EnQuest picks up Harbour Energy Vietnam assets in $84 million deal

Aberdeen-based EnQuest (LON: ENQ) has acquired Harbour Energy’s (LON: HBR) Vietnam business as part of a $84 million deal to  “grow its international operating footprint”.

The firm’s chief executive Amjad Bseisu said: “As EnQuest continues to work towards a transformational transaction in the UK North Sea, this agreement underlines our commitment to growth, a disciplined approach to M&A, and deploying capital where we see the most favourable returns.”

As part of the deal, EnQuest will take over Harbour Energy’s 53.125% stake in the Chim Sáo and Dua fields.

The London-listed oil firm said it expects to complete the deal in the second quarter of this year.

In addition to the $85 million value for the deal, EnQuest will also fork out net interim period cash flows of around $35m.

Speaking on the impact its new assets will have on production, EnQuest told shareholders that net 2P reserves and 2C resources across the fields total 7.5 million barrels of oil equivalent (boe) and 4.9 million boe, respectively.

Late last year, the firm entered the Malaysian gas market when it was awarded the rights to develop additional resources from its Seligi field.

© Supplied by EnQuest

EnQuest Petroleum Production Malaysia is developing the project in partnership with Petronas Carigali Sdn Bhd (PCSB) and E&P Malaysia Venture (EPMV) and holds a 50% equity share in the development.

Bseisu added: “Our entry into Vietnam is highly complementary to EnQuest’s well-established and high-performing Malaysia business and significantly enhances the scale of our operations and opportunity in South East Asia.

“The region is key to EnQuest’s growth and diversification strategy and we are excited by the potential to deploy our proven expertise and operating capability to optimise and enhance the Block 12W assets.

“We look forward to welcoming our new employees from the existing Harbour Energy team to the group and are committed to working with our partners, Bitexco and PetroVietnam Exploration Production Corporation Ltd, to explore future opportunities in the assets.”

EnQuest attracted by more ‘compelling’ Asian market

In September the EnQuest boss struck out at the “irreversible damage” he perceived was being done to the UK’s oil and gas market as a result of the country’s taxation policy.

Bseisu said at the time that his firm had invested over £4 billion in the UK and “has the capacity and opportunities to do so again”.

But while the independent North Sea producer was still looking for “transformative UK acquisition”, he said the firm would only look to acquire North Sea assets that don’t require too much investment.

It was at this time that he shared an interest in diversifying into south-east Asia as “the return on capital investment is compelling”.

The UK’s largest producer of oil and gas, Harbour Energy, made a similar move in recent years as it acquired Wintershall Dea to expand the company into new regions.

Both firms have previously opposed the energy profits levy (EPL), or windfall tax, in the UK which sees the headline rate of tax imposed on oil operators brought to 78%.