Hess' Southeast Asian oil & gas assets draw interest

August 20, 2018 | By | Reply More

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SINGAPORE: The Southeast Asian offshore natural gas assets of US oil and gas producer Hess Corp, estimated to be worth as much as US$5 billion (RM22.05 billion), have attracted takeover interest from firms including Thailand’s PTTEP PCL and Austrian energy group OMV AG, people familiar with the matter said.

Hess, which has a collection of gas fields in North Malay Basin in offshore Malaysia and in the Malaysia-Thailand Joint Development Area (JDA) with 50% equal partner Petroliam Nasional Bhd (Petronas), has not yet decided whether to sell the assets, according to financial and industry sources.

Their estimated market value would be US$4 billion to US$5 billion, the sources said. They declined to be identified because the takeover interest had not previously been made public.

The interest in Hess’ assets, among the few long-term and sizeable projects in the region, comes as cashed-up firms such as PTTEP are buying overseas assets, while the likes of OMV and Kuwait Foreign Petroleum Exploration Co have been scouring for acquisitions in Asia.

Hess, which hasn’t reported a profit since 2014, has been under pressure from investors to make money. It posted a smaller-than-expected loss in April-June, but many of its peers have turned profitable after the oil price crash two years ago, fuelling questions as to why Hess has not followed suit.

The firm is developing large offshore oil projects in South America and US shale oil. In 2014, it sold its Thai assets to PTTEP for US$1 billion and also sold its Indonesian assets.

“We don’t comment on rumours but we continue to believe that our Malaysia assets are an important part of our portfolio and our value creation strategy,” Hess spokeswoman Lorrie Hecker said in a statement.

“JDA and North Malay Basin are significant long-term, low-cost cash generators, producing stable production and free cash flows, which provide funding for our compelling, long-term opportunities in Guyana and the Bakken (in the United States).”

“A number of parties have looked (at the Hess assets) and have teams working on this,” said one financial source.

“Increasing numbers of companies believe a sale is probable,” said the person, adding that Hess’ project would also appeal to private-equity backed players and mid-sized energy firms.

He said PTTEP was working with a financial adviser for its interest in the assets.

Another source said some parties had done preliminary work on the assets and were waiting to see if Hess would start a sale process.

OMV and Kuwait Foreign Petroleum Exploration Co declined to comment.

This month, OMV won regulatory approval to buy Royal Dutch Shell’s upstream assets in New Zealand for US$578 million. OMV said in March that the acquisition was a key step to develop Australasia into a core region in line with its new strategy.

Petronas declined comment while PTTEP said it was focused on expanding in Southeast Asia.

“PTTEP is interested in M&A deals with particular focus on assets located in PTTEP’s region of experience such as South East Asia, which is PTTEP’s areas of expertise and the operating risk is moderately low,” the Thai company told Reuters, declining to comment specifically on Hess assets.

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