SapuraKencana aborts plans to buy Petronas' blocks offshore Vietnam for US$400m

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KUALA LUMPUR (Jan 22): SapuraKencana Petroleum Bhd has aborted plans to buy Petroliam Nasional Bhd (Petronas)'s interest in three blocks offshore south Vietnam for a combined US$400 million.

In a filing with Bursa Malaysia today, SapuraKencana said the conditional sale and purchase agreements (SPAs) on the proposed transaction have been terminated by the parties by mutual agreement.

It did not give any reason for its decision.

Oil prices have plunged nearly 70% to below US$30 a barrel in the opening weeks of 2016, from US$100 a barrel in mid-2014. The global benchmark Brent crude futures rise to US$31.25 per barrel today.

In November 2014, SapuraKencana had inked the SPA to acquire the entire interest of Petronas in the three blocks after an international bidding process. The three shallow water upstream assets are Blocks 01/97 & 02/97, Blocks 10 & 11.1 and Block 46-Cai Nuoc.

SapuraKencana president and group chief executive officer Tan Sri Shahril Shamsuddin had said the acquisition of the three production sharing contracts in Vietnam would have further strengthened its presence in Vietnam by adding exploration and production operations to its existing service operations.

Under the agreement, SapuraKencana was to acquire Petronas' interests of 50% of Blocks 01/97 & 02/97 (Cuu Long Basin), 40% of Blocks 10 & 11.1 (Nam Con Son Basin) and 36.85% of Block 46-Cai Nuoc (Malay-Tho Chu Basin).

SapuraKencana shares closed nine sen or 5.88% higher at RM1.62 today, bringing a market capitalisation of RM9.89 billion.

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