Petrominerales Announces Strategic Acquisition Of Interest In Colombia’s Ocensa Pipeline

abarrelfullabarrelfull wrote on 22 Jun 2011 07:45
Tags: colombia petrominerales pipeline

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Petrominerales Ltd. (“Petrominerales” or the “Company”) (TSX:PMG) is pleased to announce that we have entered into an agreement to acquire a five percent interest in the Oleoducto Central S.A. (“Ocensa”) crude oil pipeline from Total E&P Holdings (“Total”), for a purchase price of US$281 million.

The 830 kilometre Ocensa pipeline starts onshore at the Cusiana and Cupiagua fields and terminates at the port in Coveñas on the Caribbean coast of Colombia. The Ocensa pipeline is presently running at capacity, transporting approximately 560,000 barrels of oil per day (“bopd”) from the Llanos Basin, representing sixty percent of the current total oil production in Colombia.

We expect to transport approximately 25,000 bopd of crude oil through the Ocensa pipeline, providing numerous benefits to Petrominerales, including those listed below.

  • Ocensa is the most strategic pipeline for Llanos Basin production as it is the lowest cost crude oil transportation alternative to international markets.
  • The acquisition of an interest in Ocensa aligns with Petrominerales’ corporate objective of continuing to be the highest netback producer in Colombia.
  • With this strategic infrastructure asset, our first quarter 2011 total Company operating netbacks would have been at least $5.00 higher than the $69.34 per barrel of oil operating netbacks reported, due to lower trucking costs and higher realized pricing.
  • For approximately 25,000 bopd of our Llanos Basin production that will be transported through the Ocensa pipeline, we expect to realize average cost savings of over $10.00 per barrel of oil.
  • Transportation of Llanos Basin production on the Ocensa pipeline enables cost savings of over $20.00 per barrel of oil when compared to the cost of trucking production to export terminals on the Caribbean coast of Colombia.
  • The acquisition reduces our exposure to escalating trucking costs.
  • The interest in Ocensa will provide Petrominerales with marketing flexibility through increased access to international oil markets and premium crude oil pricing, which will further enhance our netbacks.
  • Along with our 9.65% interest in the Bicentenario pipeline (OBC), the acquisition supports our long-term corporate objectives by securing strategic transportation capacity for our growing base of production, including our heavy oil opportunities.

The acquisition is expected to close on or about July 20, 2011, subject to customary regulatory approvals.

TD Securities Inc. acted as the exclusive financial advisor to Petrominerales

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