Andes Energia combines with Trefoil holdings on Argentinian venture

(ShareCast News) - Andes Energia has agreed to a merger deal that will see the AIM-listed company's shareholders own just under 25% of an enlarged group owning 5m operational acres in the Argentina, to be renamed Phoenix Global Resources.Andes will combine with Trefoil, which owns over 99.99% of Petolera El Trébol SA (PETSA), the company responsible for the oil and gas exploration and production at Mercuria Energy Group in Argentina, by issuing of 1.899bn ordinary shares, up to 46m deferred consideration shares, and warrants and rights to be issued to Trefoil parent Mercuria Energy.The consideration shares to be issued will represent 75.38% of the enlarged share capital, with existing Andes shareholders holding 24.62%. The resulting ownership of Mercuria EG in the enlarged group will be approximately 78%.AIM-listed Andes said it expects the combination of these assets will create a stronger foothold for the group in South America with the potential to develop "conventional and unconventional" assets, particularly in Argentina.As a result of the merger the group will combine over 10m acres in Argentina, of which over 5m are operational.Earlier in 2017, PETSA made a discovery in the Vaca Muerta formation in the Puesto Rojas area. A study of the area highlighted it to contain the equivalent of more than 400m barrels of oil (BOE) of recoverable resources.Vaca Muerta is currently one of the few economically producing shale oil formations outside of North America with production over 65,000 BOE per day.It is also a key target for upstream investment with approximately $7bn of investments confirmed globally in 2017, with expectations of $12-15bn of investments in 2018.The group believe that with the work programme on these assets, it will "double production by the end of 2021".After being readmitted from suspension at 70p by the close on Monday Andes shares had tumbled to 55.38p.