Serica Energy plc's Acquisition of BHP Interests in Bruce and Keith
Monday 5 November 2018
Serica Energy plc announced that Serica Energy (UK) Limited has signed a sale and purchase agreement (“SPA”) to acquire further interests in the Bruce and Keith fields and associated infrastructure in the UK North Sea.
Under the SPA, Serica UK will acquire a 16.00% interest in the Bruce field and a 31.83% interest in the Keith field and associated infrastructure (“BHP Assets”) from BHP Billiton Petroleum Great Britain Limited. The structure of the Transaction is the same as the deals entered into by Serica with BP and Total whereby Serica will acquire interests variously in the Bruce, Keith and Rhum fields.
The Transaction has an effective date of 1 January 2018 and completion is subject to completion of the previously announced acquisition of interests in the Bruce, Keith and Rhum fields from BP. The Transaction is also subject to inter alia certain regulatory, government and partner consents with completion targeted for 30 November 2018.
The Transaction together with the previously announced purchases from BP and Total will result in Serica consolidating its ownership of the Bruce and Keith fields to 94.25% and 91.67% respectively postcompletion.
Transaction highlights
Following completion of the BP Transaction and acquisition of further interests in the Bruce and Keith fields from Total E&P UK Limited and transfer of operatorship of the Bruce, Keith and Rhum fields to Serica UK, the board believes the Transaction will further strengthen Serica’s position as one of the leading mid-tier independent oil and gas producers on the UK Continental Shelf and will provide incremental benefits to the Company.
- Further increase in reserves and production
- Serica’s pro-forma net 2P reserves as at 1 August 2018 are expected to increase by approximately 4.0mmboe from approximately 58.7mmboe post completion of the BP Transaction and Total E&P Transaction to approximately 62.7mmboe post completion of this Transaction
- Net production in 1H 2018 from the BHP Assets was approximately 1,760boe/d, of which 81% was gas
- The Transaction is expected to be immediately cash flow and value accretive following completion
- Structured to mitigate financial risk and maintain balance sheet resilience
- The bulk of the consideration under the Transaction is deferred and the initial cash consideration is expected to be funded by Serica UK’s share of net cash flows between 1 January 2018 and completion
- Further increased scale in line with strategic growth plans
- The Transaction will enhance the value Serica expects to unlock from the Bruce/Keith/Rhum areas
- No additional management and administrative resources will be required.
- The Transaction will further increase Serica’s scale and profile, providing a broader base from which to attract funding and pursue investment opportunities