OMV Yemen changing hands

Zenith Energy Netherlands, part of Canadian oil and gas company Zenith Energy, has entered into a share purchase agreement (SPA) with Austria’s OMV Exploration and Production to acquire OMV Yemen.

Under the SPA, Zenith Energy Netherlands will, subject to certain conditions, acquire 100 per cent of OMV’s shares in OMV Yemen for a total consideration of over $21.6 million.

The company has paid a deposit of more than $4.3 million which shall be credited by OMV to Zenith Netherlands as part of the purchase price upon completion.

The obligations set out in the agreement are subject to the approval of the authorities in Yemen, and the approval by the Federal Ministry of the Republic of Austria for Labour and Economy, among others. The SPA has a longstop date of nine months from the date of signing.

Furthermore, a Transitional Services Agreement (TSA) may be signed between the parties at or around completion to govern certain services to be provided by OMV or its affiliates to Zenith Netherlands after completion if it is determined that such agreement shall be required to optimize the handover.

“The acquisition of OMV Yemen represents a very significant milestone for Zenith Energy. The existing production from the asset and, more importantly, the near-term future oil and natural gas production indicated by the size of the reserves, position Zenith on an extremely exciting organic growth trajectory,” said Andrea Cattaneo, Chief Executive of Zenith.

“Finally, we look forward with enthusiasm to establishing ourselves in Yemen and contributing to the prosperity of the local economy. It is our belief that the country has extraordinary economic potential, especially in respect of its oil and gas industry, and we shall seek to maximise our relationship with the local authorities to achieve our development objectives.” 

OMV Yemen comprises OMV Yemen Block S 2 Exploration, OMV Jardan Block 3 Upstream and OMV Block 70 Upstream, incorporated and existing under the laws of Austria.

According to Zenith, OMV Yemen is one of the largest oil producers in the country with a highly prospective portfolio including a balance of immediate production, as well as a balance of short and long-term growth opportunities. Estimates show gross total recoverable gas volumes across the portfolio to be approximately 571 BSCF.

A gas discovery has been made in Block 3, representing a major opportunity for the monetisation of OMV’s Yemen natural gas production, all of which is currently flared, and several gas production offtake options are under discussion including the possibility of a connection being made to a local power station or to Yemen LNG, the company said.

Zenith may also explore the construction of a Gas-to-Power (GTP) plant to commercialize gas production and provide additional electricity supply to the local economy.

Block S-2 was discovered in 1992 and declared commercial in 2005. OMV (Yemen Block S 2) Exploration operates and holds a 44 per cent working interest, with partners including SINOPEC (37.5 per cent), YOGC (12.5 per cent) and YRL (6 per cent). Gross production during 2021 averaged approximately 7,400 barrels of oil per day (BOPD) and the field remains in the ‘primary depletion’ stage.

In Block 3, in which OMV Jardan Block 3 Upstream holds a financial interest of 36.17 per cent, gross oil resources have been estimated at about 60 million barrels unrisked by OMV, while in Block 70, in which OMV Block 70 Upstream holds a financial interest of 20.25 per cent, gross oil resources have been estimated at about 70 million barrels unrisked.

Earlier this year, Zenith Energy handed over an offer to the relevant Ministry in the Republic of Benin for a block with “significant untapped, independently assessed oil and gas reserves,” which is located offshore Benin in Western Africa.

The offer was submitted for the award of an initial nine-year licence to operate Block 1 containing the Sèmè oilfield.