M&A in Southeast Asia - 2024 Q3

Q3 has been has been very quiet, with no real M&A involving discovered resource but there were two deals of note, one involving a significant change in operatorship and the other involving exploration acreage, both being in Malaysia. I don't believe there was a payment involved for either of these deals.

The running totals for 2024 (Q3) are eight deals, with a total deal value of US $1,870 million. As a comparison, by the end of Q3 in 2023, we had seen 15 deals with a total value of about US $820 million.

New deals announced in Q3

The two new deals announced in Q3 were:

• The first came in mid-July and saw no shift in asset ownership, just a change in operatorship. The deal saw ExxonMobil agree to pass operatorship of its two Peninsular Malaysia PSCs to PETRONAS Carigali. The two PSCs are held 50:50 between the two companies, with ExxonMobil being the legacy operator. I looked at this announcement briefly at the time: https://www.dhirubhai.net/pulse/malaysia-non-ma-petronas-take-over-operatorship-pm-assets-chambers-nftae/. This was not an unexpected change and I have assumed that it is complete.
• The next deal came in late-August and saw Hibiscus Petroleum announce a deal for them to take a 30% stake in the PM-327 exploration block from PETRONAS Carigali. The farm-in deal is effective from 5th July 2024 and is currently pending approvals but, once complete, the rights holdings will be PETRONAS Carigali (70% + operator) and Hibiscus Petroleum (30%). For Hibiscus, this gives them a stake in an exploration block that, towards the outboard end, is adjacent to their existing PM-03 CAA acreage and also surrounds the fields included in their recent PKNB cluster award (see below) and therefore could offer tie-in opportunities for any discoveries.

New awards - Malaysia

We have seen four new awards in Malaysia this quarter, all of which are DROs that were offered in the MBR+ bid round that was launched in late 2023. The first three of these were announced in late-July:

• Puteri cluster: was awarded to Jadestone Energy (100% + operator). The cluster includes the Penara, Puteri-Padang and North Lukut fields, assets in which Jadestone previously held a 50% non-operated interest through the PM-318 PSC and is also surrounded by PM-428, in which Jadestone hold a 60% operated stake. The Puteri cluster will be operated under the small fields asset (SFA) terms.
• BETA cluster: was awarded to Ping Petroleum (90% + operator) and Duta Marine (10%). The cluster includes the Bubu, Bunga Tasbih, and Enau fields that are located between 4km to 8km from Ping’s existing Abu Custer asset, providing significant synergy potential for an Area Development. The BETA cluster will be operated under the small fields asset (SFA) terms.
• PKNB cluster: was awarded to Hibiscus Petroleum (65% + operator) & PETRONAS Carigali (35%). The cluster includes the Pertang, Kenarong, Noring and Bedong gas fields that could be tied-back to the fields in the Hibiscus Petroleum operated PM-03 CAA PSC. The fields are also surrounded by the PM-327 exploration block, in which Hibiscus have taken a 30% stake (see above) allowing further potential synergies. The PKNB cluster will be operated under improved R/C terms.

With the fourth DRO award announced in early September:

• Ketapu cluster: was awarded to SK Earthon (85% + operator) and PETROS (15%). The cluster contains the C13, C2, C6 and C3 fields. The fields are surrounded by the SK-427 exploration block that was awarded to the same partners back in December 2021. I have not seen any details of the Ketapu cluster terms, but understand it may have been offered under PSC terms rather than SFA terms.

This just leaves the DEWA cluster from the MBR+ round. Given their previous announcements, this seems destined to be awarded to Longboat Energy (now Seascape) and their partner(s).

New awards - Indonesia

In early-September, three new awards were announced in Indonesia, with the awards related to blocks offered in the first 2024 bid round.

• Central Andaman: was awarded to Harbour Energy (60% + operator) and Mubadala Energy (40%). It contains two deepwater blocks located offshore Aceh, where the same companies have seen recent exploration success.
• Amanah: was awarded to PT Medco Energi (operator), PT Sele Raya and KUFPEC. The block is located onshore south Sumatra.
• Melati: was awarded to PT Pertamina Hulu Energi (operator), Sinopec and KUFPEC. The block is located onshore and offshore southeast Sulawesi.

The remaining two blocks offered: Pesut Mahakam and Panai have not been awarded but the auction process is reported to be ongoing.

In addition, five work areas have been tentatively announced for the second bidding round: Air Komering, Binaiya, Gaea, Kojo and Serpang.

Cancelled deals

Q3 saw the cancellation of an announced sales process:

• In August, Harbour Energy announced in their half-year results that they have taken the decision to terminate the sale of their Vietnam business, with the decision made in June 2024. As a reminder, the deal was announced in mid-August 2023, with Harbour Energy signing an SPA with Big Energy for the latter to acquire Harbour's stake in Block 12W in Vietnam, ther only asset in the country. Harbour also announced that they have since relaunched the sales process with an aim to complete a sale in early 2025.

Deals that closed in Q2

From what I can see, the only deal to complete this quarter was the change of operatorship mentioned above.

Previously announced deals - Yet-to-complete

Given the lack of closed deals in the quarter, we see the list of announced, but yet-to-complete, deals continue to grow, with first dating from December 2022:

• The next deal came in early September 2023 and saw PTTEP acquire TotalEnergies last remaining upstream interest in Thailand through the acquisition of TotalEnergies 33.33% stake in block G12/48 (Bongkot South). At the time, they said completion was expected by the end of 2023. However, in their 29th August 2024 investor presentation they stated the completion of the SPA was still in progress.
• The next deal was initially announced in December 2023 when an LOI was signed, with the formal agreement coming in May of this year. The deal sees Criterium Energy divest their 45% stake in the Bulu PSC in Indonesia to an as-of-yet unnamed buyer. As of early-September, Criterium announced that they had received some payments from the buyer and that the transaction is expected to close early Q4 2024, with closing still contingent upon the Buyer's ability to secure the necessary financing.
• The next deal came in at the end of January, with TotalEnergies announcing that they had agreed to acquire OMV's 50% interest in SapuraOMV. When the deal was announced, it was stated that it was expected to close during the first half of 2024. This may be delayed due to TotalEnergies also acquiring the Sapura Energy stake in SapuraOMV in April (see below).
• The next deal was announced in late-April, and saw TotalEnergies announce an agreement for them to acquire Sapura Energy's 50% interest in SapuraOMV. The deal is expected to close by the end 2024 and may now coincide with the above.
• The next deal came in mid-June and saw Hibiscus Petroleum and TotalEnergies announce an agreement for the former to acquire the latter's 37.5% operated stake in Block B in Brunei. The transaction is expected to close in Q4 2024.
• The final deal came in late-June, with an announcement from Vietnam that Zarubezhneft have finally been granted approval to acquire KNOC's (KNOC manage the stake on behalf of a number of Korean companies) 75% operated stake in Block 11-2. I have not seen any confirmation that this announcement also signifies completion.

Assets on the market

I have been keeping track of the assets on the market, with these summarised in the table below:

The main changes from Q2 are:

• I have added Harbour Energy's stake in Block 12W in Vietnam after their announcement of the cancellation of the previous sales process.
• I have added Eni's Kutei basin assets after their COO Natural Resources, Guido Brusco, was quoted as saying "for sure we will dilute some, we will farm down some". This is an opportunity I have long highlighted and, given the recent discoveries and POD approvals, should attract some pretty big players.

Questions and feedback

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