Under the agreements, OMV's E&P division will buy a 50% stake of the issued share capital in a newly-formed joint venture company, SEB Upstream. This is based on a total enterprise value of up to $1.6bn - as previously announced -  which they now break down as comprising an equity value of up to $1.25bn and debt of $350mn. 

OMV will pay $540mn for a 50% interest at closing by subscribing to newly issued shares. In addition, the parties agreed to an additional consideration of up to $85mn 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 inter-company debt of $350mn.

Sapura Upstream, based in Malaysia, has production and development assets are in shallow waters there, produced roughly 4.1 mn boe/yr from offshore peninsular Malaysia, and has two natural gas exploration and production blocks offshore Sarawak in a well-developed area with existing infrastructure.

Development of its 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 some 21 mn boe/yr (60,000 boe/d). In addition to its assets in Malaysia, Sapura Upstream also has access to exploration blocks in New Zealand, Australia and Mexico.

It fits into a recent trend where mid-cap western E&P firms have divested from riskier Africa assets, and reinvested cash in upstream assets in Asia-Pacific where economic growth looks more resilient.

The banner photo above, courtesy of OMV, shows Sapura Energy CEO Seri Shahril Shamsuddin (left) and OMV E&P head Johann Pleininger (right)