PRESIDENT and CEO of Sapura Energy Bhd Tan Sri Shahril Shamsuddin was visibly happy when The Edge met him final week. His enthusiasm is comprehensible.

The oil and fuel providers supplier, through which Shahril has 16.eight% fairness curiosity, had simply introduced that Austrian oil and fuel large OMV Aktiengesellschaft was looking for to amass a 50% stake within the group’s upstream property housed beneath Sapura Upstream Sdn Bhd (beforehand often known as Sapura Exploration and Production Sdn Bhd).

The events have signed a heads of settlement and are ironing out the small print.

The pricing of the stake relies on an enterprise worth of US$1.6 billion (RM6.64 billion), which implies Sapura Energy will quickly have US$800 million recent money — one thing that the group must deleverage its debt-heavy stability sheet.

On prime of that, Sapura Energy can have a powerful associate to develop its upstream enterprise.

The enterprise worth of Sapura Upstream is a stark distinction to Sapura Energy’s market capitalisation of RM2.6 billion.

Sapura Energy’s share value noticed a powerful rebound after the announcement. During the three buying and selling days final week, the inventory gained 30% to shut at 45.5 sen on Friday. A complete of 1.12 billion shares modified arms throughout the holiday-shortened week.

The climb in share value spells investor confidence within the deal, contemplating that the counter had been hammered all the way down to an all-time low of 33.5 sen proper after the announcement of its large RM4 billion money name final month.

“It’s a superb deal … I can problem anybody who says in any other case,” Shahril tells The Edge. “It provides validity and is an endorsement of the corporate (Sapura Energy) … equal shareholding to an organization that has a market capitalisation of €15 billion.”

While Shahril is tight-lipped on the salient options of the settlement, The Edge understands that Sapura Energy could handle the three way partnership.

He provides that Sapura Energy will be capable to leverage OMV and vice versa, and that Sapura can have a presence in OMV’s strongholds. “There are additionally some elements you possibly can’t put a price ticket on, reminiscent of data, experience, market attain and coaching. There is a wealth of data and human sources that we are able to faucet in our new associate,” he says.

In a press launch, OMV chairman and CEO Rainer Seele says, “The meant partnership with Sapura Energy is a significant step to develop OMV’s actions in Southeast Asia. The oil and fuel demand on this area is predicted to extend strongly till 2030 and OMV is taking the chance to additional develop the enterprise and construct up the brand new core area.”

The stake sale will defer Sapura Energy’s plan to record its upstream property that was slated for later this yr.

“It [the stake sale] has extra worth add than an IPO. I see this as forming a partnership as an alternative of only a divestment,” says Shahril, noting that there can be uncertainties alongside the itemizing course of that vary from valuation and tedious compliance to market sentiment and investor urge for food.

Who is OMV?

The title may not ring a bell in Malaysia however the oil and fuel large has a powerful presence in Eastern Europe with a every day manufacturing of 348,000 barrels of oil equal (BOE) per day, which is evenly break up between oil and fuel, with greater than half of the manufacturing coming from Romania and Austria. OMV has a workforce of 20,721.

For its monetary yr ended Dec 31, 2017, OMV chalked up €1.59 billion in internet revenue (RM7.66 billion) from €20.22 billion (RM97.37 billion) in income. Last Thursday, its shares closed at €45.92 (RM221.37), giving it a market capitalisation of €15.02 billion (RM72.33 billion).

OMV’s upstream arm explores and produces oil and fuel in Central and Eastern Europe, the North Sea, the Middle East, Africa, Russia and Australasia.

As at end-2017, OMV had confirmed reserves of 1.15 billion BOE and confirmed and possible reserves of 1.94 billion BOE. Its downstream enterprise consists of three refineries in Austria, Germany and Romania, a world multi-brand filling station retail community and a processing…

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