United Oil & Gas (UOG) has completed the sale of the North Sea Blocks 15/18d and 15/19b (License P2366) to Hibiscus for a headline consideration of up to $5 million.
The blocks are located offshore in the United Kingdom sector of the North Sea, some 250 kilometers northeast of Aberdeen. The license includes the Crown Discovery, which consists of 2C contingent resources that range between 4 to 8 million barrels of oil. The blocks are located 12km south-east of Marigold field, which together with the Sunflower field, was acquired by Hibiscus in October 2018.
The two companies have signed non-binding Heads of Terms for the two blocks in July 2019. Hibiscus then entered into a conditional sale and purchase agreement to acquire the License P2366 from United Oil & Gas and Swift Exploration in October 2019.
The completion of the sale, announced by United on Thursday, has triggered a payment of $900,000 to the sellers, United and its minority partner Swift Exploration ($855,000 net to United).
This is in addition to $100,000 ($95,000 net to United) previously paid on signing of the sale and purchase agreement.
Up to a further $3 million will be paid by Hibiscus ($2.85m net to United) before the end of 2020, subject to certain key milestones being achieved.
In the event that these milestones are not achieved, the license will revert to United and Swift Exploration, if Hibiscus exercises its option not to pay the $3 million and the $1 million will not be repaid, United said.
In addition, up to $1 million will be paid through an overriding royalty scheme once the Crown discovery has started production.
Brian Larkin, CEO at United Oil and Gas, said: “The completion of this divestment is further proof of United’s ability to manage our portfolio in a way which delivers tangible returns for shareholders. We have, in a short space of time, added significant value to License P2366 and realized a significant return. With activity across our portfolio of multi-stage assets over the next twelve months, including the completion of the Rockhopper Egypt acquisition and the commencement of production at the Selva field in Italy, the momentum behind the business is set to continue and I look forward to providing further updates on our progress.”
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