Petrominerales Ltd. fell the most since September on concern the Canadian oil producer will be forced to sell assets at below-market prices to pay back debt after agreeing to buy an oil block in Colombia.
Petrominerales declined 10 percent to 10,420 pesos at the close in Bogota, the biggest drop on a closing basis since Sept. 12. The shares have tumbled 29 percent this year, the worst performance on the Colcap index, which has declined 7.9 percent.
The company agreed to buy an 87.5 percent interest in the Canaguaro block in the Llanos Basin in eastern Colombia for $15.95 million in cash and a commitment to cover some initial costs, according to a statement yesterday. Petrominerales seeks to operate the block, which includes an oil-producing field, once the deal closes.
“The potential for near-term production is quite valid,” Alan Knowles, an analyst at Haywood Securities Inc., said in a telephone interview from Calgary. “People are concerned, even though it’s not a material acquisition, but they’re in front of a debt repayment.”
Petrominerales may need cash because holders of convertible bonds will probably exercise an option to demand repayment of about $200 million in August, Knowles wrote in a May 6 research report to clients.