TotalEnergies Sells Upstream Business in Brunei

Hibiscus Petroleum Bhd. has agreed to buy TotalEnergies EP (Brunei) BV from TotalEnergies SE for $259.4 million.

TotalEnergies EP (Brunei) holds a 37.5 percent stake as operator of Block B, which sits 85 kilometers (52.8 miles) off the coast of Brunei. Shell Deepwater Borneo Ltd. owns 35 percent while Brunei Energy Exploration Sdn. Bhd. has the remaining 27.5 percent.

The leasehold contains the Maharaja LelaJamalulam field, which started producing 1999 and contributed about 9,000 barrels of oil equivalent per day (boepd) in net output to TotalEnergies last year, the French energy giant said in a statement Thursday announcing the divestment. The discovery was made 1989.

The production rights can be extended to up to 15 years until November 2039, Hibiscus Petroleum said separately, calling the field a “high-quality gas asset”.

The Malaysian company expects Maharaja LelaJamalulam to add a net of up to 21.7 million boe (MMboe) to its proven and probable (2P) reserves, raising Hibiscus Petroleum’s total 2P reserves by 36 percent to 82.6 MMboe. The field is projected to grow the company’s daily net production of oil, condensate and gas by about 7,865 boepd to 29,263 boepd this year.

“This is expected to bring the gas production share of the Group’s portfolio to almost 50 percent, in line with the Group’s energy transition strategy of acquiring gas-weighted assets in stable regulatory jurisdictions”, Hibiscus Petroleum said.

TotalEnergies chief financial officer Jean-Pierre Sbraire commented, “This transaction fits with our strategy to actively manage our portfolio by monetizing mature assets and to allocate our talents to the most promising assets”.

Hibiscus Petroleum expressed confidence it can improve the field’s performance and reduce operating costs.

“We have been looking for the right opportunity to enter the Brunei energy industry for some time and we would like to thank TotalEnergies for trusting Hibiscus Petroleum to steward this Asset going forward”, Hibiscus Petroleum managing director Kenneth Pereira commented.

“The additional volumes from this transaction are material for Hibiscus Petroleum and will provide an uplift of nearly 86 percent to our gas production whilst bringing us closer towards achieving our 2026 Mission of growing the Group’s net production to 35,000 – 50,000 boe per day”.

The employees of TotalEnergies EP (Brunei) will be absorbed by Hibiscus Petroleum as part of the transaction.

The parties expect to close the transaction in the fourth quarter. It is subject to approval by shareholders of Hibiscus Petroleum.

The transaction consideration of $259.4 million includes $14.4 million in net working capital as of December 2022, subject to adjustments agreed on by Hibiscus Petroleum and TotalEnergies, according to the former.

Besides the upstream unit, TotalEnergies also sells lubricants and high-tech batteries in Brunei, a Southeast Asian country of about 450,000 people.

TotalEnergies fell 2.38 percent Thursday on the New York Stock Exchange, closing at $67.37. In Paris, it also dropped 2.55 percent, closing at EUR 62.3 ($66.8).

Meanwhile Hibiscus Petroleum closed flat at $2.43 on Bursa Malaysia.