Canadian oil and gas exploration and development company Crown Point has agreed to pay CAD53.75m ($54.1m) to acquire Antrim Argentina. The target company, a unit of Antrim Energy, controls 3 oil and gas concessions in Argentina that produce roughly 1,550 barrels of oil equivalent (boe) per day, Crown Point says. As agreed, the Canadian oil company will pay Antrim a combination of CAD10.26m in cash and 35.76m shares of Crown Point, valued at a 20-day average weighed price of roughly CAD1.216 per share. The deal would leave Antrim shareholders with a 34% stake in Crown Point. Casimir Capital advised Crown Point on the transaction. Crown Point and Antrim Argentina officials could not immediately be reached for comment. The assets at stake include 3 concessions in the Tierra del Fuego area of the Austral basin and a 50.1% stake in the Cerro de Los Leones exploration concession, plus a working capital surplus of CAD7.4m. The concession areas have total proved reserves of 3.8m boe, 6m boe of proved plus probable reserves, known as 2P reserves, and 7.2m boe of proved plus probable plus possible reserves, or 3P reserves. Based on Crown Point estimates, the deal involves valuing each barrel of 3P reserves at CAD6.44 per barrel, a CAD7.66 per barrel of 2P reserves and CAD12.13 per barrel of proved reserves. As for average daily production, the deal values the average daily barrel produced at CAD29.94 per boe. The transaction increases Crown Point’s 2P reserve holdings in Argentina by 353%, the company notes, and cements its footprint and asset portfolio in the South American country. The deal is expected to be completed in May and will require the approval of regulatory authorities and at least two thirds of Antrim shareholders.
Category: M&A
GeoPark Buys Colombian Oil Producer
GeoPark, a company with oil and gas exploration and production assets in Latin America, has paid $75m in cash to acquire Hupecol Cuerva, an oil company that operates two oil blocks in Colombia. The purchase will give the Bermuda-incorported GeoPark full control over the Llanos 62 and the La Cuerva blocks. La Cuerva currently produces roughly 2,000 barrels of oil a day and has proven and probable reserves, or 2P reserves, of 8m barrels of oil, while the Llanos 62 block is still undergoing exploration. Last year, Hupecol posted $68m in revenues with an Ebitda of $30m. Officials at GeoPark decline to go into the company’s own valuation estimates of Hupecol, and note that no financial advisors were involved in the transaction. On the legal front, GeoPark was advised by NY firm Chadbourne & Parke and Colombian lawyers Suarez Zapata Partners. PWC advised on tax-related due diligence in the deal. The purchase makes give the privately-owned GeoPark a holder of assets in Colombia, Chile and Argentina with a combined oil and gas production of 9,500 barrels of oil equivalent per day.
Middle East Appetite Growing as Abu Dhabi Makes EBX Bet
Abu Dhabi sovereign wealth fund Mubadala Development Company has agreed to pay $2bn for a 5.63% stake in Brazil’s EBX group, underscoring the growing trend of big-ticket Mideast equity investments in LatAm. Bankers say they are spending more and more time pitching sovereign wealth funds with investment opportunities in a diversifying number of LatAm sectors, with the caveat that the Middle Easterners need size. “We are talking a lot to these investors to pitch them private transactions. There has been an increased interest since the end of last year,” says a Sao Paulo-based ECM banker, referring to investments with structures similar to EBX and other deals recent years, including investments in BTG Pactual and Santander Brasil. This interest does not yet appear in the public equity transactions, he notes, in which tickets are not big enough to meet buyer appetite. “These deals take time, and like any other country, you start with the most solid and concrete sectors,” says another banker, explaining the pace and the tendency for deals in FIGs and infrastructure. At this point, sovereign funds have a preference for pre-IPO investment in the big names who are sector leaders, bankers say. EBX, the holdco for billionaire Eike Batista’s family of companies, fits this profile and offers exposure to several sectors, mostly in Brazil. The price suggests a valuation of $35.5bn for the privately held group, which is made up of 11 known business units, only 5 of which are publicly listed. The valuation is higher than the total market cap for global oil services company Halliburton, which stands at $31bn. Officials at EBX decline to comment on the transaction. The deal gives Mubadala a 5.65% stake in the Centennial Asset Brazilian Equity Fund, the holding vehicle through which Batista controls EBX and it also gives it a presence in future EBX venture investments. Basing the valuation purely on the value of the listed companies, the price paid by Abu Dhabi is a 40% premium above
PdVSA Settles Nationalizations with Americans
Venezuela’s PdVSA has agreed to pay US companies Williams and Exterran for the gas compression and injection assets they lost to a Venezuelan nationalization campaign in 2009, the companies say. So far the government-owned oil company has paid a combined $121.6m to both companies as an initial payment for the assets at the WilPro El Furrial and WilPro PIGAPII, two natural gas ventures in the Andean country. An additional $239.8m will be paid to the two companies in several installments over the coming years up until 2016, according to the companies. At the time of the asset takeover, Williams held a 66.66% stake in El Furrial and a 70% stake in PIGAP II, with Exterran holding the remaining stake in these ventures. Exterran has received an initial payment of $37.6m for its participation in these ventures with a remaining $74.8m to be paid in the next 4 years. Williams in turn has received an $84m initial payment with $165m to be paid gradually until 2016. Williams has also received an additional $63m for its stake in Accroven, a venture that includes natural gas liquids extraction and feractionation plants, as well as storage and refrigeration facilities. Officials at Exterran declined to offer additional details of the compensation terms and how the money paid compares to the value of the assets lost. An investor relations officer at Williams could not immediately comment on the deal. PdVSA officials could not be reached for comment. As per the agreement with PdVSA, Williams and Exterran have suspended their arbitration against Venezuela pending the final compensation settlement. Over the past 6 months, Venezuela has sought to settle a number of outstanding compensation claims with companies that lost assets during the nationalization drive led by the administration of President Hugo Chavez.
