South American Focused explorer Pan Andean Resources (AIM: PRE) has received an offer from Petrominerals (TSX: PMG), which values the company’s Colombian and Peruvian assets at 15 pence and would leave the US and Bolivian interests with existing shareholders.
For each share in Pan Andean, existing shareholders will get 15 pence plus one share in newly formed entity Hydrocarbon Exploration, which will assume ownership of the company’s US and Bolivian assets. The offer of 15 pence for the Colombian and Peruvian assets values them at £18 million and represents a 25% premium to the company’s yesterday’s closing price of 12 pence.
The transaction, which is now subject to approval by Pan Andean shareholders and the High Court of England and Wales, is expected to close by the end of February 2010. The board has already recommended the shareholders to approve the proposed transaction.
“For some time now, we have been attempting to unlock the value of our assets. This opportunity values Peru and Colombia at roughly £18 million (equating to 15p for each Pan Andean share) whilst shareholders would also retain their interest in our Bolivian and US assets,” said Chairman of Pan Andean resources John Teeling.
The scheme of agreement covers the relationship between Pan Andean and Petrominerals until the agreement becomes effective, in particular, plans to drill the Antorcha license in Colombia before 1 May 2010 will be finalised.
Hydrocarbon Exploration will initially be an unlisted company, but Pan Andean said it anticipated re-listing the business in due course.
Pan Andean’s full year revenues reported at the end of September amounted to £1.85 million, up from last year’s £1.67 million, while pre-tax profits slid to £0.98 million from £1.2 million, but earnings per share increased to 0.58 pence from 0.39 pence.
Pan Andean has two joints ventures (JVs) to develop blocks 114 and 131 in the Ucayali basin and block 141 in the Altiplano around Lake Titicaca and was awarded block 161 in Peru. The Antorcha block in Colombia has estimated oil reserves of 600 million to 1.6 billion barrels with a 10% to 15% recov
Most of the company’s profits were generated in the United States, where the company is entitled to royalties of 1.32% and 2.15% from the Gryphon and Phoenix rigs respectively, both of which operate on the High Island 52 block, producing 20 million cubic feet of gas per day (mmcfd) and 6 million mmcfd respectively.