KUALA LUMPUR (Nov 9): SAPURA ENERGY Bhd has taken care of business to strip half of its wholly-owned exploration and production (E&P) unit Sapura Upstream Sdn Bhd to Austrian oil and gas (O&G) equip OMV Aktiengesellschaft (OMV), of which part of the returns will be utilized to repay its debt.
Sapura and OMV inked a joint venture (JV) agreement for the strategic partnership today, as a follow-up to a Heads of Agreement (HoA) marked between the two parties on Sept 12.
The deal involves OMV buying into half of the enlarged issued share capital of Sapura Upstream for US$540 million, and to repay US$350 million worth of investors’ loan owed by Sapura Upstream to Sapura Energy.
This denotes money thought of US$890 million to Sapura Energy, of which US$720 million (RM3 billion) will mostly be utilized to repay its debts. Another US$160 million will be saved for working capital in the wake of disposing of finances required for the activity.
SAPURA ENERGY has long and short-term borrowings of RM11.12 billion and RM5.76 billion separately as at end-July. Over Sapura Energy’s ongoing RM4 billion rights issue, the organization will have the capacity to pare about RM7 billion underwater to RM9.88 billion.
OMV likewise concurred for an extra thought worth US$55 million or more up to another US$30 million in possibility reserves for the most part connected to the asset volume in Block 30, Mexico at the season of taking the last investment decision.
Altogether, Sapura Energy would receive minimum cash proceeds of between US$920 million and US$975 million, with a gain of disposal of roughly US$649 million, said the organization.
Under the agreement, OMV will completely unite the JV organization’s assets in its financial reports, which contains 260 million barrels of oil equivalent (boe) in proven and probable (2P) and contingent (2C) holds, which will never again show up in Sapura Energy’s books.
It ought to be noticed that Sapura Energy’s Sabah exploration resources are cut out from the strategic partnership.
In clarifying the administrative structure of the recently framed JV organization Sapura OMV Upstream, SAPURA ENERGY organizer, president and group (CEO) Tan Sri Shahril Shamsuddin said he will be there as the chairman.
The CEO will also originate from SAPURA ENERGY, Shahril said. Meanwhile, the chief operations officer will be together selected by SAPURA ENERGY and OMV, while OMV will designate its CFO.
“The union of these two organizations realizes great procedures, capital, and improves the innovation that exists in the two organizations,” said Sharil.
“We have done this deal in a short time…we acknowledged in the beginning times of the discussion that we were adjusted in what we needed to do with our organizations and what we needed to do in the district.
“This encouraged the advancement and the rapid conclusion of this JV. We couldn’t have from a listing [of Sapura Upstream] neither the cost [offered by OMV] nor the [prospects of] improvement of the organizations and the human capital included,” he included.
The vision, said Shahril, is for the JV organization to wind up one of the biggest Asian independent O&G outfits, including that the activity would also contribute to Sapura Energy’s vision to pivot by its financial year finishing Jan 31, 2020 (FY20).
OMV is a coordinated O&G equip with impressions in Russia, Europe, the Middle East, Australia, and New Zealand, with proven reserves of 1.15 billion barrels of oil proportional and normal day by day production of 348,000 Boe/d in 2017.
OMV AG agent chairman Johann Pleininger said that the plan is to initially put resources into Malaysia before going to different nations in “development regions” of the O&G business as a major aspect of its Asian extension system.
“We need to reproduce our example of overcoming adversity in OMV as of late here in Malaysia together with SAPURA ENERGY. We will offer need to Malaysia, we are resolved to remain long haul for the upcoming decades.
It ought to be noticed that Sapura Energy’s Sabah investigation resources are cut out from the strategic partnership. Notwithstanding that, among the advantages that arouse OMV’s interests incorporate Sapura Upstream’s two flammable gas E&P blocks in its SK408 fields offshore Sarawak which has proven reserves of 9 trillion cubic feet (Tcf) of gaseous petrol.
“Effectively at the present time, [the JV] has an incredible portfolio that is fit for development. So what we are going for is to triple the production in the following two years from near 10,000 Boe/d presently to 30,000 Boe/d in 2020,” said Pleininger.
“And afterward we need to twofold to up to 70,000 Boe every day in just qualification production by 2023. OMV is money rich, it is a money machine. We would like to likewise transform Sapura OMV Upstream into a money machine in the upcoming years,” he included.
Offers of Sapura Energy rose 1.5 sen or 4.17% to close at 38 sen today, giving the group a market capitalization of RM2.25 billion.