A new offer has emerged for Suroco Energy Inc. (TO:SRN) that I feel is unimpressive.
Suroco signed a friendly agreement with Petroamerica Oil (OTC:PTAXF) to merge the two small Colombian oil companies in late April, 2014. That deal was expected to close later this month.
Then today, VETRA, a private firm which Suroco is partnered with on the Surioriente Block in Colombia’s Putomayo Basin, offered $0.60 in cash for all of Suroco’s outstanding shares.
Here’s the news release. Petroamerica’s offer valued Suroco at $.573 on April 25, 2014, so there’s very little difference between the two offers on price.
The difference is Petroamerica is offering shares of a combined company, and VETRA has offered cash.
Management at Suroco apparently doesn’t want the cash, as they declined a $0.55 all cash offer last month.
VETRA’s bump to $.60 is not that much of an improvement over $0.55, especially considering Suroco’s shares closed at $0.60 today.
Suroco’s shareholders will have to decide between cash or the upside of the combined company.
Bloomberg is out with a story today on the potential of the combined Petroamerica and Suroco.
Read: Petroamerica to Triple Output in Colombia on Suroco Deal | Bloomberg
I am a biased shareholder in Petroamerica and have followed the company closely for two years. They have since grown production from 1500 bopd to over 6000 bopd and kept every word and promise they made regarding guidance.
More to come on this. Always do your own due diligence.