OMV, Sapura Energy Sign Pact

Malaysia’s Sapura Energy has entered into a heads of agreement with Austria’s OMV to form a strategic partnership and acquire half of Sapura Upstream for $1.6 billion.

"Under the agreements, OMV Exploration and Production GmbH (OMV E&P), a wholly-owned subsidiary of OMV Aktiengesellschaft, will buy a 50 per cent stake of the enlarged issued share capital in a newly-formed joint venture company, SEB Upstream Sdn Bhd (SUP), based on an enterprise value of up to USD1.6 billion comprising an equity value of up to USD1,250 million and debt of USD350 million," said a statement from Sapura Energy Berhad.

The integrated oil and gas services company based in Selangor, Malaysia said that as part of the transaction, OMV will pay USD540 million for 50 per cent interest in SUP at closing by subscribing to newly issued shares.

In addition, the parties agreed to additional consideration of up to USD85 million based on certain occurrences 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 USD350 million.

This transaction will result in Sapura Energy receiving up to USD975 million from the proceeds from OMV’s subscription payment of USD540 million and additional consideration of up to USD85 million, as well as from the repayment from the refinancing of intercompany debts of USD350 million.

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 per cent until 2030 in Malaysia and OMV is taking the opportunity to capitalise 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 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.