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Image courtesy of Hess

Indonesia state energy company PT Pertamina and PTTEP, a Thai oil company, have agreed to acquire oil and gas blocks of Hess Corporation in Indonesia at a price of $1.3 billion, the Antara News Agency reported Monday.

Hess said it would use the proceeds to repurchase shares under its existing $4 billion share-buyback program, according to the Wall Street Journal.

“The sale marks the latest in Hess’s plan to shed assets as it struggles with lackluster profits and shareholder discontent. In October, the company reported its third-quarter earnings slid on lower revenue and production.

“So far this year, the company has sold its stake in a Russian unit for $1.8 billion to OAO Lukoil, its energy-marketing business to Direct Energy, Centrica PLC for $1.03 billion, and its East Coast and St. Lucia terminal network to Buckeye Partners L.P. for $850 million,” the WSJ said.

In the Indonesia transaction, expected to close by the end of the first quarter 2014, Pertamina will be represented by its subsidiary PT Pertamina Hulu Energi and PTTEP by PTTEP Netherlands Holding Cooperatie UA.

Pertamina spokesman Ali Mundakir said each buyer would acquire and hold 50% of the Hess assets.

With the acquisition, Pertamina and PTTEP would have 75 percent participating interest in the Pangkah block and 23 percent in the Natuna Sea A block.

Both Pangkah and Natuna Sea A are offshore blocks.

Pangkah is located northeast of Java with a production rate of 7,000 barrels of oil per day and 33 million cubic feet per day (MMSCFD)of gas, Antara said.

The Pangkah block has a proven reserve of around 110 million barrels of oil equivalent.

Pertamina and PTTEP will jointly operate the Pangkah block.

The Natuna Sea A block is located in the West Natuna sea with gas production rate of 220 MMSCFD including 145 MMSCFD from the Anoa field and 75 MMSCFD from Gajah Baru, and oil production rate of 2,350 barrels of oil per day.

The Natuna Sea A block has a proven reserve of around 209 million barrels of oil equivalent.

Other shareholders of Natuna Sea A block are Premier Oil as the operator with a 28.67 percent share , Kufpec as a 33.33 percent owner and Petronas holding a 15 percent stake.

Pertamina is trying to boost its global production, as Indonesia production falls.

In Algeria it acquired the 405a block from ConocoPhillips Algeria Limited at a price of $1.75 billion, adding 23,000 barrels of crude oil to its daily output and more than 100 million barrels to its oil reserves.

In Iraq, Pertamina completed the acquisition of a 10 percent stake in the West Qurna I block from ExxonMobil Iraq Limited.

West Qurna I, which is located near the city of Basra, southern Iraq, has production rate of 500,000 barrels of oil per day.

With the 10 percent stake acquisition , Pertamina will have a share of 50,000 barrels of crude oil per day from the block.