BP and Bridas form Pan American Energy Group (PAEG)

Transaction overview

BP and Bridas will combine their interests in Pan American Energy (PAE) and Axion Energy in a cash-free equity exchange to form Pan American Energy Group (PAEG), creating the largest privately-owned integrated energy company operating in Argentina.

Ownership and governance

PAEG will be owned 50:50 by BP and Bridas Corporation (itself a 50:50 joint venture of Bridas Energy Holdings and CNOOC Limited). PAE is currently 60% owned by BP and 40% by Bridas, while Axion is wholly owned by Bridas; there will be no cash payments for the equity swap. PAEG’s board will comprise eight directors, four nominated by each shareholder, and shareholders will share nomination rights for key senior executives. The company will be self-funded.

Assets and operations

PAE is Argentina’s second-largest oil and gas producer with 2016 daily production of around 262,000 boe (about 18% of national production), operating across the country’s four main hydrocarbon basins, including Cerro Dragon, and holding interests in Vaca Muerta and the Hokchi block in Mexico’s shallow-water Gulf of Mexico. Axion operates the 90,000 b/d Campana refinery, runs over 750 retail sites across Argentina, Uruguay and Paraguay, and has significant lubricant and aviation fuels businesses.

Strategic rationale and timeline

The unified ownership aligns upstream and downstream interests across Argentina, Uruguay and Paraguay, offering integration synergies — Axion is already the primary customer for PAE’s Argentine crude — and access to BP’s global upstream and downstream expertise alongside Bridas’ local operating knowledge. The combined group is positioned to pursue growth from extending mature production life, developing unconventional resources including Vaca Muerta, and expanding retail fuels and lubricants. Completion is subject to regulatory filings or approvals and is anticipated in early 2018.