TORONTO (miningweekly.com) – Calgary, Alberta-based oil and gas major Gran Tierra Energy has launched a $525-million bid to acquire independent exploration and production company PetroLatina Energy, marking the company’s third multimillion dollar push this year into Colombia.

Under the terms of the acquisition agreement announced Friday, Gran Tierra would make an initial $500-million cash payment at closing, and a deferred payment of $25-million before December 31.

"The acquisition represents a unique material opportunity in Colombia in terms of scale and upside potential, and will add a new core area for Gran Tierra in the prolific Middle Magdalena basin. The combination of Gran Tierra's strong, positive cash-flowing asset base and PetroLatina's attractive portfolio of development opportunities will create a premier Colombia-focused exploration and production company,” stated Gran Tierra president and CEO Gary Guidry.

Gran Tierra advised that the acquisition was expected to be funded through a combination of the company’s current cash balance, available borrowings under existing credit facilities, a new $130-million debt facility, and a private placement of up to $173.5-million of subscription receipts priced at $3 each. Each receipt would entitle the holder thereof to one share of common stock in the capital of the corporation. The pricing reflected a 7.9% discount from the five-day volume-weighted average price of $3.26 a share.

Guidry pointed out that Gran Tierra was acquiring significant proved, probable and possible reserves in a new core area in the Middle Magdalena basin, which he expected to enhance the company’s long-term growth strategy and to be a fit with Gran Tierra's current reserves and resources base in the Putumayo basin.

The transaction was expected to provide Gran Tierra with a significant growth platform in the Middle Magdalena basin with significant proved plus probable (2P) reserves additions of 53-million barrels (100% oil), increasing Gran Tierra's pro forma December 31, 2015 2P reserves by 70% to 129-million barrels of oil equivalent.

The PetroLatina deal was expected to close by October 31.

Earlier this year, Gran Tierra completed the acquisitions of Petroamerica Oil Corp and PetroGrenada as part of its corporate strategy to expand and diversify Gran Tierra's oil and gas growth portfolio in Colombia.

In May, the company increased its 2016 capital budget by between $33-million and $43-million to a range of $140-million to $150-million, from the previously budgeted $107-million.

Despite the TSX-listed stock being down as much as 5.5% on Monday at C$4.12 apiece, the stock had gained more than 41% since the start of the year, buoyed by more optimistic crude oil prices.