PETALING JAYA: Sapura Energy Bhd entered into a Head of Agreement (HoA) to dispose a 50% stake in its oil and gas exploration arm based on an enterprise value of US$1.6bil (RM6.5bil) to Austria’s OMV Aktiengesellschaft (OMV).
The proposed transaction is subject to continued ongoing negotiations between the two parties in an exclusive basis.
The proposed HoA comes ahead of Sapura Energy undertaking a massive rights issue of RM4bil to reduce its long and short term debts of more than RM15bil. Although the company has an order book of RM16.7bil, analysts had said that its high gearing has bogged down its ability to undertake large jobs.
Sapura Energy’s rights issue has the backing of Permodalan Nasional Bhd which is the second largest shareholder in the oil and gas company.
Earlier the company had planned to list its oil and gas arm, Sapura Upstream Sdn Bhd and the valuation was reported to be between RM5bil and RM7bil. However sentiments are not right for a listing exercise.
The sale of a 50% stake, if it materialises, will effectively reduce the pressure on Sapura Energy to list Sapura Upstream.
Sapura Energy’s president and chief executive Tan Sri Shahril Shamsuddin said that the company had been evaluating various options as part of the group’s broader strategic plan to strengthen its core businesses, boost its financial position and create better value for its shareholders.
“We have explored all options including the potential listing of Sapura Upstream. The invitation to enter into this strategic partnership with a leading oil and gas player serves our goals and aspirations better while providing certainty in timing and valuation,” he said in a statement.
“The partnership with OMV complements our continued strategy to grow our portfolio and expand our acreage position. OMV’s existing footprint offers new opportunities for our upstream segment and increases market reach for our services segment where OMV operates,” said Shahril.
OMV is one of Austria’s largest listed industrial companies with group sales of EUR20bil and a workforce of more than 20,000 employees.
According to a statement from Sapura Energy, in Sapura Upstream, OMV would have a strong base in Romania and Austria and a balanced international portfolio, with the North Sea, the Middle East & Africa and Russia as further core regions.