UK firm’s acquisition of ‘fast-payback’ oil & gas fields marks new country entry in Southeast Asia

London Stock Exchange-listed energy player EnQuest has set the wheels in motion to expand its presence in Southeast Asia by buying Harbour Energy’s business in Vietnam, which encompasses producing oil and gas assets.

The signed sale and purchase agreement for Harbour Energy’s business in Vietnam will enable EnQuest to get its hands on the 53.125% equity interest in the Chim Sáo and Dua production fields, which is aligned with the firm’s strategic aim to grow its international operating footprint by investing in what it describes as “fast-payback assets, with low capex and reduced carbon intensity.”

The UK player underlines that this fully staffed new country entry expands its Southeast Asia footprint beyond Malaysia, in which the firm has been present for ten years and was named ‘Operator Of The Year’ by Petronas in 2024. With an effective date of January 1, 2024, this acquisition is scheduled to complete during the second quarter of 2025.

The headline value of the transaction is $84 million, and net of interim period cash flows, the consideration to be paid by EnQuest on completion is expected to equal around $35 million. Once the acquisition is over, the UK firm will operate the Chim Sáo and Dua fields in Block 12W, deploying its late life and FPSO asset management expertise to maximize value and progress discovered resources into reserves.

Amjad Bseisu, EnQuest’s Chief Executive Officer, commented: “Our entry into Vietnam is highly complementary to EnQuest’s well-established and high-performing Malaysia business and significantly enhances the scale of our operations and opportunity in South East Asia. The region is key to EnQuest’s growth and diversification strategy and we are excited by the potential to deploy our proven expertise and operating capability to optimise and enhance the Block 12W assets.

“We look forward to welcoming our new employees from the existing Harbour Energy team to the Group and are committed to working with our partners, Bitexco and PetroVietnam Exploration Production Corporation Ltd, to explore future opportunities in the assets. As EnQuest continues to work towards a transformational transaction in the UK North Sea, this agreement underlines our commitment to growth, a disciplined approach to M&A, and deploying capital where we see the most favourable returns.”

The Block 12W production sharing contract runs to November 2030, with an opportunity for a further extension. As the block contains additional prospectivity, spread across three gas discoveries and several additional targets, EnQuest intends to investigate this potential upside.

Moreover, net 2P reserves and 2C resources across the fields as of January 1, 2025, total 7.5 million boe and 4.9 million boe, respectively. The drilling of three infill wells during 2023 and a series of well interventions undertaken in 2023-2024 positively impacted Block 12W production, with both scopes contributing about 3.0 MMboe to 2P reserves on January 1, 2025. 

According to EnQuest, net production in 2025 is forecast to average approximately 5.3 kboepd, with further significant upside potential related to well intervention performance. The company elaborates that oil, representing around 73% of output, is high quality and has historically realized about a 10% premium to Brent, while gas is commercialized via an associated gas gathering agreement.

As field volumes are produced at a life of field asset breakeven of around $40 per boe, with minimal capital requirements and a decommissioning liability that is covered via a PSC fund, EnQuest believes the resulting free cash flow underpins Chim Sáo and Dua’s value, making them strong anchor assets for the firm’s entry into Vietnam.

EnQuest has been busy with other assets in its portfolio outside Asia, as confirmed by a milestone of 70 million barrels of oil produced during May 2024 from its field in the Northern North Sea, which has been online since 2017. Shell also recently transferred its decommissioning management role to the firm at fields in the UK North Sea.