Canada based Gran Tierra Energy has agreed to divest its Brazil business unit to Swedish oil recovery company Maha Energy for $35m.
The acquisition price is subject to adjustments, along with the assumption by Maha of certain existing and potential liabilities of the Canadian company’s Brazil business unit.
Gran Tierra stated that its Brazilian assets are not significant to its Colombia growth strategy. It further stated that through the divestiture, it can reallocate people and money resources to core exploration, development and production operations in Colombia.
For Maha, the acquisition is said to be of low-risk as it gets a producing asset close to its existing Tartaruga Field, providing the company a robust foundation for growth.
Maha CEO Jonas Lindvall said: "The Acquisition represents a unique opportunity to further grow Maha's position in Brazil. It will provide Maha an immediate cash-flowing production base that can be readily grown through low-risk development initiatives, which will be complementary to our Tartaruga asset in Brazil and LAK Ranch asset in Wyoming, U.S.”
Following the completion of the deal, Maha will acquire 100% of Gran Tierra's Brazilian assets which is inclusive of the latter’s 100% operational stake in the Tiê Field and all of the Canadian company’s stake in exploration rights and obligations held in accordance to concession agreements given by the Agência Nacional do Petróleo, Gás Natural e Biocombustíveis of Brazil (ANP).
The deal is subject to the Swedish company’s obtaining of the acquisition amount, along with as customary closing conditions that include receipt of mandatory regulatory approval from the ANP.
The economic effective date of the transaction will be on or before 1 August 2017.