Maurel & Prom has signed an agreement with the Oil & Gas company Eni Congo SA, affiliate of Italian Eni S.p.A, for the sale of its stake in the operating licenses for the M’Boundi and Kouakouala oil fields in the Republic of Congo, and the decrease from 65% to 15% in the exploration license for the Kouilou area.
The total transaction price, payable in cash, amounts to US$1.434 billion. This agreement will have a retroactive economic effect at January 1, 2007, after approval from the Congolese authorities and compliance with our partners’ pre-emption rights. Interest will accrue on this amount until the closing of the deal.
The transaction concerns 45% of the Group’s reserves (proven and probable) at January 1, 2006, as determined by DeGolyer & MacNaughton, corresponding to €9.1 per share.
This deal was approved by Maurel & Prom's Supervisory Board and Eni's Board of Directors.
Following this transaction, Maurel & Prom’s for sale production share (entitlement) should amount to approximately 15,000 b/d in 2007. The current development portfolio should allow Maurel & Prom to attain its 2006 sale level (30,000 b/d) by 2009.
This transaction gives value to a significant proportion of the reserves the Group has discovered in recent years and is in line with its value-creation strategy in the Exploration & Production business. This transaction will provide Maurel & Prom with large financial resources and will hasten its exploration program in its current and future mineral rights portfolio, specifically in Colombia, the Congo, Gabon, Sicily, Syria and in Tanzania.
Following final closing of the deal, the Company will determine the allocation of the deal consideration, in order to provide :
- A return to shareholder (in the form of a dividend and/or a share buy back);
- Repayment of debt (including operating debt);
- Acceleration of the exploration and development program as well as financing of any external growth opportunity.
Through this acquisition, Eni’s entitlement production in Congo will increase from the 67,000 bpd recorded in 2006 to about 100,000 bpd in 2010 and the 2P equity reserves will increase by 126 million boe ($ 10.7 per barrel).
The deal is consistent with Eni’s strategy of acquiring hydrocarbons reserves and production in legacy countries where it plays an important role as operator and where it can add value by applying its core competencies.
Eni has been active in Congo since 1968 with exploration and development activities in which it has invested a total of US $3.9 billion. Overall production at December 31, 2006 was 407 million boe.