ExxonMobil Signs Agreement to Sell Thai Gas Assets to Horizon Oil
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Exxon Mobil Corporation XOM, the U.S. oil and gas major, has signed a deal with Horizon Oil Limited, an Australian upstream firm, to divest some of its assets in Thailand. ExxonMobil shall divest its stakes in three development licenses onshore Thailand.
Horizon’s Stake in the Gas Fields
Per the terms of the deal, Horizon will own a 60% stake in the E5 block, which includes the Nam Phong conventional gas field. The Australian energy company will also gain a 7.5% stake in blocks E5N and EU1. These blocks hold the Sinphuhorm conventional gas and condensate field. Both Nam Phong and Sinphuhorm fields are producing assets.
Consortium Structure and Partnership With Matahio Energy
Horizon mentioned that the acquisition will be completed via a consortium, where it will be taking over three-fourths of the shares of Exxon Mobil Exploration and Production Khorat Inc. (“EMEPKI”). The rest of the shares will be acquired by Matahio Energy. This deal also marks Horizon’s return to Thailand’s energy sector.
Impact on Horizon’s Production and Reserves
The acquisition has boosted Horizon’s asset portfolio, raising its net production by approximately 2,000 barrels of oil equivalent (boe) per day. Furthermore, its proved and probable reserves also increased 3.9 million boe, based on the January estimates. The company also mentioned that the gas from the fields is already under contract by Thailand’s state-owned energy firm, PTT. The gas from the fields has been secured for a long time for use at a regional power station, ensuring steady demand.
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Horizon Oil believes that it can potentially increase the value of the fields by extending their operational lifespan. The company is considering infrill drilling, i.e., drilling more wells at the fields and upgrading the facilities at the sites. This should also help optimize operations at the fields, increasing production efficiency. Alongside, the company plans on leveraging additional opportunities from both the producing assets.
Financial Structure of the Deal
According to Horizon, the deal to acquire 75% of EMEPKI will involve an upfront cash consideration of $30 million. Furthermore, Horizon will pay up to an additional $7.5 million over six years in contingent payments. However, this additional amount is subject to certain conditions. A major portion of the upfront cash consideration will be funded from its existing Macquarie Bank debt facility. Horizon stated that an approved amendment was made to the credit facility that should expand its debt capacity, facilitating an additional borrowing of up to approximately $22 million for the acquisition. Additionally, Horizon should have access to $10 million in financing, which will be made available following the closing of the acquisition.