Canada-based Frontera Energy has entered an agreement to purchase the outstanding 36.36% stake in Pacific Midstream (PML) from International Finance for $225m.
Set to provide 100% ownership of PML, the acquisition will include instalment payments over 36 months and accrued interest over unpaid amounts.
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The deal is expected to allow Frontera to carry out reduction and unwinding initiatives of different transportation commitments such as fixed rate take-or-pay arrangements.
Frontera Energy chairman Gabriel de Alba said: “This is a very strategic acquisition for Frontera as we pursue a series of initiatives intended to reduce our corporate transportation costs, provide long-term transportation flexibility, and reduce fixed cost transportation obligations.”
After the transaction, PML will include 100% stake in Petroelectrica de los Llanos, 43% in Oleoducto Bicentenario de Colombia and 35% ownership of Oleoducto de los Llanos Orientales.
The acquisition is subject to modifications to Frontera’s take-or-pay contracts that may minimise tariffs and other customary closing conditions.
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By GlobalDataFrontera Energy CEO Barry Larson said: “This initiative is important for Frontera as we look to right size our transportation costs.
“I would like to thank those who contributed to the success of these negotiations and this transaction, especially our Corporate Development and Transportation and Marketing teams who continue to work diligently to help us increase our margins by reducing our costs.”
With primary operations in Latin America, Frontera includes assets and interests in more than 25 exploration and production blocks in Colombia and Peru.
