OMV: Buys 24.99% of the Yuzhno Russkoye Field for $1.85bn

 

OMV, the international integrated oil and gas company based in Vienna, is entering a major Upstream gas project in Russia. OMV signed an agreement to acquire a 24.99% share in the Yuzhno Russkoye natural gas field located in Western Siberia from Uniper SE. The purchase price amounts to USD 1,850 mn (approx. EUR 1,749 mn based on an agreed exchange rate of EUR 1 = USD 1.0575) plus cash on the balance sheet per December 31, 2016. The transaction is anticipated to close by year end and will be retroactively effective as of January 1, 2017. The implementation of the transaction is subject to further conditions, including co-shareholder consent as well as merger control and foreign investment control clearance in Russia.

Rainer Seele, Chief Executive Officer of OMV: “The acquisition will build a new core area, Russia, in our Upstream portfolio adding 100,000 boe/d to OMV’s production. After closing, OMV will produce in total more than 400,000 boe/d. This transaction is fully compliant with the execution of our strategy and significantly reduces OMV’s production cost.”
  • Purchase of 24.99% interest in the Yuzhno Russkoye gas field in Western Siberia
  • Russia becomes new core area in Upstream with immediate production
  • Yuzhno Russkoye’s low production costs reduce OMV’ s OPEX to below USD 10/boe
The Yuzhno Russkoye field is one of the largest gas fields in Russia, situated in the Yamal-Nenets region. Current plateau production of the field amounts to 25 bn cubic meters per year (100%). The license will expire by the end of 2043. The gas from the field is the key resource for the Nord Stream pipeline which supplies Germany directly with Russian gas.
 
“An important strategic rationale behind this transaction is the ability to replenish reserves” explains Johann Pleininger, OMV Board Member Upstream. “With remaining recoverable reserves of around 580 mn boe (OMV share), Yuzhno Russkoye becomes a major source of reserve replenishment in OMV’s portfolio. The transaction enables OMV to reach its strategic target of a 100% reserves replacement rate for a period of around 5 years based on OMV’s 2016 production volume.”
 
Yuzhno Russkoye will generate attractive cash flows without requiring significant investments. CAPEX needs are expected to amount to only USD 20 mn per year until license expiry. OMV is entitled to dividends starting with the financial year 2017 and is expected to receive approximately USD 200 mn per year mid-term.