Offshore staff
ABERDEEN, UK – BP has agreed to sell its interests in the Bruce area of the UK central North Sea to London-based Serica Energy plc.
The assets, whichBP currently operates, comprise the Bruce, Keith and Rhum fields, three bridge-linked platforms and associated subsea infrastructure.
Serica will pay BP £12.8 million ($16.95 million), a share of cash flows over the next four years, a consideration equivalent to 30% of BP’s post-tax decommissioning costs, and various contingent payments dependent on future performance of the assets and product prices.
The deal should eventually be worth around £300 million ($397 million) to BP.
Bernard Looney, the company’s chief executive, Upstream, said: “We remain committed to the North Sea and continue to invest. We expect our production there to double to around 200,000 boe/d by 2020 through new projects likeQuad 204 and Clair Ridge.
“While the Bruce assets are no longer core to BP, we are confident that Serica is the right owner and operator to maximize their continuing value for both companies and for the UK.”
Serica Chairman Tony Craven Walker said: “This transaction will establish Serica as a leading British independent oil company with the scale, balance sheet, and operating capability to prosper in the North Sea’s rapidly changing upstream oil and gas industry.”
BP discovered Bruce in 1974 and brought the field into production in 1993, with Keith tied back to Bruce in 2000. Rhum, a high-pressure/high-temperature satellite field 40 km (25 mi) north of Bruce, began producing in 2005.
Under the transaction around 110 staff that operate and support the assets are set to transfer to Serica. Subject to regulatory and third-party approvals, BP aims to complete the transfer next summer.
Details of the deal are as follows:
- Bruce – all, except 1%, of BP’s 37% interest (partners Total 43.25%, BHP Billiton 16%, Marubeni 3.75%). BP is retaining a 1% ownership in this case to monitor future production performance
- Keith – all of BP’s 34.84% interest (partners BHP Billiton 31.83%, Total 25%, Marubeni 8.33%)
- Rhum – all of BP’s 50% interest (partner Iranian Oil Company (UK) 50%)
- BP will retain financial liability for decommissioning of the assets but Serica will manage planning and execution of future decommissioning activity.
Currently BP is engaged in a six-well exploration program in UK waters, and the company also plans to drill around 50 development wells over the next three to four years.
It secured seven licenses covering 25 blocks or part blocks under the UK’s 29th license round awards earlier this year. Commitments on these parcels include three additional exploration wells.
Fiona Legate, Senior Analyst North Sea Upstream at Wood Mackenzie, said of the transaction: “It’s BP’s biggest disposal since 2012 (excluding midstream divestments) and fits with our belief that the major will look to sell all bar its core west of Shetland fields, which still have materiality and longevity…
“The structure of the deal gives Serica protection from decommissioning liability, as well as an incentive to grow cash flow. It’s similar in structure toBP’s divestment of the Magnus Area [to EnQuest] and associated infrastructure in early 2017.
“The deal transforms Serica’s UK position, taking 2018 production from around 2,000 boe/d to 28,000 boe/d in 2018. It also gives Serica its first UK operator experience, a surprise given their small non-operated position at present [and] provides the small E&P player with production to offset tax losses from theirColumbus field [in the UK central North Sea] against during the development phase.”
11/21/2017
