Post-deal-collapse comment on Pacific Rubiales Energy Corp.

Actions speak louder than words. (As do bonos.)

 

Adding (later): At least nobody can accuse him of front-running anything. Practically pegged the bottom there.

ALFA wants to spend billions of dollars on this

Thanks to the indispensable Otto Rock, always with his ear to the ground for community (ahem) issues, I hear about this situation in Puerto Gaitan.

Following several days of protest around the Pacific Rubiales offices in Puerto Gaitan, Meta, a group of about 60 indigenous people entered and took over the multinational’s premises. The natives of the community Vencedor-Pirirí arrived with clubs and bows to demand that Pacific fulfill agreements it had with them, including maintenance of the Puerto Gaitan-Rubiales road, schools, and health centers. The situation in the morning became tense over the situation of Pacific employees, so the police intervened.

A police officer goes on to explain that some workers were briefly held captive until the police moved in. The host comes back to say that several vehicles have been burned in the protest.

In other news, a pal in Bogotá says Pacific has already taken its name down from its headquarters building, and I heard third-hand that signs in the oilfields are being replaced with signs that don’t have Pacific’s name. If anyone could get me a photo of either of those, I’d be quite grateful. I’d be happy to post it here with or without attribution, your choice.

Pacific Rubiales takeover situation gets truly weird

I never thought I’d just repost a press release from Orlando Alvarado on my blog. An Orlando Alvarado was at one point CFO of Derwick Associates, according to a lawsuit that company filed in 2012, and Alek Boyd says he confirmed somehow that one of these companies includes in its owners the chairman of Derwick Associates. So, this all looks terribly Derwicky, though the documentation is as yet a bit thin.

And I don’t even know what to say about this. All very strange. Theories and speculation are welcome in comments or in my inbox.

Bloomie & Reuters say Pacific Rubiales sold

UPDATE: companies confirm, see end of story

Stories here and here.

Meanwhile, the official method of informing the market:

And the share price after Bloomberg ran its first headlines:

Never change, guys.

Update 12:35 pm Eastern Time, 11:35 in Mexico. ALFA makes it official! And someone on the Twitter points out that Pacific also posted a statement, though it’s not yet on SEDAR or on the company’s own home page.

Pacific Rubiales Energy Corp. (TSX: PRE) (BVC: PREC) announces that it has entered into exclusive discussions in respect of an offer from ALFA, S.A.B. de C.V. (“ALFA”) and Harbour Energy Ltd. (“Harbour Energy”), whereby they would acquire all of the issued and outstanding common shares in the capital of the Company (“Common Shares”) not owned by ALFA for a price of C$6.50 per share, subject to completion of definitive documentation and final Board approvals. The Company’s Board has constituted a Special Committee comprised of independent directors, which has engaged an independent financial advisor to deliver a formal valuation in accordance with applicable Canadian securities laws.

Together, ALFA and Harbour Energy have completed technical, financial and legal due diligence. ALFA and Harbour Energy have agreed with the Company to work toward completion of definitive documentation expeditiously. The contemplated transaction would be subject to a number of conditions and there can be no assurance that any transaction will be completed.

ALFA currently holds 59,897,800 Common Shares, representing approximately 18.95% of the issued and outstanding Common Shares.

Pacific Rubiales, ALFA and Harbour Energy do not intend to provide further updates, except as required by applicable laws.

UPDATE2: And then there’s this. WTF, really?

Derwick Associates has a very good day

As they portray themselves

Yesterday was a good day for the guys in charge of Derwick Associates.

Last week, a group of three companies, two in Panama and one in Barbados, disclosed they had bought a bit more than 10% of Pacific Rubiales Corp. The Panama companies were well anonymized, but the Barbados one less so. Alek Boyd said on Twitter April 28 that he got the paperwork for the Barbados company. It belongs, he says, to Alejandro Betancourt, chairman of Derwick Associates. This was a surprise, given as I’ve covered each of those companies extensively and the last we heard, a top Pacific Rubiales executive was saying he didn’t know the Derwick guys.

Otto does PREC

A few interesting Pacific Rubiales items recently, picked up by the always attentive Otto at IKN. Go over there, he’s better at this blogging stuff than I am.

For what it’s worth I watched the video he linked there, and I thought it desperately needed an edit. And I hate, hate hate documentaries with looming drama music. But if for nothing else, it’s worth watching the video to see the spectacular video of the Colombian llanos that are being exploited for both petroleum and palm oil these days. Good to know what kind of paradise you’re wrecking every time you fire up the old V-8.

Sometimes a cigar is just a cigar ($PRE.to, Derwick Associates)

This week I noticed this curious securities filing from US Oil Sands Inc from 2012. It includes the following tidbit:

There’s nothing unusual about these two investment companies buying shares of an oil company. Ice Rose Holdings is controlled by Serafino Iacono, co-chairman of Pacific Rubiales Energy Corp., ID Introduction Ltd. is controlled by Jose Francisco Arata, as shown here. Arata is president of Pacific Rubiales. Oil guys, buying shares in an oil company.

