Pacific Rubiales produces heavy oil which needs light oil to blend with it for transportation

Pacific Rubiales produces heavy oil which uses light oil as a diluent to blend with it for transportation purposes

Ronald Pantin's Pacific Rubiales (PRE:TSX) has closed its acquisition of Colombian-focused light oil producer Petrominerales (PMG:TSX) for $11 per share in cash and 1 common share of NewCo.  The NewCo will be funded with approximately $100 million cash and will hold some of the non-core assets previously held by PMG.  This transaction was expected to close as PRE recently closed a $1.3Bn note offering which was a condition to closing.  PRE is acquiring PMG for roughly $47,000 per flowing barrel which boasts well for the struggling Colombian light oil sector.  Light oil is a crucial strategic component of PRE's (and others like them) growth story because the light oil is blended with their predominately heavy oil production mix allowing for more cost efficient transportation.

Ronald Pantin, CEO of the Pacific Rubiales, commented: "We are pleased to announce the closing of the acquisition of Petrominerales. This acquisition is an excellent fit with our strategy of integrating light oil with our heavy oil business to secure additional components of the value chain, provide immediate capture of additional value through asset synergies, grow production, reserves and cash flow at attractive metrics, and provide significant exploration upside. The Petrominerales light oil and pipeline assets in Colombia provide a strategic hedge for our future supply, cost, and security of diluent volumes and pipeline transportation, based on our expectation of the company's growing heavy oil production."

Now that this acqusition is closed, all eyes are on other potential takeover targets in Colombia's most productive light oil fields.  Parex Resources and Petroamerica remain at the top of our target list due to their strategic and highly productive Los Ocarros block in the Llanos Basin of Colombia where they have found success in highly productive light oil wells.

Read: Pacific Rubiales closes Petrominerales acquisition

Related: Pacific Rubiales Closes $1.3 Billion Oversubscribed Note Offering with $4 Billion Order Book