned companies in the prolific Putumayo and Llanos basins of Colombia. For Petroamerica’s shareholders, the resulting pro forma company will bring improved liquidity, increased diversity and scale, an outstanding near-term opportunity set and most importantly, the financial capability and balance sheet strength to maximize value of Petroamerica’s portfolio.”
The deal is subject to PTA shareholder approval as well as regulatory, exchange, court and other approvals.
If a superior offer is made for PTA, GTE has the right to match any offer.
Author is long PTA at the time of writing. Always do your own due diligence.
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