Strategic Gas Acquisition by Maurel & Prom
Maurel & Prom (Paris: MAU) is excited to announce a significant step in its growth strategy with the signing of a letter of intent to acquire a 40% operated working interest in the Sinu-9 gas licence in Colombia. This move positions the company to leverage its extensive experience and operational expertise in the region.
Overview of the Sinu-9 Gas Asset
The Sinu-9 gas block is strategically located within the Sinu San Jacinto basin, boasting existing infrastructure that connects to the Promigas pipeline. This allows access to prominent urban and industrial centers in northern Colombia. The asset is characterized as a producing and development-ready onshore resource, with gross production capabilities reaching up to 40 million cubic feet per day (mmcfd), representing about 16 mmcfd net to the acquired interest. Importantly, ongoing development is expected to increase these production levels significantly.
Exploration Potential and Proven Reserves
Sinu-9 contains proven reserves with substantial exploration upside. The area hosts multiple producing fields and is recognized for its strong geological continuity. Current estimates suggest gross proven plus probable reserves of 158.8 billion cubic feet (bcf) and 340.8 bcf for proven plus probable plus possible reserves as of year-end. Importantly, several ready-to-drill prospects are poised for the next 18 months, which could greatly enhance the resource base.
Market Conditions Favoring Growth
Colombia's domestic gas market features robust fundamentals that significantly benefit this acquisition. The country is currently experiencing a structural shortfall, with projections indicating a potential shortfall of 30% of demand by 2026. With the ongoing increase in domestic gas prices, currently exceeding $8 per million British thermal units (mmBtu), this acquisition positions Maurel & Prom to capitalize on the upward price trend.
Expansion of Operational Footprint
This acquisition not only reaffirms Maurel & Prom’s long-term commitment to Colombia—where it has cultivated operations for over two decades—but also enhances its portfolio diversification. The transaction is set for an acquisition consideration of $150 million, fully funded through the company's existing financial resources. Additionally, Maurel & Prom retains the option to acquire an additional 5% working interest 12 months post-closing under similar terms.
Streamlined Regulatory Process
Closing of the transaction will hinge on the successful negotiation of a definitive agreement, regulatory approvals from Colombian authorities, and satisfaction of usual closing conditions. This process aims to facilitate a smooth transition to operational control of the asset, allowing Maurel & Prom to effectively develop the gas resource.
About Maurel & Prom
Etablissements Maurel & Prom S.A., commonly referred to as M & P, is a publicly traded entity listed on Euronext Paris. The company engages primarily in the exploration and production of oil and gas in politically stable environments, which strategically complements its operations across Africa and Latin America.
Frequently Asked Questions
What is the Sinu-9 gas asset?
The Sinu-9 gas asset is located in the Sinu San Jacinto basin and is characterized as a producing and development-ready onshore resource with significant gas production potential.
How much interest is Maurel & Prom acquiring?
Maurel & Prom is acquiring a 40% operating working interest in the Sinu-9 gas licence.
What are the benefits of this acquisition for Maurel & Prom?
This acquisition enhances Maurel & Prom’s operational capabilities, diversifies cash flow, and positions the company in a market with strong demand for gas.
What is the expected timeline for gas production from Sinu-9?
The first gas production from Sinu-9 has been achieved, with ongoing tests expected to significantly boost production levels over time.
What regulatory approvals are needed for the acquisition?
The transaction is subject to regulatory approvals from the Colombian National Hydrocarbons Agency and the completion of a definitive agreement.
