Sapura Energy, a Malaysian oil and gas services company, has agreed to sell 50% of its exploration and production (E&P) business Sapura Upstream to Austria-based OMV Aktiengesellschaft in a deal worth up to $975m.
Sapura Upstream, which has production and development assets in shallow waters offshore Malaysia, has an expected life of field production of around 260 million barrels oil equivalent (boe).
Its production entitlement in 2017 was around 4.1 million boe per annum, coming from fields in Peninsular Malaysia. The company has two natural gas exploration and production blocks offshore Sarawak.
The deal, which follows an heads of agreement (HoA) signed in September 2018, will see OMV buying half of the enlarged issued share capital of Sapura Upstream for $540m in addition to a repayment of $350m worth of shareholders’ loan owed by the upstream business to Sapura Energy.
As per the agreements made by the parties, OMV’s subsidiary OMV Exploration & Production (OMV E&P) will buy a stake of 50% of the issued share capital in a newly-created joint venture company named SEB Upstream (SUP) for a sum of $540m.
The parties have also agreed upon an additional consideration of up to $85m depending on certain conditions mainly associated with the resource volume in Block 30, Mexico at the time of reaching the final investment decision. OMV and Sapura Energy have also agreed to refinance the existing intercompany debt of $350m.
OMV Group executive board CEO and chairman Rainer Seele said: “The oil and gas demand is expected to increase by 20% until 2030 in Malaysia and OMV is taking the opportunity to capitalize on this growing market.
“The cooperation will allow OMV to enter into a partnership with a highly esteemed regional independent company and will support our Upstream strategy towards establishing Australasia as a new core region.”
The deal is part of the Malaysian firm’s larger strategic plan to bolster its core businesses, and improve its financial position. A part of the transaction proceeds will be used by it to repay its debt.
Sapura Energy founder, president and group CEO Tan Sri Shahril Shamsuddin said: “The union of these two companies brings about very good processes, capital, and enhances the technology that exists in both companies.
“We have done this deal in a very short time…we realised in the early stages of the discussion that we were aligned in what we wanted to do with our companies and what we wanted to do in the region.”