Austria’s OMV has sealed its $1.6 billion partnership with the exploration and production arm of Malaysia’s Sapura Energy.
Sapura confirmed the two companies had signed a share subscription agreement, along with a shareholders’ agreement to form a strategic partnership.
The agreements will see OMV subsidiary OMV Aktiengesellschaft hold a 50% share in the newly formed joint venture company SEB Upstream which will have an enterprise value of up to $1.6 billion.
Sealing the deal: OMV and Sapura Energy have formed a strategic partnership which will see the former take a 50% share in Sapura’s E&P arm
“The oil and gas demand is expected to increase by 20% until 2030 in Malaysia and OMV is taking the opportunity to capitalise on this growing market,” OMV chief executive Rainer Seele said.
“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.”
The deal will see OMV pay $540 million for a 50% share in SEB by subscribing to newly issued shares, while an additional payment of up to $85 million could be paid based on certain occurrences.
Sapura added the additional payment milestones were mainly linked to the resource volume in Block 30 in Mexico at the time of taking the final investment decision.
Both companies have also agreed to refinance the existing $350 million intercompany debt.
Sapura said the deal would see it receive up to $975 million, based on the subscription payment, the additional $85 million consideration and the refinancing of the debt.
“OMV’s expansion strategy into Asia Pacific bodes well with Sapura Upstream’s long-term growth targets,” Sapura chief executive Shahril Shamsuddin said.
“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.”
The news comes after the two companies first announced the potential deal in September this year when they revealed they were in exclusive negotiations.
Sapura Upstream has expected field of life production of roughly 260 million barrels of oil equivalent, with production and development assets lying in shallow-water off Malaysia, while it also holds exploration assets in New Zealand, Australia and Mexico.
The deal is still subject to a number of conditions, including shareholder approval, approval from state-run company Petronas and other third-party consents.