The FINANCIAL — TNK-BP and BP p.l.c. announced on October 18 that they have reached an agreement for TNK-BP to acquire BP’s upstream and pipeline assets in Vietnam and Venezuela for an overall price of $US 1.8 billion.
The FINANCIAL — TNK-BP and BP p.l.c. announced on October 18 that they have reached an agreement for TNK-BP to acquire BP’s upstream and pipeline assets in Vietnam and Venezuela for an overall price of $US 1.8 billion.
According to TNK-BP, the acquisitions will be financed entirely through the company’s available resources and will not require additional capital from the shareholders of TNK-BP. A deposit of $US 1 billion will be made by 29 October, 2010 with final payment upon completion. Subject to government approvals and the fulfillment of other agreed pre-closing conditions, the companies expect the transaction to be completed in the first half of 2011.
According to the terms of the agreements, in Venezuela TNK-BP will acquire from BP a 16.7% equity stake in the PetroMonagas SA extra heavy oil producer, a 40% stake in Petroperija SA which operates the DZO field, and a 26.7% stake in Boquerón SA. These assets are operated as joint ventures with PVDSA and have a combined capacity of 25 thousand barrels of oil equivalent per day.
In Vietnam, TNK-BP will acquire from BP a 35% stake in the upstream offshore gas production Block 06—1 containing the Lan Tay and Lan Do gas condensate fields, a 32.7% stake in the Nam Con Son Pipeline and Terminal, and a 33.3% stake in the Phu My 3 power plant. Together, these assets form an integrated gas and power chain with a production capacity of 30 thousand barrels of oil equivalent per day (on a working interest basis), or 15 thousand barrels per day on a net entitlement basis.
Altogether, the acquisitions of the assets in Venezuela and Vietnam will bring TNK-BP net proved and probable (2P) reserves of ca. 290 million barrels of oil equivalent (WI), or ca. 260 million barrels of oil equivalent on an entitlement basis.
“The acquisitions in Venezuela and Vietnam mark a milestone in TNK-BP’s strategic expansion in the global energy market,” said Mikhail Fridman, Executive Chairman of TNK-BP Ltd. “Our company’s ambitious yet highly focused and disciplined diversification provides TNK-BP with an excellent platform for further growth and profitability, while also helping develop new competencies that can be applied at home. Given Russia’s strong relationships with Vietnam and Venezuela, we are sure that this transaction will create significant value both for TNK-BP and our local partners.”
Regarding the sale of the Vietnamese and Venezuelan assets, Robert Dudley, Chief Executive officer of BP p.l.c. said, “These are robust businesses which offer both existing production and potential opportunities for future growth. We believe they will offer TNK-BP a solid foundation as it builds its business outside Russia”.
Lexicon Partners acted as financial advisor to the Board of Directors of TNK-BP Ltd., Credit Suisse acted as financial advisor to TNK-BP management, while Goldman Sachs advised BP.
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