Page 7 - MEOG Week 28 2021

MEOG FINANCE & INVESTMENT MEOG

ShaMaran buys TotalEnergies’

stake in Sarsang

IRAQ CANADIAN explorer ShaMaran Petroleum this Energy, a subsidiary of Dallas-based Hillwood
week has announced that it has signed a deal to International Energy, since 2007. HKN owns a
acquire French super-major TotalEnergies’ 18% stake of 62%, with the KRG holding a carried
share in the Sarsang production-sharing con- 20% working interest. The Sarsang development
tract (PSC) in Iraqi Kurdistan. area contains the producing Swara Tika and East
In an official statement, ShaMaran said that it Swara Tika fields.
would pay $155mn plus “working capital adjust- Last year, HKN said that it had identified
ments” of $14.2mn to acquire 100% of TotalEn- 380mn stock tank barrels of gross 2P reserves in
ergies’ shares in TEPKRI Sarsang, the subsidiary Triassic reservoirs in Sarsang, with gross produc-
through which it holds the Sarsang stake. tion flowing at around 25,000 bpd at mid-year.
An additional consideration of $15mn is also According to ShaMaran, “the Swara Tika
payable contingent on gross cumulative pro- expansion project is well underway with the
duction from the Sarsang PSC reaching 130mn addition of a new 25,000 bpd processing facil-
barrels and Brent crude prices averaging $60 per ity, which is expected to lift gross production to
barrel or more for a 12-month period. approximately 50,000 bpd of oil by mid-2022”.
ShaMaran said that the acquisition is “trans- Upon successful completion of the deal and
formative” for its “production, reserves and of facilities of Swara Tika, the Canadian firm
financial profile and delivers on [its] focused and anticipates that its Q2 2021 average net produc-
disciplined strategy for growth”. tion will double year on year in 2022 from 11,090
It said it intends to issue a new four-year bond bpd this year.
of up to $300mn to refinance existing debt and It added that “Sarsang crude is of high quality
raise new capital for the transaction. and enjoys one of the lowest price discounts to
Until this point, the company’s sole asset Brent in Kurdistan.”
has been the 27.6% working interest it holds in Production from both Sarsang and the
the Atrush block, with operator the Abu Dhabi nearby Ain Sifni block is trucked to the Tawke
National Energy Company (TAQA) owning oilfield facilities for export by pipeline to the
47.4% and the Kurdistan Regional Government Turkish port of Ceyhan.
(KRG) a carried stake of 25%. However, ShaMaran noted that once the new
TotalEnergies’ divestment from the Sarsang Swara Tika facility is commissioned, Sarsang
PSC follows reports in Q4 2020 that it was look- “will also be connected to the Atrush feeder
ing for a buyer. At the time, Bloomberg quoted pipeline for future pipeline exports and will
sources as saying that the deal could be worth thereby have a permanent pipeline connection
around $500mn. to the export market”. HKN has high hopes for
The French company was understood to have the asset, estimating production of 50,000-plus
hired Jefferies Group to market the 420-square bpd in 2021/22 and longer term potential of
km asset, which has been operated by HKN more than 100,000 bpd.™

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