Gran Tierra, Solana to Merge into One Larger E&P Company
Gran Tierra Energy Inc. and Solana Resources Limited have entered into a definitive agreement providing for the business combination of Gran Tierra Energy Inc. and Solana Resources Limited. The transaction is expected to create an exploration and production company with a significantly increased operating scale and balance sheet.
Dana Coffield, President and Chief Executive Officer of Gran Tierra, will continue as the President and Chief Executive Officer of the combined company, while Mr. J. Scott Price, President and Chief Executive Officer of
Solana, will join the board of directors of the combined company. The Board of Directors will be comprised of seven members including the current directors of Gran Tierra: Jeffrey Scott, Walter Dawson, Verne Johnson, Nick Kirton, and Dana Coffield, as well as Scott Price, and the current Chairman of the Solana board of directors, Mr. Ray Antony. Mr. Scott, Chairman of the Gran Tierra board of directors, will maintain his position as Chairman.
Commenting on the transaction, Coffield stated, "We are very pleased to make this announcement and we expect the transaction will create a much more substantial company in a consolidating global industry while preserving Gran Tierra's operating leadership. The combination creates a company with a 100% working interest in one of the most important oil discoveries in Colombia in recent years, the Costayaco field. The anticipated production and cash flow growth from Colombia will fund continued exploration on the resulting company's combined land position, in addition to increasing the capability to undertake much larger and material new venture initiatives in the future."
Price added, "The combination of the two companies will not only consolidate a premium light oil asset in Colombia, but will also launch a substantive, well financed, South American focused entity with an enviable
land position and a portfolio of opportunities across the risk spectrum. We believe this transaction will result in significant value accruing from the asset consolidation and resultant economies of scale."
Highlights of the Combined Entity
Management of Gran Tierra and Solana expect that the combination will provide many benefits, including the following:
- Creation of a stronger South American oil producer with significant producing assets in Colombia;
- Significant exploration portfolio properties in each of Colombia, Argentina and Peru;
- Consolidation of 100% of the working interest in the Costayaco field (95% economic interest excluding government royalties), a major light oil discovery made in Colombia in 2007, currently under delineation and development;
- An entity with a pro-forma enterprise value of approximately $1.35 billion based on Gran Tierra's stock price on July 28, 2008, which is expected to result in enhanced liquidity and a more competitive cost of capital; and
- Strong pro-forma cash flows which are expected to allow the combined entity to internally finance the exploration and development of the Costayaco field, pursue other exploration opportunities on the combined company's large undeveloped land base in Colombia, Argentina and Peru, and pursue additional new venture growth opportunities.
- Los Aceites-1 in Colombia Flows 5,645 BOPD (Oct 09)
- Solana Tests Positive at Los Aceites-1 in Colombia (Sep 04)
- Solana Makes Headway on Los Aceites-1 in Colombia (Aug 25)
Company: Gran Tierra Energy more info
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