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Ophir to buy Santos’ assets in Indonesia and Vietnam for $205M

(Image Credit : Ophir Energy)

JAKARTA (RambuEnergy.com) – Ophir Energy, an independent upstream oil and gas exploration and production company listed on the London Stock Exchange, has agreed to acquire Southeast Asia’s assets of Santos Limited, an Australian listed Oil & Gas company, for an aggregate cash consideration of $205 million pre-working capital adjustments, subject to certain approvals.

The portfolio of assets includes material producing assets in Vietnam and Indonesia plus exploration and appraisal assets in Malaysia, Vietnam and Bangladesh.

Santos’ assets to be acquired by Ophir productive assets which are supplying gas to growing market with robust price. The assets are as follows:

  • Interests in two Production Sharing Contracts:

– Sampang – 45% operated interest

– Madura – 67.5% operated interest

  • Gas production from the Oyong, Wortel fields in the Sampang PSC, and the Maleo & Peluang fields in the Madura PSC.

– 12 MMboe of 2P reserves (gross)

– 11,500 boepd (gross) production

  • Also includes the Meliwis discovery (77.5% operated interest) which will be developed through the Madura infrastructure
  • Near field exploration and appraisal targets

The Transaction is in line with Ophir’s stated strategy of rebalancing its portfolio towards a larger production and cash flow base to enable us to sustainably support the refocused exploration portfolio and to consider returning capital to shareholders, Ophir said in a statement.

This rebalancing will also facilitate further economies of scale in operating expenditures, general and administration expenses (“G&A”) and will provide greater capital allocation and financing efficiencies.

The Company intends to fund the consideration through its existing financial resources and a new acquisition bridge facility, which it intends to replace in due course with an increase in the Company’s existing Reserve Based Lending (“RBL”) facility.

Key Highlights

  • A balanced and complementary portfolio of Southeast Asian assets with low operating costs, strong cash flows, near-term development opportunities and exploration potential;
  • Resilient production in Vietnam and Indonesia, providing low-risk cash flow:

– Proforma 2018 forecast working interest production from Santos assets of ~13,500 boepd;

– Proforma Group 2018 production increases to ~25,000 boepd;

– Proforma Group 2018 forecast funds flow from production doubles to  around $180 million.

  • Production life extensions utilising strategic infrastructure positions
  • 2P reserves increase of over 40% from 49.4 MMboe to 70.6 MMboe
  • Upside optionality provided by the diverse portfolio of development, appraisal and exploration opportunities in Vietnam, Indonesia, and Bangladesh.
  • Expected to bring forward Ophir’s stated objective of being free cash flow positive, and therefore its ability to consider returning capital to shareholders.
  • Material cost synergies – estimated to be in excess of $13 million per annum
  • Transaction expected to payback within three years at current commodity prices.

Transaction to be financed through existing financial resources and a new 18-month acquisition bridge facility of up to $130 million (for which term sheets have been agreed). The bridge facility will be subsequently refinanced into the Company’s existing RBL facility

“It is a declared strategic objective of Ophir to rebalance its asset base and become free cash flow positive in order to consider regularly returning capital to shareholders. This transaction accelerates the realisation of this goal,” Nick Cooper, Chief Executive Officer, said.

Ophir has maintained a strong balance sheet through the down cycle in order to benefit from such accretive opportunities that fit our established expertise. The acquired assets also offer an attractive combination of operational upside and material cost synergies with our existing Southeast Asian production base”. (*)

By Roffie Kurniawan, email: roffie.kurniawan@gmail.com

 

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