OMV purchases a 25% stake in the Yuzhno Russkoye gas field in Western Siberia, gains 100 MBOEPD

OMV Aktiengesellschaft (ticker: OMG), an Austrian integrated oil and gas company, announced Sunday that the company purchased a 24.99% stake in the Yuzhno Russkoye gas field in Russia, creating a new core area for the company’s upstream business. OMV anticipates the new assets will add 100 MBOEPD of production to its portfolio, which produced 311 MBOEPD in 2016, according to the company.

The gas field, located in Western Siberia, was purchased from Uniper SE, a German energy company, for $1.85 billion, according to a press release put out by OMV. The transaction is anticipated to close by year-end and will be retroactively effective as of January 1, 2017, subject to further conditions, including co-shareholder consent as well as merger control and foreign investment control clearance in Russia.

“The acquisition will build a new core area, Russia, in our upstream portfolio adding 100,000 BOEPD to OMV’s production,” commented OMV CEO Rainer Seele. “After closing, OMV will produce in total more than 400,000 BOEPD. This transaction is fully compliant with the execution of our strategy and significantly reduces OMV’s production cost.”

The Yzhno Russkoye field is a gas-producing field and is the primary source of gas for the Nord Stream pipeline supplying gas to Germany. The field currently produces 25 billion cubic meters (88.3 billion cubic feet) of gas per year.

OMV’s share of the field will net the company about 580 MMBOE in reserves, according to the company.

“Yuzhno Russkoye becomes a major source of reserve replenishment in OMV’s portfolio,” explained OMV Board Member Upstream Johann Pleininger. “The transaction enables OMV to reach its strategic target of a 100% reserves replacement rate for a period of around 5 years based on OMV’s 2016 production volume.”

Capex needs for the newly acquired field are $20 million, according to OMV. The company expects dividends starting in financial year 2017 to amount to $200 million per year mid-term, 10x the anticipated capex guidance.

OMV is one of Austria’s largest listed industrial companies with around 22,500 employees. The company’s annual refining capacity is 17.8 million tons (242.8 MMBO) which help to service its 3,800 filing stations across 10 countries. OMV operates a gas pipeline network in Austria and gas storage facilities in Austria and Germany.

OMV buys Russian gas field Yuzhno Russkoye

Source: OMV

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