SapuraKencana Petroleum has completed its acquisition of Newfield Malaysia Holding Inc via a newly incorporated subsidiary SapuraKencana Energy Inc today, paying US$895.9 million (RM2.99 billion) on top of an earlier earnest deposit payment amounting to US$89.8 (RM299.9 million).
In a regulatory filing, SapuraKencana said the RM2.99 billion was adjusted as per the sale and purchase agreement, under which the balance payment less the deposit must take in account working capital adjustments, prepaid expenses, intergroup advances and intergroup receipts, the preferential rights exercise by the Newfield’s production sharing contracts (PSC) partners as well as any other relevant adjustment.
The deal’s completion means that SapuraKencana now owns all of Newfield Malaysia’s oil and gas assets, which are held under Newfield Peninsula Malaysia Inc, Newfield Sabah Malaysia Inc and Newfield Sarawak Malaysia Inc.
To recap, the companies collectively have 50% equity interest in Block PM318, a 60% stake in PM323, 70% shareholding in PM329, 50% in AAKBNLP, a 30% share in SK310, 40% in SK408, 50%, limited to New Oil Production and New Facilities in Tembungo, a 40% stake in Block 2C and 25% in Block SK319.
“The transaction will enable SapuraKencana Petroleum to gain an immediate foothold and recognition as an upstream resource owner and operator. In essence we are acquiring a proven oil and gas operator with a balanced portfolio of producing and discovered fields and exploration assets in Peninsular and Sabah & Sarawak,” said SapuraKencana president and chief executive officer Shahril Shamsuddin in October last year.
Newfield’s assets would be operated separately as an independent subsidiary, added Shahril then, as being a field owner and operator means the business requires a different set of operating principles.
Commenting on the deal’s completion, Shahril said SapuraKencana is looking forward to working closely with Petronas and its other PSC partners to fully realise the full potential of the existing fields.
“SapuraKencana Energy will spearhead the SapuraKencana’s upstream business which is expected to be another core division and a significant contributor to the group,” said Shahril, who noted that the acquisition provides a strong platform to further tap into opportunities in Malaysia and other selected regions. “We are looking at an exciting next few years to grow this company.”
In the two-stage bidding process for the right to buy US-based Newfield’s Malaysian assets, SapuraKencana has edged out strong names also interested in the purchase including Talisman Energy Inc, Petrofac Ltd and a joint bid by Puncak Niaga Holdings Bhd and Hibiscus Petroleum Bhd.
News reports put the earnings of Newfield Malaysia’s collective assets at US$400 million (RM1.26 billion) in 2012, but this may rise even further given that Newfield found natural gas 50 miles off the coast of Sarawak in April 2013.
“This is the largest conventional exploratory success that Newfield has made in its 25-year history,” said Lee K Boothby, Newfield Chairman, President and CEO in April last year.
SapuraKencana had previously said that the deal will be financed by a combination of internally generated funds and bank borrowings. In a circular to shareholders dated November last year, SapuraKencana said it intended to raise approximately US$700 million (RM2.2 billion) through financing while another US$198 million (RM625 million) would come from internal funds.
Newfield’s exit came as it intends to focus on Cana, Uinta, Eagle Ford, Woodford and Williston fields in North America.
For 3Q13 ending October last year, SapuraKencana recorded RM245.55 million in net profit from RM2.38 billion in quarterly earnings, up 34.5% year-on-year (yoy) from RM182.51 million in net profit from RM2.21 billion in revenue recorded in 3Q12.
That brought SapuraKencana’s year-to-date net profits for 9MFY13 to RM749.68 million from RM6.49 billion in revenue, an impressive 87% jump from RM400.7 million of net profit from RM4.95 billion revenue recorded in the previous corresponding quarter.
At 9.45am today, SapuraKencana traded at RM4.60 apiece, up 5 sen.