TotalEnergies to sell Brunei subsidiary to Hibiscus Petroleum for $259m
TotalEnergies (Paris:TTE) (LSE:TTE) (NYSE:TTE) has agreed to sell its wholly-owned subsidiary TotalEnergies EP (Brunei) B.V. to Hibiscus Petroleum Berhad, a Malaysian independent oil and gas exploration and production company, for a total consideration of $259 million. This transaction, expected to close in the fourth quarter of 2024, marks a significant realignment for TotalEnergies as it continues to optimize its asset portfolio.
Details of the Transaction and Asset Overview
TotalEnergies EP (Brunei) B.V. holds a 37.5% interest in Block B, located 85 kilometers off the coast of Brunei, alongside partners Shell Deepwater Borneo (35%) and Brunei Energy Exploration (27.5%). The block includes the Maharaja Lela/Jamalulam (MLJ) field, which began production in 1999 and has been a substantial contributor to TotalEnergies’ output with a net production of approximately 9,000 barrels of oil equivalent per day in 2023.
TotalEnergies agrees to sell its Brunei subsidiary to Hibiscus Petroleum for $259 million, marking a strategic portfolio optimization.
Strategic Implications for TotalEnergies and Hibiscus Petroleum
Jean-Pierre Sbraire, Chief Financial Officer of TotalEnergies, commented on the sale, stating, “This transaction fits with our strategy to actively manage our portfolio by monetizing mature assets and to allocate our talents to the most promising assets.” This move is aligned with TotalEnergies’ broader strategy of streamlining operations and focusing on high-potential projects.
For Hibiscus Petroleum, this acquisition is a strategic expansion of its portfolio, particularly enhancing its presence in stable jurisdictions and increasing its proportion of gas assets. The MLJ field is a cash-generating asset with established infrastructure and is expected to provide immediate operational and financial benefits to Hibiscus. The company aims to leverage its expertise in managing mature assets to enhance production efficiency and reduce unit production costs.
Operational and Community Impacts
The MLJ field has not only been pivotal in oil and gas production but also in community development and local industry engagement in Brunei. TotalEnergies’ Maharajalela South Project, associated with the field, has significantly contributed to local skill development and provided business opportunities to local companies.
The transaction includes the transfer of skilled employees and is supported by long-term contracts, such as a gas supply agreement with Brunei LNG and a condensate sale agreement with TOTSA TotalEnergies Trading, which ensure continued operation and revenue generation.
Future Outlook and Market Impact
This acquisition is expected to bolster Hibiscus Petroleum’s operational capacity and financial standing, while for TotalEnergies, it represents a strategic divestiture allowing for enhanced focus and resource allocation to more lucrative ventures. The deal is subject to regulatory approvals and customary closing conditions.