Malaysian-listed Hibiscus Petroleum has confirmed it will buy a handful of Southeast Asian assets from Spain’s Repsol for $212.5 million.
In a statement to the Malaysian stock exchange Hibiscus said it has paid a partial deposit of $7.5 million for Repsol’s operated assets in Malaysia and Block 46 CN in Vietnam. As Energy Voice reported yesterday, operating the new assets will mark a massive step up for Hibiscus.
“It’s a good headline price, but perhaps doesn’t reflect the full value of the deal, when taking into account potential contingent payments, future liabilities and other balance sheet items the buyer will be taking on,” Andrew Harwood, Asia Pacific research director at Wood Mackenzie, told Energy Voice.
Hibiscus said it will announce full details of the proposed acquisition by tomorrow following clearance by industry regulators.
Completion of the proposed acquisition is subject to customary closing conditions, including waivers of Petronas Carigali’s and PetroVietnam Exploration & Production’s pre-emption rights as project partners, as well as regulatory approval. Regulatory approval in Vietnam, where delays are common, could prove challenging.
Hibiscus also said a transition agreement will be hammered out for the provision of various services by Repsol to Hibiscus to ensure a smooth handover.
The deal includes a 35% interest in production-sharing contract (PSC) PM3 CAA, 60% in 2012 Kinabalu Oil PSC, 60% in PM305 PSC, 60 % in PM314 PSC, and 70% in Block 46 CN in Vietnam – a tie-back asset to the PM3 CAA production facilities. The PM3 block is located within a commercial arrangement area (CAA) set up between Malaysia and Vietnam to allow exploration and the development of several oil and gas discoveries.
There could also be potential issues around the massive long term abandonment exposure, which is complicated by the joint management of the Commercial Arrangement Area (CAA) by both Vietnam and Malaysia.
Hibiscus Petroleum is Malaysia’s first listed independent oil and gas exploration and production company.