EnQuest buys Exxon’s interest in offshore Malaysia fields

EnQuest PLC, through its wholly owned subsidiary EQ Petroleum Production Malaysia Ltd, has entered into the agreement to acquire ExxonMobil Exploration and Production Malaysia Inc.’s interest in the Seligi oil field and the PM8 PSC, located offshore Malaysia. The agreement is subject to the approval of Petroliam Nasional Berhad (“PETRONAS”) and satisfaction of certain conditions precedent.

This acquisition is another step in the execution of the Company’s strategy to extend its international footprint in Malaysia. Following completion, the acquisition will contribute approximately 5,000 Boepd of net production and 11.0 MMboe of net 2P reserves to EnQuest. EnQuest has extensive experience in creating value from late stage maturing assets in the North Sea, now being extended to enhance recovery from these Malaysian assets.

Highlights

*EnQuest will take over operatorship from ExxonMobil on completion

*EnQuest and Petronas Carigali Sdn Bhd will each hold a 50% participating interest from completion

*Following completion, the transaction is estimated to contribute an additional 5,000 Boepd to the Company’s net production and 11.0 MMboe to net 2P reserves

*This acquisition will be the Company’s third project in Malaysia

*The economic date of the transaction is 1 January 2014 and the US$67.0 million cash consideration is to be subject to an interim period adjustment on completion.

*The current PM8 PSC is due to expire on 30 June 2014. It is a condition to completion that the Company will enter into an agreement with PETRONAS for the continuing development and production of petroleum resources from the PM8 PSC and Seligi oil field until 2033.

EnQuest’s CEO Amjad Bseisu said: “I am delighted to announce this acquisition which builds on our core skill of enhancing value from maturing fields. This acquisition follows from our recent partnership with PETRONAS on the Tanjong Baram field and is a significant expansion to our Malaysian operation. I look forward to deepening our relationship with PETRONAS and adding further opportunities in Malaysia.”

Further information on the transaction

As part of the transaction, EnQuest will also enter into a transition services agreement with ExxonMobil to provide for the smooth transfer of the assets.

Seligi

The Seligi field is located approximately 240 kilometres offshore Peninsular Malaysia in a water depth of 73 metres. The entire oil field encompasses approximately 80 square kilometres and has been developed with Seligi-A, the main Production platform and separate gas compression platform, along with seven minimum facilities satellite platforms tied back to Seligi-A.

PM8

The PM8 PSC comprises of six developed fields (Lawang, Langat, Serudon, North Raya, South Raya and Yong), which have been developed with four minimum facilities satellite platforms tied back to Seligi-A.

The six fields have combined original hydrocarbons in place of over 180 million barrels of oil. They have been developed with a total of 33 strings and produced around 100 million barrels of oil.

Continual review of assets

“This divestment is consistent with our long-standing practice of continually reviewing our assets for their contribution to ExxonMobil’s operating and financial objectives,” said See Kok Yew, chairman and president of ExxonMobil Exploration & Production Malaysia Inc.

“With a presence in Malaysia of more than 120 years, ExxonMobil continues to operate 32 platforms in 12 producing fields and retains a working interest in another 10 platforms in five fields in the South China Sea. These fields collectively produce about 20 percent of the nation’s crude oil and condensate, and supply about 50 percent of Peninsular Malaysia’s natural gas needs,” he added.

See noted that ExxonMobil remains a significant investor in Malaysia’s oil and gas industry, having recently brought the Telok and Damar Gas Development Projects on line, as well as advancing the Tapis Enhanced Oil Recovery Project. These upstream investments are key initiatives under Malaysia’s Economic Transformation Programme.

In addition, ExxonMobil operates a significant Business Support Centre that provides IT support across the globe and a growing engineering support function in Malaysia providing technical, engineering and application support to ExxonMobil’s global refining business.