Monday 12 November 2018

Sapura Energy Berhad (Sapura Energy) and OMV on 9 November 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.

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.