Pacific Rubiales Is Cheap to Venezuela Group With 10% Stake

A group of Venezuelan investors are prepared to increase their stake in Pacific Rubiales Energy Corp., Latin America’s biggest non-state-owned oil producer, after building up a 10 percent holding.

“The company has been unjustly punished by the fall in oil prices,” Orlando Alvarado, a Caracas-based financial consultant and one of at least three investors in the group, said Thursday in a telephone interview. “We have the capital to raise our position significantly. The company has long-term value.”

Shares in Pacific Rubiales, formed and managed by former Venezuelan oil executives, have tumbled 75 percent in the past year as oil plummeted, its contract to operate Colombia’s largest oil field wasn’t extended and two of the company’s biggest shareholders reduced their stakes. The producer more than tripled debt since the end of 2012, reported a record $1.66 billion loss in the fourth quarter and suspended dividends.

The stock rout, the biggest among 15 peers tracked by Bloomberg, has made it the cheapest of the group, with an enterprise value of 4.2 times estimated earnings before items.

O’Hara Administration Co. and affiliates IPC Investments Corp. and Telmaven Overseas Inc. acquired a 10.29 percent stake in Pacific Rubiales, Panama City-based O’Hara said in an April 21 filing. The shares rallied 7.3 percent at 2:56 p.m. in Bogota, capping a 29 percent gain this month.

“We bought the stock for investment purposes only,” said Alvarado, a 39-year-old former ABN AMRO Bank NV investment banker. “The idea is not to have management control.”

Third Biggest

Alvarado and his partners started buying Pacific Rubiales shares on the open market two months ago when oil prices were at six-year lows.

He said the group are private-sector businessmen with no ties to the government and prefer to remain anonymous given the unstable security and political situation in Venezuela. Pacific Rubiales didn’t reply to an e-mail seeking comment.

Together IPC, O’Hara and Telmaven are now the third biggest holder of Pacific Rubiales shares after Alfa SAB, the Mexican conglomerate, which has a 19 percent stake, and Lazard Ltd., with 14 percent, data compiled by Bloomberg show.

While Alvarado and his partners haven’t had contact with Alfa, they would be open to doing so in the future, he said.

Earlier this month, Lazard reported a 15.7 million reduction in Pacific Rubiales shares. Capital Group Cos. cut its holding to 3 million from 33.4 million shares, according to data compiled by Bloomberg.

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