SK Earthon Co. Plans to sell its stake in 3 oil field blocks in Vietnam

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SK Earthon Co. Plans to sell its stake in 3 oil field blocks in Vietnam

According to Wednesday's informed sources, SK Innovation's oil exploration subsidiary SK Earthon Co., is planning to sell its stake in Vietnam's three oil fields (valued at about 200 billion won, or 0.14 billion U.S. dollars), the move is the company to improve the financial situation and promote one of the initiatives.
 
The South Korean company since 1998, with the United States Texas Murphy Oil Corp. and Vietnam state-owned enterprises PetroVietnam Exploration Production Corporation(PVEP) cooperation, in Vietnam layout of four oil field blocks.
 
SK Earthon in the four oil and gas development and exploration blocks in the holding of 25%, including has been put into production of the flagship block 15-1.
 
Murphy Oil holds a 40% stake in these blocks and the remaining 35% is held by PVEP.
 
The proposed sale does not include the 15-1 block, which is currently managed by SC Securities Co.
 
By the end of 2023, 15-1 oilfield's cumulative oil production has exceeded 0.4 billion barrels, becoming the Southeast Asian country's second largest cumulative oil production area.
 
According to Vietnamese media reports, in the exploration stage of the 15-2/17 block, its recoverable oil is believed to exceed 0.17 billion barrels, the size of about equivalent to South Korea's annual oil consumption of 18%.
 
Oil industry officials say SK Earthon are looking to use oilfield assets to hedge resource development risks-such projects typically require hundreds of millions of dollars and often take more than 10 years to start production.
 
But they also warn that SK's divestiture may not be smooth sailing.
 
"The oil-producing block's valuation can be roughly estimated by multiplying the expected production over the next 25 years by the global crude oil price forecast," a South Korean oil industry official said.
 
"But for blocks that are still in the development or exploration stage, the situation is completely different. The high investment costs and inherent risks make the valuation of such blocks much more complicated."
 
He added that SK's Earthon divestiture also requires joint venture partners' consent, a factor that could complicate the negotiation process.

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