EnQuest has signed an agreement to acquire part of BP's stakes in Magnus oilfield with associated pipeline infrastructure in the UK northern North Sea, and Sullom Voe Terminal (SVT) near Shetland.
Under the agreement, BP will sell 25% interest in Magnus field from its 100% interest, 25% interest in several associated pipelines and 3% interest of Sullom Voe Terminal.
Through BP Exploration Operating Company, BP owns 12% stake in Sullom Voe Terminal.
EnQuest will pay $85m for this acquisition. Subject to customary closing conditions and approvals, the agreement will not include any upfront payment to BP.
After the completion, EnQuest will also receive operatorship of Magnus and SVT from BP.
BP group chief executive Bob Dudley said: “EnQuest’s experience of investing in and extending the life of mature assets in the North Sea make them a natural operator of Magnus and Sullom Voe in this later phase of their life.
“We believe this will enable them to prolong the life of the assets, benefiting the region and creating additional value for both EnQuest and BP shareholders.
“In addition to investing in and growing our core businesses, BP will continue to seek innovative opportunities such as this to work with partners to maximise value creation from our entire portfolio.”
Under the agreement, EnQuest can purchase the remaining 75% interest in Magnus, 9% interest in SVT and the remaining BP’s stake in the supporting pipelines by paying $300m.
This option can be exercised between 1 July 2018 and 15 January 2019.
Under this option, after the recovery of consideration and adjustments, BP would also retain 50% of net cash flows from these assets, up to a limit of $1bn.
The consideration for this further acquisition would be met by EnQuest through a combination of cash and future asset cash-flows.
Oil production from the BP-operated Clair field will continue to be exported through SVT, and the new Clair Ridge development will also export oil to the terminal when it comes on-stream.
Gas produced from the Foinaven and Clair fields will also continue to be processed through SVT.
Gas from the redeveloped Schiehallion and Loyal fields will be exported to SVT when they are brought back into production in the coming months.
SVT and Magnus are expected to transition to EnQuest as fully operational entities.
Subject to the receipt of regulatory and other third-party approvals, BP aims to complete the sale and transfer of operatorship during 2017.
Image: Sullom Voe terminal. Photo: courtesy of BP/ Flickr.