DEA To Buy Mexico's Sierra
DEA, the Hamburg-based upstream firm owned by Russian-controlled fund LetterOne, said late December 4 it signed an agreement to acquire Mexican independent Sierra Oil & Gas.
The deal is expected to close in 1H 2019 and be fully equity-funded by LetterOne. The price was not disclosed, but the Financial Times newspaper reported it to be some $500mn.
Sierra – largely owned by US private equity fund Riverstone – holds interests in a portfolio of six blocks in Mexico, including a 40% non-operated interest in block 7 containing much of the world-class shallow water Zama oil find, estimated to hold a recoverable 400mn to 800mn barrels of oil equivalent. Its block 7 partners are Houston-based Talos and UK independent Premier Oil. DEA itself also has interests in Mexico, and operates the Ogarrio oilfield there.
DEA expects to merge with larger German upstream firm Wintershall by end-1Q2019. “The acquisition of Sierra will allow DEA to achieve materiality in the highly strategic and competitive Mexican upstream,” said DEA CEO Maria Moraeus Hanssen, adding: Upon completion of the planned merger of DEA and Wintershall, this acquisition will further strengthen Mexico as a core region for the combined company.” LetterOne's principal owner is Russian oligarch Mikhail Fridman.
Sierra CEO Ivan Sandrea said: "We are pleased to have got an experienced and well capitalised industrial investor that will bring valuable technical talent and international know-how." The deal is subject to government approvals, including from Mexican upstream regulator CNH and the country's competition watchdog.
A spokesperson for Riverstone told NGW that it owns about 43% of Sierra, through three different funds, and that the terms of the sale to DEA are confidential and are not being disclosed.