Valeura Energy has announced that Valeura Energy Asia (the 'SPV'), a special purpose vehicle and a subsidiary of the Company, has entered into a Sale and Purchase Agreement with Mubadala Petroleum (Thailand) Holdings to acquire the Thailand upstream oil producing portfolio of Busrakham Oil and Gas, a subsidiary of Mubadala Energy.
This Acquisition consists of operated interests in three offshore licences in the Gulf of Thailand that include the Nong Yao, Jasmine/Ban Yen and Manora oil fields, which collectively currently produce approx. 21,200 bbls/d of oil, net to the interest being acquired. The purchase consideration for the Acquisition is US$10.4 million plus up to an additional US$50 million, contingent upon certain upside price scenarios. The acquisition has an effective date of August 31, 2022 and is subject to customary closing conditions.
- A substantial expansion of Valeura’s presence in Thailand, adding a portfolio of cash generative assets;
- Operatorship of three additional offshore licences in the Gulf of Thailand;
- Current production add of 21,200 bbls/d of oil, net to the acquired interests;
- Weighted average cash operating costs across the assets of approx. US$22/bbl, comprised primarily of fixed costs associated with offshore facilities;
- Immediate pre-tax cash flows of approximately US$30 million per month(1);
- Total proved plus probable (2P) reserves of approximately 24.1 mmbbls oil(2);
- Deal consideration of US$10.4 million as of the Effective Date plus up to an additional US$50 million, contingent upon certain upside price scenarios;
- Value accretive transaction, with no requirement for additional equity to complete the Acquisition, and hence no dilution to shareholders;
- Near-term production growth opportunity through Nong Yao field development project planned to be onstream in early 2024;
- Field life extension opportunities through ongoing infill drilling to continue the assets’ long history of reserves additions, amounting to approximately 80% replacement of produced reserves over the past five years;
- A largely autonomous business unit organisation comprised of an approximately 180-person strong operating workforce in Thailand; and
- Expected organisational and financial synergies with Valeura’s acquisition of the KrisEnergy Gulf of Thailand assets as announced in Q2 2022.
Unless otherwise noted, all production and reserves estimates in this announcement are presented on a working interest acquired basis, net to the SPV, which is controlled and 85% owned by Valeura.
(1) Management estimate, based on current operating conditions and US$85/bbl Brent oil.
(2) Reserves estimates are based on the Company’s internal assessment (non-independent) as of December 31, 2021.
Sean Guest, President and CEO of Valeura commented:
'This is a transformative transaction for Valeura, firmly establishing our Company as the largest independent operator of oil production in Thailand. By adding 21,200 bbls/d net to the SPV, we expect to immediately generate pre-tax cash flows of approximately $30 million per month, and this amount is expected to grow in the very near term as we increase production to 25,000 bbls/d and beyond with the addition of production from our pre-existing portfolio. We set out to build a business that generates cash now, while providing re-investment opportunities for the medium-term, and we believe that the two acquisitions we have signed in 2022 accomplish these goals and more, creating significant value for our shareholders without dilution.
Our forward efforts will focus on developing the potential of these assets, by projects including further development of the Nong Yao field where we are forecasting peak production rates in 2024, re-investment into the Jasmine and Ban Yen fields to continue their long history of reserves replacement, and on selective step-out opportunities where we see the potential to more fully utilise the fields’ extensive infrastructure to commercialise new accumulations. As of the end of 2021, the assets held 24.1 million bbls of estimated 2P oil reserves, representing approximately a four-fold increase over our pre-existing corporate reserves.
Moreover, we see the new assets and the workforce as an excellent fit with our highest priorities. In particular, the team’s demonstrated history in safe operations with a strong environmental performance is well aligned with our sustainability goals and we are delighted to welcome the approximately 180 like-minded individuals to the Valeura team. Just as we’ve routinely done with producing assets under our care, we intend to pursue opportunities to extend the value and economic life of these fields, whilst remaining mindful of our longer-term responsibility to ensure their eventual decommissioning is planned and appropriately funded. This line of thinking has been incorporated into all aspects of our commercial evaluation of this transaction.
We look forward to starting this exciting chapter in our Company’s history, further expanding into a region of the world we know well and charging into 2023 as a transformed company with substantial cash generation capacity and a clear path to further grow our potential value.'