British oilfield services provider Petrofac on Monday signed an agreement to sell 49 percent of the company's operations in Mexico, including Santuario, Magallanes and Arenque, to London-based Perenco (Oil & Gas) International Limited.
'Under the terms of the agreement, Perenco will pay an initial cash consideration of $200 million, with $30 million payable upon signing and $170 million payable upon completion,' a press release read.
This transaction concerns the sale of 49 percent of Petrofac Netherlands Holding B.V., which holds the Santuario Production Sharing Contract, the Magallanes Production Enhancement Contract (a tariff-per-barrel-based service contract) and the Arenque Production Enhancement Contract.
The net assets being disposed of (49 percent of the consolidated Petrofac Netherlands Holding B.V. group) had a carrying amount of $293 million at the end of 2017, according to the statement.
Petrofac said the total consideration comprised a fixed amount and contingent consideration depending upon a number of future milestones, including future field development and migration terms of its 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 $274 million, it added.
Petrofac currently estimates that an impairment charge of approximately $100 million will be recognized on completion against its 100 percent 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 Perenco's 'strong technical capability' would complement their existing brownfield operations experience to strengthen the company's offering.
'We look forward to working with them and the other stakeholders to further develop our mature field interests in Mexico. Today's agreement also marks further progress in delivering on our strategy to reduce capital intensity,' he added.
Perenco's CEO Benoit de la Fouchardiere said partnering with Petrofac in Mexico would offer 'a fantastic opportunity to reach our goals in a timely manner and, by our results, demonstrate to the State company Pemex that we can also be a partner of choice for the future'.
The transaction is subject to approval from the Federal Competition Commission of Mexico (COFECE), which is expected in the fourth quarter.
By Hale Turkes
Anadolu Agency
energy@aa.com.tr