Ecopetrol, Talisman Buy BP Assets

Colombian oil giant Ecopetrol and Canada-based Talisman Energy are acquiring BP’s oil and gas exploration, production and transportation assets in Colombia for $1.9 billion in cash. Ecopetrol will get a 51% stake and Talisman the remaining 49%. Ecopetrol says the deal includes a 25% stake in the Ocensa pipeline, 14% stake of the Colombia pipeline, and a 4% stake in the Alto Magdalena pipeline. It also includes a 20% stake in Transgas de Occidente. Excluded from the deal is BP’s Castrol lubricants business and other downstream oil activities, BP says. Equity analysts from Chile-based Celfin Capital’s Colombia office say the price paid for the BP assets “could be viewed as expensive.” However, it says the deal, which it describes as strategically important, could bring a lot of upside in probable reserves, exploration projects and pipeline assets. “Ecopetrol has paid $20.15 per barrel of probable and proven reserves versus the $9.00 it paid for Hocol 2 years ago,” Celfin says. It adds that Talisman and Ecopetrol are already partners in Colombia and Peru projects. Meanwhile, brokerage Bolsa y Renta views the transaction as positive because it helps the buyers increase reserves and gives them larger participation in strategic pipeline assets. The shop adds that Ecopetrol will likely use cash and probably issue debt locally to pay for the acquisition. A Talisman spokesman says the company will not raise new debt to pay for its part of the deal, adding that it will use cash on hand and probably some credit lines already available. An Ecopetrol spokesman says the company did not use a financial advisor. “We already participate in the majority of assets involved in the transaction. In some of them we have participated for over 20 years,” he adds. Goldman Sachs advised Talisman and Barclays Capital advised BP. Talisman closed Tuesday at CAD17.63 per share, up 0.1%, while Ecopetrol ended up 3.2% at COP3,145.