Pacific Rubiales Energy Corp. (TSX: PRE) (BVC: PREC) crashed nearly 50% when the Columbian oil producer’s potential suitors walked away from the deal.
Pacific Rubiales Energy announced Thursday morning that, at the request of ALFA, S.A.B. and partner Harbour Energy Ltd., that it has agreed to terminate the arrangement agreement entered into between such parties on May 20, 2015. Below is a short excerpt highlighting the devastating news:
“The Arrangement Agreement contemplated a plan of arrangement (the “Arrangement”) pursuant to which the Purchaser would have acquired all of the outstanding common shares of the Company not already owned by ALFA or held by the Company in treasury for cash consideration of C$6.50 per share and including the assumption of the Company’s debt.”
Click here to read the entire press release.
Pacific Rubiales Energy crashes 45% Thursday
The panic selling witnessed in Pacific Rubiales Energy is bringing back memories of 2008 for some investors as the markets seem to be teetering on the brink.
Pacific Rubiales Energy – 1 Year Chart
While its operations are not focused in Canada, Pacific Rubiales Energy is the latest blow to a beleagueredoil and gas sector. The losses in Canadian’s oil sector are beginning to mount as the country enters recession.
The Financial Post reported on July 8th that, “Globally, at least 33 major oil and gas projects have been delayed or cancelled since the start of 2015. That’s what a 50 per cent price cut does. Of those 33 axed projects, 16 are in the Canadian oil sands region…”
Pacific Rubiales Energy saw analysts cut target prices across the board as its shares went into free fall mode Thursday.
David Dudlyke, an analyst at Dundee Securities Ltd., cut his target price to $3 per share, commenting that:
“Pacific Rubiales has, in recent weeks, made it abundantly clear that, as an independent company, it will necessarily have to focus on cost-cutting, asset sales and debt reduction.”
An analyst at Paradigm Capital, Ian Macqueen, cut his target price to $0.25 per share, following the news, the lowest among estimates compiled by Bloomberg.
Pacific Rubiales Energy closed the day down 45% to $2.85 per share on over 15 million shares traded. PRE traded above $23 per share in August of 2014.
Looking to the future, Pacific Rubiales Energy reported that it will continue with its plans to reduce operating costs, divest non-core assets, reduce debt, and continue to pursue Mexico energy opportunities with its preferred joint venture partner ALFA.
Pacific Rubiales Energy led the TSX 133 points lower Thursday. The TSX Venture closed at an all-time low of 636.71. The commodity markets have been under siege for months as precious metals and energy stocks continue lower.
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