KUALA LUMPUR (Nov 12): Sapura Energy Bhd shares rose 4% in active trade this morning after it sealed a deal to divest half of its wholly-owned exploration and production (E&P) unit Sapura Upstream Sdn Bhd to Austrian oil and gas (O&G) outfit OMV Aktiengesellschaft (OMV) for US$540 million, of which part of the proceeds will be used to repay its debt.

At 9.11am, Sapura rose 1.5 sen to 39 sen with 44.72 million shares traded.

Sapura and OMV inked a joint venture (JV) agreement for the strategic partnership today, as a follow-up to a Heads of Agreement (HoA) signed between the two parties on Sept 12.

Meanwhile, Affin Hwang Capital Research upgraded Sapura to “Hold” at 32 sen with a higher target price of 35 sen after Sapura finalised its divestment deal structure last Friday with regards to its upstream assets to Austria’s OMV.

In a note today, the research house said this deal would see the set-up of a JV company, valuing it at an enterprise value of US$1.6 billion, which is in line with its existing forecast.

“Post deal, Sapura will receive up to US$975 million which will mostly be utilised to pare down the current RM16.9 billion group debt.

“With earnings looking bottomed, rights issue and divestment exercises expected to be completed by 1Q19, we upgrade Sapura to a Hold with higher target price at 35 sen (from 32 sen) as downside risk looks limited from current level,” it said.