Ecopetrol would be interested in buying the Canadian company Canacol Energy, the largest gas supplier in the Caribbean region that is listed on the BVC, TSX and OTCQX.
Currently, Canacol is trading at 0.34 book value, that is, it has a super discount that Ecopetrol can assume.
Sources tell us that Ecopetrol would be willing to pay $35,000 pesos per share. As of May 23, 2024, the stock closed at $12,900 pesos. Rebound in sight?
Ecopetrol, for a strategic gas asset
The risk rating agency Moody’s downgraded Ecopetrol’s rating to speculative grade, a credit downgrade (Ba1) and an individual rating downgrade to B1.
Firstly, debts have increased by 22% since 4 years ago, while their profits have not grown at this rate. Ecopetrol’s high dividends are leaving the oil company without cash.
Given this scenario, increasing gas reserves at a time of high demand may be the solution to guarantee greater profits and the country’s energy security.
In the last results conference, the president of Ecopetrol, Ricardo Roa Barragán, pointed out that The gas company Canacol is among its acquisition plans.
«We have learned from several media outlets about the possibility that Canacol may enter into a sale of its shares and gas assets in the country. This, surely, is part of the many opportunities and valuation options that Ecopetrol makes internally in its portfolio”said Roa.
Given Roa’s announcement, the president of Canacol, Charle Gamba, pointed out that Canacol has not discussed the sale of assets, but is not opposed to the sale of the company either.
President Petro would have asked Ricardo Roa to increase gas reserves without exploration; an easy way to achieve this goal is to buy Canacol.
Canacol reports that the reserve life index (yrs) 1P is 4.8 and 2P is 9.9.
The stock will surely appreciate when Ecopetrol’s public offer to Canacol is announced.
Currently the value of the company is $845 million dollars, spread over 34.1 million shares.
Read more: Canacol to Fitch Ratings: the Corporation complies with all its debt covenants.
