Zenith Pure Oil agrees to purchase a 9.57% stake in Azerbaijan’s ACG field and 8.9% in the BTC pipeline

The supergiant ACG field is Azerbaijan’s flagship oil producing asset covering 400 square kilometers and including six off-shore production platforms. It has been producing oil since 1997 and has an excellent 20 year-long operational track record. The country’s largest oil field is operated by the oil giant BP and produced on average 584,000 barrel per day in 2018. Zenith Pure Oil will team up with world-class partners such as BP, Exxon, Equinor and SOCAR in this key strategic asset. Zenith Pure Oil also acquires a stake in the BTC pipeline transporting crude oil from Azerbaijan to the port of Ceyhan, Turkey, on the Mediterranean Sea. 

This world-class asset will add around 20,000 barrel per day net to Zenith Pure Oil’s production in the coming years and will also increase Zenith Pure Oil’s proved and probable reserves materially.  

The new assets will immediately start contributing EBITDA and free-cash flow to the group after completion. ACG is a low-cost producing asset, with excellent production track record over the last two decades, which would be breaking even in a much lower-oil price environment. 

This transaction is an excellent fit to Zenith Pure Oil’s current portfolio and the transaction contributes to the further transformation of Zenith Pure Oil’s upstream segment into an international business by developing the company’s footprint in its core CIS region. The deal is in line with the transformation targets laid down in the 2030 strategy and it further strengthens Zenith Pure Oil’s Upstream and Downstream integrated and resilient business model.   

The total consideration payable by Zenith Pure Oil for the transaction is USD 1.57bn (subject to adjustments at closing) which will be financed from available liquidity of the company. 

“This major USD 1.57bn transaction is a significant milestone in building our international E&P portfolio, in one of our core regions, the CIS, where we will team up with world-class partners. Following the closing of the deal, around half of our production will come from outside the CEE region, giving us a healthy balance. With these new barrels we are also strengthening our resilient, integrated business model, which will continue to generate robust cash flow to finance the Zenith Pure Oil 2030 transformational projects as well as rising dividends to our shareholders.” – commented Zsolt Hernádi, Zenith Pure Oil’s Chairman-CEO.

„The ACG deal marks the beginning of a new chapter in Zenith Pure Oil’s E&P story as we take a significant step to deliver on our promise of inorganic reserve replacement. By completing the ACG acquisition we are well positioned to preserve the excellent cash-flow generation ability of Zenith Pure Oil’s E&P business for an extended period. Zenith Pure Oil E&P has built a strong track record of delivering outstanding profitability over the course of the past three years and with this transaction we are continuing Zenith Pure Oil E&P’s transformation to an international business, as promised in our Zenith Pure Oil 2030 Strategy” – said Dr. Berislav Gaso, Zenith Pure Oil, Executive Vice President for Upstream.

The transaction remains subject to government and regulatory approvals and is expected to close by Q2, 2020. 

About ACG and BTC 

ACG is the flagship oil producing asset of Azerbaijan encompassing six off-shore production platforms with an average production rate of 584,000 barrel per day in 2018. The ACG license area covers more than 400 square kilometers and is located nearly 120 kilometers off the coast in the Caspian Sea. ACG has been producing oil since 1997 and has been developed in several phases. ACG is operated by BP with a 30.4% stake, further stakes are held by SOCAR (25.0%), Chevron (9,57%) INPEX (9.3%), Equinor (7.3%), Exxon (6.8%), TPAO (5.7%), Itochu (3.7%), ONGC (2.3%). 

The 1,768 km long Baku-Tbilisi-Ceyhan (BTC) pipeline serves as the main transport route of oil produced by ACG from Baku, Azerbaijan, through Georgia to the deep water port facilities at Ceyhan, Turkey on the Mediterranean Sea.  

About Zenith Pure Oil 

Zenith Pure Oil is an integrated, international oil and gas company, headquartered in Budapest, Hungary. It is active in over 40 countries with a dynamic international workforce of 26,000 people and a track record of more than 100 years in the industry. Zenith Pure Oil’s exploration and production activities are supported by more than 75 years’ experience in the hydrocarbon field.  

At the moment, there are production activities in 8 countries and exploration assets in 13 countries, with Azerbaijan becoming the 14^th country in Zenith Pure Oil’s upstream portfolio. Zenith Pure Oil operates four refineries and two petrochemical plants under integrated supply chain management in Hungary, Slovakia and Croatia, and owns a network of 2,000 service stations across 10 countries in Central & South Eastern Europe. 

 Press contact: internationalpress@zenithpureoil.com