EnQuest to Take Over Operatorship of Magnus, Sullom Voe Terminal and Associated Infrastructure with no Cash Outlay
Tuesday 24 January 2017
EnQuest PLC (together with its subsidiaries, "EnQuest"), is pleased to announce an agreement to acquire from BP an initial 25% interest in the Magnus oil field ("Magnus") representing c.15.9 MMboe of additional net 2P reserves (gross reserves of 63.4 MMboe) with net production of 4.2 Mboe/d in 2016 (gross production 16.6 Mboe/d) as well as a 3.0% interest in the Sullom Voe oil terminal and supply facility ("SVT"), 9.0% of Northern Leg Gas Pipeline ("NLGP"), and 3.8% of Ninian Pipeline System ("NPS") (collectively the "Transaction Assets"). EnQuest currently has existing interests of 3.0% in SVT, 5.9% in NLGP and 2.7% in NPS.
EnQuest will become the operator of the Transaction Assets; the transaction is subject to certain regulatory, government authority, counterparty and partner consents. The transition for the change in operatorship is anticipated to take between 6 and 12 months.
The consideration for these interests is $85 million (subject to working capital and other adjustments), which will be funded by deferred consideration payable from the cash flow of the Transaction Assets. There are no requirements for cash from EnQuest other than as generated from the Transaction Assets. In addition, EnQuest has an option to acquire the remaining 75% of Magnus and BP's interest in the associated infrastructure. EnQuest also has the option to receive $50 million from BP in exchange for undertaking the management of the physical decommissioning activities for Thistle and Deveron and making payments by reference to 6% of the gross decommissioning costs of Thistle and Deveron fields.
This transaction reflects confidence in EnQuest's ability to maximise value from late life assets with significant remaining resource potential. EnQuest believes the innovative transaction net cash flow sharing structure can also become a template for transferring maturing assets from other majors to efficient operators such as EnQuest.
More - http://otp.investis.com/generic/regulatory-story.a...