Panoro Energy has struck a deal to buy OMV’s Tunisian subsidiary for US$65 million. This follows Panoro’s acquisition of DNO Tunisia earlier in 2018. The purchase is being carried out in association with a privately owned company, Beender Petroleum, via a new company, Sfax Petroleum.
The deal was announced on November 6, with OMV Tunisia Upstream holding 49% stakes in five oil producing concessions, with net 2P reserves of 8.1 million barrels, and around 2,000 bpd of output from 14 wells. The OMV subsidiary also owns 50% of Thyna Petroleum Services, which is the operating company on the five concessions: Guebiba/El Hajib, Rhemoura, El Ain, Cercina and Cercina South.
Panoro’s CEO, John Hamilton, said the target had “high quality producing oil concessions with low decline rates and low breakeven levels, and generate strong cash flow”. Free cash flow from the assets was around US$10 million during the first half of 2018. The total price agreed for the assets is likely to be reduced by around US$15 million, on working capital adjustments.
The five licences “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”. Operating costs are around US$12 per barrel.
Panoro plans to drill the Salloum West-1 well in the Sfax Offshore permit in the first half of 2019. Success could see production going into Thyna’s infrastructure. The acquisition of the OMV unit should be completed by December 15 and will have an effective date of January 1, 2018.
Financing for the deal will come from debt and equity financing, Panoro said. Trading company Mercuria Energy is set to play a role in this, providing US$27 million in a loan to Panoro, which will amortise over five years at an interest rate of LIBOR plus 6% per year. Mercuria may also provide another US$8 million loan to Panoro at a later stage. As a result of this deal, the trader will also provide trading and hedging services for Panoro.
Beender will hold a 40% stake in Sfax Petroleum, while Panoro will have 60%. Beender, which is backed by a local businessman, Slim Bouricha, is to pay US$11 million to cover its share of the deal. Panoro will provide US$17 million, which will be covered by a proposed US$30 million private placing.
OMV will continue to hold interests in Tunisia, most notably its development on the Nawara concession, which involves a pipeline to Gabes.