OMV has entered a deal to sell its UK subsidiary, OMV UK, to Siccar Point Energy for up to US$1 billion in a move that will see the Austrian company give up its stake in the Chevron-operated Rosebank deepwater project in the North Sea.
Image from OMV.
The overall deal is anticipated to be up to $1 billion, consisting of a $750 million firm payment, and a contingent payment related to the Rosebank final investment decision (FID) in the amount of up to $125 million.
In addition, OMV and Siccar Point have agreed on a purchase price adjustment with respect to CAPEX as of the effective date of the transaction on 1 January 2016. This will result in a further consideration in the amount of approximately $125 million, OMV said.
OMV will take a hit on the deal, and said the company expects a negative effect on OMV's group EBIT according to IFRS of approximately $386 million (EUR 350 million) at current exchange rates. This includes a loss on sale of about $504 million (EUR 458 million), predicted to be offset by foreign exchange gains of approximately $110 million (EUR 100 million) related to foreign operations that are expected to be realized at closing.
The deal, which was approved by OMV’s supervisory board today (8 November), is still subject to conditions, including regulatory approvals and is anticipated to close in Q1 2017.
OMV UK is a 100% subsidiary of OMV Aktiengesellschaft located in London, has been active in the UK for more than 20 years. OMV UK holds licenses in the British North Sea and in the area west of the Shetland Islands, where the company has been an operator there since 2004.
In October, OMV completed a deal with Canada’s Suncor Energy for 30% stake in Rosebank. Suncor made an initial payment of $50 million. In the event the co-venturers approve the Rosebank project FID and Suncor elects to participate, Suncor could pay up to $165 million more.
Rosebank is about 130km northwest of the Shetland Islands, in Blocks 213/26 and 213/27, in 1110m water depth, close to Faroese waters.
Discovered in 2004, it is considered one of the best and largest remaining undeveloped resources in the UK North Sea.
According to Suncor, the project is currently in the front-end engineering and design phase and has a design capacity of 100,000 bbl and 80 MMcf/d of natural gas.
Currently, stakeholders in Rosebank are: Chevron (operator, 40%), Suncor (30%), OMV (20%) and DONG E&P (10%).