Ophir Energy acquires Santos’ noncore Asian assets

Santos Ltd., Adelaide, has announced a continuation of the divestment of its late-life noncore assets with the sale of most of its Asian portfolio to UK-based Ophir Energy PLC for $221 million.

The deal means that Santos will exit Vietnam, Malaysia, and Bangladesh as well as Indonesia, although in the latter case the company’s 50% interest in the North West Natuna PSC (Ande Ande Lumut) oil development is not included in the Ophir sale. Santos intends to sell NW Natuna separately.

The transaction will have an effective date of Jan. 1 and completion is expected during this year’s second half. The deal also requires consent from Ophir’s shareholders.

In detail the sale comprises:

• 31.875% of Block 12W PSC (Chim Sao and Dua oil fields) in Vietnam.

• 67.5% of the Madura Offshore PSC (Maleo and Peluang gas fields) in Indonesia.

• 45% in the Sampang PSC (Oyong and Wortel gas fields) in Indonesia.

• 20% of deepwater Block R PSC (Bestari oil discovery) in Malaysia.

• 45% of SS-11 PSC in Bangladesh.

• 50% of Block 123 PSC & 40% of Block 124 PSC in Vietnam.

Santos said all employees associated with these assets will transfer to Ophir as part of the sale.

All the assets are relatively late-life and not prioritized for capital in the Santos portfolio. The company’s share of production from the assets during the first quarter was 1.4 million boe. This compares with Santos’ total production for the quarter of 13.8 million boe.

Santos Chief Executive Officer Kevin Gallagher said the sale delivers on the promise to simplify Santos’ business and focus on five core long-life assets in Australia and Papua New Guinea.

Proceeds from the sale will be used to reduce Santos’ net debt, which stood at $2.5 billion at the end of March.

For Ophir the deal is in line with its strategy of rebalancing its portfolio towards a larger production and cash flow base. It expects the buy to increase its 2P reserves by more than 40% to 70.6 million boe.

The company will fund the acquisition through its existing financial resources and a new 18-month acquisition bridge facility of up to $130 million. The transaction is expected to payback within three years at current commodity prices.