UK-listed Serica Energy has completed the acquisition of interests in the Bruce, Keith, and Rhum (BKR) fields and associated infrastructure in the UK North Sea from BP and the acquisition of interests in Bruce and Keith from Total, BHP, and Marubeni.
Serica’s completion of the BP deal experienced delays because Iranian Oil Company holds a 50% stake in the Rhum field, making the field potentially “vulnerable” to the new sanctions regime against Iran announced by the U.S. government on May 8.
In the meantime, Serica agreed with Total to acquire its stake in the Bruce and Keith fields.
The company managed to resolve the issues related to the BKR transaction in early November and announced the signature of sale and purchase agreement with BHP Billiton to acquire further interests in the Bruce and Keith fields as well as the signature of sale and purchase agreement for more interest in the Bruce and Keith with Marubeni.
Completion of the subsequent acquisitions of interests in Bruce and Keith and associated infrastructure from Total E&P UK, BHP Billiton, and Marubeni Oil & Gas were conditional on the completion of the BKR acquisition.
Following the completion of the BP deal on Friday, Serica also announced the completion of the related acquisitions of interests in Bruce and Keith and associated infrastructure from Total, BHP, and Marubeni.
Taking over operatorship
Following completion of the BKR acquisition and the BK transactions, Serica UK will be the operator of the Bruce, Keith, and Rhum fields and hold a 98% interest in the Bruce field, a 100% interest in the Keith field, and a 50% interest in the Rhum field.
As the BKR acquisition constitutes a reverse takeover under the AIM rules, admission of the ordinary shares has been canceled on completion and the ordinary shares have been readmitted to trading on AIM from this morning.
Under the net cash-flow sharing arrangements with BP, Total E&P UK, and BHP, Serica is due to receive a 40% share of the net cash flow, adjusted for notional tax of 40%, for the period from the effective date of January 1, 2018, to completion on November 30, 2018.
Additionally, Serica is due to receive 100% of the net cash flow (also on a notional post-tax basis) from Marubeni for the same period. This amounts to approximately $50 million before payment by Serica of initial consideration of approximately $22 million.
Following the completion of both transactions, Serica will see a significant increase in reserves and production. Serica’s pro-forma net 2P Reserves increased over 20-fold to 63.7 mmboe and net production from the assets acquired has averaged in excess of 23,000 boepd YTD of which over 85% is gas.
Serica expects to drive value through investment and implementation of operational efficiencies, focusing on the OGA’s target of Maximizing Economic Recovery.
Following the acquisition of BKR assets, 111 employees join Serica from BP, together with further 21 employees externally recruited. In addition, Serica established a new office in Aberdeen to house its personnel and manage North Sea operations.
Serica also announced the addition of Trevor Garlick and Malcolm Webb to its board as independent non-executive directors.
Tony Craven Walker, Chairman of Serica Energy, commented: “The acquisitions, once complete, are transformational for Serica firmly placing us as one of the leading ‘mid-tier’ independent exploration and production companies operating in the UK North Sea. They bring a significant production and reserve base from which we can build our position further in the UKCS.”
He added: “We are firm believers that the independent sector can go a long way to helping the UKmaximizee the economic recovery of the country’s North Sea resources and we aim to be at the forefront of this process.”
Mitch Flegg, Chief Executive of Serica Energy, said: “On completion of these transactions we assume operatorship of the Bruce, Keith and Rhum fields and we fully intend to use our agility and experience to significantly enhance the productivity and efficiency of their respective operations.”
Offshore Energy Today Staff