Austria's OMV is buying the 25-percent stake of Germany's Uniper in Russian gas field Yuzhno-Russkoye in western Siberia for US$1.85 billion in a deal that would give the Austrian energy group access to a major upstream project in Russia, and help the German company cut its debt.
OMV will buy Uniper's interests in two Russian companies - OJSC Severneftegazprom and JSC Gazprom YRGM Development - that own 25 percent in the Yuzhno-Russkoye field. The deal, subject to regulatory clearance in Russia and approval by the other shareholders, is expected to close by the end of this year and will take effect retroactively as of January 1, 2017, the two companies said in separate statements on Sunday.
OMV's share of the remaining recoverable reserves during the license term for Yuzhno-Russkoye until the end of 2043 is around 580 million barrels of oil equivalents (boe). The Austrian company's share of the daily production of the field is estimated at 100,000 boed. The current plateau production of the field is 25 billion cubic meters (882.9 billion cubic feet) annually, OMV said.
"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," OMV Board Member Upstream, Johann Pleininger, said.
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Via the deal, OMV will generate cash flows without requiring significant investments, with capex needs expected at US$20 million annually until license expiry. OMV is entitled to dividends starting with the financial year 2017 and is expected to receive approximately US$200 million per year mid-term, the Austrian group said.
Uniper, for its part, said that the sale would not affect its strategy, as the E&P business was no longer considered a core business.
In addition, the sale of the Yuzhno-Russkoye stake would help Uniper "achieve our deleveraging target well ahead of schedule".
Uniper's target is to generate positive free cash from operations after dividend payment and to sell assets for US$2.121 billion (2 billion euro) to reduce its economic net debt/EBITDA ratio to "comfortably below 2.0x."
By Tsvetana Paraskova for Oilprice.com
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