Maurel & Prom Divests Colombian Subsidiary to Ecopetrol for $748MM
Ecopetrol and Maurel & Prom have reached an agreement for Ecopetrol's acquisition of Hocol, a company engaged in exploration and production of hydrocarbons in Colombia.
The transaction will amount to US $580 million in addition to an approximate amount of $168 million of working capital. The transaction has an earn-out based on the level of 2P reserves of the potential Huron field in the Niscota license and an earn-out linked to the level of the future oil price.
The acquisition includes high impact exploration blocks and shares in the Upper Magdalena Pipeline (36.12%) and in Oleoducto de Colombia (21.72%).
This acquisition is part of Ecopetrol´s expansion plan in exploration and production areas, most of which is located in Colombia, and it is framed within its strategy, which is intended to increase its production up to one million barrels of oil equivalent per day in the year 2015.
Hocol is present in fields located on the basin of the Upper Magdalena Valley and the Llanos (plains) region. It started operations in 1962 and its investments have been focused on enhancement of secondary recovery, development of existing reserves, and improvement of production maintenance and yield.
Hocol produced nearly 15 thousand barrels of oil per day (kbpd) in 2008 and it is expected that it will increase to 22 thousand kbpd in 2009. Most of its production comes from the San Francisco, Balcon, Palermo and La Hocha fields, which are located in the province of Huila. It also has productive assets in the Eastern Plains region, distributed in 6 association contracts (Casanare, Estero, Garcero, Orocue, Corocora and Guarrojo).
Besides being a profitable company for its shareholders, Hocol has been acknowledged for its Social Responsibility activities and its social investment programs.
The agreement between Ecopetrol and Maurel & Prom took place in Paris today. To formalize the transaction, the legal procedures required for this type of operations with the Colombian authorities will be undertaken.
Ecopetrol is Colombia's largest company and it is integrated in the petroleum chain, positioned among the top oil companies in the world and the four major oil companies in Latin America. Besides Colombia, where over 60% of domestic production is concentrated, it is involved in exploration and production activities in Brazil, Peru and the United States (Gulf of Mexico). Ecopetrol owns the main refinery in Colombia, most of the network of oil and multiple purpose pipelines in the country, and it is considerably increasing its share in biofuels. Ecopetrol produced 447,000 barrels per day of oil equivalent in 2008.
Hocol is a very well positioned company in Colombia. Its assets are located in the areas with the greatest activity and proven potential. It operates most of its assets and is recognized for its high level performance in social responsibility within its areas of influence. Based on the value of its reserves and production, it is positioned as the seventh company in size in the country and it was ranked third for its exploration activity in Colombia in 2008.