Petrofac sells interest in Mexico for $200 million

ST. HELIER -- Petrofac Limited has announced that it has signed an agreement to sell 49% of the Company’s operations in Mexico, including Santuario, Magallanes and Arenque, to Perenco (Oil & Gas) International Limited (Perenco). The transaction is subject to approval by the Federal Competition Commission of Mexico (COFECE), which is expected in fourth-quarter 2018.

Under the terms of the agreement, Perenco will pay an initial cash consideration of $200 million, with $30 million payable upon signing and $170 million payable upon completion. The total consideration comprises a fixed amount and contingent consideration depending upon a number of future milestones, including future field development and migration terms of Petrofac’s Magallanes and Arenque Production Enhancement Contracts. This final amount is subject to adjustment based on achievement of the milestones above and will be capped at $274 million. Petrofac currently estimates that an impairment charge of approximately $100 million will be recognized on completion against its 100% equity interest in its Mexican subsidiaries. Proceeds from the sale will be used to reduce gross debt.