British oilfield services provider Petrofac Ltd. said on July 30 it had agreed to sell 49% of its operations in Mexico to Perenco (Oil & Gas) International Ltd. as it prepares to scale back oil and gas production.
Petrofac, which designs, builds, operates and maintains oil and gas facilities, expanded into oil and gas production during the oil price boom earlier this decade.
The strategy didn’t last and in 2017 the company warned that its integrated energy services (IES) division would have lower than expected profits, hit by weaker oil prices, lower capital investment by clients in Mexico and a delayed entry into the Greater Stella Area in the North Sea.
The company is now looking to refocus on core activities such as onshore engineering and construction.
Under the terms of the agreement Perenco will pay an initial cash consideration of $200 million, with $30 million payable upon signing and $170 million payable upon completion, Petrofac said.
Petrofac did not say how much Perenco would pay in total for the stake, but said proceeds from the sale will be used to reduce gross debt. The company estimates that an impairment charge of about $100 million would be recorded from the sale.
The sale of the operations, which include oil fields Santuario, Magallanes and Arenque, are subject to approval by the Federal Competition Commission of Mexico, the company said, adding that it expected approval in the fourth quarter of this year.
Reuters exclusively reported in May that Petrofac had hired investment banks Barclays and HSBC to help with the sale of its oilfields in Mexico.
Petrofac, the subject of a Serious Fraud Office (SFO) investigation in Britain in connection with a probe into Monaco-based Unaoil, might also consider selling its Greater Stella assets in the UK North Sea, sources said then.
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