Petro Andina Resources Inc. (PAR.T) are up 29%
By Jennifer Walter
Of DOW JONES NEWSWIRES
TORONTO (Dow Jones)--Shares of Calgary's Petro Andina Resources Inc. (PAR.T) are up 29% after Pluspetrol Resources Corp. N.V., said it is planning a C$8.10-a-share offer for the company, which is focused on developing a heavy-oil resource in Argentina's Neuquen Basin.
In Toronto Thursday, Petro Andina is up C$2.00 to C$8.95, well above the offer price, on 4.3 million shares.
Pluspetrol's offer totals C$400 million and represents a 17% premium to Petro Andina's closing price of C$6.95 on the Toronto Stock Exchange Wednesday. Pluspetrol said the bid also represents a premium of about 31% to the C$6.20-a-share issue price in Petro Andina's recent equity offering.
Pluspetrol, a privately held Netherlands company, is mainly focused on the exploration and production of hydrocarbons in Latin America. It said it's a major player in Argentina's energy sector and also has interests in Peru, Bolivia, Venezuela, Colombia and Chile.
Petro Andina has assets in Argentina, and exploration programs in Colombia and Trinidad and Tobago.
Rafi Khouri, an analyst with Raymond James, said the bid was unexpected. Khouri recently raised his target for Petro Andina to C$9 from C$8. "My view is that Pluspetrol's bid undervalues the company," Khouri said.
Khouri doesn't own shares of Petro Andina, but Raymond James was involved in the company's recent equity offering.
Wellington West analyst Kevin Shaw released a research report and raised his rating on Petro Andina to strong buy from buy, citing the company's strong financial position and growth prospects. Shaw, who has a target of C$12 for Petro Andina, also believes the bid undervalues the company.
Shaw told Dow Jones that while Pluspetrol's bid was unexpected, it isn't surprising given the "high quality" of Petro Andina's assets, and the fact that both companies are involved in enhanced oil recovery in South America.
"South America is a place that is very attractive on the international circuit right now because it's a large growth area for specialty oil reserves in the world," Shaw said. "There's potential that other oil companies could be interested in Petro Andina."
Shaw added that he believes it's likely the bid is hostile, given that Pluspetrol proposed a cash deal. "It's a very opportunistic positioning move by the buyer, and Petro Andina's management is obviously going to have lots to think about." Shaw doesn't own Petro Andina shares, and Wellington West has received compensation for investment banking from Petro Andina in the last 12 months.
Pluspetrol said the bid will be formally launched on Friday, and will be open for 60 days. Petro Andina officials weren't immediately available for comment.
Company Web Site: http://www.petroandina.com
-Jennifer Walter, Dow Jones Newswires, 416-306-2028 jennifer.walter@dowjones.com
(Carolyn King in Toronto contributed to this story.)
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