KARACHI: Western companies continue to exit Pakistan, the recent being Premier Oil, which has decided to sell its Pakistan’s business.
Oil and Gas Development Company Limited (OGDCL) announced on Thursday that it has submitted a preliminary non-binding cash proposal to acquire Premier Oil Pakistan Holdings B.V. (Premier) for its entire issued capital. Despite having potential growth prospects, Premier has decided to sell out its Pakistan’s assets without citing any apparent reasons. “We look to dispose of non-core assets where we can realise appropriate value. Discussions are also on-going with interested parties about the sale of our Pakistan business with conclusion of the process targeted by year-end,” Premier Chairman Mike Welton said in a financial report.
Meanwhile, OGDCL, a national oil and gas company of Pakistan and the flagship of the country’s exploration and production sector, has announced its intention to acquire Premier’s Pakistan’s business, as the company said in its notice to stock market “OGDCL is participating in the bidding round with regard to corporate sale of Premier Oil Pakistan Holdings B.V and has submitted a non binding cash offer for its entire issued capital”. A non-binding bid is a bid that shows a buyer’s interest in purchasing an item, but it doesn’t create a formal contract between the buyer and the seller.
Estimated value of Premier’s Pakistan business is approximately $150 million, OGDCL showed interest to acquire Premier’s shares earlier in 2015 and following the receipt of the offer for Premier’s Pakistan business, the company had initiated a process among the interested parties with a view to a possible disposal of Premier’s Pakistan interests. According to the OGDCL, the transaction will be subject to approval by OGDCL Board and execution of Sale Purchase Agreement (SPA) in case OGDCL’s offer is accepted. Company has also informed its shareholders that the expected completion date for the transaction is June 30, 2016.
Industry sources said that Premier and OGDCL are in discussions for some time regarding the said deal and the deal has almost been finalised between both parties, expected to be announced next year. OGDCL, which is a local market leader in terms of reserves, production and acreage, will have more potential to expedite its production further after getting the Premier assets. Premier saw strong performance from premier’s Pakistan business unit in 2014 from its six non-operated onshore. Pakistan gas fields exceeded expectations and exploration success was achieved with the Kadanwari k-36 well. Premier has been present in Pakistan, as a non-operator, since 1988.
In 1990, Premier discovered the Qadirpur field. Since then, the company has acquired interests in five other fields, all located in agricultural lowlands. All fields are long-life gas projects and have relatively low operating costs. All production is sold at the wellhead to the government-owned gas utilities, Sui Southern Gas Company Limited and Sui Northern Gas Pipelines Limited.