CIBC World Markets Inc. analyst Ian Macqueen downgraded his rating on shares of PetroMagdalena Energy Corp. (CVE:PMD) to "Sector Performer" from "Sector Outperformer" and lowered his price target to C$1.60 from C$2.
Pacific Rubiales Energy (TSE:PRE) has offered to acquire all of the outstanding common shares of PetroMagdalena Energy for C$1.60/share in cash. This represents a about 38% premium on the 20-day volume-weighted average price of PMD's common shares.
In the event of a higher offer, PRE will have five business days to match the offer. The arrangement will be subject to the approval of at least 66 2/3% of the votes cast at the special meeting of PMD's security holders and is expected to close in Q3-2012.
The acquisition makes sense for PRE because: it is cheap and accretive on a reserve basis; PRE needs diluent for its heavy oil production; PMD has 24.7 MMBoe of net before royalty 2P reserves (53% oil) at year-end 2011 and a 17.6 year RLI; PRE will acquire additional technical staff from PMD.
Macqueen has lowered price target to be in line with PRE's current cash offer for the company. Given that the acquisition price is already reflected in the stock, as of June 5, he downgraded his rating.
PMD is trading down 0.63% at C$1.57 on Wednesday. Providing quality reviews, articles and writings on crude oil, energy and gas online.
No comments:
Post a Comment