Oilfield services provider Petrofac has agreed to sell a 49% stake in its Mexican operations to France-based oil and gas company Perenco (Oil & Gas) International.

Engineers at rig site

Image: Perenco to partner Petrofac in the latter's Mexican operations. Photo: courtesy of Petrofac Limited.

The deal covers sale of 49% of Petrofac Netherlands, which owns the Santuario Production Sharing Contract, the Magallanes Production Enhancement Contract and the Arenque Production Enhancement Contract.

For Petrofac, the transaction is part of its strategy to reduce capital intensity.

As per the terms of the deal, the oilfield services provider will be initially paid $200m in cash, with $30m payable upon signing and $170 million payable upon completion.

The total consideration is made up of a fixed amount and contingent consideration, which will be subject to various future milestones, including future field development and migration terms of the Magallanes and Arenque Production Enhancement Contracts.

Petrofac stated that the final amount is subject to adjustment based on achievement of the milestones above and will be capped at $274m.

Petrofac Group CEO Ayman Asfari said: “We are delighted to welcome an experienced partner in Perenco to our Mexican operations. They bring strong technical capability that will complement our existing brownfield operations experience to strengthen our offering.

“We look forward to working with them and the other stakeholders to further develop our mature field interests in Mexico.”

The transaction is anticipated to be closed in the fourth quarter of 2018 should it secure approval from the Federal Competition Commission of Mexico (COFECE).

Perenco CEO Benoit de la Fouchardiere said: “Following a previous successful collaboration with Petrofac we have been delighted to explore further opportunities to work together. Mexico is a land of opportunities, a new play, a new country and an exciting new challenge for Perenco.

“Partnering with Petrofac in Mexico will give us a fantastic opportunity to reach our goals in a timely manner and, by our results, demonstrate to the State company Pemex that we can also be a partner of choice for the future.”