EnQuest has completed the acquisition of the remaining 75% interest in the Magnus oil field, an additional 9% interest in the Sullom Voe Oil terminal and supply facility (SVT) and additional interests in associated infrastructure in the UK North Sea from BP.
BP agreed to sell portions of its interests in the Magnus oil field and some associated pipeline infrastructure in the UK northern North Sea and in the Sullom Voe Terminal (SVT) on Shetland to EnQuest back in January 2017.
The sale included 25 percent of BP’s 100 percent stake in Magnus; 25 percent of BP’s interests in a number of associated pipelines, and a 3 percent interest in the Sullom Voe Terminal from BP Exploration Operating Company Limited’s (BPEOC) current total 12 percent stake.
Through the agreement, EnQuest also got an option to purchase BP’s remaining 75 percent interest in Magnus and to increase the stake in SVT to 15.1%, the Ninian Pipeline System to 18.0%, and the Northern Leg Gas Pipeline to 41.9%.
EnQuest exercised this option to acquire the remaining 75% interest in the Magnus field from BP on September 7, 2018 and announced the completion of the deal on Monday, December 3.
EnQuest said on Monday that the addition of Magnus is expected to add approximately 60 MMboe of 2P reserves (equating to approximately 30 percent of the group’s reserve base) as at January 1, 2018; approximately 10 MMboe of 2C resources (equating to approximately 6 percent of the group’s resource base) as at January 1, 2018; and approximately $500 million of net present value to the group at $70/bbl long-term oil price.
With an effective economic date of January 1, 2017, it is estimated that the net amount financed by BP and to be repaid out of the future cash flows from the 75% interest in Magnus is around $100 million. EnQuest has also paid its $100 million cash contribution of the consideration from the funds received through the rights issue undertaken in October.
EnQuest CEO, Amjad Bseisu, said: “We are delighted to have completed the acquisition of Magnus, the Sullom Voe Terminal and associated infrastructure from BP. These assets are a strong strategic fit for EnQuest to which we can apply our life extension expertise and deliver value for all our stakeholders.
“The addition of Magnus is expected to add material production and cash flow from the addition of significant low-cost 2P reserves. These cash flows will help facilitate the planned reductions in the group’s debt. We continue to assess further value accretive, short-cycle opportunities that have been identified at Magnus.
“SVT is an essential element of our North Sea portfolio through which we flow over one-third of our North Sea production. We are on track to deliver around £50 million of cost savings in our first year as operator, and plan further savings in 2019 while exploring opportunities for new business to maximize the terminals value.”
EnQuest now has a 100% equity stake in Magnus, 15.1% in SVT, 18.0% in the Ninian Pipeline System, and 41.9% in the Northern Leg Gas Pipeline.