Faroese oil and gas company Atlantic Petroleum has entered into a sale and purchase agreement with Decipher Energy for its 25 percent interest in the Orlando field in the UK North Sea.
Atlantic said on Tuesday that the consideration is a 2 percent revenue share of the total Orlando production revenue until the field has produced 5 million barrels of oil.
After that, the revenue share to Atlantic Petroleum increases to 4.35 percent of the total field revenue. A prepaid amount of $1 million of the initial 2 percent revenue share is prepaid on completion of the sale and purchase agreement.
Last November, Atlantic asked to be named the operator of the UK Licenses P.1606 and P.1607, containing the Orlando and Kells fields, as the then operator Iona Energy was under administration. Atlantic assumed the operatorship of both fields in December.
The company also said on Tuesday that, once the transaction is complete, it would not be participating in or funding the development of Orlando, and the only involvement for the company would be receiving its share of the sale proceeds when the field starts production.
According to the most recent Competent Persons Report prepared for Atlantic Petroleum by Gaffney Cline and Associates announced in March 2015, Orlando holds between 8.5 and 15.3 million barrels of recoverable reserves. Initial production rates on Orlando are expected to be in excess of 10.000 barrels per day.
First oil in 2018?
Under its previous operator Iona, Orlando was supposed to be developed as a subsea tie back to the Ninian central platform in the Northern North Sea. However, Iona’s administration has left the future of the field development uncertain.
Commenting on the agreement with Decipher Energy, Ben Arabo, Atlantic Petroleum CEO, said on Tuesday that the first oil from the field is now expected in 2018.
Arabo said: “We are very pleased with the agreement with Decipher Energy. The Orlando development is a good project and we are very glad to see that it will be developed with a planned first oil date in 2018.
“If the field performs as expected and the oil price remains at current levels or recovers further, there can be significant upside to Atlantic Petroleum from the Orlando sales proceeds.”
Also, the Faroese oil and gas company on Monday refinanced its debt with its main creditor Eik Bank.
Offshore Energy Today Staff