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PTTEP, Pertamina to acquire Hess stakes in two projects

PTT Exploration and Production (PTTEP) and Pertamina will take over from Hess Corporation equal stakes in the Pangkah Project and the Natuna Sea A Project located offshore of Indonesia for US$1.3 billion (Bt42 billion).

PTTEP's subsidiary PTTEP Netherlands Holding Cooperatie and Pertamina's subsidiary Pertamina Hulu Energy have signed share-purchase agreements to acquire on a 50:50 basis the subsidiaries of Hess Corporation that hold 75 per cent of the Pangkah Project and 23 per cent of the Natuna Sea A Project, according to PTTEP's filing to the Stock Exchange of Thailand yesterday.

PTTEP will fund its share of the transactions through its available cash. Completion of the transactions is subject to customary closing conditions as prescribed in the agreements with expected closing this year for the Natuna Sea A Project and the first quarter of next year for the Pangkah Project.

The Pangkah oil field located in the East Java Sea produces 7,000 barrels per day of liquids and 33 million cubic feet per day of gas, with total proved and probable reserves (2P) of 110 million barrels of oil equivalent.

After the completion of the transaction, PTTEP and Pertamina, as the ultimate owners, will jointly operate the Pangkah Project. The other partner is SakaEnergi, which holds 25 per cent.

The Natuna Sea A gas field located in the West Natuna Sea near the border between Malaysia and Indonesia produces about 220 million cubic feet per day of gas and 2,350bpd of oil, with 2P of 209 million barrels of oil equivalent.

Partners in the Natuna Sea A Project include Premier Oil, the operator, KUFPEC and Petronas, which hold participation interests of 28.67 per cent, 33.33 per cent and 15 per cent.

The acquisition of Pangkah and Natuna Sea A is a strategic fit to PTTEP's strategy of adding producing assets that contribute an immediate revenue stream, accretion of volume growth and reserves, and enhance its position in Southeast Asia.

PTTEP believes that the combined strength of PTTEP and Pertamina as the national oil and gas companies of Thailand and Indonesia, and with strong operating experience in the region, will contribute to the continued success of the projects.

Standard & Poor's Ratings Services said its rating on PTTEP at "A+" with stable outlook is not affected by the company's agreement to acquire Hess Corp's stakes in energy projects in Indonesia.

"Based on the available information, the transaction's size, associated development expenditure and the source of funds for the deal are in line with our base-case assumptions for PTTEP's investment strategy.

"We forecast the company to maintain its debt-to-EBITDA ratio at 1.0-1.5 times over the next two to three years."


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