South East Asian upstream powerhouse in the offing?

The new year has begun with Indonesia’s Medco Energi making a potential cash takeover bid for UK-listed Ophir Energy that, if successful, would create a South East Asian upstream powerhouse.

No further details have been revealed, other than the Medco has to make a clear binding offer by 28 January 2019 if a deal is to proceed. Ophir's upstream portfolio includes assets in Thailand, Vietnam, Indonesia, Malaysia, Equatorial Guinea and Tanzania. It also has exploration acreage in Mexico and Bangladesh. The company had a market cap of £252mn at the close of 31 December 2019; shares were reported to have risen 7.5% to 35.7 pence on the announcement.

Commenting on the news, Wood Mackenzie Research Director Angus Rodger, says: ‘This is a bold move by Medco, and if successful would create a Southeast Asian upstream powerhouse. Ophir's current output of 25,000 boe/d combined with Medco's stated 2018 target of 85,000 boe/d would take it to 110,000 boe/d, of which 101,000 boe/d is in-region. This would catapult the firm into being the seventh largest non-NOC [national oil company] upstream producer in South-East Asia, above Hess and BP, and just behind Repsol and Total.’

‘For Medco, a successful acquisition would substantially increase its regional footprint and diversify its mature, Indonesia-heavy portfolio. It would also bulk up its non-Asian exposure by adding growth options in Tanzania and Equatorial Guinea, to add to its existing positions in Libya, Oman, Yemen, Tunisia and the US. It would also offer exposure to the global upstream hotspot that is offshore Mexico, where Ophir recently secured participation in three blocks. Following Ophir's acquisition of Santos' Asian assets last year it appeared to have pivoted its portfolio towards Asian growth, given its troubled Fortuna FLNG project in Equatorial Guinea was struggling to attract finance.’

Photo: Ophir Energy’s upstream portfolio includes the Bualuang oil field in the Gulf of Thailand, which  has been onstream since 2008. By year-end 2017 the field had produced over 30mn barrels of oil, with a further 28mn barrels of of 2P reserves and 10.3mn barrels of 2C resource.
Source: Ophir Energy