MOL has signed an agreement with Chevron Global Ventures and Chevron BTC Pipeline to acquire their non-operated E&P and mid-stream interests in Azerbaijan.
The acquisition includes a 9.57% stake in the Azeri-Chirag-Gunashli (ACG) oil field, and an effective 8.9% stake in the Baku-Tbilisi-Ceyhan (BTC) pipeline that transports the crude to the Mediterranean port of Ceyhan, for total consideration of USD 1.57bn (subject to adjustments at closing).
Once completed, this transaction will make MOL the third largest field partner in ACG.
The ACG field is Azerbaijan’s flagship oil producing asset covering 400 square kilometers and including six offshore production platforms. It has been producing oil since 1997 and has an excellent 20 year-long operational track record.
The country’s largest oil field is operated by BP and produced on average 584,000 barrel per day in 2018.
MOL has also acquired a stake in the BTC pipeline transporting crude oil from Azerbaijan to the port of Ceyhan, Turkey, on the Mediterranean Sea.
This asset will add around 20,000 barrel per day net to MOL’s production in the coming years and will also increase MOL’s proved and probable reserves materially.
The total consideration payable by MOL Group for the transaction is USD 1.57bn (subject to adjustments at closing) which will be financed from available liquidity of the company.
“This major USD 1.57bn transaction is a significant milestone in building our international E&P portfolio, in one of our core regions, the CIS, where we will team up with world-class partners. Following the closing of the deal, around half of our production will come from outside the CEE region, giving us a healthy balance. With these new barrels we are also strengthening our resilient, integrated business model, which will continue to generate robust cash flow to finance the MOL 2030 transformational projects as well as rising dividends to our shareholders,” said Zsolt Hernádi, MOL Group’s chairman and CEO.
“The ACG deal marks the beginning of a new chapter in MOL’s E&P story as we take a significant step to deliver on our promise of inorganic reserve replacement. By completing the ACG acquisition we are well positioned to preserve the excellent cash-flow generation ability of MOL’s E&P business for an extended period. MOL E&P has built a strong track record of delivering outstanding profitability over the course of the past three years and with this transaction we are continuing MOL E&P’s transformation to an international business, as promised in our MOL 2030 Strategy,” added Dr. Berislav Gaso, MOL Group, executive vice president for Upstream.
The transaction remains subject to government and regulatory approvals and is expected to close by Q2, 2020.