Verus agrees to acquire Cieco Exploration and Production for $400m

24 September 2018 (Last Updated September 24th, 2018 11:17)

UK oil and gas firm Verus Petroleum has agreed to acquire ITOCHU Corporation’s wholly owned subsidiary Cieco Exploration & Production (UK) in a deal valued at $400m.

Verus agrees to acquire Cieco Exploration and Production for $400m
An offshore platform. Credit: Bryan Burke

UK oil and gas firm Verus Petroleum has agreed to acquire ITOCHU Corporation’s wholly owned subsidiary Cieco Exploration and Production (UK) in a deal valued at $400m.

The acquisition includes a 25.8% interest in the Hudson field, a 23.1% stake in the Western Isles Development Project, a 2% interest in the Brent Pipeline System, and a 1.2% interest in the Sullom Voe oil terminal.

According to Verus, the takeover of Cieco Exploration and Production will add about 11,000 barrels of oil equivalent per day (boepd) to its daily production. The acquired firm operates as an asset holding company and this deal does not involve the transfer of any staff.

Verus will fund the transaction through a mixture of equity, existing cash reserves and debt. Equity will be offered by HitecVision, the majority owner of Verus.

Verus Petroleum CEO Alan Curran said: “Verus is pleased to have signed this sale and purchase agreement with ITOCHU, which is aligned with our strategy to expand our production base and cash flow through the acquisition of high-quality production assets.

"The combined Alba, Babbage and Cieco acquisitions increase our net production to around 18,000 boepd."

“This transaction builds on our Boa oil field acquisition in 2017, and our acquisition of interests in the Alba oil field and the Babbage gas field earlier this year. The combined Alba, Babbage and Cieco acquisitions increase our net production to around 18,000 boepd.

“The Western Isles development includes the Harris and Barra oil fields. Production has exceeded expectations since it started in November 2017 and is currently on a plateau at in excess of 40,000 boepd, with an estimated field life of 15 years.”

The deal is subject to regulatory approvals and is likely to conclude during the fourth quarter of 2018.

Meanwhile, Verus is shifting to new offices in the Silver Fin building on Aberdeen’s Union Street later this year to support its growing business.

In May, Verus signed an agreement to acquire 47% interest in the Babbage gas field located in the Southern North Sea and 50% operated interests in the Cobra discovery adjacent to Babbage, from Premier Oil.