Petroamerica lashes Suroco bid hijack move

Canadian explorer Petroamerica Oil has hit out at what it terms the “inaccuracies” in a rival’s attempt to hijack its proposed takeover of Colombia-focused Suroco Energy.

Petroamerica late last month offered C$77 million (US$70 million) for Suroco, a company with stakes in four blocks in Colombia’s prolific Putumayo basin.

However, Vetra Holding on Monday attempted to scupper the move, offering C$0.60 per Suroco share in an all-cash deal, as compared with Petroamerica’s offer of C$0.573 per share.

Vetra claimed its offer was “more compelling and superior” to the arrangement between Petroamerica and Suroco, saying it was unaware that the last two were in discussions until an arrangement was made public by Petroamerica’s offer.

Vetra also claimed the arrangement between Petroamerica and Suroco would result in “ongoing risks” to shareholders, listing some of these as:

  • limited control over investment activities;
  • lack of value creation from exploration and business development activities;
  • significant financial commitments;
  • minimal synergies;
  • production declines of a principal asset;
  • forecasted declines in cash flow;
  • lack of a sustainable reserve base;
  • lack of board representation for Suroco shareholders.

Hitting back on Monday, Petroamerica said: “There are numerous inaccuracies and misleading statements in Vetra's press release that Petroamerica intends to address in the coming days by way of a more detailed response after reviewing Vetra's information circular in detail.”

Petroamerica said it remains committed to the arrangement, which represents “an opportunity for both (sets of) shareholders to participate in the continued growth of the combined businesses”.

Suroco's assets include a 15.8% stake in the Suroriente Block, a 50% interest in the Alea 1848A Block and a 49.5% share of the Alea 1947C Block.

The company also offers probable reserves of 3.1 million barrels and daily production of 2461 barrels of medium oil.

Vetra joins Suroco in three of the four blocks, operating the Surioriente Block, which contains Suroco’s only producing assets.

"Suroco’s technical team has a proven ability to identify N Sand play concepts and prospects and is actively negotiating additional farm-ins and licensing opportunities in the region."

The deal is expected to close by the end of June and is subject to customary approvals.

A range of Canadian independents have carved out a niche operating in Colombia, where the regulatory regime is viewed as favourable and guerilla violence has been trending down over the past decade.

Some consolidation among peers already occurred in the space last year when player Pacific Rubiales acquired fellow independent Petrominerales in a $907 million deal.

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