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PTTEP, Pertamina agree to buy Hess Indonesia offshore assets

BY ELISABETH BEHRMANN & BENJAMIN HAAS

BANGKOK (Bloomberg) -- PTT Exploration & Production, and PT Pertamina agreed to jointly buy Hess Corporation’s stakes in two offshore energy projects for $1.3 billion. PTT Exploration, or PTTEP, and Pertamina will buy Hess’ 75 % interest in the Pangkah oil field, located in the East Java Sea, and its 23 % stake in the Natuna Sea A gas field in the West Natuna Sea, PTTEP said in a statement.

PTTEP has expanded its investments to 45 projects in 12 countries, including last year’s acquisition of Cove Energy’s oil and gas assets in Mozambique for $1.6 billion, to diversify output. The company said in July that sales from its Zawtika project near Myanmar will begin commercial production in Q1 of next year.

“The Indonesian projects would allow closer oversight by PTT Exploration compared with its other faraway projects such as in Canada and Africa,” Chutima Woramontri, an analyst at BNP Paribas Securities in Bangkok, said by phone. “It’s a very positive move for PTT Exploration to expand its assets in Southeast Asia.”

The Pangkah field has daily output of 7,000 bbls of oil and 33 MMcf of gas, while the the Natuna Sea A field produces 220 MMcf of gas and 2,350 bopd, PTTEP said in the statement. The two fields have combined reserves of about 319 MMboe, it said.

Thai Assets

PTTEP, which is paying cash for the stakes, expects the Natuna Sea A project purchase to be finalized within this year and the Pangkah project to close in the Q1 of 2014. The company is paying $650 million for its stake, according to the statement.

“The pricing here, looking at the reserves and the production, are both attractive compared to recent transactions,” Trevor Buchinski, an analyst at Macquarie Securities Thailand, said by phone. “This also sets the stage for the next acquisition, Hess’ Thai assets, and it’s an early indication that the risk of PTTEP overpaying in Thailand is lower.”

Tevin Vongvanich, PTTEP’s CEO, said on October 29 the company is interested in buying Hess’ assets in Thailand, according to a Reuters report. Hess has a 35 % stake and is the operator of the Sinphuhorm field in Thailand, according to the company’s website.

Growth Strategy

“The acquisition of Pangkah and Natuna Sea A is a strategic fit to PTTEP’s growth strategy of adding producing assets that contribute immediate revenue stream,” the company said in the statement.

Buying the stakes “is in line with Pertamina’s growth strategy to acquire more producing assets that provides an immediate addition to production and reserve hence increase the revenue,” the company said in an e-mailed statement. The company estimates that its output will be about 2.2 MMboed by 2025, contributed equally from domestic and overseas operation, it said.

12/02/2013

 

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