London-based independent E&P company Panoro Energy’s Norwegian subsidiary Panoro Tunisia Production AS has signed an agreement with OMV Exploration and Production GmbH to acquire 100 per cent of the shares of OMV Tunisia Upstream GmbH for a transaction value worth US$65mn
OMV Tunisia holds a 49 per cent interest in five oil-producing concessions in Tunisia with net 2P reserves of 8.1 mmbbl and net production of approximately 2,000 bopd from 14 wells. It also owns 50 per cent of Thyna Petroleum Services SA (TPS), which serves as the operating company for the five oil-producing concessions.
The five oil-producing concessions, which include Guebiba/El Hajib, Rhemoura, El Ain, Cercina, and Cercina South, are located onshore and shallow water offshore near to the city of Sfax, and adjacent to Panoro’s operated Sfax Offshore Exploration Permit (SOEP) recently acquired from DNO ASA.
Through this transformational acquisition, Panoro adds high-quality oil producing assets with existing infrastructure, well-managed operations and substantial upside potential. In addition, this acquisition further establishes Tunisia as a new core area for Panoro and is an important step towards the Company becoming a material, full-cycle African focused E&P independent.
The concessions benefit from low operating costs of approximately US$12 per barrel, robust downside protection and attractive fiscal terms. GCA estimates 2P NPV10 of OMV Tunisia of approximately US$92mn from 1 July 2018, and additionally, OMV Tunisia generated some US$10mn in free cash during the first half of 2018.
The remaining interest in the concessions and TPS is held by ETAP, the Tunisian national oil company. The concessions are currently jointly-managed and jointly-operated by ETAP and the Target through TPS, a long-standing and respected joint-venture operating company. TPS is located in the city of Sfax and has approximately 130 employees. Panoro will have the right to appoint the Deputy General Manager as well as the Development Manager in TPS. The future strategy and work programme at TPS will be jointly managed by Panoro and ETAP and the JV has already identified several opportunities to enhance production and increase reserves from the Concessions.
Due to the location adjacent to the SOEP permit and its extensive available infrastructure, the Concessions create a unique opportunity for Panoro to unlock the development and exploration potential in the SOEP permit through a tie-in to the existing TPS infrastructure and pipeline system.
Mercuria Energy, one of the world’s largest independent energy traders, has a long-term strategic relationship with Panoro and is providing an acquisition loan facility of US$27mn to Panoro Tunisia. The loan will amortise over a period of five years and carries an annual interest rate of LIBOR plus six per cent per annum. In addition, Panoro has secured from Mercuria an additional junior loan facility for a further US$8mn, which Panoro Tunisia might decide to drawdown at a later stage.
John Hamilton, CEO of Panoro, said, “Following the completion of the DNO Tunisia AS transaction this summer, we are extremely pleased to announce our second acquisition in Tunisia with the purchase of OMV Tunisia Upstream GmbH from OMV. The acquired company holds high quality producing oil concessions with low decline rates and low breakeven levels, and generate strong cash flow.”
“The five oil-producing concessions, Guebiba/El Hajib, Rhemoura, El Ain, Cercina, and Cercina South perfectly complement our existing business in Tunisia, specifically the adjacent Sfax Offshore Exploration Permit. This accretive acquisition is in line with our announced strategy to expand further in Tunisia and highlights our determination to continue building a leading international independent exploration and production company focused on Africa,” Hamilton further added.
