Maha Energy AB (Public) (“don’t“or”Inc“) is pleased to announce that it has signed a term sheet regarding the business combination with DBO 2.0 SA (“DBO“) in consideration of 36,775,410 new shares in Maha (the “transaction“). Maha and DBO have agreed in the term sheet to finalize the final documents during the 45-day grace period. The transaction is subject to, among other things, verification and satisfactory accuracy, board approvals and, if applicable, regulatory approvals, and subject to the approval of the necessary resolutions to the general meeting in Maha. The transaction is expected to close in Q1 2023.
DBO is a private oil and gas company focused on mature offshore fields in Brazil. DBO was founded in 2017 and brings North Sea investors to invest in Brazilian assets, working with Brazilian partners and applying the most advanced North Sea methods to identify additional reserves, develop oil and gas fields. and increase oil and gas recovery.
Maha and DBO had their first strategic discussions in 2018. Since then, DBO Group has invested around $40 million and established a strong position in the Brazilian E&P market, investing in offshore fields with 3R, which later joined 3R. Listing of 3R Petroleum on the Brazilian Stock Exchange. Pursuant to the partnership with 3R Petroleum, DBO became a 15% shareholder in 3R Petroleum Offshore SA (“3R Beach“), which has operating interests in producing oil and gas fields in Brazil. 3R Offshore A (licence to operate deepwater fields in Brazil) and two assets in the Brazilian Offshore – Peru Cluster ( 100% operating working interest) and Papa Terra Cluster (62.5% operating working interest, subject to completion of transaction with Petroleo Brasileiro SA)Petrobas“). In addition to these assets, DBO is constantly working on new business development opportunities, and will combine all of its assets and efforts in Maha to execute further growth through a common powerful platform.
DBO’s major investors and shareholders are Sven Harald Øygard (29.6%), Kjetil Solbrække (20.7%), Halvard Idland (20.7%), AGR Petroleum (9.1%) and Thor Merault (8.4%). New shares in Maha issued in consideration of DBO shareholders will be subject to a lock-up period of 1 (one) year from the closing of the transfer.
Highlights of the transaction1
- The transaction reinforces the creation of a diversified portfolio that is balanced between mature oil and gas onshore and offshore assets.
- In addition to increased production and reserves, DBO brings extensive oil and gas experience, a highly successful transaction track record, and access to other growth opportunities for Maha.
- The transaction will increase Maha’s net 2P reserves by approximately 18.5 mmboe and is expected to add approximately 2,000 boepd of net production in 2023.
- The assets at DBO come with infrastructure, including the Papa Terra FPSO (post-closure) and Peru production platform, yielding lower operating costs, and from which DBO indirectly benefits as a 3R offshore shareholder. has its own pro rata share.
- Based on public reserve reports from DeGolyer & MacNaughton and Gaffney Cline, 1P and 2P reserves have a net expected value (NPV10) of USD 108 million and USD 166 million to DBO, respectively, in 2023 at USD 71/bbl. based on oil price. And then USD 66/bbl and gas prices in the range of USD 5.0-5.5/mcf.
- A $21 million reduction in DBO’s share of (i) 3R Offshore’s mandatory payments (depending on oil price and production performance, as well as the Malombie development) and (ii) Papa Terra The significant consideration for the cluster to be awarded to Petrobras, generates net assets of USD 86 million for 1P reserves and USD 145 million for 2P reserves.
- The share swap in the transaction gives DBO a net asset value of approximately 0.42x based on 1P stock values and 0.25x based on 2P stock values.2and an EV/2P multiple (trade value to 2P reserves) of approximately USD 3.1/boe.
- Stocks and asset values are derived from public stock reports from DeGolyer & MacNaughton and Gaffney Cline.
- Based on Maha’s closing share price of SEK 10.15/share and USD/SEK 10.31 as of 2 December 2022
Per Cluster: Peroá, Cangoa and Malombe
The Peruvian gas cluster is located in the Espirito Santo Basin, in shallow waters off the coast of Brazil. Approximately 72.4% gas has been recovered and the remaining 2P reserves are estimated at 19 mmboe gross per year by the end of 2022. The cluster has a 55 km gas pipeline connection to the Kasimba gas processing plant (operated by Petrobas) and an unmanned platform owned by 3R. Onshore with an opex of around USD 5/boe. The Peru cluster includes the Peru and Congo production areas and the Malombi discovery. Malombi is considered to be connected to the Peru platform in the future and could add up to 16 kboepd (gross) of estimated production. During October 2022, gross production in the Peru cluster was 2.5 kboepd (gross).
3R Offshore agreed to acquire Peru Cluster from Petrobas in February 2021 and the acquisition closed in 2022.
Papa Terra Cluster
Papa Terra is a heavy oil field located in deep water in the Campos Basin, about 100 km off the coast of Rio de Janeiro state, Brazil. Approximately 2.4% of oil has been recovered by October 2022 and 2P gross reserves are estimated at 166 mmboe per year through the end of 2022. This represents a recovery factor of 11.4%, which compares to an average of 15.6% for the Campos Basin, suggests. More high capacity beyond 2P storage. During October 2022, gross production was 16.0 kboepd and production is expected to increase in the coming years due to increased drilling activity.
Papa Terra was discovered in 2003 and production began in November 2013. The field was developed with an FPSO (P-63) and a Tension Leg Wellhead Platform (P-61), both owned by the oil field owners. Combined oil processing capacity of 140,000 barrels per day, water injection capacity of 340,000 barrels per day, storage capacity of 1.4 million barrels and slots to connect 21 production wells and 11 injection wells. Currently, 6 production wells and 3 injection wells are operational and all systems have idle capacity to implement revitalization and rehabilitation activities.
3R Offshore has agreed to the acquisition of Petrobra’s working interests (62.5%) in the Papa Terra cluster in July 2021 and the acquisition is subject to special conditions precedent.
This information is information that Maha Energy AB (Publ) is obliged to make public under EU market abuse regulations. Information submitted for publication, through the agency of the contact person below, at 09:10 CET on 5 December 2022.
For more information, please contact:
Paulo Thiago Mendonza (CEO)
Tel: +46 8 611 05 11
Victoria Berg (Investor Relations)
Tel: +46 8 611 05 11
Maha Energy AB (Publ) is a listed, international oil and gas company whose business activities include the exploration, development and production of crude oil and natural gas. The strategy is to identify and develop underperforming hydrocarbon assets globally. Maha operates four oil fields: Tartaruga and Tay in Brazil, Powder River (LAK Ranch) and Illinois Basin in the United States. The shares are listed on Nasdaq Stockholm (MAHA-A). It is headquartered in Stockholm, Sweden with a technical office in Calgary, Canada, as well as operational offices in Greville, Illinois, USA and Rio de Janeiro, Brazil. For more information, please visit our website www.mahaenergy.ca
20221205 Maha Energy Press Release ENG_DBO