Petrominerales Ltd. (PMG), a Calgary-based oil company that operates in Colombia and Peru, dropped after announcing a $36.9 million acquisition to expand into Brazil amid declining production.
Shares fell 2.9 percent to 13,860 pesos at 2:24 p.m. in Bogota after earlier falling as much as 3.4 percent, the largest intraday drop since Nov. 28. The stock is down 56 percent this year in the second-worst performance on Colombia’s Colcap Index, which has climbed 15 percent.
Petrominerales acquired a 75 percent stake in Alvopetro SA Extracao de Petroleo e Gas Natural, according to a statement. The acquisition includes seven exploration blocks in Brazil and three onshore producing oil fields. Petrominerales’s production, down 29 percent in the third quarter from a year earlier, dropped further in November, the company said today.
The acquisition is “interesting but higher risk,” CIBC World Markets Inc. analyst Ian Macqueen wrote in an e-mailed response to questions. “It won’t solve their problem of declining production.”
Fortress Energy Inc., also based in Calgary, will have the remaining 25 percent, according to a separate statement. Alvopetro is a Brazilian private oil and gas company, according to the Fortress statement.
“We are excited about our initial entry into Brazil with this large resource opportunity,” Petrominerales said in its statement.
Production averaged 25,032 barrels a day in November, Petrominerales said today in an operational update. In the third quarter, the company pumped 26,334 barrels a day, down from 37,124 a year earlier, according to a statement Nov. 5.
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