Saudi Arabia - joining the dots

A series of blog entries exploring Saudi Arabia's role in the oil markets with a brief look at the history of the royal family and politics that dictate and influence the Kingdom's oil policy

AIM - Assets In Market

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Iran negotiations - is the end nigh?

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Yemen: The Islamic Chessboard?

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Acquisition Criteria

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Valuation Series

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Wednesday 30 April 2014

Sinopec and China Huadian acquire 15% stake in Petronas' Pacific NorthWest LNG project


  • Sinopec and China Huadian, one of China's largest power companies, have agreed to acquire a 15% stake in Petronas' proposed Pacific NorthWest LNG project, BC
  • The acquisition also includes the 15% associated interest in Petronas' Montney position
  • Sinopec has also entered into a Heads of Agreement to purchase an additional 3mmtpa of LNG for 20 years sourced primarily from the Pacific NorthWest LNG project 
  • Following Petronas' acquisition of Progress Energy in 2012 for CAD5.5bn, the company announced its intention reduce its exposure to the LNG project by divesting up to a 50% stake
  • Divestments to date are Japex (10%), Petroleum Brunei (3%), Indian Oil (10%); post completion of the sale to Sinopec and China Huadian (15%), Petronas will retain a 62% stake in the project

Encana divests more gas assets


  • On 31 March 2014, Encaca sold its interests in the Jonah Field to TPG
  • On 29 April 2014, Encana announced the sale of further gas assets in US L48 to an undisclosed buyer
  • Encana has adopted strategy known as "Getting Back to Winning", focusing on liquids-rich opportunities/higher returns at times of weak gas pricing
  • PE buyers continue to pick up gas assets - after low risk, long-lived cash generating assets, potential for cost efficiencies
  • With absence of shareholder pressure, PE buyers can hold assets and take longer-term view on gas prices
  • PE can also achieve higher returns as do not need to pay corporate tax (profits distributed directly to shareholders), similar to MLPs

OMV farms-in to Tullow Madagascar blocks


  • On 30 April 2014, OMV announced the acquisition of a 35% WI in Block 3109 (Mandabe) and Block 3111 (Berenty) from Tullow
    • Tullow will retain 65% WI and remain Operator
    • Block 3109: 2D to be shot in 2014
    • Block 3111: First well to be spud in Q1 2015
  • The acquisition continues OMV's strategy of "build[ing] up a new exploration business in the region of Sub-Saharan Africa"
    • In August 2013, OMV farmed into a 40% WI in Niko's Grand Prix PSC, offshore Madagascar (Niko 35% WI), EnerMad (25% WI)
    • In December 2013, OMV farmed into Ophir's exploration projects in Gabon:
      • Mbeli (10% WI)
      • Ntsina (10% WI)
      • Gnondo (30% WI)
      • Manga (30% WI)
      • 3D seismic is planned on all the licences in 2014, with 1 well to be drilled on each of Mbeli, Ntsina and Gnondo
    • In March 2014, OMV teamed up with Murphy Oil to acquire Blocks 2613A and 2613B, Namibia from Brazil's Cowan Petroleum; OMV acquired a 25% WI in the blocks, with Murphy taking 40% and Operatorship
      • OMV's head of exploration and production, Jaap Huijskes, said in a statement at the time: "Offshore Namibia offers great exploration potential as it is largely unexplored, yet has all the elements of an effective hydrocarbon system"