ALFA announces that Newpek divested all its assets in Texas

Rhea-AI Summary

ALFA S.A.B. de C.V. announced the divestment of its subsidiary Newpek LLC's assets in Texas, including wells and leases in the Eagle Ford and Edwards Shale, to Ensign Operating LLC and Reliance Eagleford Upstream Holding LP. This transaction, valued at $88 million, allows Newpek to cancel its obligations in the joint venture. Consequently, ALFA will report an extraordinary gain of $58 million in its 3Q20 EBITDA. This move aligns with ALFA's strategy to divest non-Mexican oil and gas assets and facilitate independent operations for its subsidiaries.

Positive

• ALFA will recognize an extraordinary gain of $58 million in 3Q20 EBITDA.
• The divestment has an implied value of $88 million for Newpek.

Negative

• None.

SAN PEDRO GARZA GARCÍA, N.L. Mexico, Aug. 18, 2020 /PRNewswire/ -- ALFA S.A.B. de C.V. (BMV: ALFAA) ("ALFA") announced today that its subsidiary, Newpek LLC ("Newpek"), divested all of its assets in Texas, including all wells and leases in the Eagle Ford Shale ("EFS") and Edwards Shale ("Edwards"). Newpek transferred its assets in Texas to Ensign Operating LLC ("Ensign") and Reliance Eagleford Upstream Holding LP ("Reliance") in exchange for a complete cancellation of its obligations in the joint venture and operating contracts.

At the close of 2Q20, EFS and Edwards had a total of 591 wells connected to sales.

This transaction has an implied value of US $88 million for Newpek, resulting from the cancellation of its obligations. Hence, ALFA will recognize an extraordinary gain of US $58 million in 3Q20 EBITDA. Details of the agreement were not disclosed.

In line with ALFA's strategy to divest Oil & Gas assets outside Mexico, Newpek also closed its administrative office in Irving, Texas and moved remaining functions to Monterrey, Mexico.

This transaction is also aligned with ALFA's recent announcement to unlock its high underlying value potential through a gradual and orderly process towards fully independent subsidiaries; versus the current conglomerate structure.

For more information please visit: https://www.alfa.com.mx/SP/press.htm

iralfa@alfa.com.mx
www.alfa.com.mx
+ (52) 81-8748-2521

View original content:http://www.prnewswire.com/news-releases/alfa-announces-that-newpek-divested-all-its-assets-in-texas-301114364.html

SOURCE ALFA, S.A.B. de C.V.

FAQ

What is the value of the assets divested by ALFA's subsidiary Newpek in Texas?

The divestment of Newpek's assets in Texas has an implied value of $88 million.

How much extraordinary gain will ALFA report from the divestment in 3Q20?

ALFA will report an extraordinary gain of $58 million in its 3Q20 EBITDA.

What does ALFA's divestment of Newpek's assets align with?

The divestment aligns with ALFA's strategy to divest oil and gas assets outside Mexico.