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By Marcelo Rochabrun and Mie Dahl
Jaime Gilinski Photographer: Esteban Vanegas/Bloomberg
Colombia’s richest family is upping its bet on Venezuela’s energy rush with a plan to take control of oil and gas producer GeoPark Ltd., a small company that has reached a deal to operate an oil field in the South American nation.
The announcement sent Bogota-based Geopark’s shares soaring as much as 12% on Thursday before paring gains.
The Gilinski family bought a 20% stake in GeoPark earlier this year as a way to enter the Venezuelan oil business following the detention and removal of former strongman Nicolás Maduro. On Wednesday, GeoPark announced that the family had secured rights to the Bare Block, a producing heavy-oil field in Venezuela’s Orinoco Belt.
Under the deal, GeoPark will initially take a 5% stake in the company holding the Bare contract, then acquire the Gilinskis’ remaining 95% stake in exchange for 42.1 million new GeoPark shares. That would leave Grupo Gilinski as the controlling shareholder with about 56.3% of GeoPark. The shares are being issued at $12.22 apiece, a 26% premium to GeoPark’s 30-day average price. The stock traded slightly below that level on Thursday afternoon.
The deal is part of a US government-led push to revive Venezuela’s oil industry. Executives from Chevron Corp., GE Vernova Inc. and Eni SpA on Wednesday joined US Energy Secretary Chris Wright and acting Venezuelan President Delcy Rodriguez to unveil a wave of deals aimed at boosting the nation’s crude production.
Read More: Chevron, Eni Lead Wave of Deals to Lift Venezuela Oil Output
Colombian billionaire Jaime Gilinski — who’s worth $40.3 billion, according to the Bloomberg Billionaires Index — has taken steps to cash in on Venezuela’s reopening economy since Maduro’s arrest, including with the purchase of ice cream chain Tio Rico and through a plan to increase Colombian shipments through his packaged foods company Nutresa SA.
Read More: Colombia’s Richest Man Eyes Venezuela to Multiply His Fortune
GeoPark said it will now operate the Bare field through a 25-year Production Participation Contract (CPP) with Venezuela’s state-owned oil company, Petróleos de Venezuela SA. GeoPark will finance all capital spending and operate the field in exchange for a 65% net working interest, with rights to directly sell its share of the crude. Bare currently produces about 11,000 barrels a day and has the potential to produce up to 95,000 barrels per day, the company said. The approaching deal was first reported by Bloomberg last week.
CPP contracts, first used under Maduro, have become a centerpiece of Venezuela’s effort to attract foreign capital back into its dilapidated oil industry. A legal overhaul this year brought the contracts into the country’s formal oil-law framework and gave private operators greater scope to manage investment, operations and sales while the state retains ownership of the resources.
US sanctions on Venezuela’s oil sector have long complicated foreign investment, creating significant hurdles for new deals. Geopark said there is no effective date for the CPP deal to start, partly because the company still needs to fulfill “regulatory requirements and sanctions-related compliance.” It estimated that could take as long as 120 days.
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