Vietnam M&A - Big Energy (BitExco) agree to acquire Harbour Energy's stake in Block 12W
(Originally published on August 11, 2023)
On Thursday, Harbour Energy announced that they have entered into a sale and purchase agreement to divest their 53.125% operated stake in Block 12W in Vietnam to Big Energy, a newly established, dedicated oil and gas business in Vietnam and has been active as Bitexco Group. The deal is for a consideration of US$ 84 million and has an effective date of 1 January 2023, it is expected to close by the end of 2023.
Block 12W
Block 12W contains the Chim Sao and Dua fields that are located about 350km south of Vung Tau, offshore Vietnam, in the Nam Con Son basin. The Chim Sao field was discovered in November 2006, with first production in October 2011 through a development based on a single wellhead platform and a FPSO. After processing, the oil is exported via shuttle tanker and the gas by subsea pipeline via a tie-in to the Nam Con Son pipeline for sale into the domestic market. The Dua field was brought onstream in July 2014 through subsea wells tied-back to the Chim Sao FPSO.
Harbour Energy's interest in the asset came as the company was created through the 2021/2022 merger between Premier Oil and Chrysaor. Premier had an interest in Block 12W since 2004. At the time of the merger, the rights holdings for Block 12W were Harbour Energy (53.125% + operator), MedcoEnergi (31.875%) and PVEP (15%).
According to company reports, the fields produced at a combined average rate of 8,127 BOEPD in 2022 (~4 kboepd net to Harbour’s 53.125% interest) and is expected to produce similar volumes in 2023. The natural production decline is being managed by infill drilling, with two infill wells drilled in 2022 and a sidetrack drilled in 2023.
Harbour Energy motivation
The divestment represents a country exit from Vietnam, which provided the lowest contribution of any country within Harbour portfolio of producing assets. It will simplify their portfolio with only a ~2% hit in production volumes.
The only question of interest that it raises, is what this deal could mean for Harbour's potential development of the Kuda Laut and Singa Laut fields in the Tuna PSC in Indonesia. The approved POD for this development is based on the processed gas being exported to Vietnam, most likely through a tie-in to the Chim Sao facilities.
If the plan is unchanged, then I would imagine that the sales and purchase agreement will include terms for this future tie-in and Harbour will need to maintain relationships with the Vietnamese government to ensure that this sale doesn't jeopardise the cross-border gas sales agreement.
Big Energy motivation
As stated, Big Energy is a newly established, dedicated oil and gas business in Vietnam and has been active as Bitexco Group. Bitexco (and now Big Energy) have been active buyers in Vietnam. In 2021, they acquired Repsol's remaining asset in Vietnam: Block 15-2/01, which gives them a small interest in the TGT fields through a unitisation agreement. Then, in late-2022, it was announced that they had agreed to acquire MedcoEnergi's 31.875% stake in Block 12W.
Therefore, once these two deals for Block 12W close, Big Energy will hold an 85% operated interest, with their partner PVEP holding the remaining 15%. They should have a good understanding of the asset and the potential remaining value. In addition, this gives them their first operated position with the operations team moving over with the asset providing new capabilities.
I can see Big Energy / Bitexco continuing their acquisitive trend in Vietnam, particularly as international companies look to exit, but it is unlikely we will see them move internationally any time soon.
