Malaysian oil and gas firm Sapura Energy has signed an agreement to offload 50% stake in its wholly owned subsidiary, Sapura Upstream, to Austria’s OMV Aktiengesellschaft.

Based on an enterprise value of $1.6bn, the proposed deal will enable Sapura Energy and OMV AG to be strategically placed to expand portfolios and future business activities, achieve synergies and attain sustainable long-term growth.

The companies have agreed to continue the negotiations for the proposed deal on Sapura Upstream on an exclusive basis.

Sapura Energy president and CEO Tan Sri Dato’ Seri Shahril Shamsuddin said: “The partnership with OMV AG complements our continued strategy to grow our portfolio and expand our acreage position.

“OMV AG’s existing footprint offers new opportunities for our upstream segment and increases market reach for our services segment where OMV operates.”

“OMV AG’s existing footprint offers new opportunities for our upstream segment and increases market reach for our services segment where OMV operates.”

The partnership will boost Sapura Energy’s competitive advantage by tapping the strength of its portfolio of commercially viable gas fields offshore Sarawak and its acreage in new markets in New Zealand, Gulf of Mexico and most recently, Australia.

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By GlobalData

In addition, OMV AG will stand to benefit from the in-house capabilities of Sapura Energy.

Tan Sri Shahril added: “We have explored all options including the potential listing of our Upstream business. The invitation to enter into this strategic partnership with a leading oil and gas player serves our goals and aspirations better while providing certainty in timing and valuation,”.

With more than 20,000 employees, OMV is one of Austria’s leading listed industrial companies with group sales of €20bn.

Sapura Energy has been exploring several options as part of the group’s strategic plan to bolster its key businesses, and strengthen its financial position.