Malaysia’s oil and gas services company Sapura Energy is planning to divest 50% stake in its upstream business to Austria’s OMV Aktiengesellschaft for an enterprise value of $1.6bn.
For the transaction, Sapura Energy has signed heads of agreement (HoA) with OMV to form a strategic partnership.
OMV intends to acquire a 50% stake in Sapura Energy’s wholly-owned subsidiary, Sapura Upstream which was previously known as Sapura Exploration and Production.
Sapura and OMV, however, will continue to negotiate for the proposed transaction on an exclusive basis.
The agreement will allow the two firms to be strategically positioned to create sustainable long-term growth, expand portfolios and future business activities, Sapura said.
Sapura Energy president and chief executive officer Tan Sri Dato’ Seri Shahril Shamsuddin said: “The partnership with OMV AG complements our continued strategy to grow our portfolio and expand our acreage position. OMV AG’s existing footprint offers new opportunities for our upstream segment and increases market reach for our services segment where OMV operates.”
The proposed sale is part of Sapura Energy’s broader strategic plan to strengthen its core businesses, and boost its financial position.
Shamsuddin added: “We have explored all options including the potential listing of our Upstream business.
“The invitation to enter into this strategic partnership with a leading oil and gas player serves our goals and aspirations better while providing certainty in timing and valuation.”
Sapura Energy said that the partnership will boost its competitive advantage by leveraging on the strength of its portfolio of commercially viable gas fields located offshore Sarawak and its acreage in New Zealand, Gulf of Mexico and Australia.
OMV CEO and executive board chairman Rainer Seele said: “The intended partnership with Sapura is a major step to develop OMV’s activities in South East Asia.
“The oil and gas demand in this region is expected to increase strongly until 2030 and OMV is taking the opportunity to further expand the business and build up the new core region.”
Earlier this year, OMV has announced its plan to boost its production capacity to 600,000 barrels per day by 2025 through acquisitions of assets in cost-effective regions rich in reserves.