Canadian oil and gas company Frontera Energy has scrapped its plans to acquire full ownership of Pacific Midstream by terminating a $225m deal to buy a stake of 36.36% in the latter which it previously didn’t own.
Image: Frontera Energy drops plans of acquiring 100% of Pacific Midstream. Photo: courtesy of supakitmod/ FreeDigitalPhotos.net.
As per an agreement made in October 2017, Frontera was to buy out the stake of International Finance Corporation (IFC) and funds related to it, in Pacific Midstream.
At the time of signing the agreement, Frontera said that the full ownership in Pacific Midstream will enable it to pursue initiatives pertaining to the reduction of, and unwinding of, several transportation commitments, including fixed rate take-or-pay arrangements.
Frontera will now continue to own a majority stake of 63.64% in the company and will pay a break fee of $5m to IFC due to the deal termination.
The company, in a statement, said: “Frontera does not expect this transaction to have any impact on previously disclosed 2018 guidance metrics.”
Pacific Midstream currently owns stakes of 43% in Oleoducto Bicentenario de Colombia and 35% in Oleoducto de los Llanos Orientales.
Oleoducto Bicentenario de Colombia is a consortium founded in 2010 by Ecopetrol to build, operate and manage a 230km pipeline laid from Colombia’s eastern plains (Llanos) region to the Banadia station, where it links to the Caño Limón-Coveñas pipeline.
Oleoducto de los Llanos Orientales, on the other hand, is a Colombian hydrocarbons transportation joint venture. It was created in 2007 by Ecopetrol to construct and operate a 235km diluted heavy crude oil pipeline between the Rubiales pumping station in Meta department, and the Monterrey station located in Casanare department.
In October 2016, Frontera Energy had signed an agreement to sell its stake in Petroelectrica de los Llanos (PEL) to an affiliate of Eléctricas de Medellín – Ingeniería (EDEMSA) for $56m.
PEL owns a 260km power transmission line with 192MW of authorized electricity demand. The company provides power to the Rubiales and Quifa oil fields and the Oleoducto de los Llanos pipeline.