The Argentinian shale assets of Andes Energia (AEN) have caught the eye of global asset manager Mercuria. As part of the latter’s plans to widen its footprint in South America, the two companies have agreed a merger which will see Mercuria Energy Group’s oil and gas exploration subsidiary reverse into Andes’ Aim listing to create one of the world's largest shale exploration companies, called Phoenix Global Resources (with the ticker PGR). Andes owns about 250,000 acres in the Vaca Muerta formation, which is seen as one of the best prospects for shale development outside of North America.
Mercuria’s interest was first touted in March when it extended $60m (£46m) in credit facilities to Andes and ousted the group’s old chief executive in favour its own head of commodity trading, Anuj Sharma. Andes’ shares were then suspended in late June after Bloomberg news reported the upcoming merger and resumed trading on 24 July following the release of the official merger document.
In order to fund the merger, the Aim-traded company will issue 1.899bn ordinary shares and up to 46m deferred consideration shares to Trefoil, the oil and gas subsidiary of Mercuria EG. Andes’ current shareholders will own just under a quarter of the new company, while Mercuria – through its current stake in Andes and the newly issued shares – will own 78 per cent.
