Gran Tierra to acquire PetroLatina Energy for $525m

Gran Tierra Energy has signed an agreement to acquire Colombian-based exploration and production company PetroLatina Energy in a transaction valued at $525m.

The acquisition will give Gran Tierra complementary acreage positions in Middle Magdalena basin, Llanos basin and Putumayo basin and will also add 469,000 working interest (WI) acres across Colombian portfolio.

PetroLatina’s key asset is a 100% operated WI in the Midas Block in the Middle Magdalena basin, which comprises the Acordionero conventional oil field discovered by the company in 2013.

Acordionero consists of about 90% of PetroLatina’s total WI 2P reserves of 53MMbbl. As of 31 May this year, one discovery exploration well and three follow-up appraisal wells have been drilled in the field.

Gran Tierra Energy president and CEO Gary Guidry said: "The acquisition represents a unique material opportunity in Colombia in terms of scale and upside potential, and will add a new core area for Gran Tierra in the prolific Middle Magdalena Basin.

"The combination of Gran Tierra’s strong, positive cash-flowing asset base and PetroLatina’s attractive portfolio of development opportunities will create a premier, Colombian-focused exploration and production company."

The acquisition will establish a new core area for Gran Tierra in the Middle Magdalena basin and is expected to be funded through a combination of the company’s existing cash balance, available borrowings under its existing credit facilities, a new $130m debt facility and a private placement of up to $173.5m worth of subscription receipts

Guidry further added: "We are acquiring significant proved, probable and possible reserves in a new core area within the Middle Magdalena basin, which we expect to enhance our long-term growth strategy and to be an excellent fit with Gran Tierra’s current reserves and resources base in the Putumayo basin."

With the acquisition, Gran Tierra will be able to improve its land position in the Putumayo basin by increasing its WI in the PUT-4 Block from 70% to 100% WI and adding the 100% WI PUT-25 block.