Following the completion of the acquisition of BP’s interest in the Magnus oil field, EnQuest has agreed with BP to undertake the management of the physical decommissioning activities for Thistle and Deveron fields in the North Sea.
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 that agreement, EnQuest also got an option, exercisable between July 1, 2018 and Jan 15, 2019, to purchase BP’s remaining 75 percent interest in Magnus, a further 9 percent interest in SVT and the remainder of BP’s interests in the associated pipelines for a consideration of $300 million.
Furthermore, EnQuest got an option to receive $50 million from BP in exchange for undertaking the management of the physical decommissioning activities for Thistle and Deveron and making payments by reference to 6% of the gross decommissioning costs of Thistle and Deveron fields.
The two companies completed the transaction last December.
On Wednesday, January 31 EnQuest informed that, 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 starts, 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.
Furthermore, EnQuest will 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.
According to EnQuest, 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.
The Deveron field was discovered in 1972 and the Thistle field in 1973. The Thistle Alpha platform was installed in 1976 and started production in 1978 for BNOC/Britoil/BP. The license operatorship subsequently changed to DNO in 2003, then to Lundin in 2004 before the demerging of Lundin’s UK assets in 2010, when EnQuest became the operator. The installation is operated by EnQuest which holds a 99% interest and BP holds the remaining 1% interest.
Offshore Energy Today Staff