Hungary’s MOL buys stake in 6 North Sea blocks from Premier Oil

Hungary’s MOL Plc.has executed a Sale and Purchase Agreement with Premier Oil UK Limited to acquire shareholding interest in Central North Sea offshore assets in 6 licences.

The portfolio includes non-operated equity stakes in the Scott (21.84% unitised Working Interest (“WI”)), Rochelle (15% unitised WI) and Telford (1.59% unitised WI) fields, as well as participating interest in further exploration licences such as the Rochelle Upper Jurassic deep prospect.

The acquisition is estimated to increase MOL’s 2P Reserves by 14.3 MMboe from the three producing fields (Scott 9.3 MMboe, Rochelle 4.4 MMboe, Telford 0.5 MMboe), deriving from 73% oil and 27% from gas. Besides the reserves, further Prospective Resources (7 MMboe, unrisked) provide additional upside potential.

Year to date production from above-mentioned assets has averaged 3.7 mboepd, while the peak production of the assets is expected to reach 6.2 mboepd in 2016. Overall UK peak production for MOL now is expected to reach 20-22 mboepd in 2018. Together with MOL Group’s already existing assets in the UK North Sea, this transaction will combine to create considerable operational synergies. Through the acquisition, MOL will also obtain tax depreciation pool. Key assets (Scott, Telford and Rochelle) are operated by Nexen, one of the largest and most reputable and experienced operators in the region.

The base consideration offered to the seller amounts to USD 130mn, which is subject to adjustments at closing, expected to take place in second half of 2014. The acquisition will be fully funded by the Group’s operating cash-flow, which is sufficient to cover the costs of the contemplated transaction above organic capital expenditures of 2014.

Alexander Dodds, Group Executive Vice President for Upstream in MOL commented:

“This transaction extends the presence of MOL Group on the global map of offshore E&P and provides several additional strategic rationales. Building on our already existing assets in the UK North Sea, this acquisition represents a significant step forward in growing a solid sizable North Sea portfolio. I am certain that these assets are of considerable quality and will bring further positive results. The synergies gained with this transaction will complement MOL ‘s ambitions, and help realize the company’s vision of considerable growth of its international portfolio.”

Tony Durrant, Chief Executive of Premier Oil, commented:

“Our ownership of this package of non-operated assets in the Scott area has generated significant cash flow for the group since acquisition. However, this sale will allow our team in the UK North Sea to focus principally on our operated Solan and Catcher developments, and is a further step towards achieving our targeted disposals for the year.”

Press Release, June 30, 2014

 

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