Petrofac Sells Down to Perenco in Mexico
Petrofac has agreed to sell 49% of its operations in Mexico including its service contracts in three fields - Santuario, Magallanes and Arenque - to the French-UK independent Perenco for $200mn, it said July 30. The transaction is subject to approval by Mexico's anti-trust agency, expected Q4 2018.
Petrofac was awarded the contracts between 2011 and 2012. At least two of the three oil fields have some associated gas production.
The total consideration comprises a fixed amount and contingent consideration depending upon a number of future milestones, including future field development and migration terms of Petrofac’s Magallanes and Arenque Production Enhancement Contracts, but capped at $274mn. Petrofac expects to record an impairment charge of about $100mn on completion against its 100% equity interest in its Mexican subsidiaries. Proceeds from the sale will be used to reduce gross debt.
Petrofac CEO Ayman Asfari said Perenco brings "strong technical capability that will complement our existing brownfield operations experience to strengthen our offering. We look forward to working with them and the other stakeholders to further develop our mature field interests in Mexico. Today’s agreement also marks further progress in delivering on our strategy to reduce capital intensity.”
Perenco CEO, Benoit de la Fouchardiere, said: “Following a previous successful collaboration with Petrofac we have been delighted to explore further opportunities to work together. Mexico is a land of opportunities, a new play, a new country and an exciting new challenge for Perenco. Partnering with Petrofac in Mexico will give us a fantastic opportunity to reach our goals in a timely manner and, by our results, demonstrate to the state company Pemex that we can also be a partner of choice for the future."
Mexico's new president-elect, Andres Manuel Lopez Obrador, has made oil and gas production a priority. Speaking in the capital July 27, he said: “Production has continued to fall, and if we don’t act with urgency, there will continue to be problems in the short and medium terms.”