British petroleum exploration and production company EnQuest has completed the acquisition of the remaining 75% stake in the Magnus oil field in the UK North Sea from BP.
The company exercised an option in September to acquire the stake from BP.
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The transaction also includes the acquisition of an additional 9% interest in the Sullom Voe Oil terminal and supply facility (SVT) in the Shetlands, as well as supplementary interests in associated infrastructure, namely the Ninian pipeline system and Northern Leg gas pipeline.
EnQuest CEO Amjad Bseisu said: “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.
“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 £50m of cost savings in our first year as operator, and plan further savings in 2019 while exploring opportunities for new business to maximise the terminal’s value.”
The company expects the acquisition of the Magnus field to result in the addition of 60MMboe of 2P reserves and 10MMboe of 2C resources.
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By GlobalDataThe field is also estimated to add $500m of net present value to the group at $70/bbl long-term oil price.
In January 2017, EnQuest signed an agreement to acquire an initial 25% stake in Magnus field from BP for $85m and had an option to acquire the remaining 75% after 1 July 2018 until 15 January 2019. The consideration for the exercise of this option is $300m.
Carrying an effective economic date of 1 January 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 oil field is $100m, which is subject to customary completion adjustments.
EnQuest has also paid its $100m cash component of the transaction consideration from the funds received through the rights issue undertaken in October.
The balance amount will be repaid out of net cash flow.
The company now owns a 15.1% interest in SVT, 18% in the Ninian pipeline system and 41.9% in the Northern Leg gas pipeline.
