UK-based independent oil and gas production and infrastructure company RockRose Energy announced on Monday it has signed a share purchase agreement with US-based Marathon Oil.
The agreement is for the sale of Marathon’s UK businesses Marathon Oil UK (MOUK) and Marathon Oil West of Shetland (MOWOS), representing a complete exit from the UK for Marathon. MOUK and MOWOS assets in Peterhead, Aberdeen and offshore Scotland will transfer to RockRose on completion of the deal.
MOUK holds a 37%-40% operated interest in fields in the Greater Brae Area, while MOWOS holds a 47% interest in Foinaven East and a 28% interest in the BP-operated Foinaven Field unit.
Marathon UK produced 21.4 million barrels of oil equivalent (Mboe) of proved reserves at the end of 2018, with 2018 production averaging approximately 13,000 barrels of oil equivalent per day (boepd).
RockRose anticipates the production of Marathon UK’s assets will remain roughly the same in 2019, which would bring RockRose’s anticipated total net production to 24,000 boepd in 2019.
RockRose executive chairman Andrew Austin said: “This acquisition marks a major step change in the group’s reserves and production profile. Given the quality of these assets the Board’s view is this is a good opportunity to make the transition to the role of operator.
“We look forward to welcoming Marathon Oil UK employees, who have an excellent track record operating in the North Sea, to the RockRose team at closing.”
The transaction is expected to close in the second half of 2019 with an effective date of 1 January 2019. RockRose will pay Marathon $140m as part of the acquisition, which the company anticipates will be funded by existing facilities and resources.
Marathon Oil chair, president and CEO Lee Tillman said: “Today’s announcement to divest our UK business represents our continued commitment to portfolio management and further concentrates our portfolio on high margin, high return US resource plays.
“I’d like to recognise the significant contributions of our UK employees – both current and past – who built and have operated the Brae Field for more than 30 years.”
Oil & Gas UK’s upstream policy director Mike Tholen said: “This news is a further signal of confidence in the industry – new entrants bring fresh ambition for investment, reinvigorating activity in existing fields and pursuing new opportunities.
“The multi-million pound transaction is a fitting illustration of how the hard work to improve the attractiveness of the UK Continental Shelf is enabling a diverse range of investors to play into the basin.
“While we cannot comment on the commercial decisions of our members, we commend the contribution Marathon Oil has made to the success story of the UK North Sea. The sale, and indeed purchase of assets, is a natural part of the commercial life of the UKCS and presents new opportunities to maximise recovery.”