DEA to Buy Sierra Oil and Gas
DEA Deutsche Erdoel AG announced Tuesday that it has signed an agreement to acquire Sierra Oil & Gas.
The transaction, which is described by DEA as an “important milestone” in the company’s international growth strategy, is subject to government approvals, including from Mexico’s National Hydrocarbons Commission and the Federal Economic Competition Commission.
The deal is expected to close in the first half of 2019 and will be fully equity funded by LetterOne.
Sierra holds a 40 percent non-operated working interest in Block 7, containing a significant part of Zama, which is described by DEA as “one of the largest shallow water discoveries in the past 20 years globally”.
As a whole, Zama is estimated to hold 400 million to 800 million barrels of recoverable oil equivalent and is expected to start production by 2022/23.
“The acquisition of Sierra will allow DEA to achieve materiality in the highly strategic and competitive Mexican upstream market and provide us with a high-quality exploration and appraisal portfolio in one of the world’s most sought-after offshore basins, as well as a strong team,” DEA’s Chief Executive Officer, Maria Moraeus Hanssen, said in a company statement.
“The transaction also underlines our confidence in the future of Mexico’s energy industry. Upon completion of the planned merger of DEA and Wintershall, this acquisition will further strengthen Mexico as a core region for the combined company, which will become one of the major players in Mexico,” Moraeus added.
Juan Manuel Delgado, Country Manager for DEA’s Mexican business, said “DEA is fully committed to contributing to the development of Mexico’s oil and gas sector”.
“We are excited to work with our joint venture partners in Block 7 on delivering first oil from Zama on an expedited timetable and to being actively involved in unlocking the significant production potential of the Sureste basin,” Delgado added.
“Sierra’s team has a tremendous track record in Mexico and brings valuable expertise and in-depth knowledge of the Mexican upstream sector to DEA. We look forward to working with them on growing DEA’s business in Mexico in the future,” Delgado continued.
In September this year, DEA announced that LetterOne and BASF had signed an agreement to merge their oil and gas businesses and create Wintershall DEA. Closing of the transaction is expected in the first half of 2019.
DEA is an international exploration and production company with headquarters in Hamburg, Germany. Sierra Oil & Gas describes itself on its website as “Mexico’s first independent oil and gas company”.
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