OMV News, November 9, 2018 - 11:30 am (CET)
Sapura Energy Berhad (Sapura Energy) and OMV today signed a Share Subscription Agreement and a Shareholders’ Agreement to form a strategic partnership.
Under the agreements, OMV Exploration & Production GmbH (OMV E&P), a wholly-owned subsidiary of OMV Aktiengesellschaft, will buy a 50% stake of the issued share capital in a newly-formed joint venture company, SEB Upstream Sdn Bhd (SUP). This is based on a total enterprise value of up to USD 1.6 bn which comprises an equity value of up to USD 1,250 mn and debt of USD 350 mn.
OMV will pay USD 540 mn for a 50% interest in SUP at closing by subscribing to newly issued shares. In addition, the parties agreed to an additional consideration of up to USD 85 mn based on certain conditions mainly linked to the resource volume in Block 30, Mexico at the time of taking the final investment decision. Both parties have also agreed to refinance the existing intercompany debt of USD 350 mn.
Sapura Upstream is a major independent oil and gas (O&G) company based in Malaysia with an expected life of field production of approximately 260 mn boe and strong growth prospects. Production and development assets are located in shallow waters offshore Malaysia. Sapura Upstream’s production entitlement in 2017 was approximately 4.1 mn boe per annum, from fields in Peninsular Malaysia. Sapura Upstream has two natural gas exploration and production blocks offshore Sarawak in a well-developed area with existing infrastructure. The significant discoveries in its SK408 fields offshore Malaysia between 2014 to 2017 showcase Sapura Upstream’s strong in-house upstream capabilities. The development of the SK408 gas fields is on track and first gas is expected in 2020 with a significant ramp-up in 2023. This would lead to an estimated total plateau production entitlement of approximately 21 mn boe per annum which translates to approximately 60 kboe/d. In addition to its O&G assets in Malaysia, Sapura Upstream also has access to exploration blocks in New Zealand, Australia and Mexico.
“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,” said Rainer Seele, CEO and Chairman of the Executive Board, OMV Group.
Johann Pleininger, OMV Board Member Upstream and Deputy Chairman of the Executive Board: “This acquisition will add attractive reserve volumes to our portfolio and result in a significant near-term increase in production. As Asia Pacific is an attractive growing market, Malaysia will represent OMV’s platform for further regional growth.”
“OMV’s expansion strategy into Asia Pacific bodes well with Sapura Upstream’s long-term growth targets. We believe the partnership will create sustainable growth for the business, realising synergies from both sides to achieve our vision of creating the largest regional independent O&G company,” said Tan Sri Dato’ Seri Shahril Shamsuddin, President and Group Chief Executive Officer, Sapura Energy.
As part of the agreement, the management of the partnership will be based in Malaysia and there will be equal representation from both sides for the board of directors. OMV intends to fully consolidate Sapura Upstream in its financial statements.
Completion of the transaction is subject to conditions including Sapura Energy’s shareholder approval, Petronas approval and other third party consents as well as finalization of the transaction documents including ancillary agreements.
OMV is producing and marketing oil and gas, innovative energy and high-end petrochemical solutions – in a responsible way. With Group sales of EUR 20 bn and a workforce of around 20,700 employees in 2017, OMV Aktiengesellschaft is one of Austria’s largest listed industrial companies. In Upstream, OMV has a strong base in Romania and Austria and a balanced international portfolio, with the North Sea, the Middle East & Africa and Russia as further core regions. 2017 daily production stood at approximately 348,000 boe/d. In Downstream, OMV operates three refineries with a total annual processing capacity of 17.8 mn tons and more than 2,000 filling stations in ten countries as of year-end 2017. OMV runs gas storage facilities in Austria as well as in Germany; its subsidiary Gas Connect Austria GmbH operates a gas pipeline network in Austria. In 2017, gas sales volumes amounted to 113 TWh.
Sapura Energy Berhad
Sapura Energy Berhad is a global integrated oil and gas services and solutions provider operating across the entire upstream value chain. The Group’s spectrum of capabilities covers exploration, development, production, rejuvenation, as well as decommissioning and abandonment. With a highly-skilled and technically-capable workforce, strategic world-class assets, and strong project management capabilities, the Group today delivers its integrated solutions and expertise in over 20 countries.