Pacific Rubiales Energy Corp. (TSX: PEG) announced today that it has closed the acquisition of Kappa Energy Holdings Ltd. for a cash payment of approximately US$168 million, subject to minor post-closing adjustments and regulatory approval in Colombia.
Proceeds were financed through the previously announced issuance of a convertible unsecured subordinated debenture offering of C$240 million with an 8% coupon and a conversion price of C$13.00. GMP Securities L.P. acted as the exclusive financial advisor in connection with this transaction.
Kappa is a Colombian oil and gas exploration and production company which holds exploration and production licenses in Colombia with a commanding land position totaling 747,000 acres. This acreage consists of nine leased and operated blocks in the Catatumbo, Lower, Middle and Upper Magdalena, and Llanos basins of Colombia.
Kappa has a strong existing reserve base with, as of May 31, 2008, approximately 10.3 million barrels oil equivalent (MMBOE) of proven and probable reserves and 24.2 MMBOE of proven, probable and possible reserves. In addition, 166 MMBOE of prospective resources have been identified in the best estimate case. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. All the reserve numbers quoted above are net before royalties.
The reserve and resource estimates set forth herein were prepared by Petrotech Engineering Ltd., of Burnaby, Canada effective as of May 31, 2008 in accordance with the Canadian Oil and Gas Evaluation (COGE) Handbook and the requirements of the Canadian National Instrument 51-101 standards of disclosure for oil and gas activities. The independent reserve and resource evaluation report has been filed on SEDAR.
Ronald Pantin, the company's Chief Executive Officer, stated "We are thrilled with the potential upside of the Kappa acquisition and have exciting plans to maximize the value of this investment." -- www.cnxmarketlink.com
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