What caught my eye was the address of Arata’s company. Torre Kyra PH-1, where have I heard that address before? That’s right: Derwick Associates. Having spent too many hours studying both Pacific Rubiales and Derwick Associates, without the vaguest sense that they overlapped*, I had to wipe up the shrapnel from my exploding head.

A Pacific Rubiales executive using Derwick’s address in 2012. That would have been pretty interesting.

But as I always like to do, I gave Pacific Rubiales a chance to comment. And in a rare departure, the company responded. A gracious note, too (even though they apparently have me confused with another blogger). Here’s what they say:

As to Derwick Associates, Mr. Arata does not know the company or the people running it and has no relationship with that company.  The address in question was the address in Caracas for companies that Mr. Arata worked for, but the office was sold back in 2009 and has not been used by Mr. Arata since. The filing from 2012 is simply an error, resulting from a failure on our part to update ID Introduction’s corporate address when helping Mr. Arata file the notice of private placement you read.  The proper corporate address is actually in Panama.

Thanks for the heads’ up on this, as we are now checking all our filings to make sure that ID Introduction’s proper address is reflected in all current filings.

So now on to another person using the address of Torre Kyra, PH-1. Mr. Alvarado, I’d love to give you a chance to comment, too, but I can’t find any contact info. Be in touch, let me know how to reach you.

* Unless you count that they both have dealings with David Osio’s financial institutions. But who doesn’t, right?

Alfa’s financial investment ($PRE.to, ALFAA.mx)

ALFA, a big Mexican conglomerate, said in May it had bought 31,437,700 shares of Pacific Rubiales Energy Corp. (PRE.to), or 10% of the company. It disclosed after buying some shares for $18.43, which at the time was a low price for PRE.

Then, in August, Alfa announced it had bought 9 million shares of PRE.to at $21 a share, bringing its total holding to 17%.

We don’t know exactly how much Alfa spent on its PRE.to shares, but we know from Canadian regulatory filings that from May 20 to August 20, Alfa paid an average $21.03 per share, or $489 million.

At that point, things were looking good. Those 53,657,900 shares closed that day at $21.65 apiece, for a total value of C$1,162 million.

Price action since then:

At the current price of $17.88, that decline works out to a paper loss of $200 million on Alfa’s shares since that Aug. 20 press release. (From $1,162 million to $961 million. Feel free to check my math, I failed basic arithmetic.)

I’m no expert in trading patterns, but I have a theory here.

Venezuela recastrates environment ministry

Some oil spill in Venezuela. Stolen without permission from El Universal.

Venezuela. One of the world’s biodiversity hotspots. A place with a nasty heavy-oil industry that produces tremendous quantities of water and spills oil into tropical rivers. And now, a place with no environment ministry.

It was bad enough when the ministry was stupid and weak. Now, it’s been “consolidated” with the housing ministry. In a country where nobody except the government builds homes, the housing ministry has its hands full. It won’t dedicate a whole lot of time or money to the environment.

Pond of produced water from oil well in Anzoátegui state, Venezuela, with scum of crude oil in foreground. Open to migrating birds, occasionally “cleaned” by burning off crude. My photo.

Meanwhile, in Colombia, the environment ministry has grown a spine and recently sanctioned Pacific Rubiales Energy Corp for improper water disposal in the llanos. (Funny how the Colombian press and the company have failed to report on that, eh? Thanks to Primera Página, the only real independent biz media in Colombia, for the heads-up on that news item.)

Sure, it’s probably about a decade late to the action, but it shows that a government can occasionally restrain the excesses of the oil industry if it wants to. In Venezuela, that won’t be happening.

Wet savannah near Campo Rubiales, Colombia. My photo.

I eagerly await the condemnation of Amazon Watch, the International Rivers Network, and other protectors of the environment.

Another day, another Amazon oil spill

PetroPerú tries its hand at environmental devastation. Environmental Health News writes it up in English:

On the last day of June, Roger Mangía Vega watched an oil slick and a mass of dead fish float past this tiny Kukama Indian community and into the Marañón River, a major tributary of the Amazon.

Community leaders called the emergency number for Petroperu, the state-run operator of the 845-kilometer pipeline that pumps crude oil from the Amazon over the Andes Mountains to a port on Peru’s northern coast.

By late afternoon, Mangía and a handful of his neighbors – contracted by the company and wearing only ordinary clothing – were up to their necks in oily water, searching for a leak in the pipe. Villagers, who depend on fish for subsistence and income, estimated that they had seen between two and seven tons of dead fish floating in lagoons and littering the landscape.

“It was the most horrible thing I’ve seen in my life – the amount of oil, the huge number of dead fish and my Kukama brothers working without the necessary protection,” said Ander Ordóñez Mozombite, an environmental monitor for an indigenous community group called Acodecospat who visited the site a few days later.

Read it all here.

And on July 2, PetroEcuador had a freakishly similar situation. Amazon Watch offers the details: