OMV AG agreed to buy Pioneer Natural Resources Co.’s exploration and production assets in Tunisia for $866 million, raising the likelihood central Europe’s biggest oil company may sell new shares to finance recent takeovers.
The price includes $65.7 million of working capital, which will be adjusted based on 2010 financial results, Vienna-based OMV said in a statement today. The transaction is expected to close in the first quarter.
“Considering OMV has repeatedly said it wants to maintain its credit rating, the option of financing the acquisitions purely via debt seems fairly unlikely,” said Philipp Chladek, an analyst at Raiffeisen Centrobank in Vienna, who rates OMV at “hold.”
In October, OMV agreed to take over Petrol Ofisi AS, Turkey’s biggest fuel retailer, for 1 billion euros ($1.3 billion). It financed that deal in the short term with cash and existing bridge loan facilities, and said the Tunisian deal will also be initially funded with existing cash and committed credit lines.
“OMV remains committed to strict capital discipline and retains the clear objective of maintaining a strong investment grade credit rating,” it said in today’s statement.
Chief Executive Officer Wolfgang Ruttenstorfer has said the company may issue new stock, convertible bonds or hybrid capital to finance the Turkish deal.
OMV will obtain immediate production of approximately 5,700 barrels of oil equivalent a day following the acquisition, of which 90 percent will be oil and 10 percent gas. The acreage holds proved and probable reserves of 38 million barrels of oil equivalent. That compares with OMV’s total 1.87 billion barrels of oil equivalent on this basis at the end of 2009.
“The acquisition is less about current reserves and more about additional exploration potential,” Chladek said.
Pioneer rose 85 cents, or 1 percent, to $89 at 10:28 a.m. in composite trading on the New York Stock Exchange. The shares touched a record $90.03 earlier in the day. The Vienna Stock Exchange is closed today for a public holiday.
The purchase price may be reduced by 13 percent because of pre-emption rights in the Anaguid exploration permit and the Mona/Durra production concession by a partner, according to the statement.
The sale of the Tunisian assets will allow Pioneer to “strategically redeploy capital to our high-return, oil-related core assets in the U.S.,” Chief Executive Officer Scott Sheffield said in a separate statement.
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