EnQuest: Agreement with BP on Thistle Decommissioning
Wednesday 31 January 2018
Following the completion of the acquisition of an initial 25% interest in the Magnus oil field on 1 December 2017, EnQuest PLC has agreed with BP to undertake the management of the physical decommissioning activities for Thistle and Deveron.
Under the terms of this agreement with BP:
EnQuest will receive $30 million in cash in exchange for undertaking the management of the physical decommissioning and making payments by reference to 3.7% of the gross decommissioning costs of the Thistle and Deveron fields when spend commences, subject to a cap of £57 million. EnQuest’s current estimate of its exposure to decommissioning costs is lower than the $30 million cash being received; and
EnQuest will also have an option, exercisable over a 12 month period, to receive a further $20 million in cash in exchange for making additional payments by reference to 2.4% of the gross decommissioning costs of these fields, subject to a cap of £42 million. The transaction aligns the interests of the parties involved in the production and decommissioning phases, reflecting the industrial logic for the operator to undertake the decommissioning of these assets.