November 26, 2012 / 4:53 PM / in 5 years

TEXT-Fitch on Pacific Rubiales and C&C Energia deal

Nov 26 - Fitch Ratings views Pacific Rubiales Corp.'s (Issuer Default Rating
'BB+') proposed acquisition of C&C Energia Ltd (C&C) as neutral to
slightly positive for Pacific Rubiales' credit quality. According to the
announced proposal, Pacific Rubiales will acquire all of C&C's producing assets
in Colombia in a stock swap. Pacific Rubiales would also acquire a 5%
participation in a new company, which is yet to be created, that will own all of
C&C's exploration assets. This acquisition will add approximately 18.4 million
barrels of oil equivalent (boe) of proved and probable reserves and increased
the company's gross production by approximately 11,424 barrels per day.

Pacific Rubiales' production profile will improve through this transaction, as
C&C's lighter crude production will provide Pacific Rubiales with a more
favorable diluent source to transport its heavy crude production. Pacific
Rubiales estimates that this acquisition will represent savings of approximately
USD376 million per year on diluent cost.

Pacific Rubiales will issue approximately 22 million shares to C&C's shareholder
in exchange for their production assets and for a 5% interest in the new
company. The value of C&C's production assets and the 5% interest in the new
company are estimated at approximately USD490 million and USD130 million,
respectively, based on the company's offered. This translates into an
acquisition cost of approximately USD620 million. Pacific Rubiales is not
expected to assume any new debt as part of this acquisition.

Pacific Rubiales' ratings are supported by the company's position as the largest
independent oil and gas producer in Colombia and a strong management team with
significant expertise in heavy oil exploration and production. The ratings also
reflect the company's strong liquidity and low leverage. Pacific Rubiales'
credit quality is tempered by the company's small scale, production
concentration and relatively small reserve profile. The company also benefits
somewhat from its partnerships with Ecopetrol (IDR 'BBB-'), Colombia's national
oil and gas company, which shares in Pacific Rubiales' investments and

Additional information is available at ''.

Applicable Criteria and Related Research:
--'Corporate Rating Methodology' (Aug. 8, 2012).

Applicable Criteria and Related Research:
Corporate Rating Methodology

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below