Hungarian energy firm MOL Plc is buying Chevron Corp.'s stake in a giant oil field in Azerbaijan for $1.57 billion, as U.S. majors retreat from the central Asian state after 25 years to refocus on production at home.
MOL said Nov. 4 the deal agreed with Chevron includes a 9.57% stake in the BP Plc-operated Azeri-Chirag-Gunashli (ACG) field in the Caspian Sea and a 8.9% stake in the Baku-Tbilisi-Ceyhan pipeline that transports the crude to the Mediterranean.
Reuters first reported on the talks between MOL and Chevron last month.
"What this deal gives us is longevity and stability," Berislav Gaso, MOL's executive upstream vice president, told Reuters by telephone after MOL announced the transaction in a filing.
He said MOL will keep looking for acquisitions but is "not in a rush" and any further steps will not be as big, with the aim on maintaining the ability to generate cash.
"I like barrels but I love dollars even more than that."
He said the Azeri purchase will add about 20,000 barrels per day (bbl/d) to MOL's production guidance, which will rise to 120,000-130,000 bbl/d.
MOL said in a presentation last month that it was seeking to add 350 million barrels of oil and gas reserves by 2023.
The company also said the largest potential for organic reserve replacement was in Norway, but opportunities other than organic growth would be required to achieve this.
MOL is focused on Croatia and Hungary, which account for 64% of its total upstream oil and gas production, while it also produces in the North Sea, Iraq and Russia.
Discovered in the early 1970s when Azerbaijan was part of the Soviet Union, ACG is the largest oil field in the Azerbaijan sector of the Caspian Basin.
In 2018, ACG's total production for the full year was on average 584,000 bbl/d.
Investment bank Jefferies advised Chevron on the deal.
The combined company is expected to generate annual synergies of $1.2 billion and will operate as Cenovus Energy Inc with headquarters in Alberta.
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