(WO) — Frontera Energy Corp. plans to move forward with a $525-million offer from Parex Resources Inc. for its Colombian upstream assets after GeoPark Ltd. declined to match the revised bid.
Frontera said it received formal notice from GeoPark that the company would not exercise its contractual right to match the Parex proposal, which Frontera’s board had previously determined constituted a “superior proposal.” The decision clears the way for Frontera to terminate its existing arrangement with GeoPark and enter into definitive agreements with Parex to complete the transaction through a plan of arrangement under British Columbia corporate law.
Under the proposed deal, Parex would acquire Frontera’s Colombian exploration and production business for $500 million in cash plus an additional $25 million contingent payment tied to development milestones. Parex would also assume certain debt obligations tied to the assets.
GeoPark said its board concluded that increasing its bid would not align with the company’s disciplined capital allocation strategy. The company determined that raising its offer would weaken expected returns and reduce financial flexibility compared with alternative investment opportunities within its portfolio.
As part of the termination of the previous agreement, GeoPark will receive the return of $75 million previously placed in escrow, along with interest, and a $25 million breakup fee from Frontera. GeoPark said it will instead focus on optimizing production from its Colombian assets, particularly the Llanos 34 block, while advancing growth projects in Argentina’s Vaca Muerta shale play.
