Pacific Rubiales Scouring for Colombia Oil Acquisition, CEO Says

Pacific Rubiales Energy Corp. (PRE), the the world’s fastest-growing major crude producer, said it’s looking to buy a low-density crude producer in Colombia in a bid to reduce the cost of transporting its mostly heavy oil.

The company buys gasoline on the international market and blends it with heavier oil before sending the mix to port at a “huge cost,” Chief Executive Officer Ronald Pantin said yesterday in an interview from his Bogota office.

“There are light oil companies in Colombia that it would be a no brainer to get their production,” Pantin said. “We are looking. We are not in negotiations. The moment is now but you need two to tango.”

Pacific, run by the ex-Petroleos de Venezuela SA executive who left in 2000 as then-President Hugo Chavez stepped up control of the state company, boosted output sevenfold over the past five years by plying the Rubiales field, Colombia’s largest. Pantin didn’t rule out a bid for Calgary-based Petrominerales (PMG) Ltd. as he seeks new growth opportunities.

“It’s a great company, they have a lot of light oil,” he said. “I am not negotiating with them. I am keeping an eye on all of them.”

Share Slump

Petrominerales, which produces mostly from fields in Colombia’s Llanos basin, reported a 31 percent decline in second-quarter production. July output rose and the company has opportunities to continue growing, Petrominerales Chief Executive Officer Corey Ruttan said in an Aug. 9 interview.

Petrominerales shares have slumped 29 percent this year in Toronto and trade at 10.67 times estimated 2013 earnings, according to data compiled by Bloomberg. Pacific Rubiales (PREC) has lost 14 percent and fetches 10.78 times forecast profit, the data show. Rubiales’ market value is $6.23 billion compared with $501 million for Petrominerales.

Pacific’s compound production growth over the last five years is 47 percent, the fastest among 109 producers with a market value of at least $5 billion tracked by Bloomberg. The group average is 8.4 percent growth, the data show.

The company’s shares fell last week after reporting net income of $57.6 million, or 18 cents a share, down from $224 million, or 76 cents, a year earlier. The fall was largely caused by a 5.1 percent drop in the Colombian peso, lower oil prices and a depreciation of assets.

Beating Target

Pacific will surpass its 2013 output target and is “sure” it will secure soon a license for the CPE-6 block, Pantin said.

The top range of the company’s forecast for this year is an average net daily production of 127,000 barrels of oil equivalent. Rubiales accounts for 65 percent of the company’s production, according to a July presentation.

“We’re going to be higher,”Pantin said. “Why am I saying that? Because of Peru, Cajua, Sabanero and CPE-6.”

Pacific Rubiales, which had licensing delays for its CPE-6 block in Colombia’s Llanos basin, now expects a blanket exploration and development license from Colombia’s environmental agency known as ANLA within three to six weeks, Pantin said.

License Expiry

“I’m sure we are going to get it,” Pantin said. “I talk to ANLA every day. They are very pleased with the way meetings with local communities went.”

Pacific Rubiales has identified CPE-6 as a key area for future production growth. The company’s contract at the Rubiales field is set to expire in June 2016. Ecopetrol’s board will decide whether to issue a new license in the field.

“I’m very optimistic,” Pantin said. “Our proposal for a new contract is a good one. It will be production sharing with Pacific as the operator. It’s beneficial for both Pacific and Ecopetrol.”

Ecopetrol declined to comment on the contract in an e-mailed response to questions.

To contact the reporter on this story: Andrew Willis in Bogota at

To contact the editor responsible for this story: James Attwood at

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