TotalEnergies Signs an Agreement in View of Acquiring the Remaining 50% of SapuraOMV, a Significant Upstream Gas Operator in Malaysia

Rhea-AI Summary

TotalEnergies signs an agreement to acquire the remaining 50% of SapuraOMV, a significant upstream gas operator in Malaysia, for $530 million, expecting to own 100% of the company by the second half of 2024. SapuraOMV's main assets include interests in block SK408 and SK310 offshore Sarawak.

Insights

Energy Sector Analyst

With TotalEnergies' strategic move to acquire the remaining 50% of SapuraOMV Upstream Sdn, this denotes a significant expansion of their footprint in the Malaysian gas market. The deal, valued at $530 million, is substantial and indicative of TotalEnergies' confidence in the region's resource potential and market dynamics.

Currently, SapuraOMV's assets, particularly the 40% interest in SK408 and 30% in SK310, are pivotal for TotalEnergies due to the growing demand for natural gas as a cleaner energy source. These blocks are instrumental in Malaysia's offshore production and full ownership could streamline operations and potentially improve profit margins through economies of scale.

From an investor's standpoint, the anticipated closing in the second half of 2024 means that short-term stock reactions may be tempered, as market participants often discount events so far in the future. However, investors will likely monitor the progress of regulatory approvals closely, as these are necessary hurdles that could influence TotalEnergies' stock value.

Financial Analyst

Assessing TotalEnergies' financial position relative to the acquisition of SapuraOMV, the investment of $530 million must be contextualized within the company's overall capital allocation strategy. The deal should be financed comfortably by TotalEnergies, assuming their balance sheet remains robust. Investors should consider how this acquisition might affect dividend payouts and share repurchase programs in the medium term, as capital will be directed towards asset integration and development.

Given the upstream nature of the acquisition, the capital expenditure and subsequent operational costs will be substantial. However, the potential for increased reserves and production output could translate to improved long-term revenue streams. It's essential to weigh these prospects against the inherent risks of the energy sector, such as commodity price volatility and geopolitical factors.

PARIS--(BUSINESS WIRE)-- Regulatory News:

TotalEnergies (Paris:TTE) (LSE:TTE) (NYSE:TTE) has signed an agreement with Sapura Upstream Assets Sdn Bhd (SUA) to acquire its 50% interest in Malaysian independent gas producer and operator SapuraOMV Upstream Sdn (SapuraOMV) for a consideration of $530 million, subject to closing adjustments. Closing is expected in the second half of 2024.

This agreement follows a first agreement signed with OMV on January 31^st, 2024, for the acquisition of its 50% interest in SapuraOMV.

After completion of both transactions, which are subject to some conditions precedent, in particular regulatory approvals, TotalEnergies would own 100% of SapuraOMV.

SapuraOMV’s main assets are its 40% operated interest in block SK408 and 30% operated interest in block SK310, both located offshore Sarawak in Malaysia. In 2023, SapuraOMV’s operated production (100%) was about 500 Mcf/d of natural gas, feeding the Bintulu LNG plant operated by Petronas, as well as 7 kb/d of condensates. On block SK408, the development of Jerun gas field is on track for a startup in the second half of 2024. SapuraOMV also holds interests in exploration licenses in Malaysia, Australia, New Zealand and Mexico, where a discovery was made in 2023 on block 30.

“Following the transaction with OMV announced two months ago and this new transaction with Sapura Upstream Assets, TotalEnergies will have full ownership of SapuraOMV and become a significant gas operator in Malaysia,” said Patrick Pouyanné, Chairman and CEO of TotalEnergies. “The SapuraOMV assets are fully in line with our strategy to grow our gas production to meet demand growth, focusing our portfolio on low-cost and low-emission assets. We look forward to strengthening our global partnership with Petronas in Malaysia, a country where we see further development opportunities for our Company.”

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About TotalEnergies in Malaysia
TotalEnergies owns interests in two PSCs in exploration phase and signed in June 2023 an agreement with Petronas and Mitsui to develop a carbon storage project in Southeast Asia and evaluate several CO₂ storage sites in the Malay Basin.

About TotalEnergies
TotalEnergies is a global integrated energy company that produces and markets energies: oil and biofuels, natural gas and green gases, renewables and electricity. Our more than 100,000 employees are committed to provide as many people as possible with energy that is more reliable, more affordable and more sustainable. Active in about 120 countries, TotalEnergies places sustainability at the heart of its strategy, its projects and its operations.

@TotalEnergies TotalEnergies TotalEnergies TotalEnergies

Cautionary Note
The terms “TotalEnergies”, “TotalEnergies company” or “Company” in this document are used to designate TotalEnergies SE and the consolidated entities that are directly or indirectly controlled by TotalEnergies SE. Likewise, the words “we”, “us” and “our” may also be used to refer to these entities or to their employees. The entities in which TotalEnergies SE directly or indirectly owns a shareholding are separate legal entities. This document may contain forward-looking information and statements that are based on a number of economic data and assumptions made in a given economic, competitive and regulatory environment. They may prove to be inaccurate in the future and are subject to a number of risk factors. Neither TotalEnergies SE nor any of its subsidiaries assumes any obligation to update publicly any forward-looking information or statement, objectives or trends contained in this document whether as a result of new information, future events or otherwise. Information concerning risk factors, that may affect TotalEnergies’ financial results or activities is provided in the most recent Universal Registration Document, the French-language version of which is filed by TotalEnergies SE with the French securities regulator Autorité des Marchés Financiers (AMF), and in the Form 20-F filed with the United States Securities and Exchange Commission (SEC).

View source version on businesswire.com: https://www.businesswire.com/news/home/20240422916948/en/

TotalEnergies

Media Relations: +33 (0)1 47 44 46 99 l presse@totalenergies.com l @TotalEnergiesPR

Investor Relations: +33 (0)1 47 44 46 46 l ir@totalenergies.com

Source: TotalEnergies SE

FAQ

What is TotalEnergies acquiring in Malaysia?

TotalEnergies is acquiring the remaining 50% of SapuraOMV, an independent gas producer and operator in Malaysia.

How much is the acquisition deal worth?

The acquisition deal is worth $530 million.

When is the closing expected to happen?

The closing is expected in the second half of 2024.

What are SapuraOMV's main assets?

SapuraOMV's main assets include a 40% operated interest in block SK408 and a 30% operated interest in block SK310, both located offshore Sarawak in Malaysia.