Subject to the satisfaction of all of the conditions to closing set out in the Arrangement Agreement, it is anticipated that that the Arrangement will close in the fourth quarter of 2013. Conditions to closing under the Arrangement Agreement include, among other matters, receipt of all required regulatory and stock exchange approvals, receipt of required court approvals, receipt of Petrominerales shareholder approval and the absence of material adverse changes respecting Petrominerales.
Arrangement Agreement Terms
The Arrangement Agreement contemplates a reciprocal non-completion fee of US$60 million payable on the occurrence of certain circumstances. In addition, the Arrangement Agreement provides for an irrevocable offer by Pacific Rubiales to purchase Petrominerales' equity interest in the Ocensa pipeline if the Arrangement is not completed by December 10, 2013 for any reason, provided that: (i) Petrominerales has not entered into an agreement to sell its Ocensa equity interest to a third party, and (ii) the Arrangement Agreement has not been terminated due to the fault of Petrominerales. The Arrangement Agreement also provides for customary non-solicitation covenants, subject to customary "fiduciary out" provisions entitling Petrominerales to consider and accept a superior proposal and a right in favor of Pacific Rubiales to match any superior proposal.
A copy of the Arrangement Agreement will be filed by Petrominerales on SEDAR and will be reviewable under Petrominerales' profile at www.sedar.com.
The Arrangement is a culmination of Petrominerales' exploration and development successes in Colombia and Peru. "The key to our success in Colombia has been our unparalleled asset base combined with our talented staff who are true ambassadors of Petrominerales' Vision and Values", said Corey C. Ruttan, President and Chief Executive Officer of Petrominerales. "Over the past eleven years, we have discovered over 100 mmbbls of oil in Colombia, grown production to over 23,000 bopd, returned over C$150 million to shareholders through dividends, generated over US$700 million of royalties and tax revenue for Colombia, and established Fundacion Vichituni investing in highly successful voluntary social investment programs creating a lasting benefit to local communities. Since our initial public offering in 2006, at C$3.75 per Petrominerales share, Petrominerales shareholders have earned a compound annual rate of return of over 20% on their original investment, including dividends and the value of this Arrangement."
Management views the Arrangement as an opportunity for our shareholders to realize value for a large portion of Petrominerales' assets, at attractive metrics, while continuing to participate directly in the upside of our exploration acreage in Brazil. ExploreCo will be well-capitalized at inception with significant cash, no debt, a strong team of professionals based in Brazil, and a focused portfolio of exploration and exploitation assets onshore Brazil.
As part of the Arrangement, ExploreCo will be capitalized with C$100 million in cash and Petrominerales' 75% interest in Alvopetro S.A. Extracao de Petroleo e Gas Natural ("Alvopetro"). A share purchase agreement has been entered into by Petrominerales with the holder of the remaining 25% interest in Alvopetro to transfer such interest, subject to the satisfaction of certain closing conditions, to ExploreCo. Upon closing, ExploreCo will hold 100% of AlvoPetro. Alvopetro holds all of Petrominerales' Brazil exploration assets consisting of three producing fields and 12 exploration blocks comprising 120,013 gross acres onshore Brazil.
Most Popular Stories
- Apple Wants Samsung to Pay $22M for Patent Dispute Legal Bills
- NASA Fellowships, Scholarships Bring Diversity to Workforce
- Twitter Coming to Phones Without Internet
- Dish Network Leads 2013 Top 50 Advertisers List
- Networks Vie for U.S. Hispanic TV Viewers
- Ad Counts Rise in 2013 for Hispanic Magazines
- Jobs Report Brings Cheer As Unemployment Drops to Five-year Low
- Starbucks Gets Grinchy; No Gingerbread Lattes for Tampa Customers
- Entravision Initiates Quarterly Cash Dividend
- Warner Bros. Unleashes 'Hobbit: Desolation of Smaug' Merchandise