Sapura Energy to reap RM4 bil proceeds in partnership deal

November 9, 2018 | By | Reply More

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KUALA LUMPUR: Sapura Energy Bhd (SEB) has formed a strategic partnership with Austria-listed industrial company OMV Aktiengesellschaft (OMV AG), which will raise up to US$975 million (RM4.06 billion) in proceeds, said SEB president and chief executive officer Shahril Shamsuddin.

Under the agreements inked today, SEB will issue new shares amounting to 50% of the enlarged issued share capital of newly-formed company SEB Upstream Sdn Bhd (SUP) – which will hold the entire stake in Sapura Upstream Sdn Bhd – to OMV AG’s wholly-owned subsidiary OMV Exploration & Production GmbH for US$625 million, and also receive US$350 million from the Sapura Upstream group as repayment of an amount owing to SEB and its subsidiaries.

Shahril said of the total proceeds, US$890 million would be secured initially following the completion of the deal on Jan 31, 2019.

This comprises proceeds from OMV AG’s share subscription in SUP (which will be renamed Sapura OMV Upstream Sdn Bhd) worth US$540 million and the US$350 million repayment of inter-company indebtedness.

SEB will receive the remaining cash payment of up to US$85 million from OMV AG depending on the achievement of the final investment decision in respect of a petroleum block in Mexico (Block 30) and on the actual Brent prices for 2019-2022 against the average price forecast.

Shahril said the initial proceeds would be used to pay about US$720 million of the SEB group’s debts. The rest will be for working capital (US$160 million) and to defray expenses relating to the transaction (US$10 million).

“We are starting to build our order book that requires more working capital and we want to bring down our debt to equity level from 1.6 times to 0.6 times when the exercise is completed.

“This will give us a very strong balance sheet,” he told a press conference on the partnership here today.

Earlier, both companies inked a strategic partnership agreement to make Malaysia as the hub to expand SEB’s upstream business, currently valued at US$1.6 billion, in the Asia-Pacific region and Mexico.

Shahril expected the partnership to partially contribute to SEB’s growth going forward, projecting that the company would return to the black in the financial year ending Jan 31, 2020.

It will also be backed by an improved order book value and an increase in oil and gas production, which is likely to be tripled in the next three years from the current 10,000 barrels of oil equivalent.

“I’m certain we will turn around in 2020,” he said.

OMV AG is one of Austria’s integrated oil and gas companies and one of the largest listed industrial companies there with group sales of 20 billion euros and a workforce of more than 20,000 employees.

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