Pacific Rubiales sells Ocensa Pipeline stake

Pacific Rubiales Energy Corp. has reached an agreement to sell its 5% interest and transportation rights in the Oleoducto Central S.A. (Ocensa) oil pipeline in Colombia for a total cash consideration of US$ 385 million to a consortium led by Darby Private Equity (Darby), the private equity arm of Franklin Templeton.

The investment will be made by Darby's Fondo de Infraestructura de Transporte de Colombia (FINTRA). The Ocensa pipeline interest and transportation rights were acquired from the Company's previously announced acquisition of Petrominerales Ltd., which closed on 28^th November, 2013.

The transaction includes the sale of the 5% equity interest in the Ocensa pipeline, along with the accompanying transportation capacity rights, including current and future capacity expansions. The Company has entered into a ten year agreement to secure transportation capacity for a take-or-pay incremental charge in addition to the regulated tariff on the pipeline. The transaction is expected to close in early 2014.

Ronald Pantin, the Company's Chief Executive Officer, said, "This transaction represents an attractive deal for both companies. Darby will receive a steady and secure rate of return on its investment. Pacific Rubiales will receive US$ 385 million in cash, which we will use to pay down the debt incurred by the Company in connection with the Petrominerales acquisition, reducing the acquisition cost to approximately Cdn$ 1.2 billion and significantly improving the acquisition metrics.

"In addition, we have secured approximately 29 million bpd of long-term transportation capacity in the largest and most secure oil pipeline in Colombia, which is  strategic to the Company's plans to increase its heavy oil production out of the southern Llanos basin. Along with our existing preferential capacity rights in the Ocensa pipeline and our interests in the new Bicentenario oil pipeline, this additional capacity in the Ocensa pipeline will largely eliminate our need for major long-haul trucking and is expected to reduce our overall transportation costs in the future."

Itaú BBA acted as sole financial advisor on this transaction.

Adapted from press release by Hannah Priestley-Eaton

Read the article online at: https://www.worldpipelines.com/business-news/02012014/pacific_rubiales_sells_ocensa_pipeline_stake/