BP PLC and Bridas Corp., Buenos Aires, have agreed to merge their interests in oil and gas producer Pan American Energy LLC (PAE) and refiner and marketer Axion Energy Argentina SA in a cash-free deal, forming the privately owned, integrated Pan American Energy Group (PAEG).
Operating in Argentina, PAEG will be owned equally by BP and Bridas, which itself is a 50-50 joint venture of Bridas Energy Holdings of Argentina and CNOOC Ltd. of China. PAE is currently owned 60% by BP and 40% by Bridas, while Axion is wholly owned by Bridas. There will be no payments for the equity exchange. The deal is expected to close in early 2018.
PAEG is expected to benefit from BP's global upstream technical and downstream marketing experience as well as Bridas' operating knowledge. The combination may also offer further integration synergies-Axion's 90,000-b/d Campana refinery is already the primary customer for PAE's Argentine crude oil production.
PAE in 2016 produced 262,000 boe/d, consisting of 108,000 b/d oil and NGLs and 891 MMcfd of gas, or 18% of Argentina's total oil and gas production. The company has 1.56 billion boe in total oil and gas reserves, including Bolivian reserves.
PAE has interests in Argentina's four main hydrocarbon basins-Golfo San Jorge, Neuquen, Noroeste, and Marina Austral-which includes its operated Cerro Dragon field in Golfo San Jorge and interests in the Vaca Muerta shale in the Neuquen region.
The company also has gas production interests in Bolivia as well as 80% interest and operatorship of Hokchi block in the shallow-water Mexican Gulf of Mexico, awarded as part of Mexico's Round 1.2 tender in September 2015.
Axion Energy owns and operates the Campana refinery 75 km north of Buenos Aires, has more than 750 retail sites in Argentina, Uruguay, and Paraguay, and has material lubricant and aviation fuels businesses.
"Supported by the combined skills and expertise of BP and Bridas, this new integrated business will be able to pursue growth and development opportunities in Argentina, Uruguay, Paraguay, and Mexico," commented Bob Dudley, BP Group chief executive.
"We see value-enhancing opportunities throughout PAEG's businesses-from extending the life of mature production and developing new unconventional resources including Vaca Muerta, to growth in retail fuels and lubricants marketing," Dudley said.
Pan American Energy was formed in 1997 by the merger of Bridas and Amoco. CNOOC in 2010 acquired a 50% stake in Bridas, which in 2012 acquired ExxonMobil Corp.'s assets in Argentina, Uruguay, and Paraguay, creating Axion Energy.
