Swedish energy company Maha Energy AB is set to divest its 65% working interest in Block 70, Oman, to Mafraq Energy LLC for a transaction valued at $14 million. The agreement, subject to the signing of a definitive sale and purchase agreement and approval from the Government of the Sultanate of Oman, marks a significant development in the energy sector.
Under the terms of the deal, Mafraq Energy will take over project responsibilities and cover all costs from December 1, 2023. Maha Energy will receive a portion of the purchase price, amounting to $2 million, leading up to the closing date. The remaining amount, up to $12 million, is structured as an earnout linked to actual produced volumes from Block 70. Payments will commence with a cumulative net production volume of 1 million barrels, reaching a maximum if the production volume hits 12 million barrels.
The exit strategy positions Maha Energy to be released from all obligations and liabilities related to Maha Oman upon closing of the transaction. The comprehensive agreement aligns with Maha Energy’s strategic objectives, allowing for a streamlined transition of ownership and operational responsibilities.
Maha Energy was awarded onshore Block 70 in Oman in 2020, undertaking an extensive work program in 2022 and 2023 to fulfill the minimum work obligations of the exploration and production sharing agreement (EPSA). In 2023, a short-term production test revealed challenges with the high viscosity of the produced oil, prompting considerations for a heat influx strategy to address the issue.
Kjetil Solbraekke, CEO of Maha Energy, expressed confidence in the deal, stating, “Block 70 has high viscosity oil, requiring a strategic approach. I believe the project needs to consider a heat influx strategy, necessitating new tests, significant investments, and a dedicated operator. I am confident that Mafraq Energy, involved in this asset from the outset, will provide the expertise needed for the project’s success.”
The completion of the transaction is contingent upon the satisfaction of closing conditions, including the signing of a definitive sale and purchase agreement and approval from the Government of the Sultanate of Oman. The move signifies a strategic shift for Maha Energy, allowing for a focus on other opportunities while ensuring a seamless transition of Block 70 to Mafraq Energy.
