Ophir buying Santos’ Southeast Asia oil and gas assets for $205M

Ophir Energy is set to buy a package of Southeast Asian fields from Australian oil and gas company Santos Limited for a total of $205 million.

According to Ophir, the portfolio of assets includes material producing assets in Vietnam and Indonesia plus exploration and appraisal assets in Malaysia, Vietnam, and Bangladesh.

Ophir has described the Santos assets package as a balanced and complementary portfolio of Southeast Asian assets with low operating costs, strong cashflows, near-term development opportunities and exploration potential.

Santos has said that the producing assets sold are relatively late-life and are not prioritized for capital in the Santos portfolio. Santos’ share of production from the assets in the first quarter of 2018 was 1.4 million barrels of oil equivalent.

The transaction will add ~13,500 boepd of net working interest production to Ophir in 2018 and ~21.2 MMboe to Ophir’s net working interest reserves

Nick Cooper, Ophir Chief Executive Officer, said: “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 realization of this goal.

The acquired assets also offer an attractive combination of operational upside and material cost synergies with our existing Southeast Asian production base”.

Under the terms of the sale, the transaction will have an effective date of 1 January 2018. Completion is expected in the second half of 2018 and is subject to customary consents and approvals for a transaction of this nature.

Completion is also subject to approval by Ophir shareholders as required under London Stock Exchange regulations, expected to take place in June 2018.

Focus on Australia and PNG

Santos Managing Director and Chief Executive Officer Kevin Gallagher said: “The sale of the Asian assets further delivers on our undertaking to simplify our business and focus on our five core long-life natural gas assets in Australia and Papua New Guinea.”

“We have always believed the Asian assets are a quality portfolio and are pleased to achieve an attractive outcome for our shareholders. Santos will work with Ophir to ensure a smooth transition, including the transfer of all the Santos employees to Ophir.”

Proceeds from the sale will be applied to further reduce Santos’ net debt, which stood at $2.5 billion at the end of March 2018.

The assets sold to Ophir include the following interests:

• 31.875% in the Block 12W PSC2 (Chim Sáo and Dua oil fields), Vietnam;
• 67.5% in the Madura Offshore PSC (Maleo and Peluang gas fields), Indonesia;
• 45% in the Sampang PSC (Oyong and Wortel gas fields), Indonesia;
• 20% in the Deepwater Block R PSC (Bestari oil discovery), Malaysia;
• 45% in the SS-11 PSC, Bangladesh;
• 50% in Block 123 PSC and 40% in Block 124 PSC, Vietnam.

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

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