August 01, 2018 [Tank News International] - Petrofac announces that it has signed an agreement to sell 49% of the company’s operations in Mexico, including Santuario, Magallanes and Arenque, to Perenco (Oil & Gas) International Limited (Perenco).
The transaction is subject to approval by the Federal Competition Commission of Mexico (COFECE), which is expected in Q4 2018. Under the terms of the agreement, Perenco will pay an initial cash consideration of $200m, with $30m payable upon signing and $170m payable upon completion.
The total consideration comprises a fixed amount and contingent consideration depending upon a number of future milestones, including future field development and migration terms of Petrofac’s Magallanes and Arenque Production Enhancement Contracts.
This final amount is subject to adjustment based on achievement of the milestones above and will be capped at $274m. Petrofac currently estimates that an impairment charge of approximately $100m will be recognised on completion against its 100% equity interest in its Mexican subsidiaries. Proceeds from the sale will be used to reduce gross debt.
Petrofac’s Group Chief Executive, Ayman Asfari said: “We are delighted to welcome an experienced partner in Perenco to our Mexican operations. They bring strong technical capability that will complement our existing brownfield operations experience to strengthen our offering. We look forward to working with them and the other stakeholders to further develop our mature field interests in Mexico. [The] agreement also marks further progress in delivering on our strategy to reduce capital intensity.”
Perenco’s Chief Executive Officer, Benoit de la Fouchardiere, said: “Perenco remains proud of its independence which allows us to work differently and make our own success. However, by being pragmatic and opportunistic we are always looking to learn from others and try to improve ourselves thereby targeting a win-win relationship with Petrofac. Congratulations to the Perenco and Petrofac teams for having achieved our joint venture agreement, and I am looking forward to seeing immediate results from this promising new Mexican partnership.”
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