MIAMI -- Exterran Holdings, Inc. (NYSE: EXH) agreed to settle its suit against Venezuela over assets nationalized in 2009 by Venezuela's state oil and gas giant Petroleos de Venezuela, S.A. (PDVSA) Gas, S.A. for approximately $442 million, the company said. Exterran received an initial payment of approximately $177 million in cash at closing ($50 million of which will be used to repay insurance proceeds previously collected under the policy Exterran maintained for the risk of expropriation), and is due to receive the remaining principal amount of approximately $265 million in periodic cash payments through the third quarter 2016.
The net proceeds from the sale of these assets, when combined with the net proceeds of approximately $112 million from the March 2012 sale of Exterran’s Venezuelan joint venture assets which were also nationalized in 2009, total in excess of $500 million.
In March 2012, WilPro Energy Services (El Furrial) Limited and WilPro Energy Services (PIGAP II) Limited, the joint ventures owned by subsidiaries of Exterran and The Williams Companies, Inc., completed the sale of the nationalized assets of those joint ventures to PDVSA Gas, S.A.
Prior to the nationalization of these assets in 2009, the joint ventures provided natural gas compression and injection services to an affiliate of Petroleos de Venezuela S.A. Exterran had a 33.3% ownership interest in WilPro El Furrial and a 30% ownership interest in WilPro PIGAP II.
As its share of the settlement, Exterran received $37.6 million at the closing, $4.7 million in June 2012 as an installment payment, and is due to receive the remaining approximately $70 million in periodic cash payments through the first quarter 2016.
Exterran intends to use the initial proceeds received from the sale of its Venezuelan subsidiary’s assets (net of the $50 million to repay insurance proceeds previously collected) of approximately $127 million, as well as the remaining proceeds it is due to receive from both transactions in the principal amount totaling approximately $335 million, as such proceeds are received, for the repayment of indebtedness and for general corporate purposes.
As a result of the nationalization of its Venezuelan subsidiary’s assets, Exterran recorded asset impairments during the year ended Dec. 31, 2009 totaling $329.7 million ($379.7 million excluding the insurance proceeds of $50 million). During the year ended Dec. 31, 2009, Exterran also recognized an
impairment of approximately $90 million to write off its investment in the joint ventures.
Exterran, which was party to two suits against Venezuela before the World Bank's International Center for the Settlement of Investment Disputes (ICSID) will now suspend its second suit, after agreeing to suspend its first suit over an expropriated joint venture that it had with Williams Company after the settlement reached in March.
In April 2010, Exterran, through its subsidiary Universal Compression International Holdings, S.L.U. ("UCIH") had filed a separate arbitration proceeding before ICSID against Venezuela for $40
0 million related to its other assets and investments which were nationalized in 2009. The ICSID tribunal hearing the case held a 4 day hearing on the merits of that case July 9-13. Later last month, Venezuela also requested the removal of J William Rowley QC, as the chair of that ICSID tribunal hearing the case. The company agreed as part of the settlement to suspend its proceedings.
"Exterran has agreed to suspend the arbitration proceeding previously filed by its Spanish subsidiary against Venezuela in connection with the nationalization of its Venezuelan subsidiary’s assets, pending payment in full by PDVSA Gas of the purchase price for these assets," Exterran said in a statement. "The joint ventures have agreed to suspend their previously filed arbitration proceeding against Venezuela in connection with the nationalization of the joint ventures’ assets, pending payment in full by PDVSA Gas of the purchase price for those assets."
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Exterran Holdings, Inc., through its subsidiaries, provides natural gas compression services as well as providing service, fabrication and equipment for oil and natural gas production, processing and transportation. The company is headquartered in Houston, Texas, and has has approximately 10,000 employees in 30 countries. 3/24/2012 Venezuela to Pay Nationalized U.S. Firms $420 Million
6/7/2009 Venezuela Oil Price Nudges Higher Amid Guessing Game Over Cost of State Takeovers