UK Temporary Generation Specialist Expands in Brazil
UK temporary power generation company Aggreko has agreed to pay BRL404m ($223m)in cash for Companhia Brasileira de Locacoes, or Poit Energia, a temporary power company in Brazil. The deal expands Agrekko’s existing presence in LatAm and involves an earn-out payment of up to BRL60m to be paid if the company meets performance targets for the end of 2012, Aggreko says. Aggreko plans to finance the acquisition by tapping its existing debt facilities. Officials at Aggreko and at Poit Energia could not immediately be reached for comment. Last year, Poit Energy had an Ebitda of BRL44m, based on company estimates, meaning the price paid for the company comes in at a 9.18x Ebitda multiple, not including any additional amount paid in the form of an earnout. Aggreko estimates that it will have 36 service centers across Latin America with South American revenues reaching BRL555m. Sao Paulo-based Poit Energia generates revenues from temporary power rental solutions such as generators and lighting towers.
Hypermarcas Signs Pharmaceutical JV with Ache
Brazilian consumer products company Hypermarcas has inked a joint venture deal with Brazilian drug company Ache Laboratorios Farmaceuticos, for the creation of a biotechnological products company. The new venture, the Companhia Brasileira de Biotecnologia Farmaceutica, or Bionovis, will research, produce and market biotechnological products a project that will require an estimated investment of BRL500m ($276.5m) in a span of 5 years, Hypermarcas says. As structured, Hypermarcas will retain a 25% stake in the joint venture. Hypermarcas has seen its operating performance suffer of late as a result of its more restrictive sales terms with wholesalers, according to Moody’s latest credit opinion published November 9. Data from Capital IQ shows the company’s Ebitda margin for 2011 stood at 8.8% at the year’s close, down from 22.1% the year before. Leverage has also grown for the company on the back of a string of acquisitions.
OGX Raises Campos Basin Bet
Brazilian oil company OGX has bought an additional 20% stake in the BM-C-37 and BM-C-38 blocks in the offshore Campos basin, from Maersk oil, it says. With the purchase, the terms of which were not disclosed, the company owned by Brazilian billionaire Eike Batista increases its stake in those wells to 70% and becomes the operator. Maersk will hold the remaining 30% interest in the blocks. Officials at OGX say the deal is a farm-in agreement with an upfront fee and a fixed invested amount that should help fund additional exploration in the area but no additional information is available. The partners have one more year before their exploratory license in the Campos basin expires and they plan to continue to intensify the exploration campaign over the coming months. The latest purchase by OGX makes the company directly responsible for drilling 6 wells in those two blocks in the Campos, an area that alone accounts for more than 75% of oil production in Brazil.
Camargo Aims to Delist Developer Unit
Brazil’s Camargo Correa plans to spend up to BRL180m ($100m) to acquire all outstanding shares of its Camargo Correa Desenvolvimento Imobiliario real estate unit, it says. The conglomerate plans to hold a public tender offer to acquire all of the 38.25m shares, representing 33.85%, that it doesn’t own, for up to BRL4.70 each. It doesn’t disclose a timetable for the public offer.
IFC Sees More Strategic Plays
There should be more opportunities for IFC equity investments in LatAm M&A transactions, especially regional companies expanding cross border, an official tells LatinFinance. The multilateral lender took a $200m stake in Grupo Suramericana to help the Colombian financial group purchase ING’s pension assets last year, and is open to other similar opportunities going forward. “Sura is a regional player looking to become a pension operator across countries, something that governments need. They are in the region to stay, and not going anywhere. We have seen the emergence of these kinds of companies,” Giri Jadeja, the IFC’s senior manager for LatAm and the Caribbean, says. The IFC has a position in Colombia Davivienda, another regional player expanding across borders, and potentially expanding banking to a greater portion of the population. “We are very encouraged by this and therefore we have made a change in our strategy and are looking to support [such companies],” he adds, noting that there could be other opportunities as more Europeans consider strategic exits from the region.
Cemig Buys Abengoa out of JV
Companhia Energetica de Minas Gerais (Cemig) has agreed to buy the remaining 50% of the Companhia Transmissora Alianca de Energia Electrica (Taesa) JV from Spain’s Abengoa for BRL863.5m ($480m), the companies say. The deal follows last year’s sale of the initial 50% for EUR485m ($695m) in cash. The price is adjustable by inflation through the date of closing of the deal, which is subject to regulatory approval. The joint venture holds the STE, ATE, ATEII and ATE III transmission concessions, which cover 2,138 km and have been in operation for an average of 5 years. The companies do not disclose any advisors. Cemig is heard planning an equity sale for its Taesa, to be led by BTG Pactual and Bank of America Merrill Lynch.