OMV has signed a Heads of Agreement with Sapura Energy to acquire a 50% interest in its upstream subsidiary at an enterprise value US$1.6 billion. The move highlights OMV strong appetite to build a new core business in Asia-Pacific. The top prize is Sapura's undeveloped gas resource in Sarawak (Malaysia), which we estimate at 367 mmboe (net to Sapura). The portfolio also includes seven producing oil fields offshore Peninsular Malaysia (current production: 10,700 b/d), as well as exploration acreage in Australia, New Zealand and Mexico. The lower oil prices and reduced oilfield service rates have left Sapura Energy struggling to maintain its order book, leaving it with little available financing to develop and grow its upstream business. If the deal is finalised, proceeds will go towards reducing Sapura Energy's debt and funding its broader strategy to expand in both oilfield services and upstream.