Petro Rubiales and Pacific Stratus Agree to Merger to Create Pacific Rubiales Energy Corp.
Nov 12, 2007
VANCOUVER and TORONTO, Nov. 12 /CNW/ - Petro Rubiales Energy Corp. (TSXV: PEG) and Pacific Stratus Energy Ltd. (TSX: PSE) are pleased to announce that they have entered into an agreement by which Petro Rubiales will combine on a market to market basis with Pacific Stratus through a court approved plan of arrangement. Pursuant to the combination, Pacific Stratus will become a wholly-owned subsidiary of Petro Rubiales and the combined entity will be renamed "Pacific Rubiales Energy Corp." The combined entity is expected to have a fully diluted market capitalization of approximately Cdn$2.5 billion and will result in the formation of a world class diversified oil and gas producer, with an inventory of exploration upside opportunities. Shareholders in Pacific Rubiales will own a unique company with:- Significant oil and gas production (2008 estimated combined production in excess of 30,000 barrels of oil equivalent per day (boepd)) - Continued significant natural gas exploration upside from Pacific Stratus's 100%-owned Colombian blocks (the La Creciente block has 7 prospects, with the initial prospect "A", containing proved plus probable reserves of 0.6 trillion cubic feet (tcf) of gas) - Oil exploration opportunities on the Arauca, Quifa and new Peruvian blocks - Complementary management skill sets with an enhanced technical expertise in both production and exploration, in both oil and gas - The largest independent oil and gas exploration and production base in Colombia - Positioning amongst the largest international oil and gas exploration companies on the TSX - Significant upside given the below market metrics as compared to the company's TSX peer group - A balanced and diversified asset base - A strengthened cash position of Cdn$220 million and balance sheet to support future acquisitions in South America, positioning it as a significant and opportunistic oil and gas consolidatorPacific Stratus shareholders will receive 8.85 common shares of Petro Rubiales for each share in Pacific Stratus. The holders of common share purchase warrants and options of Pacific Stratus will receive common share purchase warrants and options of Petro Rubiales, in amounts and at exercise prices to be based on the common share exchange ratio. The exchange ratio represents a market to market transaction based on the agreed 10, 15 and 20 day volume weighted average price of the two companies. The transaction will require approval by 66 2/3% of Pacific Stratus shareholders voting and present at a special meeting of Pacific Stratus shareholders to be held in Toronto in early 2008 (exact date to be announced at a later date). Petro Rubiales' shares shall remain the same and no action is required by its shareholders. Completion of the transaction is subject to the satisfaction of certain conditions by both parties, including the completion of due diligence investigations. It is also subject to the execution of a definitive agreement and the approval of both the Toronto Stock Exchange and TSX Venture Exchange. It is anticipated that the transaction will be concluded in the first quarter of 2008. The agreement may be terminated if certain conditions are not met, but if a party terminates the agreement or fails to consummate the transaction or enters into an agreement with a third party, such party shall pay to the other a termination fee. Upon completion of the transaction, the board of directors of the combined entity is expected to be Serafino Iacono (Co-Chairman), Miguel de la Campa (Co-Chairman), Ronald Pantin, Jose Francisco Arata, German Efromovich and Gordon Keep. In addition, a four person advisory board consisting of Augusto Lopez, Miguel Rodriguez, Jose Efromovich and John Zaozirny will also be appointed, with the expectation that the board of directors of Pacific Rubiales will be increased to ten at its next annual meeting, at which time these four individuals will be added to the board of directors. The boards of directors of both Petro Rubiales and Pacific Stratus have unanimously approved the transaction. The recommendation of Petro Rubiales' board of directors is supported by a fairness opinion from its financial advisor, Endeavour Financial International Corporation, and that of Pacific Stratus's board of directors is supported by a fairness opinion from its financial advisor, GMP Securities L.P. As well, Orion Securities Inc. provided an additional fairness opinion to the board of Pacific Stratus. Ronald Pantin, President and Chief Executive Officer of Petro Rubiales said, "This transaction is a merger of complementary companies that helps create one of the largest oil and gas production and development companies in Colombia. It provides an immediate increase in production to our shareholders and creates a diversified company with an exciting exploration portfolio." Jose Francisco Arata, Chief Executive Officer of Pacific Stratus stated, "This transaction is very compelling in that it combines Pacific Stratus's very strong exploration team with an extremely competent production team from Petro Rubiales. Both companies hold a significant oil and gas exploration portfolio and the merger will allow them to leverage their strong operational and exploration expertise at their respective properties. The combined entity is well placed to become a significant factor in the Colombian and South American energy market." Petro Rubiales and Pacific Stratus have an existing letter agreement whereby Pacific Stratus has the right to earn 50% of Petro Rubiales' interest in the Quifa Association Contract, while Petro Rubiales has the right to earn a 50% interest in Pacific Stratus' interest in the Arauca Technical Evaluation Agreement, both in Colombia. Endeavour Financial International Corporation acted as exclusive financial advisor to Petro Rubiales and GMP Securities L.P. is acting as exclusive financial advisor to Pacific Stratus. Petro Rubiales and Pacific Stratus will host a special joint web cast and teleconference call on Tuesday, November 13, 2007 at 8:30 a.m. (EST) to discuss the transaction. The web cast can be accessed through: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2096820 Call-in details are as follows: Toronto & International: (416) 644 3433 North America: (800) 732 0232 Petro Rubiales, a Canadian-based company and producer of heavy crude oil, is owner of 100 percent of Meta Petroleum Limited, a Colombian oil and gas operator which operates the Rubiales and Piriri oil fields in the Llanos Basin in association with Ecopetrol S.A. the Colombian, state-owned oil company. The Company is focused on identifying opportunities primarily within the eastern Llanos Basin of Colombia. Pacific Stratus Energy is a Canadian-based oil and gas company that initiated operations in 2004. The company is focused on identifying attractive opportunities primarily within the upstream Sub Andean basins. Pacific Stratus has a current net production of 1,900 barrels of oil per day, with working interests in the Caguan, Dindal, Rio Seco, Puli B, La Creciente, Moriche, Guama and Arauca blocks in Colombia and blocks 135, 137 and 138 in Peru. The company has offices in Toronto, Caracas and Bogota. Further information is available on our website at www.pacificstratus.com. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release. This press release contains forward-looking statements based on assumptions, uncertainties and management's best estimates of future events. Actual results may differ materially from those currently anticipated. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from those expressed or implied by such forward looking statements are detailed from time to time in the respective company's periodic reports filed with the British Columbia Securities Commission and other regulatory authorities. Neither company has the intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
For further information:
For further information: Petro Rubiales Energy Corp.: Mr. Ronald Pantin, Chief Executive Officer and Director, (604) 688-9180 or Dr. Sally L. Eyre, Senior Vice President, Corporate Development, (604) 688-9180; Pacific Stratus Energy Ltd.: Jose Francisco Arata, Chief Executive Officer, (416) 362-7735, email@example.com or Peter Volk, General Counsel & Secretary, (416) 362-7735, firstname.lastname@example.org