Pacific in Record Slump as Attacks Damp Sale Prospects

Pacific Rubiales Energy Corp., Colombia’s biggest independent oil producer, capped a record two-day drop as pipeline attacks push up costs and spur concern that asset sales may fetch less than planned.

The stock tumbled 17 percent to 31,480 pesos in Bogota, the biggest back-to-back loss since trading begin in December 2009. A re-balancing of Colombia’s benchmark index contributed to the drop, Diego Usme, an analyst at Ultrabursatiles said.

“While Pacific’s infrastructure assets will definitely attract investors, evidently there has to be a price reduction because of the public order situation,” Usme said by telephone from Bogota. “The weighting drop within the Colcap will mean portfolio managers will have to make adjustments.”

Pacific, with $3.7 billion of debt according to data compiled by Bloomberg, said Jan. 28 that it expects to generate as much as $1.4 billion from selling stakes in its Ocensa pipeline and Pacific Midstream unit, as well as an initial public offering of other infrastructure assets. Debt levels have increased following at least 10 acquisitions of companies and oil block stakes between 2011 and 2013.

In a first-quarter operational report yesterday, Pacific said the closure of the Bicentenario pipeline following rebel attacks had increased transport costs. Pacific didn’t immediately respond to an e-mail and voice-mail seeking comment on prospects for planned infrastructure asset sales.

Colombian pipeline explosions have surged over the past year as the government holds peace talks in Havana with the country’s largest rebel group, the Revolutionary Armed Forces of Colombia, or FARC. There were 22 pipeline attacks in the first two months of this year, and a total of 259 in 2013, according to Defense Ministry data.


Colombia’s newest pipeline is ready to resume transportation of crude from the Llanos plains to the country’s east after repairs to damage from rebel attacks earlier this year, a government official said.

Restoration of the Bicentenario duct that feeds oil into the Cano Limon-Covenas pipeline was completed April 18, Deputy Energy Minister Orlando Cabrales said in an interview yesterday. Bicentenario remains halted as repairs to Cano Limon have been prevented by a local indigenous group, he said.

“The production that enters Bicentenario is being transported by truck since Feb. 20,” Cabrales said. “And the 67,000 barrels that should be transported by Cano Limon are stopped. That’s the situation.”

Bicentenario is controlled by state-owned Ecopetrol SA.

Talks Delayed

Planned talks between government officials and representatives of the U’wa indigenous group, which is blocking Cano Limon repair work, failed to take place April 18 and are now scheduled for tomorrow. The pipeline that transports oil from eastern Colombia to the Caribbean coast has been halted since March 25 after rebel attacks, RCN Radio reported April 8.

Paralysis at the Cano Limon pipeline has cut Ecopetrol’s production by 2.2 million barrels this year, costing the company $220 million and Colombia $136 million in lost royalties, the company said in a e-mailed response to questions.

Bicentenario opened in October with daily capacity of 133,000 barrels, according to the operating company’s website. Plans to extend it and to build a new pipeline to the Pacific Coast will depend on more oil being found in the Llanos area, Cabrales said.

“With the discoveries that Ecopetrol has made so far we are on the right path, but we still have to wait a bit more,” he said.

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