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PTTEP Agrees to Pay Hess $1 Billion Cash for Thai Assets

PTT Exploration & Production Pcl (PTTEP), Thailand’s biggest publicly listed oil and natural gas explorer, agreed to pay about $1 billion cash for Hess Corp. (HES)’s stakes in oil and gas assets in Thailand.

PTT Exploration, or PTTEP as the company is known, will gain stakes in the Pailin, Morakot and Ubon mainly oil fields as well as increasing their share in two producing gas fields in the deal, the Thai company said today in a statement.

The purchase follows PTTEP and Indonesian state-owned oil company PT Pertamina’s deal last year to buy Hess’s Indonesian assets for $1.3 billion. Today’s agreement is consistent with the Thai company’s goal of using surplus revenue to boost production and reserves, Naphat Chantaraserekul, an analyst at DBS Vickers Securities (Thailand) Co. Ltd. said by phone from Bangkok.

“The acquisition is positive for PTT Exploration because the valuation is at a reasonable price,” Chantaraserekul said. “The company’s main problem is to find new acquisitions at reasonable prices to meet its production increase goal and generate higher returns from excess cash.”

The acquisitions will increase PTTEP’s production by about 17,000 barrels of oil equivalent per day, it said in the statement. PTTEP’s shares gained 0.6 percent at 10:40 a.m. in Bangkok.

PTTEP has expanded its investments to more than 40 projects in Southeast Asia, Australia, the Middle East, North and South America and Africa, including the 2012 purchase of Cove Energy Plc’s oil and gas assets in Mozambique for $1.6 billion, to diversify output.

“Strategic Fit”

The new Thai acquisitions are “a strategic fit to PTTEP growth strategy by adding producing assets, accretion of volume growth and reserves, and strengthening our investment in Thailand,” Tevin Vongvanich, PTTEP’s chief executive officer, said in the statement.

The purchase of Hess Thailand Holdings II Ltd. will conclude on April 22 and the acquisition of Hess Exploration Thailand Co. will close by the end of May, according to the statement.

Hess, which has climbed more than 6 percent this year, has been streamlining its holdings after pressure from billionaire shareholder Paul Singer’s Elliott Management Corp. A “substantial divestment program” could help maximize value for holders, Elliott said on Jan. 29.

Its recent divestments include the sale of about 74,000 acres of dry gas acreage in the Utica Shale in January for $924 million and the sale of its terminals on the U.S. East Coast and in St. Lucia to Buckeye Partners LP for $850 million in October.

Hess spokesman Michael Henson did not return a phone message left after business hours in New York.

To contact the reporters on this story: Jacob Adelman in Tokyo at jadelman1@bloomberg.net; Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net Rebecca Keenan, Andrew Hobbs

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