Petrominerales CEO Says Colombia Asset Sale Creates Interest
Petrominerales Ltd. (PMG), Colombia’s worst-performing major stock in the past year, said it’s receiving interest from prospective buyers of oil pipeline stakes as the Calgary-based company seeks to reduce debt.
“There are parties by the day that are continuing to enter the data room,” Chief Executive Officer Corey Ruttan, 42, said in a telephone interview yesterday.
The company announced in May that it was hiring TD Securities Inc. to act as an adviser to monetize assets including its 5 percent stake in the Ocensa pipeline, which links Colombia’s oil-rich eastern plains with the Caribbean coast. Petrominerales also holds 9.65 percent of the Bicentenario pipeline, also in Colombia. The interest in the Ocensa pipeline alone is worth about $300 million, Darren Engels, an analyst at FirstEnergy in Calgary, said by telephone.
The company hopes to use the pipeline asset sales to pay holders of $195 million in convertible bonds this August, with all holders expected to exercise a put option, said Ruttan.
Petrominerales also has access to a $250 million credit facility with a group of 10 banks led by Standard Bank Group Ltd, which the company may have to use before selling one or both of the pipeline stakes, said Ruttan.
The stock surged 10 percent to 12,280 pesos at 9 a.m. in Bogota trading, the highest intraday since May 6. The company reported late yesterday that its Curito-1 discovery well produced over 5,900 barrels of oil per day in tests.
The oil explorer whose operations are mainly based in Colombia has lost 42 percent in the past 12 months, the biggest decline in Colombia’s IGBC equity index, as it sought to tap new finds amid declining output. The company is looking to develop oil deposits trapped between sand in the Gomo reservoir in Brazil.
“Our goal is to maintain and modestly grow production this year,” said Ruttan.
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