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by Stockwatch Business Reporter

U.S. markets were closed for Independence Day. West Texas Intermediate crude for August delivery lost 23 cents to $48.76 in electronic trading on the New York Merc, while Brent for August lost 25 cents to $50.10 (all figures in this para U.S.). Western Canadian Select traded at a discount of $13.70 to WTI ($35.06), unchanged. Natural gas for August lost eight cents to $2.91. The TSX energy index added 2.86 points to close at 192.29.

Colombia-focused Gran Tierra Energy Inc. (GTE) lost 30 cents to $4.04 on 2.84 million shares, after agreeing to buy the private PetroLatina Energy for $525-million (U.S.). This will be its third takeover this year, and by far its most expensive. Gran Tierra previously bought PetroGranada Colombia and Petroamerica Oil in January for a combined total of about $89-million (U.S.) and 13.6 million shares. These deals added production of about 3,400 barrels of oil equivalent a day (before royalties) and were done primarily to expand Gran Tierra's position in its core Putumayo basin. PetroLatina operates in the Middle Magdalena basin and is forecast to produce 5,400 barrels of oil a day (before royalties) in the second half of 2016. The $525-million (U.S.) purchase price works out to a hefty $97,200 (U.S.) per barrel of production. By comparison, Gran Tierra paid just $28,000 per barrel of production when it bought Petroamerica. On top of that, in order to finance the acquisition of PetroLatina, Gran Tierra is using up its cash, taking on debt and completing a $173.5-million (U.S.) private placement under which it will ultimately issue 57.8 million shares (compared with about 288 million currently outstanding). Investors seem unnerved by the dilution and the high purchase price. Gran Tierra promises that the takeover will be worth it. It has high hopes for the Middle Magdalena basin, which will become a new core area for the company. There, it says it can more than triple the production of PetroLatina's core asset, the Acordionero field, to 15,000 barrels a day (before royalties) in 2019. As well, although Acordionero's production is conventional, Gran Tierra points out that PetroLatina's assets as a whole are in the heart of an emerging unconventional trend.

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