British Gas parent Centrica PLC has signed an agreement to acquire ConocoPhillips’s nonoperated interests in the gas and oil-producing Statfjord field, along with associated satellites in the North Sea, for $223 million.
“The acquisition…underlines our commitment to invest in North Sea production and secure future energy supplies for the UK,” said Mark Hanafin, Centrica Energy managing director.
The fields, which lie across both the Norwegian and UK sectors of the Northern North Sea, produce gas for the UK market. Centrica said the acquisition further strengthens its “integrated business model” and “provides another secure source of gas for our UK customers.”
The deal will see Centrica acquire a further 15.17% interest in the field which, combined with its existing equity interest, will increase its overall stake in this core asset to 34.3%.
It will also see the company increase its interest in the Statfjord satellites Statfjord Nord, Statfjord Ost, and Sygna, which are producing fields tied back to Statfjord.
The gas produced from these fields is either uncontracted or already contracted to Centrica and is directly linked to the UK market.
The acquisition adds material long-term production to Centrica’s portfolio, providing additional reserves of 36 million boe, an increase of about 9% split 60-40 between liquids and gas.
The resulting net increase in production will be over 11,000 boe/d, with production weighted towards liquids in the early years.
Centrica said field development costs of £200 million relating to the acquired interests will be required to maximize the long-term recoverable reserves from these fields and the acquisition is expected to generate strong immediate earnings and cash-flow.
Last year, Centrica acted on an earlier threat to stop production at South Morecombe, the UK’s largest gas field, in response to the British government’s recently imposed windfall tax on North Sea profits.
“Decisions on when to run the field are made on a commercial basis, taking into account market factors, operating costs, and earnings,” the company said. Earlier, Centrica stopped production at Morecambe Bay, a reservoir in the Irish Sea about 25 miles west of Blackpool (OGJ Online, June 7, 2011).
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